Archive → January, 2009
No Large American Corporations
There is a controversy (at least to some) brewing on the “buy American” provisions of Obama’s economic stimulus plan.
The “buy American” provisions would require major public works projects to favor U.S. steel, iron and manufacturing over imports.
This is essential to force consumers of infrastructure projects to buy American — it is an American stimulus bill. America does not have enough money to stimulate the entire world. For decades, U.S. corporations have been exporting jobs and importing products from around the world. This has resulted in unemployment, followed by more unemployment.
Multi-national companies, like IBM and hundreds of others, are not American companies. IBM has almost 70% of all its employees outside the U.S. and routinely lays off U.S. workers and hires abroad. It is false to call IBM an American company, just because its headquarter is in the U.S. Likewise, for Exxon, General Electric, etc. Halliburton actually relocated its headquarter to Dubai and receives $BILLIONS every year from U.S. taxpayers — moving their headquarters is a rare example of Halliburton being honest.
Without the “buy American” provision then the stimulus bill will be stimulating businesses in other countries and motivating multi-nationals to lay off in the U.S. and hire abroad. Watch the Republicans scream and yell that it is “protectionism”. Yes, it is. So what! It is about time that the U.S. started protecting its own citizens. Hopefully, Obama and the rest of the Democrats will not cave and remove the language. Let the rest of world protect their citizens. Dump NAFTA and the hundreds of other trade deals that are not in the best interest of ORDINARY Americans.
Remember — do not be misled into thinking protectionism brought on the Great Depression. The U.S. is already in a Depression and has been the biggest advocate of free trade in the history of the world. It has not helped and if the U.S. continues to be a “free trader” things will get much worse in the U.S. Let’s redefine corporations based on how many employees they employ in the U.S. If we require that 2/3rds of the employees be in the U.S., there will be very few, if any, large American corporations. Think about it — and try to name one!
America is doomed.
Once a Week Mail Delivery
As the Postal Service campaigns to cut one day of mail service per week, why not consider cutting five days of mail service per week. Really, how many people would suffer if they only got their mail once a week. Already, virtually the only mail I get is junk even with my best efforts to stop it. On a rotating basis people could get mail once a week. That is got to save the Postal Service a little money. It would also encourage businesses to stop sending snail mail. A few more million people would be out of work but those are not good jobs anyway. Alternatively, the displaced postal workers could be redeployed into other areas, e.g. staffing all those unemployment offices.
America is doomed.
Irrelevant “I’ve Got Mine” Republicans
How could the Republicans make themselves more irrelevant? Perhaps, they could continue to fight the newly elected, and widely popular, President Obama and try and prevent the stimulus bill from passing? Maybe Republicans could campaign for more and bigger tax cuts which have not worked in four decades and have only put the country into more and more debt. Perhaps, Republicans could continue to defend highly paid executives who mismanage companies while using taxpayer money to pay extravagant bonuses. Maybe Republicans could go on the media and complain about minor contraceptive programs in the stimulus bill — they don’t understand that preventing unwanted children from being born might be fiscally easier on the economy and struggling families.
As Obama continues to try and be bipartisan the Republicans will have none of this and keep preaching their tired old nonsense of the last four decades. In a clever though not subtle move, Obama is likely to appoint Republican Senator Judd Gregg to Commerce Secretary so that a Democrat could be named to replace him and give Democrats the veto-proof 60 in the Senate. Expect the Republicans to go a little crazy next week trying to get Gregg to decline the position. Even after only 10 days in office, it is becoming clear to Obama (a very smart guy) and most of the rational part of the country, that Republicans don’t much care about the 11 million unemployed. Instead, Republicans only care about being able to claim that Obama failed for the next elections.
This observation results is the most basic realization. Even if Obama “fails” to revive the economy, he is going to spend a boat load of money to stimulate it. America will understand that Obama has done everything he can and, even if the economy continues to struggle, America will conclude that the country would be even worse off without Obama’s initiatives. Further, there will likely be more unemployed and the unemployed will be much more vocal in two and four years. Translation — Republicans will lose more seats in Congress in two years, counter to decades of statistics regarding mid-term elections. Further, Obama will easily be reelected in four years. Somewhere along this journey, the Republicans will finally understand they are irrelevant and have to be more populist and even socialist.
On the lighter side, what do you call a large group of white people? — Republicans.
For the time being it will be politics as usual but as the economy continues to falter, even with the best intention of the Democrats, more and more Democrats will be created and fewer and fewer Republicans. A 100 year study in the U.K concluded there are more suicides when conservatives are in power. This is hardly surprising because conservatives always want to promote the rich and screw everybody else. The unofficial motto of the Republican Party: “I’ve got mine, go fuck yourself.”
America is doomed.
Forced to Do the Right Thing
First, it was Timothy Geithner, the newly confirmed Treasury Secretary, claiming that he made a careless mistake when he evaded $32,000 in taxes. Only when it looked like he would be nominated did he do the right thing and pay all the back taxes. Further, Geithner lied in his testimony to Congress when he claimed it was just a mistake. This man is a high powered economist and wants America to believe he cannot do his own income taxes. This is an outrageous lie.
Now, the HHS nominee, Tom Daschle, has a tax problem and only recently paid over $128,000 is back taxes and fees. Daschle, like Geithner, claims it was all just a terrible mistake. Again, this is the height of riduclousness that Daschle wants America to believe he just didn’t know better.
Both Geithner and Daschle are crooks, maybe, small letter c crooks, but crooks nonetheless. Why can’t America find people who can hold high level office that have not compromised themselves? Why does America have to settle for people who are liars or are incompetent? Excuse me, but I don’t believe either of these men claiming it was all an innocent mistake. Both tried to get away with something and only when it was apparent that it would impact their appointments did they come forward to correct the problem. This is not even close to ethical or high character and certainly does not meet any minimum standard for cabinet level jobs.
America is doomed.
Business Exploitation of Workers
It is a poor argument to claim that a business cannot pay people a living way because the market doesn’t support it. This is an important and critical point. All Americans are the market. If some business cannot pay their employees a living wage, then it is not a valid business. It doesn’t matter if the owner of that business makes a living wage or not. In fact, it is unethical and immoral for a owner of a business to make a living wage on the backs of exploitation of others. Thus, the “fake” business should either raise their prices so they can pay employees a living wage or cease to exist. If the market doesn’t support raised prices then there is, in fact, no market for the product. Once the business ceases to exist, the previous consumers of the business will have to find alternatives to the business or be willing to pay a higher price for the service. In which cases, a new business will emerge that can pay employees a living wage.
American capitalism loves to extol the greatest of the “free enterprise” system and I would agree there have been some success. However, when the system is not capable of creating enough LIVING WAGE jobs for its citizens then the system has failed. It has to be replaced with another system that can sustain the population. It matters little that even a majority does well with a failed system — it has to work for everybody.
America has lots of resources and lots of capability. There is plenty of food to feed the population. There is plenty of land where people can live. There is plenty of creative people who can create jobs to employ others. There is a great university system were people can be trained with new skills. However, even with all these good things about America, the current capitalism system doesn’t work any more. There are many reasons for this. Let’s just consider a few.
- The political system has rewarded some and dismissed an ever increasing number of people, e.g. 11 million people are without jobs, 20 million people are underemployed. Millions and millions of people who have full time jobs cannot support themselves. The middle class has been and continues to be decimated. American capitalism cannot function without a large middle class with considerable disposable income. Who will be buying the products or services that the businesses produce without disposable income? For many years, Americans have used the artificial wealth of “homes” and easy credit to spend. That is over, forever.
- Technology is causing massive job destruction and this trend will continue. It is generally a good thing to make society more efficient but the efficiency has a cost to humans which must be adjusted to and corrected. Think of any new business and it will generally involve using as much technology as possible because it is cheaper than human capital. Businesses created today will employ a small fraction of the people that same business employed a generation ago.
- The private system cannot provide basic services to the population. For example, nearly 50 million people have no health care and another 30 million people have very poor health care.
- The U.S. government is going broke trying to sustain the current failed system. This will result in a destruction of the U.S. dollar and a lose of purchasing power in terms of gold internationally. Ultimately, this will require nationalism where America has to figure out how to sustain its population at the expense of other countries. Other countries will do likewise.
Ultimately, a capitalism system like the one in America will implode. The only alternative to implosion is to kill all the excess people that cannot be supported. As the market gets more and more efficient there are fewer and fewer people needed and you have to eliminate another group. In the end, there will be few remaining.
Magical thinking, about god or some equivalent bull shit, will not solve the problem either. There is no god that is gong to come down and save America or any other country on earth. It is irrational to think otherwise — it may even be a mental illness. Pray as much as you want but without an income in America you will have to rely on the kindness of other people to survive. There is no god around to save you.
American capitalism is dead — it just hasn’t been buried yet. There are still too many people running around thinking that it can be revived — mostly people who have benefited from the current system. These people will not be successful and American capitalism will be replaced with a new system that can sustain the population. It is going to take a while.
America is doomed.
Limit Compensation
All companies who receive ANY government assistance should have their yearly compensation (including salary, bonuses and stock options) limited to the salary of the President of the United States which is $400,000. Meanwhile, no full time employee should be paid less than a living wage which is approximately $30,000 per year and varies some throughout the country. Thus there would be approximately a thirteen time ratio from the lowest to the highest paid employee in a company. Over time, the ratio should be reduced to approximately eight and apply to any U.S. company who receives any money at all from the federal government. The living wage should apply to every full time employee in America.
The total number of hours that an full time employee can work should be reduce to 35 hours per week so that more employees are needed. This number could be reduced on increased based on unemployment rates.
The only way to get America out of this financial crisis is to give jobs to all Americans and to pay ordinary Americans more money. Giving money to just the rich will not help this economy. America is based on a middle class with plenty of disposable income. As the middle class has been crushed, America has declined.
America is doomed.
French Have Balls
Unlike weak Americans, the French have the balls to get out and protest against their government and the way they are handling the financial crisis. In the end the French will get more from their government.
Meanwhile, millions are laid off in America and hardly a peep is hear out of ordinary Americans. Americans need to get into the game and quit letting the politicians and rich people push them around.
America is doomed.
Blame America
Blame America for the global financial crisis. The American form of “free enterprise” that has been championed by Milton Friedman and implemented by Republicans over the last forty years, has destroyed the economic system of nearly the entire world:
The ITUC warned that around the world more than 50 million jobs could be lost this year and that more than 200 million people would be driven into absolute poverty. The confederation said that the financial crisis had arisen because of “rampant speculation and financial profiteering” and that new global financial architecture needed to be established to “support regulation and ensure coherence”.
Some in American still think the current crisis is like other recessions that have occurred in the last forty years. They are wrong for many reasons. In the past, there were monetary and fiscal corrections that could be made which resulted in recoveries. These are gone this time. America is so far in debt that the increased debt alone will destroy the U.S. dollar. Protection is already a foregone conclusion and is in the latest Obama stimulus bill. Hyper inflation will emerge once crippling deflation finishes ravaging the economy, depleting savings and destroying wealth for ordinary people.
America will embrace socialism in order to provide basic necessities to Americans. There will be massive redistribution of wealth as America reconstructs a doomed currency. Oil and gold will become very expensive in U.S. dollars. The only commodities that will be relatively cheap are the ones that can be produced in America with little energy. Renewable energy will no longer be just to avoid importing oil — it will be the only energy the new America will be able to afford.
This Depression will not be like the Depression of the 1930s, because there are lots more people and many less options. People will not be able to return to farms to grow food to avoid starving to death. They will require the government to distribute food to all. Banks will be nationalized and in many ways have already been. Americans will attempt to emigrate to other countries because the conditions in America will be onerous and difficult. Many people will die and many will kill themselves as hope vanishes. There will be giant rallies of the unemployed, riots in cities, assassinations of politicians, elimination of current conservative political parties, and emergence of very left wing organizations which will make the current democratic party appear conservative.
A quicker solution would be to default on all the debt, establish a new currency, and nationalized banks so that commerce could begin again. All able people would be provided jobs or training for jobs. Great social programs, like universal health care, would be created. There will be living wage guarantees, higher taxes, and restrictions on wealth accumulation. A new green economy will emerge to employ millions of new workers. Universities will thrive as education is valued and people who excel at innovation are recognized as national heroes. Some private ownership will continue but most people would live in government owned properties. Corporations will be completely redefined in order to remove the greed and corruption from the system and virtually all will be non-profit.
Unfortunately, none of the transformation that is necessary will happen soon, because America continues to assume this is just an ordinary recession and the tools of the past will work again. They are wrong; thus, the pain will continue for a while.
America is doomed.
Amazon – Metaphor Of Destruction
Today, Amazon announced strong earnings and is an excellent example of why America is doomed. The Amazon model for book delivery (and lots and lots of other merchandise) is very efficient, easy for consumers to use, and cheaper than the traditional brick and mortar model. Translation, Amazon achieves more with a lot less people, i.e. unemployment. Ditto, for Netflix. Meanwhile, goodbye Circuit City, Borders, Barnes and Noble, and Best Buys — to name just a few. Yes, a few more jobs at UPS and Fed Ex. But, on balance, a lot less jobs for America.
Amazon is a good company and kudos to the people that run the company. However, the implications of companies like this is less employment for America. Plus — nobody is talking about the extent that technology is eliminating jobs. Thus, nobody is addressing the job destruction phenomenon that is occurring in the U.S. The latest stimulus bill doesn’t address that at all.
Further, Amazon will have to get more efficient about its model in order to continue to do well. Translation, doing more with less people and using technology even more. In the process, the digital world will make it more difficult to sell “books”, just like the virtual destruction of the traditional music business. That is, if it is digital it can be copied and distributed for virtually zero cost.
Even authors, can publish online for almost nothing and receive almost nothing in income. This has been happening for decades with the free software foundation who produce more software than all the “for profit” software companies in America. Meanwhile, companies are embracing free software tools and paying virtually nothing for it. Companies, like IBM, have embraced linux in their bids. Screw Microsoft (yeah — those greedy bastards!), Sun, and you name it. Think of any great new software idea, start a company, and if it is really good the free software will clone it in short order and will probably do it even better. Too bad I spent all that time in Computer Science grad school.
Replicate the “free” model to Wikipedia, self-publishing authors, and new media stars ala youtube.com. All of these venues result in people producing products for free to other for free. Meanwhile, ignore traditional commerce and the “free enterprise” system. It is full employment for the unemployed who won’t make any money. Sure, there are still traditional books that are doing well but this is only because it takes a while for people to figure out they don’t have to buy it any more.
Think about this — if it was really difficult to leave the place you live, what place would you still have to go to? For me, it would only be places where my physical body must be there, e.g. doctor, haircut. That’s about it. So, how much commercial space does the U.S. need for retail? If your community is like mine, there is lots of retail space for lease and more every day.
America is doomed.
Previous U.S. Bank Borrowing Insignificant
Todd Sullivan points out the scariest chart ever in his post. Below is the chart of U.S. bank borrowing from the Federal Reserve through 2008. Notice that all the previous borrowing is insignificant.
America is doomed.