posted on 02 May 2016
by Rodger Malcolm Mitchell, www.nofica.com
Every politician tells voters he/she plans to bring jobs back to America. It is a lie, designed to fool desperate people.
It is a lie when Donald Trump says it. It is a lie when Ted Cruz and Hillary Clinton say it. It is a lie when Bernie Sanders says it.
The very words, "bring jobs back to America" always are, and always must be a lie.
I'll tell you why, but first let's go over what Bernie Sanders says, for it is quite typical of all politicians.
Can you think of any reasons why United Technologies would transfer operations to Mexico? Do the words "profit," "lower costs," "lower selling prices," and "competitive advantages" come to mind?
Are these bad words in business? If you were running a business, would you forget about profits, costs, selling prices and competitive advantages?
Would you consider your company to be a charitable operation, the purpose of which is to pay more money than necessary for labor and materials?
Actually, the loud and clear message is, "Be as inefficient as possible. Force American businesses to paying more for labor and goods than they need to. Make sure American businesses can't compete with the rest of the world."
But, of course, there is another part to the story.
Supposedly, because the CEO was overpaid, and because United Technologies made a big profit, and because it received big defense contracts, and because it received lots of money from Indiana as well as from the U.S. - because of all these things, United Technologies should pay more than necessary for labor and materials.
The "logic" is that because UT is profitable, it can afford to pay more than necessary, so that is exactly what a patriotic American should do.
You also do not need to have a PhD in economics to understand that there are many reasons for unemployment in manufacturing, and trade policies isn't one of them - unless one believes that protectionism is long-term beneficial to a nation's economy.
Remember, protectionism runs both way. What we do to other countries, those other countries will do to us.
The Great Recession caused unemployment. The fault: Lack of federal government regulation of banks.
Every recession and depression has been cured by federal deficit spending. Tea Partyish austerity has delayed recovery. The fault: Insufficient deficit spending by the federal government.
Manufacturing largely uses unskilled labor. Third-world nations can supply unskilled labor at a low cost.
As a result, the U.S. has been converting to industries that require more skilled and educated workers.
But, the excessive cost of education together with widespread poverty, has taken many American workers from school. The fault: Insufficient federal support for education and insufficient financial support for the poor.
See the pattern here? The politicians blame business for doing exactly what businesses should do: Be efficient, creative and competitive.
The real problems are the fault of the federal government and its austerity-leaning policies.
Hmmm . . . He says layoffs have been happening for 35 years, and NAFTA came 22 years ago, but the layoffs are the fault of NAFTA?
Agreed. The Gap between the rich and the rest is too wide. In fact, it is the single worst economic problem in America and in the world.
But that problem will not be solved by erecting federal trade barriers to shelter increasingly inefficient businesses (i.e. protectionism.)
It will not be solved with federal spending cuts and tax increases (i.e. austerity).
It will not be solved by impoverishing America with college debt, or by allowing criminal bankers to run wild.
Bernie Sanders hates the Citizens United (Supreme Court) case that indicated corporations are people. Yet, wants corporations to act like super patriots, and give their profits to charity - a sure way to destroy the American economy by making our businesses inefficient.
Bernie has some good ideas. Medicare for All is one. But the notion that companies are responsible for unemployment, and should pay excessively for labor and materials, is economically suicidal.
The federal government was responsible for the Great Recession, and in fact has been responsible for every recession and depression in U.S. history.
Growing the American economy does not involve building a wall of protection around inefficient businesses and their workers. Growing the American economy requires making sure American business is competitive.
Finger pointing at business for not solving the federal government's problems is a sure way never to solve the Gap problem.
Stop over-taxing businesses and start educating the American workforce. That is the federal government's job.
THE RECESSION CLOCK
Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip - the familiar pre-recession pattern.
Recessions are cured by a rising red line.
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka "stimulus") is necessary for long-term economic growth.
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