by Benjamin T. Moore, Jr.
Outsourcing – The High Cost of Low Price
Greed Is Good – Gordon Gekko – Wall Street
A basic foundation of our Democracy is Capitalism. One of the fundamental premises of Capitalism is that people will do what is in their own selfish interests. Where they work, what they buy, how they vote, the fundamental premise is that people will look out for “number 1” before all others. You raise capital because you have an idea you believe is profitable. I invest in your idea – give you capital – because I’m anticipating a nice – ROI – Return On my Investment. Or, as Gordon Gekko says, it is all about “greed.” I’m greedy to make more money without having to do anything but loan money. You’re willing to go into debt to me and other investors because you’re anticipating all of the money you’ll eventually make.
Government’s Role
The 10th Amendment which recognizes that any powers not specifically enumerated within the United States Constitution, remain within the province of the various States, has as it’s basis the premise that local government being closer to the needs/greed, issues and concerns of the citizen, is much more responsive and reflective of those needs.
It does make a certain amount of sense. Farmers in Iowa are going to have a different set of issues and concerns than bankers in New York. People who work in a Steel Mill in Cleveland are going to have a different set of concerns than peanut farmers in Georgia or cotton growers in Mississippi. The theory is, communities govern themselves much more efficiently than a centrally located federal government. Again we embrace the theory that greed or selfishness with regard to issues works best when it comes to government.
Corporations
Ayn Rand High Priestess of the Virtue of Selfishness. Darling of Paul Ryan and Guru of the Republican philosophy
The problem of course is, when you take the “virtue of selfishness” – thank you Ayn Rand – turn it into a fundamental principle and apply it across the board. Suddenly you have businesses and corporations operating on this exact same premise. To wit: do what is best for the corporation and everything else will take care of it’s self. This requires quite a leap of faith, since there haven’t been any real studies done – at least that I’m aware of – which have actually studied the effect on society of a “me first, damn everyone else, philosophy.”
Corporations exist for two purposes only. The first is to become as profitable as possible. The second is to grow as large as possible. These two objectives may not be what is best for our planet or it’s population. Balance is critical to the health of all living organisms. Make no mistake about it, our planet, this Earth is a living Biosphere. When things get out of balance, whatever it takes, balance will always be restored. One way or another.
Usually the largest cost for any corporation is labor. It is also the one cost over which management of the corporation can exercise the most control. The cost of supplies, raw materials, the building, land etc., are fixed costs. The labor however, can be manipulated relatively easily.
Unions Fight Back
Children Working in a Textile Mill
Collective bargaining – Unions – were created to protect the workers. Before Unions you worked 7 days a week. You had no vacations, no sick days, no benefits, no healthcare. Children could work in factories, mines and scampered along the steel girders of “sky scrapers.” There was the very real danger that going off to work in the morning might be the last time your family, wife and children would see you alive.
You were paid a pittance for your labor and the company owner – usually a “robber baron” – kept all the profits. Unions changed everything. The conditions for the workers improved. Children no longer could work when they were supposed to be in school. Profits were shared with the employees and the “middle class” was born. Prior to Unions, there was little to no upward mobility within our society. If you were not born rich, chances were you were going to die in poverty.
The only people who could afford a higher education were the wealthy. Thus, one could not better one’s self through education. It simply was not available. Remember the “Gold Rushes” in the 1800’s? The only chance you had for upward mobility was to strike it rich. People were willing to endure unbelievable hardships for the opportunity to have financial security. Unfortunately, without the education to go along with it, there were a lot of people who became millionaires but still died penniless. They did not know what to do with their money. They did not understand how to invest it or what to invest it in.
Return of the Robber Barons
“The Strong Takes From the Weak and the Smart Takes From the Strong.”
The “Robber Barons” and their bastard offspring, the modern mega- corporations have not forgotten their “Golden Age.” They are doing everything they can to return to those times of rapacious profits and the labor force is their primary target.
Union Workers On Strike for a Living Wage.
Unions and collective bargaining have always been their arch enemy. Their technique and methodology has been subtle and insidious. The first thing they did was get the government to pass laws to protect workers. This may seem counter intuitive until you realize, by doing this, they’ve been laying the ground work to make the argument that Unions are obsolete. We now have OSHA laws to protect workers in the work place. We’ve got child labor laws to protect children. You get the picture. The next step was to use their media outlets to begin disseminating the idea that Unions were the reason for the high costs of goods and services.
You must never forget, our media is totally corporate owned. The stories you read, programs you watch are controlled, approved and directed by powers and people with agendas you never see, never hear about and do not know exist. As a friend once advised me, “whenever I hear something in the media, I always ask myself, why do they want me to believe this.” I’ve found this to be invaluable advice. Everything that happens, happens for a reason. For every effect, there is a cause. There are no coincidences.
“I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one — and enjoy with his family the blessing of hours of pleasure in God’s great open spaces..” __Henry Ford
Henry Ford
Looking out for and treating workers fairly has always been good for business. Henry Ford realized this and built Ford Motor Company on the principles of paying his workers enough money so that they could afford to purchase the products they were assembling. Thus, he had a built in customer base.
Somewhere along the line, businesses, corporations and industry rejected Henry Ford’s wisdom. It has become “open season” on the American workforce.
Globalization – That New World Order
I was a virgin when I got married for the first time at the tender age of 23. I heard you were supposed to talk and really get to know one another during the courtship phase. To that end, my prospective wife and I talked about anything and everything. From how many children we wanted, to finances – always an important issue – and of course sex. “Oh,” she said, “once we’re married, why you can have it any time and as often as you’d like!” Damn! That sounded good! As those of you who have been married already know… Boy was I in for a surprise!
What was promised, sold and delivered… turned out to be nothing like what I had envisioned. Thus it was with the promises made when it came to the wonders of globalization!
President Nixon greets Chairman Mao
In 1972 when President Richard M. Nixon went to China, all the talk was about how a whole new market was being opened up. There would be billions of Chinese just waiting to buy American products. Our economy would boom trying to keep up with the Chinese demand for American goods and services. So, how’d that turn out? Like my first marriage… not well!
Sleeping With The Enemy
Young woman in a Chinese sweatshop assembling Nike shoes
To be fair, it has turned out pretty well for the “neo-Robber Barons” of today. We began to get our first intimations of what was going on back in the early 80’s. Some of you will remember? There were a series of news stories that exposed the working conditions in 3rd World countries where some of our popular athletic shoes were being manufactured. Nike was heavily criticized for their practice of manufacturing and assembling shoes for sale and distribution here in America, that were made in 3rd World “sweatshops.”
A popular Nike shoe
The new model was make it there and sell it here. Because of their extensive marketing campaigns we did not seem to mind that their $80 – $150 dollar shoes only cost about $5 dollars to make and were being manufactured by – in some cases – children working 14 hour days for $50 cents an hour. Nike shoes became a fashion statement and we just had to have them.
Other companies took notice. If you could manufacture your product in a part of the world without minimum wage laws, without having to pay for benefit packages such as healthcare, payroll taxes, social security etc. what a deal! The steady exodus of jobs began.
Why Congressional Bills Are Written By Lawyers
Believe it or not, short, simple contracts are often the hardest to break.
If you’ve ever looked at a piece of congressional legislation, I’m sure you found it long, wordy, hard to read and even more difficult to understand. This of course is by design. It accomplishes several things. The first of course is the insertion of loopholes. Lawyers and our courts would be out of business if laws and contracts were written in plain English. There would be no dispute over our intent. If you and I wrote up a contract saying, “You were going to paint my house for $1,200 and I was going to supply the paint.” We sign and date it and it’s an enforceable contract. It could easily be written on a napkin.
IRS Tax Code
When you have a bill that’s 500 pages or more long, you’d best believe there’s plenty of chicanery buried in that bill. Who’s responsible? Lobbyist are. This is what they get paid big bucks to do. Our tax code is an excellent example. It would take you longer to read all the way through it than it would take you to read your King James version of your Bible… twice! What’s worse? It’s much more difficult to understand. Buried within our tax code are such gems as:
- A Foreign Tax Credit.
Companies pay taxes on their profits to foreign nations, usually at a reduced rate because of tax incentives given them by that nation to open a manufacturing plant there. Then they get a deduction from the IRS for foreign taxes paid.
- Reinvestment In The Foreign Location.
The American company has the option, or loophole as some have called it, to reinvest the profits made in the foreign country back into the foreign location. If the profits are never transferred to the company in the United States, the company is not required to pay taxes on those profits. These profits are used to expand overseas operations and remain not taxable by the IRS. The IRS calls this money, “Unrepatriated Earnings”, and the total of unrepatriated earnings reaches well into the $600 billion range.
- Savings On Payroll Taxes
For many corporations in the United States payroll expense represents half of their total expenses every year. Overseas companies do not have the employer contributions, unemployment taxes and the minimum wages that contribute to the large expenditure that it is in this country. Coupled with the literally thousands of people in other nations for whom a $7.00 per hour job would be a windfall, many companies see these tax benefits as more than making up for the negative publicity and the constant campaign against outsourcing.
Hitting The Snooze Button
The alarm clock has been ringing and the American people are starting to wake up! As the “Middle Class” sees it’s self decline, along with a shrinking job market, they’re becoming concerned. They should be! If you’ve been paying attention, you’ve noticed sleeping potion has been delivered through our media. The first concoction was a dose of “the American worker is not competitive on the World Market.” This was back during our trade war with Japan.
Rising Sun Movie Poster
The movie “Rising Sun” (1993) starring Sean Connery and Wesley Snipes, based on a book by Michael Crichton, was a fictional account of the very real business philosophy of Japanese corporations. They were in essence dumping products onto our markets to gain market share. It wasn’t until our Government began fighting back that things evened out. The Japanese wanted to sell their cars in our market. Thus we demanded that they not only open their markets for the sell of American made and manufactured cars, but that they build manufacturing plants here in America and employ American workers.
There was some hemming and hawing at first, but things got better for both countries when the doctrines of fairness and fair trade were introduced into the equation. Nevertheless, at first the excuse for the imbalance in trade was to blame the American worker for not being as competitive and competent as his Japanese counterpart.
Blame It On Mexico
The next dose of sleeping potion has been to place the blame for the loss of American jobs, on illegal immigrants. The party line is, they’re sneaking across our southern border at night to steal our good American jobs.
Undocumented Migrant Workers
It is not that I wonder whether or not there is intelligent life in the Universe. I wonder if there is intelligent life right here in these United States! I really have to take my hat off to the corporate propaganda machine that has silly “Red Necks” screaming about building a fence across our entire southern border and staying up all night with night vision goggles and walkie-talkies trying to catch Pedro. Waste your time on any and everything except, rounding up and arresting corporate CEO’s who hire and employ undocumented workers. It’s lunacy. It’s like watching someone try to go up the “down escalator.” After you’ve had a good laugh, you really should take them by the hand and lead them around to the up “escalator.”
Scene from the Untouchables starring Costner and Connery.
It is like that scene in the movie “The Untouchables” starring Kevin Costner. I’m referring to the scene where Sean Connery’s character is giving him the “how far are you prepared to go speech?” Everybody knew where the booze was. The problem was that the money had corrupted, government, law enforcement and the courts. Sort of sounds like what we’ve got going on today doesn’t it?
They know where all the factories, meat packing plants and farms employing undocumented workers are. The problem is, our prices are now based on exploiting the cheap – though invaluable – labor these workers provide. The equation is simple. The lower the labor cost the higher the profits. The more profitable the company the larger the compensation package for the CEO.
Stop and think! When is the last time you or someone you know, filled out an application to pick fruit on a farm? When is the last time you or someone you know filled out an application to work in a meat packing plant? How about cleaning an office building at night? It is all smoke and mirrors. A shell game. It is based on misdirection. Focus on the undocumented workers simply trying to make enough to get by. Pay no attention to the owners of the corporations!
Outsourcing
One China is Enough
The average annual salary of an American middle class worker is right in the neighborhood of $48,000 dollars. The average annual salary of a Chinese middle class worker is less than $7,000 dollars U.S. See the problem? There is no way that the American worker can compete with a Chinese worker. To do so America would have to become like China. I don’t think this is what we want. Truth be told, it’s not what “big business” wants either. Why? Because people making $7,000 a year cannot afford the products they must sell to remain profitable.
Sensata Made over $450 million in profit during their 4th quarter. It wasn’t enough and the plant is being moved from Illinois to China.
Outsourcing will ultimately bring down American corporations. Outsourcing is like heroine being injected into the veins of corporate America. It may feel euphoric at first, but eventually there is going to be a fatal overdose. As more and more Americans lose their jobs to outsourcing, the American market will contract and there will be no one able to purchase those new iPads, SmartPhones, automobiles or new homes. Families will be unable to send their children to college. Indeed it becomes pointless to obtain a college education when there will be no jobs guaranteeing you can pay back your “student loans.”
Colleges and Universities will begin to fail and we will no longer produce the people necessary to maintain our society. Doctors, teachers, engineers, scientists, computer programmers, the people who have designed and invented American society and culture will vanish.
The Future Of The Path We’re On
Damage from Hurricane Katrina
Those post-apocalyptic movies we’ve all seen about a dystopian future will become prophetic. It is already happening around us right now. Hurricane Katrina devastated our Gulf Coast. That was seven years ago and we still haven’t fully recovered and rebuilt. What’s worse, the hi-tech preventive measures that need to be put in place, have not been because we simply cannot afford it. When your philosophy is to shrink government to the size you can drown it in a bathtub, you discover that nature and the oceans may drown you first.
A dystopian future is a great setting for a movie… but not in real life. This is how Hurricane Sandy left a portion of New Jersey. Can we rebuild?
Now we see that New York is equally at risk. Hurricane Sandy dealt a devastating blow to an area of the Country that has basked in the delusion that they were largely immune from the types of storms that hit the Gulf Coast . We need “Storm Surge Barriers” similar to the ones in Amsterdam. These types of projects require significant government expenditures. Where does the government get it’s revenue? From taxes, both corporate and personal.
They’ve got Storm Surge Barriers in Amsterdam. Why can’t we build them here? Oh, right! That might involve raising taxes…
When corporations outsource jobs to China and other places, American workers lose their jobs. If they’re not working, they’re not paying income taxes. When corporations take advantage of loopholes in the tax system, when rich people are not paying their fair share, we do not have the revenue stream to repair and rebuild after a natural disaster.
Let’s say you live in Wyoming or somewhere and you feel that hurricanes are the least of your worries, where is your money invested? Where is your pension fund? What stocks are held in your mutual fund and or annuities? You may not live on the Atlantic seaboard or on the Gulf Coast, but believe me, you took a sizeable hit along with everyone else. We’re all in this together and yes, you’re affected too.
Outsourcing Our Way To Poverty
Small Business Owners are affected when their customer base becomes unemployed. We’re ALL in this together.
You may feel relatively secure because you are self-employed or own your own business. What you need to understand is, in order for you to survive, you need a customer base. When people in your community are out of work, your business takes a hit. Think about this the next time a factory closes and ships it’s jobs overseas.
You just lost a percentage of your customer base. Yes, outsourcing affects you. When people have to make those hard decisions with regard to rent/mortgage, food, clothing and transportation, there is no money left to patronize your “ice cream parlor,” car wash, or whatever your business is. You need to be concerned and you need to not only support those workers who’ve lost their jobs due to outsourcing. You need to become an activist.
Greed
Is this fair?
Let’s go back to where we began. Believe it or not, it actually is in your own selfish best interest to look out for your fellow man. The better he does, the better you can do. The more he achieves, the more you can achieve. I’m not talking about those CEO’s who are raping the profits from their companies and giving their employees the down elevator shaft. They’re not putting their money back into the community any ways. This is why painting them as the “job creators” is such nonsense. If I give $100,000 dollars to a poor person, that person is going to spend it to buy goods and services. If I give that same $100,000 to a millionaire, they’re going to tuck it away with all their other 100’s of thousands of dollars and it will not be circulated back into the economy.
The people who will spend that money – the poor and middle class – are the ones patronizing your business and creating demand for your products or services. It is that demand that causes businesses to have to hire more people and that is what creates jobs!
Do me a favor, the next time one of your Republican associates starts reciting his silly talking points and mentions “illegal immigration” as a huge problem, ask him how many American jobs Mexicans have outsourced to China? Enjoy the ensuing silence.
