Thursday, December 15, 2011

U.S. Manufacturing: A Matter Of National Security

Forget about liberal v. conservative, Progressive v. Tea Party.  Bringing back manufacturing to U.S. soil is a matter of national security, and I’ll tell you why.
Let’s start with an A.P. article on P.7B of today’s Denver Post about how China just raised their tariffs again on imports of all U.S.  larger cars and SUV vehicles. They did this in retaliation for the U.S. warming of economic and strategic relations with other parts of Asia, Australia, and the E.U.
For those of you who keep up with this sort of thing, you know that China has already imposed a 25% tariff on all goods entering their country, while enjoying a 2.5% tariff on all goods they exported to the U.S. No, the decimal point is not a typo.
The idea behind the U.S. strengthening economic ties with other parts of Asia and the E.U. (sans China) is that, together, we may be able to offset China’s increasingly enormous economic clout and voracious appetite for world political domination.
Former National Security advisor Zbigniew Brezinski strongly advocates such an alliance, not only on economic grounds, but in order to help broker an equitable reconciliation of China with India, Japan, Taiwan, and South Korea, so they don’t end up going to war with each other and start WWIII.
So that this alliance may stand on its own and stand up to China, the strategy necessitates that we are able to supply our trading partners with valuable goods and technology over the next couple of decades, independently of China’s influence.
Mr. Brezinski has the right idea, but according to Peter Navarro and Greg Autry, authors of a book called Death By China, we may no longer have the manufacturing capacity to get the job done, because U.S. manufacturers have shipped their factories overseas, mainly to China.
According to Navarro and Autry, the book “documents the myriad ways that a powerful, wealthy, and corrupt Chinese Communist Party emboldened by a growing nationalistic frenzy is becoming the biggest threat to global peace, prosperity, and health since Nazi Germany.
From currency manipulation and abusive trade policies, to slave labor and deadly consumer products, China’s ruthless rulers threaten the livelihood of the citizens of every developed nation.
These thugs have created a frightening amoral society ruled by a constant fear hidden to outsiders and bought off with the ill gotten profits of a myopic quest for economic advantage at any cost – social, environmental, or civil rights concerns be damned.
Worse, as with everything else, China is scaling and exporting the model around this world, threatening their neighbors and exploiting developing nations across the globe with a new imperialism.
While America worries that Al-Qaeda or Iran may get their hands on a weapon of mass destruction, China is using our Wal-Mart dollars to build them by the score; filling brand new nuclear submarines with missiles aimed at our heartland and building stealth planes designed to obliterate our friends in Japan, Korea, and Taiwan.”

Assuming that these guys are correct, and I believe that they are, how are we supposed to strengthen our economic ties with Asia and the E.U. to go up against the monolithic power of China, when we either make our goods in China or buy all our parts from China?

Think about that for a moment, and then think about how our U.S. multinational corporations have beat feet for the Orient to make a buck and left us vulnerable to a threat that makes Al Qaida look like the cast from The Breakfast Club.

If we don’t bring manufacturing back to our shores very soon, and I mean yesterday, our children can kiss what is left of the American dream goodbye.

A meaningful response to this very real threat should transcend every domestic political ideology. Both sides of the aisle and the middle should be immediately changing tax, trade, and banking policies to incentivize the return of U.S. manufacturing to our shores and to disincentivize outsourcing to countries that refuse to support a fair and balanced trade policy.

We can sit a listen to the Cheney family telling us how in danger we are by getting our troops out of Iraq, like we really have anything to fear from Iraq alone, or even Iraq and Iran together, except that Haliburton's loss of military contracts may reflect negatively on their quarterly dividends. But, since Iran is currently good buddies with China, that particular alliance is something about which we should be very concerned.

Please then, let us pause for a moment from our incessant arguments about what is  morally a better domestic policy for the U.S. and concentrate together about how to meet what I firmly believe is nothing less than an existential threat to this country.

J. Brandeis Sperandeo

Friday, December 9, 2011

It’s A Small World After All: Why Incomes Have Gone Down In Colorado




The U.S. Census Bureau just announced that the adjusted median income in Colorado went down 9% during the years 1999-2010. A friend asked me why. I certainly don’t have all the answers, but I do read a bit, and I think there are lots of factors that contributed to the income decline and are probably inter-related.

I will list what I can remember. I would suggest that you use my ideas as a template for further research on your own or discard them as you choose. Those of you who read my posts regularly know that my political leanings are somewhat left-of-center. There may therefore be factors that I have missed, dismissed, or have discounted, due to my tree-hugging bent of mind:

1. Trade imbalance with China. They pay a 2.5% tariff on everything they ship to the U.S., but we pay 25% (please note the decimal placement) on everything we ship to them so…

2. Large corporations ship their manufacturing plants to China or Brazil, or India, etc. Why should a tractor company selling tractors to China pay American wages and a 25% tariff, when they can buy really cheap subsidized Chinese steel, pay virtual slave-labor wages in China, and sell directly intra-China with no tariff?

Large corporate CEOs, in general, outsource labor and services to boost their bonuses and stock value for wealthy investors but…

3. Smaller companies with plants in the U.S., especially start-up companies, will not or cannot pay decent wages to U.S. workers, because they have to compete with both large corporations and a foreign trade policy that puts them at a double disadvantage, so you get paid less and…

You can say it’s the union’s fault or the greedy corps. Take your pick, but keep in mind that only about 7% of the U.S. workforce is represented by unions, while corporations currently have $2 trillion in the bank upon which they are just sitting. So you would think that the killing these major corporations are making would at least add to the U.S. government revenue stream but…

4. Our tax structure is designed to allow the wealthiest/corporations among us to pay taxes at lower rates than the secretaries who answer their phones. Between the general system of corporate loopholes/credits and the Bush tax cuts, Exxon/GE and at least the top 20 Fortune 500 companies got billions in subsidies from us, paid zero in taxes, and the median income folks got the bill.

You would also think that the big corporations would use all that extra cash to put some people to work, but you heard me right the first time. Corps have made more money than at any time in history and are sitting on $2,000,000,000,000 but refuse to invest it in hard capital like materials and labor “until they feel more secure.”

Again, we can argue why exactly it is that the U.S. Chamber of Commerce is telling all of its members to hold off on capital investment until the next election. But please, let's not. At any rate, because of the loss in revenue to the government over the last 12 years…

5. Federal, state, and local government coffers have been cash-strapped, so they had to stop building and lay off workers who used to buy houses and cars and other stuff in Colorado.

When people can’t spend money, local businesses suffer and sales taxes go down too.  With less revenue, more government services are cut and workers are laid off, etc. This is what is known as a negative spiral. But let’s not forget about…

6. Healthcare costs which have spiraled upward astronomically, far outpacing inflation.  The health insurance/pharma industries have consistently made truly obscene profits and guess who is paying for their stockholder’s dividends? And then there are…

7. The two“off the books”wars of the 2000’s, now on the books that have to be paid for, uh again by us suckers in the median group. Of course, a biggie was...

8. The whole banks/hedge fund/Fanny/Freddy/lack of regulation that allowed Wall Street to bet/lose our money at the track, lie about it to Congress, and then make us cover their losses, just before they started charging us more in banking fees, services, and interest on credit cards and such (as our reward for bailing them out.) But the good news is…

9. The private sector has created 120,000 “new jobs” this year, (which is more jobs than during the entire W. administration). Unfortunately, most of these “new jobs” are replacements for the same jobs that were downsized/outsourced from last year. You know, the ones that used to be full-time salaried positions, with benefits? Corporations, uh, converted them to contract labor jobs.  

With contract labor, employers don’t have to pay payroll taxes, unemployment, family leave, disability, Workers Comp, pensions; and contract laborers can’t use this time toward Social Security retirement. And then there is always…

10.        Government sanctioned waste/fraud. Why do people making $500K a year get Medicare/Medicaid? Why do we allow the drug companies to take government subsidies and then mark up their pills 1000%? Why do we keep paying $5 billion a year to oil companies that have cleared record profits for the last 30 years? The richest corps in the world start with Exxon Mobil, as numero uno.

Why do we allow the FBI/DEA/CIA/NSA/TSA/DHS/DOD to have separate massively bloated budgets for doing the same job when they often operate in conflict with each others' missions and our national interest?

And then there is the military industrial complex that Eisenhower warned us about. As only one example, big-time military government contractor, Halliburton, “lost” $8 billion (in cash) of our tax money in Iraq. Literally lost huge planes (C-130’s) full of huge pallets full of heaps of money. Oops! And yet…

11.        Government did nothing to stop any of the above from happening. From Enron to Exxon, to Goldman Sachs, to BP, to Blackwater, to foreign trade policies, to tax shelters, instead of being able to count on our government to look out for the median income folks, we have a three-ringed circus playing two shows a day in the D.C. Beltway and we can’t even afford a ticket for a seat in the nose-bleed section.

Both sides are to blame, though it would appear that the vast majority of corporate-money-funded, anti-median-income-earner legislation and the filibustering of pro-worker bills seem to have come from the GOP side of the isle.

12.        The crisis in Europe does not help any either, because things like 401Ks suffer, especially when our financial institutions are allowed to play the foreign markets and lose your retirement savings. Moreover, our largest trading partner is the E.U. How are they going to buy our stuff, if they are broke?

Billionaire and Democratic politician/hedge fund manager, John Corsine, can’t find $1.2 billion that he blew, betting on foreign government securities in Greece and Italy. And the GOP wants to get rid of the new legislation that is designed to stop similar abuse in the future.

You may say, “What does all that national/international stuff have to do with my job in Colorado?” My view is that all politics may not be so local after all, and hopefully, I have given you an idea about how our welfare in Colorado is inextricably linked to national and international economics…

And that crap rolls downhill. This is the only version of “trickle down economics” that I can see working in Colorado and the U.S., and the whole process does not seem to inure to the benefit of median income-earners.

The only counties in Colorado that did well were the ones whose residents already had a butt-load of money. The rich got really richer, and the median folks and the working poor are now working two contract labor jobs for less pay, no job security, and no benefits.

That’s all I could think of off the top of my head. I am sure that there are more factors. I hope that this little primer gives you more or different ideas, which you are welcome to share with me (or argue that I am wrong) on this blog or in the social media.

J. Brandeis Sperandeo

P.S. It would be great if Congress would modify the payroll tax bill for 160 million Americans before the holiday recess. I know that we could all use the $1,500 in our paychecks next year and millionaires and billionaires would not miss the tiny increase in taxes (oh heavens, I said it! Taxes!) to pay for it.
Happy Holidays!

JBS