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This smells like total BS to me

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  • #16
    Re: This smells like total BS to me

    Originally posted by CWSmith View Post
    Well Andy, I respectfully disagree.

    You don't have to read very much on this forum to see that many of us blame the Chinese. It's "Chinese Junk" and "Chinese slave-labor" and it's a common theme. It used to be Japan. If you don't see that, then I guess there's not much discussion about it.

    Regarding my "garbage heap" comment, I'll stand behind that too. You and I see things considerably different in this respect, though I agree with you that it is the job of corporations and bosses to ensure profitability. But how much and when is enough, enough? Perhaps you feel that there is no limit or no liability or responsibility to be considered in that quest. Perhaps things in California are significantly different than they are here.

    But here, I see lots of abandoned buildings, left behind as a result of poor industrial leadership and planning. I see factories closed and jobs squandered, not by loss, but by management choice. Jobs are gone and yet those ex-workers and their decendants are left to pick up the costs of that abandonment. We're left with the pollution and broken promises that were given to our workers and our local governments, which reduced taxes and built infrastructure to attract or keep those businesses.

    I've seen first hand with my ex-employer who took $10 million in taxpayer money as an incentive grant to expand the business in our state and on the day they grasped the check, they laid off 140 workers in direct violation of the Federal "older workers protection act". Neither the Republican governments in Albany or Washington showed any concern. I saw the two major industries in my area move major product lines to China and to India and at least in the case of my company, it was against the concerns of Asian Sales Engineers who were telling us that the "Pacific Rim" wanted "Made in America". I've seen us let go top-notch engineers and designers, just because we could further our profits. And, I've seem them brag about the $80 million they could save just for "faking" the corporate HQ at a foreign address.

    There once was a time in this country when such actions might well have been considered treason or at least "unpatriotic". But of course, our new America is one of "corporate" greed. They have their own party and they now have most of us believing that what is right for them, is right for us. Unfortunately there are all too many of us who believe that. Just on the news tonight, I see the amount of corporate contributions handed out a majority of the "twelve" who are going to save us another $1.5 Trillion. I am sure we can all count them to not take any of those cost cuts at the expense of these corporate contributers. We'll cut whatever is necessary from the backs of the poor and the middle class and we'll force a few thousand more under the poverty line long before we touch a dime of "corporate" money. But as you infer, corporations don't do anything illegal, they do what they are supposed to do... maximize their profits, even if it means scuttling the country and the workers that gave them their existance.

    Great post. We are seeing the result of capitalism taken to the extreme. What is our future if jobs don't return? We earn to much even at the lowest wages so the claims that the American worker is lazy doesn't fly. I think we are doomed if our government refuses to enact legislation to level the playing field. Why the heck are we on the losing side of a trade war with a communist country? Common sense tells me their slave labor force must work for a few dollars and hour and as long as they are ordered, that is not how our society operates!


    • #17
      Re: This smells like total BS to me

      I'm glad we can discuss like adults, even if we disagree.

      I don't think that we're seeing the result of capitalism gone too far. There is no such thing as extreme, there is no need or want to limit the desire to increase earnings and growth. I don't really think that things are any different where you live as compared to California. CEOs are judged by how well their companies grow. It's the same everywhere in the US.

      If we are blaming capitalism and the free market economy, then I think we are missing the real problem. What is really happening is that capitalism and free trade is being manipulated. When China pegs its currency to the dollar at an artificially low level that allows them to undercut US manufacturing, this is not the fault of American business. When US manufacturing has to deal with EPA, Sarbannes Oxley, Obamacare, and myriad other laws and regulations while China has none of it, it is not the fault of American business. How can we reasonably expect American business to compete when things are this lopsided? Pull out some of the annual reports you get and study them. Look at the percentage of after tax earnings. Sure there are the oil companies and a few other mega corps that are doing big numbers. Most are making between zero and several percent. Not many are doing more than 10%. This is reality. The cost advantage of outsourcing to China is maybe 10-15% for most products (at the cost of goods sold line). In other words, it is not a choice. There is a right move and a wrong move, financially speaking. The wrong move would very likely be fatal for the company, and definitely for the CEO.

      Reality is that American companies don't really want to offshore or outsource their production to China. It is a bigger pain in the arse than you can imagine. So why do they do it? Why don't they just accept a little lower profit? Here's why: There is no such thing as "accepting a little lower profit". As mentioned above, for the vast bulk of companies, there is survival versus extinction. That's reality, and no, it's not just the reality in California. Businesses all around the US are going under as a result of this. CEOs across the US are making the same choices for exactly the same reasons.

      The problem is that our Gov't is not doing the right things to ensure that the US has a healthy industrial base. In fact, they would serve the economy better if they did nothing at all. The repubs want tax cuts, which will not solve anything but will increase corporate profits. The Dems have proven that their demand side stimuli are ineffective. As is the Fed's expansion of the money supply. None of it has created jobs or improved the outlook.

      The US occasionally criticizes China for its blatantly aggressive monetary policy, but does nothing to effect a change. This is a HUGE HUGE HUGE issue. Did I mention huge? Estimates are that the Yuan is held at 1/2 to 1/6 of what it wouldbe valued at were it allowed to float. How can this possibly be addressed by US businesses? The Chinese are a totalitarian state. They have the time and the patience to pump out goods and destroy our industrial base. That's what they've been doing! They DO NOT HAVE TO SHOW A PROFIT. They are content to consider this an investment that will pay off when the US economy has been thoroughly decimated. There's only two kinds of fish in this ocean: sharks and guppies. We are not competing with the guppies.

      Almost everyone understands that companies operating in the US have a huge handicap due to over-regulation that the Asian competition does not have, but there is no move at all to repeal any of it. Instead, the problem gets worse, via legislation like Obamacare and cap and trade.

      Left to its own devices, the US has some very strong advantages. We have the strongest (by far) level of available private investment capital. We have a more educated workforce, and one that is more productive than our Asian competition (except for Japan's which is comparable). We have access to our own markets without the added burden of shipping costs. And, significantly, we still lead the world in innovation. However, these advantages are easily overcome when we allow a foreign competitor to dump his output here, free of the burdensome regulatatory environment that US companies endure, and operating under a Government that overtly opresses its workers for the sole purpose of competitive advantage.

      And capitalism is to blame for this? Huh?? The problem is that the US has put every possible burden and impediment in the way of allowing capitalism to function. What we are facing is not failed capitalism; we are looking at utterly screwed up attempts to meddle with capitalism. And while we have shot ourselves in the foot with our own over-regulation and ineffective trade policies, we have allowed a communist country, which DOES NOT operate in a free market and which controls its prices to allow it to dump impossibly cheap goods into our home market, to effectively put the US out of the consumer goods industry.

      CWS, we don't disagree on the tragedy of the empty buildings you mentioned. But you are blaming it on a problem that is not the problem. As for the time in the past where things were different, I suggest you take a good hard historical look at the behavior of both companies and Government. There is no actual material difference, just romantic remembrances of more honorable times that were really just as devoid of honor as today is.

      That's the reality of what is happening. The problem is not capitalism! Capitalism is the solution, always has been and always will be. Want job growth? Here's reality, and it's been reality forever. Jobs come from commerce. Commerce depends on investment. So if you want jobs, you can hope for patriotism or a return to old values all you want, but it won't result in a single job. You need to attract investment. And to do that, you have to offer a better return than the competition. Right now, the US offers a poor return relative to foreign competition. That's not the fault of CEOs. Saying it is their fault is like blaming a bank's woes on the customers that took their deposits to a different bank that pays higher interest. CEOs are greedy... sure. They're paid to be greedy. Well, that's not quite the word. They are paid to maximize the shareholder's equity. They are simply doing the job they are paid to do, and the numbers are what they are. All of us - people and Gov't - need to face the cold reality that financial decisions are based on the numbers. All the US needs to do is change their approach to make it FINANCIALLY attractive to invest in the US, and the problem would be on its way to being solved. As long as we blame everything under the sun, but turn a blind eye and let foreign competitors kick our butts by manipulating prices, as long as we continue to shoot ourselves in the foot by heaping ever more regulations on business, as long as we put literally years of red tape in the way of putting up factories, then no one is going to invest in the US, there will be no recovery, and there will be no jobs. China gets this, and - surprise! - that's what they're doing. How ironic. We are supposed to be THE definitive capitalist economy. Yet we are being beaten at our own game on our home court by Communists, who have adopted capitalist principles of competition! And some of us look at this all and decide that the problem is capitalism! Ah guys, I really don't follow the logic here at all. The US was built on capitalism. Capitalism created the most dominant economic power in the history of the world. Now, at this point there are all sorts of forces distorting it and placing us in a world of hurt, and instead of blaming those forces, the problem is capitalism itself? Bless you, but it doesn't make a lick of sense to me.