Saturday, June 18, 2011

Don't Hold Your Breath

In Response to the Time Magazine Article

Don't Hold Your Breath June 20 2011 by Rana Foroohar

http://www.time.com/time/nation/article/0,8599,2076568,00.html

It looks to me that America has plunged into a deep hole. It is bothering to me and to many other Americans. America is not on sustainable path and something needs to be done before we will get to the point of chaos that is happening in Greece right now. The political system in this country has grown to become unsustainable and incapable of leading this country to the capacity this country has had 50 years ago. We have turned from a productive nation that at one point was able to produce most of its good to a nation that imports most of the goods purchase at stores. This change has caused a severe reduction in the ability of this country to generate jobs. So why are people surprised that the economy is too weak to generate enough jobs? As long as the economy was able to produce enough service jobs and rely on tax revenue from sales of cheap goods from over seas (as happened in the last 20 years) the economy did OK. Once we passed a critical threshold from which there was severe layoff from services and manufacturing in 2007 - we seem not to be able to generate enough jobs.

The article talks about 5 myths

1) This is a temporary blip - this myth is correct - no one knows when the economy will get back to normal (say 5% unemployment)
2) We can buy our way out of it - this myth is correct - It will not work because we do not have enough jobs that export $ so we can pay for the stuff we import - buying more will just put us in a bigger hole!
3) The private sector will make it all better - this myth this correct - corporations that have money do not spend it here because they can invest it where he growth is (China India etc.)
4) We'll pack up and move for new jobs - this myth is correct - even if you move you may not find good enough work and most people can't move anyway because they are under water. Many of the jobs offered are at lower pay.
5) Entrepreneurs are the foundation of the economy - this myth is correct - the # of start ups and IPO's are in decline. Large corporations control segments of the market and the opportunities are not as rosy as they were in the 80's.

The dilemma we have is that if we want manufacturing jobs - we will not be able to compete with the cheap labor from China, India etc. Manufacturing in the US is viable only if taxation is placed on imports. But wait we have taken taxation off instead. Corporations for a long time pushed to take out taxation because they saw the benefit that cheap labor overseas will give them. Now corporations have it the way they like it. They can invest in factories overseas - make the stuff there for cheap - bring it here and sell it for a nice profit. So why are we surprised we do not have enough jobs. It is not just manufacturing that moved. the manufacturing drags with it engineering design and R&D - we are bleeding out of our own making. We enjoy the "benefit" of cheap goods that now we can fill our house with (and trash later) but we are also now seeing the effects of it in terms of loss of jobs. This process of "pressure equalization" between the low wage countries and high wage countries like the US is inevitable according to many in the name of free economy. What these people forget to tell you is that countries like China and India do not let their people bring in good from the US without taxation -so why are we doing this to ourselves. Although many corporations in America are successful many people in America are not doing great. With official unemployment over 9% (unofficial over 14%) we need to wonder what are we doing wrong and how can we fix this.

We must hold corporations responsible to this country. Although the Supreme Court determined that corporations are entities with rights like individuals, many corporations seem to have forgotten that they are there to serve the people and the country. Corporations, although instruments of profit making, should have the public responsibility to the American people that supersedes their ambition for easy profit that they accomplish by going multi-national and off shore. The effects of American corporations moving R&D and manufacturing overseas not only creates unemployment and reduction in GDP, but also reduces innovation on a national scale.Countries like Germany have dealt with the same issue. They did not simply take the rout of exporting jobs out of the country. Their export is strong and unemployment is lower than the US.

As pointed out in

http://benjamindavidsteele.wordpress.com/2010/08/27/capitalist-us-vs-socialist-germany/

"worker representation to be half of board members of companies. In Germany, the industrial and financial sectors are highly regulated keeping jobs from being outsourced and ensuring main street benefits rather than just wall street"

I see this as the biggest challenge America is facing. America does not need health care reform. It needs Corporation reforms that will allow both Corporations and Citizens (that most own stocks in the company the work at) to achieve success together.

For more reading about corporations in America - read this...
by  Thomas P. Byrne

http://uclalawreview.org/?p=1056



.

2 comments:

  1. Shalom,
    I read your blog it is good.

    ReplyDelete
  2. As it looks to me this deep hole has no bottom at all, it have only layers called generation. The foul down will be from one generation to the next. This happen for generations at Greece. The US economy don't need now a injection cure which reduce only the pain. It need a surgical cure operation to stop and avoid that foul-down the hole.
    Doe's slogan "YES WE CAN" means we can print more US$ to full-feel that hole.
    The present young generation must speak up to avoid and stops that multiply-trillion US$ deficit&debit, which will need to care that burden.
    Aba

    ReplyDelete