Bush's "Ownership Society" Already Doomed by his Trade Policies

AmericanEconomicAlert.org ^ | Friday, September 10, 2004 | Alan Tonelson

[FITZ]

American labor cannot survive on the $0.50 an hour that a Mexican worker can or the $0.25 an hour that a Chinese worker can. No way can the typical average American pay $4,000 property tax a year, 1/3 his income in income tax, high Social Security, taxes, Medicare taxes, gasoline taxes, high sales taxes and all the other many taxes and earn those kinds of wages. End all taxes and the American could work for far less also.

[A. Pole]

You asked how innovation protects salaries in a global economy. The auto industry wages are higher than ever, yet they compete with extremely low-wage nations every day.

So what is your answer? What is the economical mechanism which innovations protect high salaries?

[DoughtyOne]

Yes, I agree with that.

[GOP_1900AD]

Simply put, the GOP needs to return to its original core values. Doing that one thing would sufficiently distance us from the Dims, while appealing broadly and deeply to the majority of Americans, that we could dominate the political scene for the forseeable future. The thing which prevents this is that there is muddled thinking and confusion in the minds of many modernists nominally on the right, which purports that a certain, quasi libertarian economic point of view which arose mostly in reaction to liberal regulations put in place from FDR onward, is in and of itself "conservatism." If we want to truly restore the GOP, this notion must be debunked. It will not be easy. There are few still alive who know enough about classical conservatism to make the argument into a substantial movement. And equally problematic is the muddling of things in with some very silly isolationism of the most naive kind, the kind which purports that neutrality can be a reality for a great power. This tarnishes the purer calls for a return to GOP core values. Look at how many laugh at Buchanan here. That is important data.

[RFT1]

Youre quite wrong. The original Mustang lasted from 64 1/2 to 68, with the 67-68 models being a fairly major revsion in themselves. The Chevelle had a 64-67 product cycle, the Corvette Stingray only lasted 4 years, the Original Camaro/Firebird only lasted for 3 model years.

[DoughtyOne]

Erik, I'm sorry, I'm not trying to attack you, but that is the big lie. Why do you guys insist on that pi$$ poor example?

Nobody is trying to deny other nation's access to our markets. I'm certainly not. What I do think is wrong, is that our workers are having to compete with with people, who's standards of living are almost non-existant, for wages.

Why do you think it's such a great idea to put your neighbor out of work, just so you can find a great buy? I've never understood that logic. It's the ultimate 'me first' attitude, one that is as embarassing for me to watch, as it is devistating to our economy.

We have flooded this nation with tens of millions of poor. We have undercut our workers ability to make a living on a number of fronts. We allow nations like China to charge 40% tariffs on our exports, then gift them with all the business they can handle.

I guess I'm from the old school, but I'd rather have a guy down the street make the goods I purchase, than children - political prisoners and the military in China.

I may not own as much, but I'll sleep a hell of a lot better.

[ApesForEvolution]

For me, the time has come to get behind Bush and make sure he gets re-elected. While I have some MAJOR differences with Bush, he is still greatly preferable to John Kerry, and the fact is one of them will wind up president.

I won't be harping on Bush's shortcomings for the next couple of months. I have something in mind for just after the election, but for now I'm going to back off.


***

Well said mis amigo...

[Wolfie]

I saw Cheney on TV tonight touting the administration's plan for a "lifetime of education". I'm surmising that means re-training for a never-ending series of dead-end jobs.

[ApesForEvolution]

(US socialist liberalism would be dead without the help of politicians who claim to be conservatives)

***

You're red-hot brother!

[DoughtyOne]

a few of the more prominent lies over the last decade

we don't need manufacturing, everyone will move to information technology

we can't find trained engineers, we must import trained engineers from India

those out of work engineers can't be retrained, it would take too long

we don't need information technology jobs in the U.S., we can outsource them from India much cheaper

moving $600 billion dollars of yearly of trade deficits off shore didn't have any impact on jobs in the U.S.

running that $600 billion dollar trade deficit had no impact on wages in the U.S.

flooding the nation with tens of millions of illegal immigrants had no impact on wages in the U.S.

outsourcing clerical jobs to India and other nations had no negative impact on wages in the U.S.

none of these wonderful policies harmed our nation in any way

gifting China with our complete patent database would be a good thing

giving Loral and other corporations the latitude to give away top missile gyro and MIRV technology was no problem

oh, you don't know what you're talking about...

[Wolfhound777]

"For example, are individual investors really supposed to keep up with the nanosecond-by-nanosecond changes in the financial markets?"

No. Nor would they have to. Only day traders need to worry about this. Most successful traders don't' even look at quotes during the day. The shorter the time frame of investment, the more risk and margin of error due to murky signals. This is a non-issue.

Is health care really just like any other good or service, and will consumers really shop for it just like they shop for sneakers or SUVs?

Yes. They would. A little competition and caps on frivolous lawsuits would lower the cost. Additionally, you will attract the best and the brightest to the profession. No one is going to expend the cost and time to go to medical school and not be able to make a handsome living at it. Hmmm...let's see...years of school, school loan debt, high stress work atmosphere...who would bother to not make a handsome living.

"But the biggest obstacle to the ownership society is the steady stripping from Americans of the resources needed to buy control over their lives. And one of the biggest forces behind this worsening incapacity is a trade policy designed to plunge Americans into competition with much lower-paid third world workers, and drive down domestic wages and salaries in the process."

First of all the "steady stripping of resources" is the tax on the money we make, not globalization. As far as globalization is concerned, it may be harsh but this is how the game is played. Why would anyone pay inflated salaries in the US for jobs anyone can do. The reason that salaries are high in some professions is supply and demand. The less qualified people you have to fill the job, the higher the pay. If anyone in the world can do the job, you have an excess supply of workers and business can shop for the lowest cost which would be good for people if they had more money in their pocket to invest (in other words own) part of this company. Workers need to take it upon themselves to continually make an effort to update current skills and actively acquire new skills that set them apart from the excess supply to stay employed in a dynamic free market society. No one said it was easy and no one is owed a living.

"Since these peaks, real private sector wages have fallen 4.4 percent – a performance previously unheard of in American history. And manufacturing wages, which are most affected by international competition, have fallen 5.6 percent. Worse, even though the economy has technically been recovering from the last recession for nearly three years, real private sector wages during this period are up only 0.4 percent, and real manufacturing wages are up only 1.4 percent."

Yes, get used to it. The economy has gone through drastic changes in history that were just as painful before. Agriculture to the Industrial revolution to manufacturing to the service and information economy. We are a service and information economy now. I would however agree that we need to keep serious manufacturing (military technology, weapons systems. ship building) in the US for obvious reasons. But anyone in the world can manufacture the majority of the junk that gets produced these days. Again, business will gravitate to the lowest cost which would be good for people with more money in their pockets due to lower taxes. This excess money in peoples pockets could be put to work by investing in these companies that are doing their duty to look for the lowest cost of doing business to turn a profit. Putting your money to work and compounding your profits is what builds wealth. Not working for a paycheck every two weeks and having so much money taken out every year that you really don't start earning anything for yourself until May! That is four months out of every year, you have no money to put to work creating wealth.


"More disturbing, signs keep appearing that the link between work and economic viability is growing weaker in America. Last month´s announcement that the official national poverty rate had risen in 2003 for the third straight year, to 12.5 percent, attracted deserved attention. At least as important, however, is the large and growing number of impoverished Americans who are working Americans. One in every four working Americans today earns less than $8.70 per hour (in 2004 dollars) – the effective federal poverty-level wage. As social policy analyst Beth Shulman wrote on Labor Day in the Washington Post, this trend “undermines our most fundamental [national] ideal: that if you work hard, you can support yourself and your family.”

Could be any number of reasons for this but I suspect a piss poor education system (thanks to the socialist NEA) that does not prepare anyone to compete in the work place. It's just more important to feel good about yourself and adhere to the new religion of political correctness that frowns upon competition. Suddenly at 18 years old, Johnny and Susan leave the NEA cocoon (public schools) unprepared for college or the work force. They know that no one is smarter, better, or stronger than they are and everyone feels good about themselves, so how is it that we keep losing out in interviews and getting rejected by colleges? Why weren't we taught about the real world? We can't compete with the others. No matter, my teachers pushed a socialist agenda that said the workers that do have jobs will take care of me. Wait I know, I can get a job for $500 a week at DNC or some other moon bat organization, vote democrat, and collect my welfare checks. Even though it keeps me below the poverty line, if I keep voting democrat, soon everyone will be equal in salary no matter what job they have.

"It should be obvious to everyone why stagnant and falling incomes will doom the opportunity society. Tax cuts will only marginally help workers who earn increasingly meager wages and, therefore, have less and less taxable income to begin with to cut and transfer to private health and retirement accounts. The idea that these workers will be able to buy a business or a home after tax cuts is downright moronic. Tax cuts will be equally pointless for workers deciding among job training programs if the economy keeps losing job opportunities that can pay a living wage."

Let's face it. Not everyone can be a lawyer, doctor, hot programmer, or other professional earning big money. The economy is not losing job opportunities that can pay a living wage. It's creating different job opportunities paying living wages that our public schools just do not prepare our students to do. If you don't adapt, you perish.

"In other words, tax cuts and privatization can´t drive U.S. economic policy unless the United States retains, or rebuilds, a meaningful tax base. If President Bush knows how to do this without reversing his outsourcing-centered trade policies, now´s the time to tell us. But that´s unlikely unless his opponents start asking him."

This is an outright fabrication. Almost the entire federal tax base of this country is the top 5% of wage earners. They pay 75% of all federal taxes.

But mostly it comes down to the choices and decisions people make. If you don't work hard at improving your lot or adding to your education or pick a profession that is just not going to pay you a decent living wage, I don't want to hear the jealous and covetous whining.

Daniel Akst recently offered in the Wall Street Journal:

If you're newly graduated from college, you may be wondering right about now just how you're going to save the world. Your commencement speech, after all, was probably delivered by a well to-do older person who exhorted you to go out and make a difference somehow. Lots of other people will offer advice on what to with yourself as well -- rent "The Graduate" sometime and listen for that line about "plastics." Joseph Campbell, as silly as he was sage-like, might have suggested you "follow your bliss." The vastly more credible Thoreau urged you to "go confidently in the direction of your dreams." I hope what you are dreaming of is making the world a better place, and unlike all these other kibitzers, I can tell you exactly how to do so. Just go out and make the most money you can. Then, if you still want to do more, give it away. Contrary to your prosperous commencement speaker, anything else you do is selfishness and vanity. Don't get me wrong: It's not bad to delude yourself that you are pursuing a low-paid line of work in the name of helping others. Heck, you probably would be helping others -- only not nearly as much as you could by getting rich. Face the fact that if you embark on a career as, say, a social worker, you've done so because you like it, because it makes you feel important and because you don't have the stomach to do some really major good. That would require making piles and piles of dough. I know this is news you don't especially want to hear. And I know it sounds callous. So instead of trying to prove the case by cold, hard logic, let me tell you a story. This is the tale of a couple of ambitious young men who graduated from an Ivy League university in 1978. One -- we'll call him "Dan" -- idealistically chose a career in journalism, hoping eventually to transcend even this sainted calling in order to write novels. The other, whom we'll call "Alex," descended to the nethermost reaches of Manhattan to work inthe securities industry, where he set about seeking his fortune. Fast-forward 25 years. Our two graduates, out of touch for a while, renew their acquaintance. How have they fared since college? Dan did more or less what he set out to do. He has had a career in journalism (including some modestly edifying muckraking), has published a couple of well-received novels and now spends his days typing industriously away, undeterred by the world's indifference to his work. Alex, mean while, made several hundred million dollars. In fact, Alex is retired from business and spends his time running the foundation he established with some of his wealth. When he dies, a good hunk of the rest will go the same way. Now, my question for all you budding poets and video artists and social workers is: Who ended up doing more to make the world a better place, Dan or Alex? It's hard to argue with Alex's foundation. But Alex was improving the world long before he devoted himself and his wealth to philanthropy. How? First, he made his money by providing an unambiguously valuable service. Trust me, become an activist or artist and sooner or later you will wonder whether what you do is really worth while to anyone. But Alex doesn't have to puzzle over the value of what he did, because someone clearly was willing to pay all that money for the fruits of his labor. Along the way, he treated his employees well, helping them and their families achieve better -- and no doubt longer -- lives, since affluence and longevity are correlated. At the end, when the business was sold, he rewarded them handsomely. What Alex specifically did on Wall Street, moreover, helped make the securities markets more efficient, which benefits everyone -- especially the present and future retirees, middle-class families, endowed colleges and other non-plutocrats who make up so much of the market by investing through pension funds, mutual funds and other institutions. Alex didn't meet a lot of widows and orphans in his work, but what he did almost certainly improved their lot. For doing this work, Alex was magnificently rewarded, enabling him to amass a significant sum of investment capital -- which makes the rest of us richer as well. Capital is the lifeblood of the economy, fueling the productivity gains that in turn fuel expanding affluence and social progress. As if none of this were sufficient, Alex's earnings required him to pay enough income taxes over the years for the government to employ a small army of social workers. He never shirked these obligations through dubious tax-shelter schemes, either. And don't forget the foundation! The conclusion is unavoidable: If you have a good education, you shouldn't just consider getting rich. Creating and amassing wealth is an outright moral obligation. Do so and you can take comfort not just in financing public services but in knowing that you are giving people what they need or want, generating jobs and underwriting the affluence that makes art, justice, environmental protection and other social goods possible. Of course, making yourself a pile of money is good for you too. You'll live in a better neighborhood, drive a safer car, get to be more selectivein choosing a spouse and enjoy a longer, healthier life. Your kids will get a better education, which in turn will mean more of the same for them, too -- and will better equip them to improve the world still more. From a moral standpoint, it is clear that Alex has done his part. With such an eleemosynary career under his belt -- and such bulging bank accounts -- he has decided to indulge himself and stop making money. The money he already has is busily reproducing itself, of course, and mean while he is spending most of his time figuring out how he can use it to make the world a better place. Sounds like fun, no? Meanwhile, Dan is writing another novel -- just what the world needs. The shelves at Barnes & Noble are full of them. Libraries are bursting. Yet he selfishly pours his energies into adding one more. How can he redeem himself for squandering his education in this way? Perhaps his next book should be a story about two friends and what they've learned over the years about saving the world. If it's a bestseller, he can always give the money away.

[Wolfhound777]

"What "we"? Are you talking about American workers who are to lower their wage expectations and standard of living to match the Third World levels?"

It's called capitalism. If you are going to compete, yes, you need to lower your wage expectations to their level. If they can do the same job as workers here for less money, it is the duty of the corporation to to keep the cost low and turn a profit. Lest we forget, the only reason for a corporation is to do just that, turn a profit.

[Wolfhound777]

"Let's look at the auto industry. Through innovations like computer design, automated manufacturing processes, plastics, etc the US auto industry is strong. Consumers have more choices in vehicles, profits are high, life-cycles are short and quality is at its best.

If we would have listened to the protectionists in the 1980s, our car companies would have been protected, stagnant and dead meat when finally exposed to Japanese competition."

Oh yeah, the auto idustry is strong. Japanese cars out sell US cars by a huge margin in the US and there is a good reason for it. They know what American consumers want in an automobile better than detroit does. And they still build a superior product for less, and they have outsourced their workers to robots.

[ApesForEvolution]

Bottom line, don't be an employee, and if you are, that's a choice and it has consequences. Everything has risks/returns/pos/neg. I just don't have time to worry about it...only time to do the next big one and bring as many with as possible.

[Wolfhound777]

Your can be an employee to learn and then do what you want. You can stay an employee and be smart about how you build your wealth. You have to sacrifice early to reap reward later, it's just how life is and it doesn't require a whole lot of money to get started. $50 a month saved every month starting as early as you can does wonders, especially in a decent stock fund. It's the compounded earnings that will create your wealth. You are correct that everyone has choices and there is a risk/reward scenario to everything you do. Not everyone starts out in the same postion at the starting gate. It's true others are disadvantaged and they have to work harder. It may not be fair, but nothing is out of ones reach if they devise a plan and work hard. The biggest failure of American education is that they don't start teaching kids in elementary school about money and how to put it to work for ROI. Money can work on it's own to create wealth. At first, it takes a few years, but at a certain level that compounding takes off and the results are amazing.

[ApesForEvolution]

Right on...

"It may not be fair, but nothing is out of ones reach if they devise a plan and work hard."

If a person can't find enterprise in America and succeed, they aren't looking, and if they find it, they aren't working.

And, then, yes, add sound economic finance principles and work in God's economy, not this world's (starts with the tithe for Christians). He's got a lot and He wants us to enjoy it as well share the whole good news deal with everyone else. Jesus wasn't poor, and His heart wasn't on loving money, but living good so others can see how good God is.

/preaching

[WilliamofCarmichael]

RE: Anybody who wants to claim that the majority of American Corporate Executives have no allegience to this nation are just misinformed. Most do not want to move jobs overseas. They are forced by lack of innovation, restrictive labor contracts, or restictive regulations.

Then why are not executives heading companies that outsource to us (e.g., Japanese autos) forced, kicking and screaming also to outsource offshore to a third country? How do they make it here with all those obstacles and American executives cannot?

You see, they outsourced to us -- a developed country that desires their products, especially when the products are made by our workers -- we, on the other hand, outsource to corrupt, tyrannical third world countries to get "cheap" labor to make products and services to export back to us.

Yes, I know that the bulk of our outsourcing offshore -- to Europe for example -- is done right: make it there, sell it there.

You'll find that New Democrat, Third Way progressives (ndol.org for example) take advantage of greed-related cognitive impairment to advance their world socialism schemes hatched at Davos, the U.N., universities, socialist Europe, socialist India, Communist China, etc.

In return for immediate profits (and the "promise" of 2 to 3 billion middle class spendin' fools) American useful idiots transfer wealth, technology, and jobs to developing nations redistributing Western nations' wealth and all under rules set by the world's Marxists-leftist-liberals; to wit, Third Way progressives of the Clinton ilk. IMO.

[Euro-American Scum]

It should be obvious to everyone why stagnant and falling incomes will doom the opportunity society. Tax cuts will only marginally help workers who earn increasingly meager wages and, therefore, have less and less taxable income to begin with to cut and transfer to private health and retirement accounts. The idea that these workers will be able to buy a business or a home after tax cuts is downright moronic. Tax cuts will be equally pointless for workers deciding among job training programs if the economy keeps losing job opportunities that can pay a living wage.

Sounds tailor-made for Hillary in 2008.

[Wolfhound777]

I agree and think it's a moral duty to amass as much wealth as you can. You can't help people with it if you don't have it.

[ApesForEvolution]

I agree and think it's a moral duty to amass as much wealth as you can. You can't help people with it if you don't have it.

***

Amen and amen! I can't help my brothers and sisters out of the gutter if I stay there myself....