Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

America Unmade
NewsMax ^ | May 22, 2003 | Diane Alden

Posted on 05/23/2003 5:49:40 AM PDT by Phaedrus

The Design and Manufacturing Show was held in Chicago on March 5, 2003. Bob Dwyer is a manufacturing representative with 19 years of experience and was one of the participants. His observations should make us reflect on the fundamental crisis regarding what has gone wrong with the American economy, its corporate culture, job creation and economic growth, and the heavy hand of government interference in the name of political correctness.

His concerns also illustrate the deception and disconnection of the transnational establishment and corporate sector from our core, our foundation, our value as a nation-state and certainly the disconnect from the average worker.

As it is, neither government nor transnational corporate entities seem to recognize there is a problem. They sing the siren song of free markets and free trade with no understanding of them. That song is repeated over and over again without consideration as to how damaging their version of free trade is in its current form. There is a willful blindness on the part of some to the damage being done to American society, the nation-state republic, the citizens, workers, taxpayers and to our national cohesion.

The Manufacturing Story

“I told CNBC … that it was a slow show, said Dwyer. “I didn’t mention the flow of Chinese [industrial] spies who were in and out of our booths. I told the CNBC reporter that I have been informed by some Fortune 500 firms that they are not considering domestic suppliers for contract manufacturing work. I have been told that my Wisconsin-based company would not be considered for work unless we have a “presence” in Mexico, China or other countries. Large firms with government contracts have also told me that they cannot consider my company because we are not minority owned, woman owned, or located in a hubzone, a disadvantaged area. In 2002, one firm said that they could not consider using my company for the entire year because they were behind on their ‘disadvantaged’ quotas.”

Dwyer added, “I am concerned that the WTO [formerly GATT], NAFTA and the upcoming FTAA are putting United States businesses at a disadvantage. It appears that unelected bureaucrats have too much power in deciding the fates of American businesses. Foreign companies do not have the additional regulatory or health care costs that are paid by United States firms. I have spoken to lobbyists in Washington, D.C., and I came away with the sense that the people involved in making these agreements are not as concerned with obtaining fair trade as they are in earning commissions on the deals they finalize. One wonders if any dealmakers have a true, clear picture of the state of manufacturing in America.”

At the Manufacturing Show, U.S. Commerce Secretary Don Evans spoke about the “great things” that American companies were doing to compete in the global economy. He mentioned Motorola as one example.

Motorola, of course, has spent $1 billion in transferring its production to China. It is about to invest another $90 million in research and development in China. Very little of Motorola is now in the United States. Yet Evans considered that a success story. Problem is that not only has Motorola transferred jobs and production to China, it has also transferred crucial technology as well.

Bob Dwyer is not the only manufacturer concerned about the future of manufacturing in the U.S. At a recent meeting in Asheville, N.C., as reported in the Asheville Citizen-Times, Augustine Tantillo, former chief of staff for former U.S. Sen. Strom Thurmond, R-S.C., and a former U.S. Department of Commerce official, had some harsh truths to relate to power.

“Government officials have not grasped how crucial manufacturing jobs are to the American economy and how devastating looser trade restrictions have been to those jobs,” said Tantillo, now of the American Manufacturing Trade Action Coalition, before about 90 people at a manufacturing summit.

He maintained, “Government leaders and others believed for much of the '90s that the country was undergoing a transition from a manufacturing-based economy to a knowledge-based one.”

"Then the [tech] bubble burst, and we began to learn a very hard lesson and that is there's only a few ways to create wealth," he said. "You have to either farm something, mine something or manufacture something. The bubble burst. Unfortunately, our policy makers are acting as if it had not."

Chalmers Johnson, the author of “MITI and the Japanese Miracle,” stated the profound nature of the U.S. transformation very well. “It is close to impossible to get Americans today to understand that an economy based on manufacturing and an economy based on finance are not equivalent. Manufacturing provides jobs for the largest number of citizens; finance is the non value-adding but crisis-provoking segment of modern society. Japan is the world's leading manufacturing country; the United States is the stronghold of finance capitalism.”

But what happens when the stock market and financial transactions, mergers and acquisitions and leveraged buyouts are no longer enough to keep the American economic engine going? Economist Robert Scott writes: “All 50 states and the District of Columbia have experienced a net loss of jobs since the implementation of NAFTA in 1994 and the creation of the WTO in 1995. Between 1994 and 2000, the U.S. lost more than 3 million jobs and job opportunities – equal to 2.3% of the labor force. Exports rose over the period, but imports rose faster, yielding net job loss figures ranging from a low of 6,000 in North Dakota to a high of 310,000 in California. Other hard-hit states – over 100,000 jobs lost in each – include Texas, New York, Michigan, Pennsylvania, Illinois, Ohio, North Carolina, Indiana, and Florida.”

Furthermore, he writes, “These states have high concentrations of the kinds of industries (motor vehicles, textiles and apparel, computers and electrical appliances) where production has shifted most rapidly to export-processing zones in China, Mexico, and other countries since NAFTA and the WTO took effect.”

In addition, companies in the electronic and technical areas have been complaining about foreign competition for years. Much of it amounted to dumping goods on the American market – often after having copied our technology, then selling it back to us at prices which American manufacturers can’t compete with.

As businessman, economist and author of “In Praise of Hard Industries,” Eammon Fingleton relates, “the United States in the space of a single generation is presiding over the sell-off of much of its industrial and commercial base. This base required the sweat and enterprise of many earlier generations to create.”

Economic Ebola

The 2002 report to Congress from the U.S. China Security Review Commission states: “Over 90 percent of the FDI (foreign direct investment) attracted to the U.S. was for the purpose of acquiring ownership of existing U.S. businesses. The opposite is true for FDI flows into China where estimates indicate that 90 percent of FDI is destined to establish new operations. In short, U.S. capital and Chinese labor are manufacturing products in China for both the Chinese and American markets. U.S. manufacturing workers are increasingly displaced.”

A phenomenon in recent years that Fingleton notes is that major American corporations have been taken over by foreign interests that include Amoco taken over by British Petroleum and Chrysler by Daimler-Benz. American finance is held by foreign entities: First Boston, for instance, is owned by Credit Suisse, Republic Bank by HSBC Bank USA, Dillon Read by Union Bank of Switzerland, the Kemper Corporation by Zurich Insurance, and Bankers Trust by Deutsche Bank. We must now add Bank of America as well.

The list extends to American book publishing, half of which companies are German owned. Dot coms as well have been impacted, including Yahoo! and E-Trade, Datek, Cisco Systems and MP3.com.

Not long ago the Anglo-Dutch food company Unilever bought out Ben and Jerry’s Ice Cream – just as in the mid-1980s a British consortium bought out the family-owned Pillsbury, split it up, sold off profitable sectors and the flourmills, and finally sold what was left to General Mills.

Meanwhile, Siemens of Germany bought out Westinghouse’s generating sector in 1998 and sold it to a French concern. While Westinghouse was beating the drums for Most Favored Nation (MFN) status for China, lobbying the Clinton White House, it was also making a deal to sell on credit its AP600 nuclear reactor to China. The Chinese required that the reactor be built with Chinese labor, and the jobs Westinghouse promised for American workers never materialized.

Westinghouse also knew it was divesting itself of most of its American operations, making its support of MFN status for China rather self-serving, not to mention on the lower end of an ethical scale in conducting business.

But so what else is new in the more recent climate of ethical collapse in government and corporate America? Two bedfellows who continue to act as if the best interests of the United States mean nothing.

Then of course there is Germany’s Siemens, Inc., which has some operations in the U.S. and is a rather bad actor in the scheme of things. It doesn’t even hide the fact it is outsourcing U.S. technical jobs that were supposed to be part of America’s “new economy.”

However, a transnational has no loyalty to American interests. It is dumb to think otherwise. Certainly it has no loyalty to America’s highly educated and trained technical workers.

Like other technology concerns, Siemens played fast and loose with American jobs and as a result, the U.S. economy is the poorer. All in the name of cutting costs. Swell in the short term, but the loss of American high-tech jobs in the process and the importation or outsourcing in order to employ cheaper labor means that wages will continue to be depressed.

Transnational corporations have no commitment to building companies in the U.S. Leveraged buyouts of American companies through mergers and acquisitions are not creating more companies, but are buying and selling out American assets. Downsizing has occurred in many of these buyouts, leaving large numbers of Americans out of a job.

So they will find other jobs, better jobs, you say? Not necessarily.

In fact, U.S. Department of Labor statistics show over 50 percent of the time those who are re-employed earn up to 20 percent less than they did in their previous jobs. It doesn’t take a Harvard economist to figure out that at some point Americans will no longer be able to buy “stuff” from China, or anywhere else for that matter, as jobs are outsourced, downsized or sent overseas.

The High-Tech Job Betrayal

It isn’t just manufacturing that is taking a hit. Now U.S. banks, brokers, insurance and other financial groups plan to move 500,000 jobs overseas in the next five years, with India the most enticing target. Relocations to foreign nations like China and India were expected to save $30 billion a year in operating costs, reported the management consulting firm A.T. Kearney, which spoke to about 100 financial services firms' executives.

Companies like CIGNA and AETNA are outsourcing or sending technical and office jobs to places like India, the first choice. Followed by Canada, Brazil, Mexico, Philippines, Hungary, Ireland, Czech Republic, Australia, Russia and China.

CIGNA is also importing foreign replacement workers; and laying off Americans using Congressional approved L-1 visas. Representative Nancy Johnson, R-CT is asking CIGNA, Aetna and other companies to answer why they are firing local workers and replacing them with non-immigrant workers. The L-1 visa system allows for outsourcing through a foreign company or consulting firm using foreign technical labor at lower wages or replacing older workers with new and cheaper blood. (http://www.nbc30.com/nbc30/2190071/detail.html)

Granted, the dimwitted Congress gave the technical transnationals as well as many American companies carte blanche to play fast and loose with the work visa system. Congress did so by increasing the numbers of H-1B and L-1 visa holders in 1998. They allowed the hiring of replacement workers for American technical personnel at lower wages. This is well documented by Dr. Norman Matloff, University of California-Davis, as well as the Cornell study and several other research efforts.

Nonetheless, as in the case of Siemens, a transnational that constantly acts the transnational whore, may be in need of a dose of reality. If Congress allows this job displacement of American workers to continue, sooner or later it will catch up with them. Siemen’s even admits using the L-1 visa scam to outsource hiring to consulting firms like the Indian concern, Tata Consulting.

As former Siemen’s employee Mike Eamons reports: “JP Morgan Tampa, Siemens Energy & Automotive Atlanta, American Express, Siemens Shared Services Orlando. In fact, Siemens Shared Services used the ‘L-1’ visa to replace their Accounts Payable staff with Indians from India. It's not just the Information Technology industry that is targeted.”

The great friend of the workingman, Sen. Hillary Clinton, recently praised the opening of Tata Consulting's new Buffalo office at the same time Americans were training their Tata Consulting employees/foreign replacement workers at Siemens in Lake Mary, Fla. (http://tp: //www.hannatroup.com:81/USA/tata/HillaryTCS.html; http://www.hannatroup.com:81/USA/tata/TCSFears.ht)

You would think that our representatives would listen. Perhaps when hell freezes over. They listen to the big checks that companies like Siemens put in the campaign war chests and that is all.

As Eamons says, “Over eight months of begging and pleading for help from the likes of Florida Senator Bob Graham (D), Florida Senator Bill Nelson (D) and Florida Representative John L. Mica (R) have gotten us nowhere.”

Meanwhile, American companies are leaving the U.S. by the dozens. They now include Maytag. It is bailing out even after Illinois gave the company nearly $8 million in loans and grants, while the city of Galesburg raised $3 million and hiked its sales tax to help Maytag survive.

Unions even granted concessions, but the CEO of Maytag said they just couldn’t compete with products made in Mexico with cheap labor and few taxes or regulations. The American market was being flooded with cheap goods and Maytag could no longer compete.

You can hardly blame Maytag, but “free trade” has not made the vast majority of Third World workers any richer nor has it helped the U.S. retain the core of its economic strength in manufacturing and now technical jobs as well.

The poor remain poor in countries like Mexico. In the first half of the 1990s there was economic growth in Mexico. Nonetheless, the number of people living below the poverty line increased by 14 million in the 10 years from the mid-1980s. This was due to the fact that the benefits of a more open market all went to the large commercial operators, with the small concerns being squeezed out.

One can hardly blame a company for trying to get around thousands of regulations, 75,000 pages in the Federal Register, diversity demands, countless lawsuits, and a 45,000-page tax code that requires a phalanx of lawyers and tax accountants to wade through. The regulation gorilla alone adds $700 billion to costs for individuals and companies in the U.S. They hurt the “little” guy the most.

Unfortunately, however, there are still too many in Congress who still think taxes and regulations don’t drive business out. They need to get a grip before they destroy this country.

Notwithstanding, the U.S. Bureau of Labor Statistics reveals that unemployment among electronic engineers who are U.S. citizens is 7 percent. Among computer hardware engineers it is 6.5 percent. Unemployment across the board is at 6 percent and some forecasts indicate it will rise to nearly 7 percent by fall of 2003.

Now Congress must renew the H-1B and L-1 visa and decide whether or not to revert to the original numbers of 65,000 per year from 195,000 per year presently. (See “H-1B: Bombing the Middle Class.”)

We are still faced with the importation of cheap labor, through legal and illegal immigration. That has had a devastating impact on the social infrastructure in states like California, Texas, Florida, New York, North Carolina, Illinois, Arizona, New Mexico and Nevada. Even many northern states have budget deficits in the billions due to lower revenues and having to absorb higher costs in social, educational, and medical costs partly due to tremendous increases in immigration.

It should also worry Americans that at some point, we may have to choose whether to abide by the decisions of an outside entity such as the World Trade Organization rather than look to our own interests.

We may be forced to accept foreign workers, because we signed the WTO agreement. An Indian consortium is bringing suit against the U.S. if we restrict work visas, like H-1B or L-1 visas, for entrance into the U.S. This same group is pressuring Congress and the State Department to create a new visa category for workers from India or Pakistan and potentially China.

If the WTO agrees to accept the case and the Indian group wins, that means that the U.S. will have to change its immigration laws to suit the WTO, Indian economic interests and foreign guest workers.

The Bottom Line

Indeed, transnationals are corporations without countries. Since much of the ownership in stock, bonds and actual plant itself in the U.S. is now in foreign hands, their only requirement is stability.

In fact, the end game of these entities is to pursue broad markets upon which international elites play economic games. The "market" is the ultimate good. It takes precedence over U.S. political or social needs. In that ultimate perfect whole market, nation-states as political entities are simply part of the economic picture and not ends in themselves.

Am I being anti-capitalist? Unfortunately, in the short time since the collapse of the Soviet Union and since unfree "free markets" ascended to the status of the Golden Rule, the Borg-like collective attitude of transnationals has become the norm and it is not a good omen for the nation-state called America.

With the help of Congress, various administrations and pressure to open American markets to foreign goods, the economic establishment sold out low-tech manufacturing in the name of free trade several decades ago. This was supposedly to create more and better American jobs and to expand free-market capitalism to many countries.

Some jobs were created. But as more people became wealthy, the vast majority remained in place in terms of real dollars and what they would buy. In fact, wages for people working in American manufacturing or retail don't buy nearly what they used to in terms of real dollars compared to what the dollar would buy in 1973 or 1982.

Meanwhile, manufacturing wages were at their highest real wealth function in 1979. Since 1979, the manufacturing sector has been over taken by the retail sector in numbers of jobs created, along with food service sector. But those are low-paying jobs, usually under $30,000 a year.

The retail sector or food service sector has never even come close to matching the buying power or staying power in terms of real wages of manufacturing jobs. In addition, more recently, white-collar high tech American labor finds that foreign workers under H-1B are replacing them or L-1 visas or their jobs are being sent to India or China, Ireland or Eastern Europe. The American dream is rapidly turning into a nightmare.

Adam Smith and the Mess We Are In

The St. Thomas Aquinas of Capitalism, Adam Smith, would weep. He never realized that a nation would be so foolish as to sell off its assets and give up its comparative advantage on the whim of transnational businessmen who have no loyalty to any nation. How could he have understood that a nation would throw out quality for quantity? He never figured an ostensibly capitalist nation such as the U.S. would shoot itself in the foot by perverting the doctrine of free trade and the free market.

Smith was also smart enough to know that businessmen and government working together can be a dangerous mix. That is why in the U.S. today we don't really have capitalism but rather corporatism; that is where government and business corrupt the market in unison. In the end they kill off the goose that lays those golden eggs and they do so without a care for the future, as they live in the virtual reality of things being as they always were.

Smith's comment about the nature of businessmen applies to managerial bureaucratic government types as well. He said, "silent with regard to the pernicious effects of their own gains … neither are, nor ought to be, the rulers of mankind."

Smith might have understood that the amoral cohabitation between large corporations and the government usually clash with the best interests of a nation. Too bad most of us never read his 1,000-page tome to get the entire picture. Certainly free traders, transnational corporations and our government leaders never have.


TOPICS: Business/Economy
KEYWORDS: china; economy; freetrade; invisiblehand; manufacturing; mdm; trade
Navigation: use the links below to view more comments.
first 1-5051-64 next last
When "The Invisible Hand" and the politicians' "free trade" mantra allows short-sighted corporate greed to export manufacturing and technical jobs and proprietary technology to nations that do not permit the import of our goods, what we export is our standard of living. That is, we lose. It's happening, Folks. Your kids and mine will pay.
1 posted on 05/23/2003 5:49:40 AM PDT by Phaedrus
[ Post Reply | Private Reply | View Replies]

To: betty boop; Alamo-Girl; unspun; cornelis; Remedy; Dataman; Junior; logos; Hank Kerchief; ...
ping ...
2 posted on 05/23/2003 5:50:24 AM PDT by Phaedrus
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
Bump for later reading...

assuming the country is still here when I get back!
3 posted on 05/23/2003 5:57:49 AM PDT by F-117A
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
"corporatism; that is where government and business corrupt the market in unison. "

Centralization of money and power is not a good thing.
4 posted on 05/23/2003 6:04:44 AM PDT by PeterPrinciple
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
Excellent post. I've been beating this drum, but not as factually or eloquently. People seem to have forgotton their "Economics 101": You must produce a tangible product in order to survive.

I can't help but wonder how those corporations expect to sell their products in America when Americans are unemployed? Similar circumstances have led to two world wars, certainly numerous revolutions.

5 posted on 05/23/2003 6:07:28 AM PDT by GingisK
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
... and the politicians' "free trade" mantra allow s ...

no excuse ...

6 posted on 05/23/2003 6:19:50 AM PDT by Phaedrus
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
Motorola, of course, has spent $1 billion in transferring its production to China. It is about to invest another $90 million in research and development in China.

---------------------

Wrong. So far Motorola has invested four billion and intends to spend $10,000,000,000 at Chines prices and land/labor values.

This is one of the things that happens when you elect a globalist love-in airhead as president.

7 posted on 05/23/2003 6:20:51 AM PDT by RLK
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
When "The Invisible Hand" and the politicians' "free trade" mantra allows short-sighted corporate greed to export manufacturing and technical jobs and proprietary technology to nations that do not permit the import of our goods, what we export is our standard of living. That is, we lose. It's happening, Folks. Your kids and mine will pay.

We are paying right now. A few of my clients were at that show. Usually a good show will yield 250 solid leads. The average this time was around 40 or 50. As far as government contracts go, they all have ropes (not strings) attached so that you not only have to transform your company into a socialist utopian model but have to do business with the same. The result is decreased efficiency which costs more of our tax dollars.

8 posted on 05/23/2003 6:26:26 AM PDT by Dataman
[ Post Reply | Private Reply | To 1 | View Replies]

To: GingisK
"I can't help but wonder how those corporations expect to sell their products in America when Americans are unemployed? Similar circumstances have led to two world wars, certainly numerous revolutions."

Thus the circle begins...

We, the people cheered when the cheaper (affordable) chinese/ japanese/ mexican garbage (now better than ours) flooded the markets (WalMart KMart etc) to the point where we, the people, did NOT buy the slightly higher priced (Union Wages) American prices.
To cut the prices, American companies were NOT allowed to lower expenses, in fact they were constatly FORCED by govt to raise their costs.
If the companies were to survive, they had to:
1. Get Americans to back themselves (WAKE UP!) YOU are the displaced workers! Buy American!
2. Find a way to lower production costs
...a. lower wages (NO WAY! say we, the people)
...b. Cut quality (We become the "made in Japan" junk)
...c. Move your production to a LESSER TAXED / LOWER EXPENSE area (which means NOT inside the USA)

The companies move overseas, you get laid off, you can't buy anything, the companies stay away. The USA turns into another South Africa slum country.

How many companies in the USA are gone now thanks to:
1. Unions who would rather see the company go broke than to lower wages a couple of percent (POWER !)
2, Lawyers! Does anyone realize that litigation is now the LARGEST industry in the US? How many BILLION$ are sucked out of our, the people's, wallets? The lawyers thank you.
3. Can't leave out the EPA!
4. to placate the complainers - yes, crooked CEO's etc can harm a company, but this only happened thanks to the encouragement of a slimmy x-prez who bribed the companies to hire people when they needed none and to make the economy look even better, lie like hell about profits.
---to hire all those extra people (at minimum wage +), the companies fired many professionals (higher wages), the schools quit training for higher level technical/business jobs, so know our tech comes from India and other countries.

Americans are now the Janitors of the world ???

9 posted on 05/23/2003 6:31:18 AM PDT by steplock ( http://www.spadata.com)
[ Post Reply | Private Reply | To 5 | View Replies]

To: GingisK
We're a service economy now. Which is all well and good, but you can't have a nation of 280 million people that only produces paper. Plus, the industry we do have requires less and less workers as we get more productive. Kind of a a downward spiral.

I can't complain, personally, the service economy has been very good to me. But, I can see the long-term problems for the country.
10 posted on 05/23/2003 6:35:26 AM PDT by Modernman
[ Post Reply | Private Reply | To 5 | View Replies]

To: Phaedrus
"Then the [tech] bubble burst, and we began to learn a very hard lesson and that is there's only a few ways to create wealth," he said. "You have to either farm something, mine something or manufacture something..."

Apart from their lack of morality and tendancies toward criminality, one of the things I find most disturbing about the current crop of CEO's is that many don't seem to want to build anything. They just want to "do deals" and manipulate stock prices. Unfortunately, this creates wealth for THEM in a way that is completely unrelated to the theoretical PURPOSE of the business.

In the past thirty years, there is an outrageous history of CEO's cleaning out the wealth of a company by wounding or destroying it. "Chainsaw Al" is the cover boy of this kind of parasitic management. The fact that this man is NOT in jail is a rather telling commentary on the government's attitude toward corporate crime.

A generation ago, CEO's tended to be outstanding citizens who were leaders within their companies and their communities. There are still many examples of that type of CEO, but I'm afraid the parasites have gained the upper hand. And the government has given these people both a "hand up" and a free ride. It's very sad.

P.S. Sorry to hear about Maytag. I used to know a couple members of the Maytag family 25+ years ago.

11 posted on 05/23/2003 6:41:40 AM PDT by Semi Civil Servant
[ Post Reply | Private Reply | To 1 | View Replies]

To: arete; bvw; Tauzero; kezekiel; ChadGore; Harley - Mississippi; Dukie; Matchett-PI; Moonman62
There is a willful blindness on the part of some to the damage being done to American society, the nation-state republic, the citizens, workers, taxpayers and to our national cohesion.

Good article PING.

12 posted on 05/23/2003 6:43:34 AM PDT by BureaucratusMaximus (if we're not going to act like a constitutional republic...lets be the best empire we can be...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
...what we export is our standard of living. That is, we lose. It's happening, Folks. Your kids and mine will pay.

Phaedrus, you are so right: That is exactly what we're exporting -- the American standard of living. Short-sighted politicians and so-called "American" corporations (which are effectively transnationals) are selling the American worker/consumer down the river. The American worker/consumer, in order to make the rest of the world prosperous and "stable" and "more democratic," will wind up being a pauper himself, if present policies continue.

13 posted on 05/23/2003 7:05:09 AM PDT by betty boop
[ Post Reply | Private Reply | To 1 | View Replies]

To: Semi Civil Servant; Dataman
A generation ago, CEO's tended to be outstanding citizens who were leaders within their companies and their communities.

As far as government contracts go, they all have ropes (not strings) attached so that you not only have to transform your company into a socialist utopian model but have to do business with the same.

These comments go to the culture, to the loss of Traditional American Values, to the lack of selflessness and to the high hypocrisy of the use of the term "service" by our corporate executives and politicians. This is precisely where I wanted to go with this article.

The link between (what I believe is) our coming economic decline and the degradation of our values is exceedingly real but almost wholly overlooked and misunderstood.

14 posted on 05/23/2003 7:05:23 AM PDT by Phaedrus
[ Post Reply | Private Reply | To 11 | View Replies]

To: BureaucratusMaximus
Good article PING.

I agree. So how do we change the trend and begin rebuilding our industrial base? How do we get govt. interference off the back of business, esp. medium to small businesses? Real answers is what I'm looking for.

I have no desire to face my grandkids when they ask me what I did in the economic war - and I have no substantive answer.

15 posted on 05/23/2003 7:05:54 AM PDT by toddst
[ Post Reply | Private Reply | To 12 | View Replies]

To: Phaedrus; RedWing9; chicagolady; TheRightGuy; Chi-townChief; KMC1; Oldeconomybuyer
brief scan at first w/ big bump
16 posted on 05/23/2003 7:07:40 AM PDT by unspun ("Do everything in love.")
[ Post Reply | Private Reply | To 2 | View Replies]

To: toddst
I have no desire to face my grandkids when they ask me what I did in the economic war - and I have no substantive answer.

You have raised a chillingly real question for those of us, which is most of us on FR, who care for more than ourselves. Here's my fantasy. On election day, we all go to the polls and answer the questions "What's best for America?" and "What's best for posterity?".

17 posted on 05/23/2003 7:14:31 AM PDT by Phaedrus
[ Post Reply | Private Reply | To 15 | View Replies]

To: F-117A
...assuming the country is still here when I get back!

I was going to say "LOL" but you're too close to the truth and it's not a laughing matter.

18 posted on 05/23/2003 7:15:58 AM PDT by scripter
[ Post Reply | Private Reply | To 3 | View Replies]

To: Phaedrus
I was responsible for designing, installing and managing a booth at the International Machine Tool Show in 1979 for a Connecticut company called Unimation, which was the first company in the world to market an industrial robotic system. The display included a small-batch manufacturing process incorporating machine tools made by DoAll, a Chicago company. At that time, I recall reading a voluminous amount of trade publications that decried the manner in which our industrial base was being undermined by off-shore production and foreign competition. These arguments made sense to me then.

However, it is now 25 years hence. I have followed these trade and labor issues through the years. At this juncture, I admit I must reconsider my position because the protectionist market bias and its arguments do not square with the facts. It must be that the premises upon which these kinds of protectionist arguments are made are fundamentally flawed.

We have just witnessed a monumental moment in the history of the planet. Since 911, the American response to our new security threat has revealed to the entire world that there is no greater power on earth than the United States. It is now recognized universally that the United States has managed to achieve truly global hegemony. The US dominates every sphere of activity; economic, political, scientific, military. This has not happened since the era of the Roman Empire. As a nation, we must be doing something right!

I now believe that we need to rethink our categorical antipathy to foreign trade, just as we are re-examining our foreign alliances in light of new developments revealed by 911 and the resultant Afghan and Iraqi Wars. Security concerns will alter our trade relationships to reflect the support or non-support of other countries to our current crisis. Britain, Japan, Italy, Spain, Poland, Australia, the Netherlands, and others can now reap the benefits of their support. France, Germany, Russia, Turkey, China, and even Mexico and Canada can now suffer the consequences of their perfidy.

But the need for this realignment does not negate the benefits of implementing the principles of free trade and free markets. I believe that the US has achieved its overwhelmingly dominant position insofar as it has implemented and maintained these principles over time, and must continue to do so if we want to continue to prosper.

Our current dominant market position is the sum of gains and losses in individual sectors. But our achievements only validate Adam Smith's concept of "the Invisible Hand".
19 posted on 05/23/2003 7:28:17 AM PDT by vanmorrison
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
Your kids and mine will pay.

Glad we can agree on something.

20 posted on 05/23/2003 7:33:57 AM PDT by balrog666 (When in doubt, tell the truth. - Mark Twain)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus

 

"I didn’t mention the flow of Chinese [industrial] spies who were in and out of our booths.

Smith was also smart enough to know that businessmen and government working together can be a dangerous mix. That is why in the U.S. today we don't really have capitalism but rather corporatism; that is where government and business corrupt the market in unison.

We are still faced with the importation of cheap labor, through legal and illegal immigration. That has had a devastating impact on the social infrastructure in states like California, Texas, Florida, New York, North Carolina, Illinois, Arizona, New Mexico and Nevada. Even many northern states have budget deficits in the billions due to lower revenues and having to absorb higher costs in social, educational, and medical costs partly due to tremendous increases in immigration.

If the WTO agrees to accept the case and the Indian group wins, that means that the U.S. will have to change its immigration laws to suit the WTO, Indian economic interests and foreign guest workers.


21 posted on 05/23/2003 7:35:31 AM PDT by Remedy
[ Post Reply | Private Reply | To 1 | View Replies]

To: Phaedrus
It is close to impossible to get Americans today to understand that an economy based on manufacturing and an economy based on finance are not equivalent. Manufacturing provides jobs for the largest number of citizens; finance is the non value-adding but crisis-provoking segment of modern society.

Not all Americans have the skill-sets to successfully participate in an economy primarily centered around finance and information technology, either. I've read reports that state that a high school graduate in the U.S. has far less choice in terms of occupations than do his counterparts in most other developed countries.

22 posted on 05/23/2003 7:36:35 AM PDT by independentmind
[ Post Reply | Private Reply | To 1 | View Replies]

To: unspun; Phaedrus
This is the same BS that we've been hearing since the 80s when the trade deficit was used as a political bludgeon against Presidents Reagan and Bush I. I've been in manufacturing in one form or another for 30 years now and barely a day has gone by where I haven't been concerned about job loss (very bad choice of career on my part.)

And the reality is that American manufacturing has been exported for at least the last 45 years. When we were kids in the 60s, it was sold to us as a good thing because it would help rid us of the "baddddd" air and water pollution and, besides, we had better things to do with our time.

A lot of these "experts" such as the author of this piece (who does make quite a few excellent points) are looking for a quick fix to shut the barn door years after the horses have run out.

I could go on and on about this but time doesn't permit right now.
23 posted on 05/23/2003 8:02:47 AM PDT by Chi-townChief
[ Post Reply | Private Reply | To 16 | View Replies]

To: Phaedrus
p.s.: These trends may account (at least in some part) for President Bush's concentration on small businesses -- both as the engines of job creation, and as the "cradles" of future large corporations. This would be the rationale for the tax cuts he's trying to get (and which he won't get in the size he wants).

As noted, most small business owners pay taxes at the personal rate. Cut their taxes, and they have more money to plow back into their businesses, as capital investment and as new-hire employee salaries. Thus job expansion and technological innovation are both benefited by cuts in marginal tax rates.

Of course, the Dims either don't get this -- or they do get it, and just don't want to see Bush economic policies succeed. They keep intoning the tired ol' mantra: "He's trying to get tax cuts for his rich friends and corporations!!!" What dunces they are. They would be completely irrelevant -- except for the fact that we can't seem to get them out of our faces and out of the way of needed economic reform. :^)

24 posted on 05/23/2003 8:30:58 AM PDT by betty boop
[ Post Reply | Private Reply | To 13 | View Replies]

To: betty boop
As noted, most small business owners pay taxes at the personal rate. Cut their taxes, and they have more money to plow back into their businesses, as capital investment and as new-hire employee salaries. Thus job expansion and technological innovation are both benefited by cuts in marginal tax rates.

Most small businesses don't have the clout to lobby for special tax loopholes either. Nor do they have the ability to shift income to foreign subsidiaries and avoid taxes altogether. And then we get to the expensing of stock options for tax purposes, which one could argue gives an edge to publicly traded companies, which are generally larger in size. And the list goes on and on...

25 posted on 05/23/2003 8:37:40 AM PDT by independentmind
[ Post Reply | Private Reply | To 24 | View Replies]

To: Phaedrus
Thank you so much for the heads up to the great article! I agree with your views at post #1. Hugs!
26 posted on 05/23/2003 8:46:16 AM PDT by Alamo-Girl
[ Post Reply | Private Reply | To 2 | View Replies]

To: betty boop
I'm sure that the Demo-rats "get it." The worst nightmare for these guys want right now is for the economy to start percolating.
27 posted on 05/23/2003 10:03:39 AM PDT by Chi-townChief
[ Post Reply | Private Reply | To 24 | View Replies]

To: Modernman
We're a service economy now.

Seein that we're the largest exporter in the world, that's pretty darn good for a service economy.

28 posted on 05/23/2003 10:10:03 AM PDT by 1rudeboy
[ Post Reply | Private Reply | To 10 | View Replies]

To: 1rudeboy
What I mean is that the service sector is the biggest part of our economy.
29 posted on 05/23/2003 10:11:04 AM PDT by Modernman
[ Post Reply | Private Reply | To 28 | View Replies]

To: independentmind
Most small businesses don't have the clout to lobby for special tax loopholes either. Nor do they have the ability to shift income to foreign subsidiaries and avoid taxes altogether.... And the list goes on and on....

It sure does, independentmind. Plus there's no ability to shelter personal wealth from current taxation inside the business. If you're a small business owner, all profits are currently taxable in the year they're earned.

A recent Wall Street Journal editorial gave a telling example of this. If you're a Warren Buffett -- the majority stockholder in Berkshire-Hathaway -- you can shelter your profits inside the business. Sure, taxes will be paid on profits, but at the corporate, not the personal rate. Berkshire-Hathaway retains earnings -- i.e., it does not distribute dividends to stockholders. I thought this was an interesting fact; for Mr. Buffett has been loudly editorializing against the Bush proposal to eliminate taxation of dividends. If such a provision were to be enacted, there would be considerable pressure on corporations to distribute dividends -- meaning that there would be reduced incentives to accumulating personal wealth inside a majority-owned business. Sure, Mr. Buffett would receive his dividends tax-free, just like the little guy. But in the case of Berkshire-Hathaway -- which has a history of expanding by means of acquisitions -- there would be less retained earnings to fund such a "growth strategy." Instead, shareholders would receive business profits to which they are entitled.

I read recently that Microsoft has something like a $400-$500 million cash position due to retained earnings. Sure, to some extent this is reflected in the share price. Yet still I wonder whether another purpose of following this strategy is simply to have sufficient means to defend the firm against hostile take-overs. Meanwhile, under current law, the "little guy" shareholder doesn't get paid -- though the managerial class gets to effectively defend its own positions, and large shareholders get to shelter their pro-rata profits from current taxes.

30 posted on 05/23/2003 10:12:29 AM PDT by betty boop
[ Post Reply | Private Reply | To 25 | View Replies]

To: Chi-townChief
The worst nightmare for these guys want right now is for the economy to start percolating.

Yeah, Chi-townChief. But if the economy doesn't start "percolating" pretty soon, it's going down the tubes. If the Dims know this, do you suppose they care -- or is scoring points against the president, and winning the next election, more important to them than the prosperity of their fellow citizens?

31 posted on 05/23/2003 10:15:47 AM PDT by betty boop
[ Post Reply | Private Reply | To 27 | View Replies]

To: betty boop
such a provision were to be enacted, there would be considerable pressure on corporations to distribute dividends -- meaning that there would be reduced incentives to accumulating personal wealth inside a majority-owned business

Dividends are also paid in cash, which are a lot harder to fudge in financial statements. Any incentives to encourage the regular payment of dividends would be a good thing.

32 posted on 05/23/2003 10:22:29 AM PDT by independentmind
[ Post Reply | Private Reply | To 30 | View Replies]

To: independentmind
Correction:
Dividends are also paid in cash, and as a benchmark of performance, are a lot harder to fudge in financial statements.
33 posted on 05/23/2003 10:30:16 AM PDT by independentmind
[ Post Reply | Private Reply | To 32 | View Replies]

To: betty boop
"If the Dims know this, do you suppose they care -- or is scoring points against the president, and winning the next election, more important to them than the prosperity of their fellow citizens?"

Well, the Rats always tell us that theirs is the "party of hope" and right now they're hoping for another terrorist attack in the U.S. or for the economy to tank or for things to turn sour in Iraq or all of the above.
34 posted on 05/23/2003 10:33:54 AM PDT by Chi-townChief
[ Post Reply | Private Reply | To 31 | View Replies]

To: Phaedrus
My kids! Heck _I'm_ paying right now! We all are!
35 posted on 05/23/2003 10:36:48 AM PDT by hedgetrimmer
[ Post Reply | Private Reply | To 1 | View Replies]

To: Chi-townChief
See Boro Reljic's article in the Leader a few weeks ago -- about more govenment jobs existing now in Illinois than in manufacturing?

http://illinoisleader.com/opinion/opinionview.asp?c=4642
36 posted on 05/23/2003 11:18:13 AM PDT by unspun ("Do everything in love.")
[ Post Reply | Private Reply | To 23 | View Replies]

To: unspun
Hate to say it, but The China Fund (CHN) has been the best performer in portfolio since first of the year.
37 posted on 05/23/2003 11:18:23 AM PDT by TheRightGuy (I like PEACE ...and there's nothing more peaceful than a dead terrorist!)
[ Post Reply | Private Reply | To 16 | View Replies]

To: betty boop
Beyond the $2.0+ trillion taken in by the Feds are the several hundred billion dollar Tax Code and regulatory burden and the immnese costs to society of rampant unchecked litigation. The Republicans may be willing to give us a relatively small tax cut but both the Dems and the Repubs are a Party of Big Government. Actual shrinkage is never mentioned. I would agree, however, that the Repubs are the clear lesser of two evils. I join Sobran in being The Reluctant Anarchist.
38 posted on 05/23/2003 1:38:33 PM PDT by Phaedrus
[ Post Reply | Private Reply | To 24 | View Replies]

To: Phaedrus
I don't think I'll be offered a realistic choice on election day. Better of two evils mabey, but hardly a choice IMO. I'm still waiting for someone to represent me. Funny thing, most people I know feel the same way, and have for many years.
39 posted on 05/23/2003 1:56:44 PM PDT by m18436572
[ Post Reply | Private Reply | To 17 | View Replies]

To: RaceBannon; Dutchy; nutmeg; PARodrig; Clemenza; firebrand; Yehuda; Black Agnes
ping
40 posted on 05/23/2003 2:07:40 PM PDT by Cacique
[ Post Reply | Private Reply | To 1 | View Replies]

To: sourcery; Nick Danger
ping ...
41 posted on 05/23/2003 5:05:01 PM PDT by Phaedrus
[ Post Reply | Private Reply | To 40 | View Replies]

To: steplock
Litigation is now the largest industry in this country? Really? Do you have a source for that? Because that is one damning statement!
42 posted on 05/23/2003 5:10:55 PM PDT by Billy_bob_bob ("He who will not reason is a bigot;He who cannot is a fool;He who dares not is a slave." W. Drummond)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Phaedrus
In fact, wages for people working in American manufacturing or retail don't buy nearly what they used to in terms of real dollars compared to what the dollar would buy in 1973 or 1982.

That looked like a checkable fact, so I went off to check it. The result was kind of interesting.

She's half right: the statement is true for a comparison with 1973. The average weekly earnings in Manufacturing today do not have as much purchasing power as the average weekly earnings in 1973.

The statement is not true for 1982... the purchasing power is about the same. I did a few more points in between to make certain that the following observation is correct: all of the loss in purchasing power since 1973 took place between 1973 and 1982. I didn't do the math, but it's a good bet that the entire loss of purchasing power took place during the period of double-digit inflation in the Carter Administration.


43 posted on 05/23/2003 6:02:15 PM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
[ Post Reply | Private Reply | To 41 | View Replies]

To: Phaedrus; JohnHuang2; MadIvan; TonyInOhio; MeeknMing; itreei; jd792; Molly Pitcher; muggs; ...
Bumps for an eye opening read !
44 posted on 05/23/2003 7:57:48 PM PDT by ATOMIC_PUNK ("A conviction that we are right accomplishes half the difficulty of correcting wrong." --T Jefferson)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Nick Danger; ATOMIC_PUNK; yall
but it's a good bet that the entire loss of purchasing power took place during the period of double-digit inflation in the Carter Administration.


45 posted on 05/24/2003 4:56:13 AM PDT by MeekOneGOP (Bu-bye Dixie Chimps! / Check out my Freeper site !: http://home.attbi.com/~freeper/wsb/index.html)
[ Post Reply | Private Reply | To 43 | View Replies]

To: ATOMIC_PUNK
Thanks for the heads up!
46 posted on 05/24/2003 4:56:36 AM PDT by MeekOneGOP (Bu-bye Dixie Chimps! / Check out my Freeper site !: http://home.attbi.com/~freeper/wsb/index.html)
[ Post Reply | Private Reply | To 44 | View Replies]

To: All
Stephen Roach, Morgan Stanley, on Deflation, excerpted:

As I see it, there are three powerful forces at work — the first being the business cycle. Recessions, by definition, are deflationary events. So, too, are subpar recoveries ... The [stock market] bubble — and the post-bubble shakeout that has ensued — is the second key macro underpinning to the case for deflation ...Globalization is the third leg of the stool. Not only has trade liberalization expanded aggregate supply in tradable goods markets, but there has been a comparable development in the once-non-tradable services sector. The globalization of services — the newest and potentially the most powerful piece in this equation — reflects three developments: global deregulation, which transforms administered pricing into market-determined prices; surging cross-border M&A activity that has led to the creation of huge multinational service providers; and the Internet, which has facilitated the growth of IT-enabled service exports (i.e., software programming, consulting, design, engineering, etc.) from places like India. In the long run, the supply-led impetus of globalization generates incremental income that supports increased aggregate demand. But today’s world is far from that long run. Instead, it is coping with the impacts of the first-round effects of globalization on the supply side, which further exacerbate the global imbalance between supply and demand.

47 posted on 05/24/2003 6:18:09 AM PDT by Phaedrus
[ Post Reply | Private Reply | To 46 | View Replies]

To: All
Trade-Weighted US Dollar. A stronger Dollar is deflationary (1995-2002) because foreign goods are cheaper and a weaker Dollar (2002-now) is inflationary because foreign goods are more expensive. This is why, I believe, the Administration is not opposing current Dollar weakness.
48 posted on 05/24/2003 6:44:45 AM PDT by Phaedrus
[ Post Reply | Private Reply | To 47 | View Replies]

To: 1rudeboy
Seein that we're the largest exporter in the world, that's pretty darn good for a service economy.

We're currently the world's best at "finding a need and filling it," which is the classic capitalist modus operandi. What we need to examine are the demotivators and barriers for people 1) being able to see the value in solving other people's problems and 2) being able to build a business to offer the solutions.

Problem 1 is primarily a matter of mentality; the capitalist spirit is what gives a person the "antennae" to detect opportunity. Problem 2 is primarily a resources problem: how effectively can one gather the capital, talent, and technology to design, create, market, and sell the solution. Despite the left's worshipping of education, all that is really needed to solve Problem 1 is to reduce the barriers affecting Problem 2. In other words, keep taxes, interest rates, and regulation low, and people will recognize more opportunities to gain profit.

49 posted on 05/24/2003 7:41:18 AM PDT by kezekiel
[ Post Reply | Private Reply | To 28 | View Replies]

To: Phaedrus
...nearly all Federal legislation from the New Deal to the Great Society and beyond had been unconstitutional. Instead of fighting liberal programs piecemeal, conservatives could undermine the whole lot of them by reviving the true (and, really, obvious) meaning of the Constitution. Liberalism depended on a long series of usurpations of power.

"What the federal government isn't authorized to do, it is fobidden to do." On that basis, Phaedrus, probably 90% of what the federal government is doing right now would be things on the "forbidden list." I agree with Sobran that both major political parties are parties of "big government." We do not see the Republicans exactly rolling back big government, now do we?

But then, there is no apparent social consensus for getting the federal government back into constitutional-trim. Absent that, can we really expect that politicians will lead an effort to do that?

Thanks for the link to Sobran's great essay.

50 posted on 05/24/2003 11:00:21 AM PDT by betty boop
[ Post Reply | Private Reply | To 38 | View Replies]


Navigation: use the links below to view more comments.
first 1-5051-64 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson