Jobs

The Golden Goose, and Historic Boo Boos

There is only one golden goose, free people practicing free
enterprise engaged in making products.

And the American golden goose is severely wounded, with
business activity at 51.8% for June, 1991. Not only is the U.S.
economy now a four-cylinder engine, but that engine is
misfiring, with only two cylinders working.

Two thousand years ago the Christians, and the
Communists now, tried “from each according to their ability,
to each according to their need.” Human nature being what
it is, it didn’t work for either group.

Later, the New Deal/Great Society programs modified the
phrase to “from each according to their ability to pay, to
each according to their need”. This is hardly working
much better, as the entitlement programs sap the earnings
and purchasing power of those working.

The problem with America today is that we have free people
practicing free enterprise engaged solely in providing
services, and have lost our manufacturing base to “free”
trade.

Opportunity Knocks

The Bush (Vannevar) Symposium, held in Washington, DC,
March 18, 1991 concluded that a revival of manufacturing
here is essential to the future of American science and
technology.

Federal and state programs are spending about $50 million a
year to assist manufacturers improve their efficiency and
technology. Isn’t that great!

Other nations, particularly Japan Inc., give extensive
support to encourage technological advances.

What our nation really needs is an industrial policy to
produce an expanding, full employment economy based on
a strong manufacturing foundation to produce the
necessary golden eggs.

Today, “Americans are more united on whether the
government should do more to protect jobs from foreign
competition: 87% agree.” (AP survey published Feb. 6, 1993)

A dud duck

Services are certainly an important part of the economy, but
it is manufacturing that generates 2-3 service jobs, not
vice versa. All the booming economies of the 90’s are
manufacturing countries: Germany, the Asian tigers.
“Service” countries like Britain and the United States are
withering on the vine.

When you factor in the government-run post office, military,
state-owned businesses like transportation, power,
research, etc.; millions of government employees, the
medical industry; the “golden goose” private sector
become very small indeed, particularly if you remove the
non-productive retail sector.

The P- words

The P- word “protectionism” may be anathema to the free-
trading, laissez-faire capitalists, but the P- word “prosperity”
for the United States demands protection of our wage
levels and standard of living from competition from
virtual slave, subsistence labor countries. All else is P-
“poppycock”!

Equalization is practiced in many aspects of our lives.

The anti-trust Sherman Act of 1890 was an early attempt to
equalize business competition in the domestic United States.

The Federal Communications Commission attempts to
equalize competition in television and radio markets.

In horse racing, weights are inserted into the saddles to
equalize the weight each horse will carry.

We would be horrified if a football game were arranged
between the Princeton Midgets (10 year olds) and the Dallas
Cowboys in the Super Bowl, even though they both play by
the same rules.

Why does the establishment think it is normal for the United
States and Bangladesh to compete without restraint,
particularly when both play by different rules.

Actually, the P- word “protectionism” is very much in
evidence in our trading laws and practices. We protect and
subsidize the sugar, grain, peanut and rice growers, the
dairy farmers; we protect the automobile, semi-conductor,
research, steel, and textile industries, as well as air, rail,
marine, and public transportation, medicine; and have
quotas on many other products.

We protect the dollar. We regulate the gross quantity of
money. We regulate interest rates.

Other countries also practice protectionism: Japan, China,
Korea, India, Taiwan, the European Community and the east
European countries.

What we are really trying to prove with this hybrid
protectionist-free trade policy has not been explained. Are
we really trying to bring the abject 88 million Mexicans, one
billion Indians, one billion Chinese, and other millions of
Asian and South American workers up to minimal U.S.
standards of living in food, housing, and medical care?

Actually, we are doing virtually nothing to alleviate the
condition of our own 30-40 million American citizens living
below the poverty line, let alone the starving people of
Somalia or Ethiopia.

Are the national politicians only paying attention to the
best organized lobbies and giving them protection, and
letting the rest disintegrate and disappear to the detriment
of American businesses and workers, the balance of trade
deficit, and the federal budget deficit?

Going down the tubes

The result of exporting the bulk of our manufacturing jobs
overseas since the 60’s is obvious; we no longer have the
tax ratables in employers and employees to cover our
federal expenditures. We no longer have enough service
and retail employers to employ our population. We are
rapidly going bankrupt, at the rate of $350 billion a year,
supporting our needy through entitlement programs. We
are going into debt to foreign businesses, at the rate of
$100 billion a year, to pay for our imports of stereos, TV,
radios, textiles, shoes, cars, etc., etc., etc.; items we
manufactured for ourselves prior to 1960.

! Those whom the gods would destroy !
! they first make mad !

Voodoo economics

The voodoo economic policies of the 80’s and 90’s are to
reduce the purchasing power of the people, import most
of the manufactured goods people buy, stimulate the
economy with Keynesian $250 billion federal deficits,
causing inflation, shill for free trade, productivity, and
against protectionism; and then sit on our hands.

Gephardt

Rep. Richard Gephardt clearly saw the need and the solution

as he campaigned for the presidency in Iowa in 1988–do
what needs to be done to restore a manufacturing base to
the American economy.

Although the messenger was overwhelmed at the time,
the message is still true, and needs implementation today.

Roosevelt

Roosevelt and organized labor realized in the 30’s that you
have to put purchasing power into the hands of the
people in order to have a robust economy.

The United States is still the largest market for cars,
television, radio and stereo sets, cameras, optical goods,

personal computers, cement, VCR’s, clothing, shoes, and
sporting goods, and it is the height of lunacy to transfer the
savings of prior generations overseas to pay for our $100
billion annual trade deficit when we can stop the
hemorrhaging by producing more
of what we consume domestically–two-thirds of our Gross
National Product.

By so doing, we increase dramatically federal income tax
revenues, and reduce government expenses to support
the unemployed, the under-employed, the drop-outs, and
those on welfare, with a concurrent reduction in crime.

The Trade Deficit

Foreign trade deficits have been over $100 billion a year
since `83, or a minimum loss of national wealth of at least
$800 billion. Couple this with the $1.9 trillion Reagan added
to the national debt, and the nation is $2.7 trillion poorer.

The $101 billion trade deficit in `90 breaks down as
follows:

Japan $41 billion
Taiwan $11 billion
China $10.4 billion
Hong Kong $ 5 billion
Korea $ 5 billion
Imported oil $30 billion
Canada + $200 million
Mexico + $200 million
European Community + $200 million

For the trade deficits of `80-`90, we owe Japan alone $350
billion.

Obviously, a “one world” economy is not working in our
favor; quite the contrary.

Selective Regulation

We regulate banks, insurance companies, the stock and
commodities markets, utilities, telephone companies, radio
and television, transportation.

We regulate against people’s propensity for avarice and
abuse of power.

But heaven forbid that we regulate against the greed of
those seeking the lowest labor costs anywhere in the
world regardless of its impact on the welfare of our nation
and its workers.

A policy vacuum

Seriously, is it the goal of our foreign trade policy to
raise the standard of living of all 5 billion people in the world
to that of middle class Americans? A goal that will take a
thousand years, if ever.

Or is it really our policy to lower the standard of living
in America to that of the Chinese and the Indians in their
thatched huts?

What exactly is our policy and objective, if any?

So far we are not even making a serious effort to see that
mothers and children in the Third World — or vassal
countries like Egypt — get adequate food, let alone life
necessities like pure water and medical care.

Free trade is really a policy to impoverish America.

Free trade is reducing our country to that of a supplier of
raw agricultural products and lumber.

We are adrift on the siren seven seas of international
trade, with nothing to trade with but I.O.U.’s redeemable by
the sale of the nation’s assets.

We are living like the poor, rich family in the decaying
mansion, selling the family jewels one by one to eat.

The free trade fuzzy-wuzzies

A small number of prominent economists, such as Jeff Faux
of the Economic Policy Institute, Washington, DC, have
developed the view that free trade may be an outdated
notion.

Japan has succeeded tremendously well in world markets,
yet has one of the most restrictive trade policies in the
world. In other words, Japan takes care of its own!

The United States cannot be all things to all people. There
is a limit to idealism, and lines must be drawn to
demarcate what can be afforded, what must be preserved in
order not to kill the golden geese who lay the golden eggs
that pay for all the idealistic programs at home and abroad.

The U.S. should not be the primary market for every country
that wants to develop products for export. Two billion Asians
can develop trade among themselves; one billion
Europeans are developing trade among themselves, 500
million Africans can develop trade among themselves, 500
million South and Central Americans can develop trade
among themselves.

All the largest countries in the world are basket cases:

China with 100 million unemployed, the USSR with no food
on the shelves, India changing its economic policies to
survive, the U.S.A. with 10 million unemployed, 30-40 million
living at the poverty level, and going deeper into debt
every day.

Join the Libertarian Party

Obviously, the Republicans and Democrats are filled with the
fuzzy-wuzzies. If they truly believed in free trade, free
enterprise, laissez-faire capitalism and freedom, they would
be
joining the Libertarian Party in droves and removing all
quotas
on steel, cars, textiles, sugar, etc.

That no Republicans or Democrats are libertarians shows
that
they are committed to a government-managed economy,
and so it is
up to them to foster and protect a strong domestic
manufacturing
base in the same way that they have fostered and
protected a
strong agricultural base.

A prime example of the fuzzy-wuzzies is American criticism
of Japan and Europe for protecting their agricultural base
while
America does the same.

The Pope

Pope John Paul II, in his May, 1991 encyclical entitled “The
Hundredth Year”, referred to the “exploitation”, neglect
and
“quasi-servitude” that remains rampant throughout the
third
world, as harsh as in the days of the encyclical “Of New
Things”
100 years ago which addressed the impoverished conditions
of the
industrial working class at the end of the 19th century.

He described some working conditions as “situations in
which
the rules of the earliest period of capitalism still flourish in
conditions of `ruthlessness’ in no way inferior to the
darkest
moments of the first phase of industrialization.”

Actually, conditions are not all that much better for the
survivors of America’s once mighty industrial working class;
most
are unemployed, underemployed, holding 2-3 jobs, or on
welfare.

The Pope’s recommendation is to accept the good qualities
of
capitalism, harnessing self-interest and the profit motive,
but
also insisting that capitalism needs to be controlled and
limited
by other forces in society outside the business world.

He states that the objectives of an economic system should
be “a sufficient wage for the support of the family, social
insurance for old age and unemployment, and adequate
protection
for the condition of employment.”

In closing, the encyclical says, “The church…recognizes
the positive value of the market and of enterprise, but
which at
the same time points out that these need to be oriented
toward
the common good.”

This is not a business cycle, this is a blood bath

Recession? Depression? Obviously depression!

The purchasing power of the American economy is
definitely
depressed, with no relief in sight.

The solution is simple. Protect and rebuild our
manufacturing base in the same manner that Japan, India,
China
and everybody else protects its workers from cheaper
labor or
more advanced industries.

Originally, “voodoo economics” was used in the 80’s to
describe the now discredited “supply-side” economic theory.

Supply side economics promised a rapidly rising tide, but
the only thing that rose was the percentage of income of
the
richest Americans vis-a-vis the rest. Earnings of the top
2.5
million equal the earnings of the bottom 100 million.

The Level Playing Field

Now voodoo economics should be used to describe the
perva-
sive popular theory that the United States shall be the
premier
destination of the manufactured goods of all countries
regardless
of whether or not the goods are made by prison slave labor
as in
the case of China, by Asians making 30 cents an hour
without
benefits, or by Mexicans making 40 cents an hour, and that
U.S.
labor is capable of competing on this “even playing field”
with
its $4 an hour minimum wage.

Add the burden on American business of 8% social security
taxes, 2% workman’s comp insurance, unemployment
insurance, 5%
health care premiums, pension programs, environmental
protection
laws, heating costs, 5% sick pay, 5% vacation pay, jury duty
pay.

Then consider for a moment what a $4 an hour budget
buys.
$4 x 40 hours x 52 weeks equals an annual income of $8320.

Deduct minimal 10% federal income tax, 8% social security
payments, state taxes, city taxes, unemployment,
disability
taxes, for a minimum total of 20%, or a net spendable
income of
$6656. (The poverty line for a single person in `90 was
$6,652)

Deduct bare-bones annual minimums of:

Food at $1 a meal, or $1095
Rent of $200 a month $2400
Utilities of $50 a month $ 600
Medical insurance $1000
Transportation to work, $2 a day, or $ 520
Laundry at $3 a week $ 156
Clothes and shoes $ 300
Telephone maybe – $10 a month $ 120
Personal hygiene/household, $1 a week $ 52
$6,243

(Note that all the above necessities are either subsidized
or
regulated by government, except personal
hygiene/household.)

This leaves $413 a year for discretionary spending for insur-
ance, charitable contributions, a car, entertainment, etc.

$1.13 a day!

Mexico at 40 cents an hour has a labor advantage of 12 to 1
over our minimum; Asia at 30 cents an hour has an
advantage of 16
to 1.

With labor costs like these, foreign exporters can “pick a
number” in setting prices to undersell American producers,
even
those with the sharpest cost accounting pencils.

It is the height of arrogance–actually stupidity–to contend
that American labor is 12-16 times more efficient than
foreign
labor, particularly when both operate the same automated
machines
and robots.

And too many American workers are deficient in reading,
writing and arithmetic.

The issue is really “fair” trade, not “free” trade.

The Bottom Line

“They” say that the U.S. is a “bottom line” country, that we
primarily concern ourselves with the bottom line.

The bottom line in the federal budget is that its $1.4
billion is 34% of our current ’91 gross national product of
$4.1.

“They” (the Wabash College economists) say that when
taxa-
tion exceeds 30%, the people can’t afford to live. This
seems
true: total taxes are 40%, millions of people have filed for
bankruptcy and the country has been in a recession for
over a
year without signs of bottoming out.

The bottom line is, in this regard, that Reagan was right
that the U.S. economy cannot afford this level of
government
spending.

Our gross Gross National Product

Consumer spending is 67% of our Gross National Product,
military spending is 5.5%, and service industries are claimed
to
be 67%.

(Who says figures don’t lie?)

National health care costs are over $750 billion, or 18% of
our total current national income.

This leaves manufacturing and everything else at minus 58%

of our Gross National Product.

(Who says figures don’t lie?)

Jobs, Jobs, Jobs

“They” say retrain all the welfare recipients and help them
to get jobs.

Great, what jobs?

IBM and GM ex-workers would love to have these non-
existent jobs.

The country has 118 million employed (46% of the total
population), and a 6.7% unemployment rate.

Finally it is dawning on our business pundits that
productivity gains in an industry leads to a permanent loss
of jobs in that industry.

The executive vice president of the American Express
Company, in his letter to the Times published July 30,
1991
claims that services “industries such as banking,
accounting, se-
curities, telecommunications and transport now account for
78% of
U.S. employment and 67% of the U.S. gross national product.”

You might note in passing that all of these named industries
are government regulated.

He also went on to state that they all “continue to face
protectionist walls abroad.” When are we going to learn to
pro-
tect our own, and climb out of the hole we have dug for
ourselves!

The retail sector boomed during the 80’s with malls
mushrooming all over. Now that the people have lost their
pur-
chasing power, the retail stores and malls are failing and
going
bankrupt.

There is no dearth of imported cars, TV’s, stereos, cameras,
VCR’s, clothes, shoes, trucks; just a dearth of purchasing
power.
Roosevelt saw this need in the 30’s and pumped dollars
into the
pockets of the workers.

In the 90’s, we take dollars out of the workers’ pockets.

Inflation is Good

Why is it that we have inflation, a post World War II
phenomenom? With all the increased productivity, prices
should
actually be lower.

The obvious answer is that the continuing astronomical
federal deficits increase the money supply by at least that
much.
Taking the current $4.1 trillion economy and the $250
billion
deficit, the deficit is 6%, just about the current rate of
inflation.

So bank savings pay 5% interest, and inflation is 6%, so the
real return is minus 1%.

Not much of an incentive to save.

The deficit forecast for fiscal `91-`92 is $282 billion.
For `92-`93, $348 billion.

In reality, we are borrowing money – and paying interest –
to pay the interest on our debt.

Are we crazy?

Most American household incomes have fallen behind
inflation since 1973–18 years ago. Marriage,
homeownership and
children are being postponed into the over-30 age group.

This stagnant personal income means that even
jobholders
cannot afford cars and homes. 71% of families under 34
cannot
afford median-priced homes where they live. The average
new car
price is equal to 47% of the median annual income of
American
families.

The consumer price index increased 55% between 1980
and
1990, while corporate profits increased 103%, i.e. 10% a year.

Already, over half the women in America are working just to
achieve a modicum of a decent standard of living. 80% of
working
women say they would quit their jobs if they did not need
the
money. 59% of women over 20 are working. Tens of
millions of
Americans live below the poverty line. Tens of millions are
on
welfare. The unemployment rate stands at 6.7% rather than
the
“full employment” rate of 3.5%.

We believe that when the Constitution says to “promote the
general welfare”, it did not mean to put the people on
welfare.

Has anyone seriously considered that when unemployed
people
become employees, consumers and taxpayers that, rather
than being
a drain on the economy and government treasuries, the
whole
nation benefits.

Back to more taxes – Galbraith/Clinton

All the real needs of the nation are in the public sector:
repairing bridges and highways, expanding airports,
providing
housing for the poor.

Our total tax burden is already 40%. We have no money to pay
for more public works.

The nation’s needs—a decaying infrastructure, dying cit-
ies, sub-standard housing, under-employed and
unemployed peo-
ple—are not going to be paid for by increased taxes on
the
surviving employed; they will only be paid for by American
work-
ers producing the goods that American consumers buy.

The roaring 80’s

With the decline of manufacturing since the 60’s, and the
deregulation of the savings and loan banks in the 80`s,
enterprising people have turned their attention to making
their
fortunes in real estate and the financial markets.

As Henry George stated, all wealth is eventually traced back
to ownership of the land, and the S & L’s were used in all
manners of enterprising, speculative ways to develop
land and
real estate. The collapse of this over-heated development
boom
triggered the collapse of many imprudent S & L’s.

As for the financial markets, clever people discovered that
capital could be raised by the sale of debt “bonds” to
purchase
the ownership “stock” of corporations, and thus acquire
control
of otherwise perfectly sound, profitable, ongoing
businesses.

Of course, the net result has been to severely reduce the
profitability of these “leveraged” businesses, as they now
have
to pay the exorbitant interest on the “junk” bonds first out
of
their current income, as opposed to previously paying
dividends
from their residual net profits.

Gleefully jumping on this financial bonanza bandwagon
were
the major commercial banks, the major insurance
companies, and
again the S & L’s.

Now the results of these financial shenanigans are coming
due. A $500 billion bill to redeem the insured deposits of
the
failed savings and loan banks. Chapter 11 bankruptcy for
the
failing corporations. No taxable revenues for the federal
government.

A remedy for this farce would be legislation to disallow
proceeds from a “bond” sale to be used to purchase “stock”.

This would funnel investment and enterprise into new
businesses and jobs, not re-structuring old businesses
and
saddling them with debt, with the interest payments tax
deductible on their profit and loss statements.

A sensible economic policy for the U.S.

1) begin to generate $100 billion federal surplus rather than
$300 billion deficits, and apply to the federal debt of $3.5
trillion. A $100 billion surplus over 35 years would pay off our

national debt, and reduce the incomes-transfer of poor-to-
rich
interest payments of $330 billion a year to zero. Senator
Pat
Moynihan has made the point that all personal income
taxes are
now being used just to pay the interest on the federal debt.

2) reduce inflation to zero

3) set interest rates at the post World War II level of
5%

4) full employment, with an unemployment rate of 3.5%

5) begin to generate foreign trade surpluses rather than
$101
billion deficits

Business talks of the low saving rate, of the need for more
investment, more productivity, more jobs.

What are we going to invest in? More retail malls? The
service sector has been laying off workers by the tens
of
thousands.

New jobs in what? The obvious answer is staring us in the
face.

Domestic manufacture of the goods we consume.

The bottom, bottom line

It is all very nice to be concerned about the economic
welfare of foreign countries, but after all charity really begins
at home, and the working, unemployed, underemployed
people of
America are suffering greatly under the currently popular
“free
trade, laissez-faire, robber baron” policies of the
government.

The bottom, bottom line is that either we change our free
trade policies to fair trade policies to create a truly level
playing field for the benefit of all, or continued global
“free” trade
will continue to destroy our country.

–30 –

References

The Bush (Vannevar) Symposium, held in Washington, DC,
March 18, 1991 concluded that a revival of manufacturing
here is essential to the future of American science and
technology.
–NYT 3/22/91

40% of personal income going to all levels of government
–Milton Friedman 12/14/88 WSJ

80% of women say they would quit their jobs if they did not
need the money. 59% of women over 20 are working.
–NYT 6/18/91

30-40 million Americans live in poverty.
— NYT 6/12/91

Consumer spending equals two-thirds of total Gross
National Product activity. First quarter of ’91 at $4.12 billion
GNP rate. –NYT 6/27/91

Health care costs $600 billion in ’89; or 11.5% of the GNP.

Military spending – 5.5% of GNP. –NYT 3/3/90

One million bankruptcies in ’91. –NYT 6/27/91

For the trade deficits of ‘80-’90, we owe Japan alone $350
billion.
–NYT 4/4/91

Trade deficit with China $10.4 billion in ’90.
–NYT 3/30/91

The deficit forecast for fiscal ‘91-’92 is $282 billion. For ‘92-’
93, $348 billion. –NYT 7/16/91

This stagnant personal income means that even jobholders
cannot afford cars and homes. 71% of families under 34
cannot afford median-priced homes where they live. The
average new car price is equal to 47% of the medial annual
income of American families.
— NYT 6/18/81

The consumer price index increased 55% between 1980 and
1990, while corporate profits increased 103%, i.e. 7% a year.
–NYT 7/5/91 (Statistical Abstract of the US)

7 million people hold a 2nd job. -–NYT 7/25/91

Interest payments on the federal debt were $240.9 billion in ’
89.
-–NYT 7/24/91

S&L bailout estimate $500 billion. -–NYT 7/31/91

Business activity at 51.8%. -–NYT 8/2/91

“Turkish textile quotas” -–NYT 3/29/91
Jobs

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