Today your author read on the death of legendary economist and free market supporter Milton Friedman. The 94 year old genius was a pioneer in shaping the economic policies for several Presidential administrations. In your author’s opinion Friedman curbed the impact of socialism in America , which first reared its ugly head in the early days of The New Deal.
What has already become apparent to your author and is no surprise is that the big Democrat Party bosses obviously don’t share Friedman’s economic vision. Just several days ago Congress defeated a bill that would open up trade with Vietnam . Your author watched as Democrat Congressman Dennis Kucinich from Ohio , who also wants to bail out of Iraq , declare the following:
"Haven't we lost enough jobs in this country? We have close to an $800 billion trade deficit and this bill just keeps going in the same direction."
Unfortunately Kucinich suffers from having to please his constituency and paints a nirvana of economic prosperity that in all likelihood will never return to Cleveland, which is the city where Kucinich built his political power as their former mayor. So according to Kucinich industries that are bled from a variety of ailments ranging from government regulation to poor business decisions, will remain in the US and are almost certain to fold. Of course those who have the jobs now will be happy but their grandchildren will not be able to fill their shoes because many of their employers will have bit the dust. Vietnam will remain impoverished and America will slip again from global competitiveness. Kucinich must think that Americans will suddenly change their buying habits, opting out for the more expensive Made in America brand and only ensure an ever-increasing trade deficit.
When the left cannot convince the reader that global trade will be our detriment they often employ the emotional side. Many will cite that American corporations set up sweatshops overseas, often in an Asian country, where employees are paid pennies by American standards. Your author recalls the public relations berating bestowed upon Nike as it related to cheaper labor pools found overseas. If these self-proclaimed do-gooder critics had seen their wishes materialize, plants would have been shut down and the previously employed would have been sent back to live in poverty. Many of the female and child assembly labor would have been relegated to the street corners as prostitutes.
The truth is the labor costs are cheaper in many foreign countries. Would it not be best to see such a movement to occur therefore that country’s reliance on international aide? Before the ridiculous run up in the cost of doing business in America became relevant, wages in The States were rather low and the cost of doing business was advantageous to the business owner.
Your author takes Friedman’s work a step further. It has long been his belief that like weather, society and economics are comprised of patterns. Within these patterns are current trends. Those who propose that America can still be the manufacturing giant as they had been in the past are obviously not noticing these trends, this idea of being a textile powerhouse was the result of the aftermath following World War II. It was after the War that most of the manufacturers, which were located in Europe , had seen their factories destroyed. Continents such as Asia, Africa and South America were not developed. America and Canada were, for a lack of better words, the only ones left.
Now to understand trends and patterns as they relate to economics, one must agree that prior to World War II America ’s economy was influenced by farming. According to the Carey Institute farming rural or agrarian economies employed nearly 30 million of the labor force or one third of America ’s population in 1920s. By the late 1920s there were an estimated 7millon farms in operation. America farms as a base for economic stimulation had already experienced a depreciation in value and this was primarily due to the Dust Bowl, which ran along with overall Great Depression that was soon to follow, then post World War II and the rise of manufacturing jobs became the catalyst. The manufacturing sector peaked, if labor unions are any indication, during the 1950s when organized labor represented 36% of the workforce. In 2005 labor unions represented between 9-10% of the total labor force. During manufacturing’s golden era, farms in the United States and their labor importance were dwindling as farms owned totaled 5million and would continue to decline in ownership and means of employment for decades to come. The shift from the agrarian economy to a manufacturing one could be considered the first development of the pattern.
The second shift began to take root in 1970s as technology and science of all types became rooted in the American economic landscape. Biotech, software and engineering began to rule the economy. This was even more evident as manufacturing jobs, much of them employing unskilled labor, began to move overseas in search of these cheaper labor pools and to ensure American corporations’ competitiveness while capital investment flowed into Silicon Valley and related industrial centers in America . There was a need for educated and skilled not unskilled.
Europe has tried in vain to maintain their presence in the world by relying on manufacturing. The end result has been multiple bouts of economic depression. The European politicians employed high tariffs on cheaper foreign imports and funded social assistance programs and subsidies. The end result could best be seen in Italy , a country desperately attempting to maintain their specialty textile sector while experiencing zero economic growth during fiscal year 2005. Ireland , a classic case of European welfare socialism and economic stagnancy that left them nearly bankrupt, produced an economic miracle when they began to welcome foreign investment. The Irish government, against the European Union’s wishes, slashed corporate taxes. Funds flowed in from international software, telecommunication and biotech firms. This spring of new found economic stimulators has come to include financial services. The country continues to need labor, opening their doors to the skilled and educated. Currently Ireland ’s unemployment rate is just under 5%, which is phenomenal when compared to the rest of Europe ’s rate of 9%.
The march of global economics doesn’t recognize borders or governments. These will only interfere with its guaranteed continuance. Unfortunately for some on America ’s left they expect some secret mojo to fall from the sky and change what is history in the making. The politicians for the left have taken their money in contributions and made promises for their constituency’s support but will fail in delivering results.
Another issue as it relates to folks such as Kucinich, your author discovered that between1947-55 the Speaker of the House was paid $12,500 and from 1955-65 this figure jumped to $22,500. In 1947 the minimum wage was $00.40 and adjusted for inflation that equals $3.04. In 1965 the figure was $1.25 or $6.73 when inflation is considered. It should also be noted that the workforce for America that was comprised of non-supervisory workers that are paid the minimum wage has continued to decline. Currently the workforce paid the minimum wage is 31% of America ’s employed. It was in 1950 that the largest number of benefactors of the minimum wage, representing 56% of the workforce. All of this brings your author to a second point of political promises set forth by the Democrat Party leadership: an increase in the minimum wage.
An argument never heard against increasing the minimum wage ties right into national security. The common explanation that attempts to explain the estimated 7 million illegal immigrants is that these visitors will perform work tasks that American citizens will not. First let us define the illegal immigrants being discussed, although the left would like to lump them under the Latino population, allow some honesty. The illegal immigration issue is primarily centered around Mexicans and Central Americans and crossing the southern border. On a daily basis your author sees signs that the job duties argument is true from lawn care workers, fruit pickers, hotel cleaning staff and busboys. Now are these all people in The States here illegally? That would be impossible to determine less he directly asks them. Would not increasing the minimum wage entice more to venture over? One must know that Mexico ’s minimum wage is several dollars less than ours coupled with the fact that Mexico ’s peso possesses little in the way of everyday buying power. How will this impact the remaining textile jobs? Meanwhile Democrat Senator Ted Kennedy of Massachusetts and others have attempted to rewrite current immigration laws not being enforced by suggesting a guest workers’ program. It should be noted that nearly all political contributions made by labor unions find themselves in Democrat Party coffers.
If the minimum wage is increased one thing is certain, what the supporters aren’t telling you and that is that the total cost of living will increase at the same clip. This will be experienced in prices being paid. Additionally the Democrats may achieve another feat if they do pass such legislation, which they have promised to do and that is increasing the tax revenues. This will ensure more funds and without restraints, more government waste. Additionally your author will be less likely to pass along substantial cash tips because why when one is being forced to pay it with the increase cost of doing business via an increased minimum wage is implemented. The ones supporting such an item will need to ask their politicians. Why did their taxes increase but yet cash gratuity has shrunk? It is foolish to suggest that the benefactors would gladly accept a taxed wage increase over untaxed cash.
Your author has thought about what would be a solution to this often politicized issue. There seems to be only one answer. As American corporations seek to obtain a competitive advantage while controlling costs-why not make wages competitive? If the reader is employed in a certain field the going rate would be a certain range. Why not? It would inspire those who are complacent at the minimum wage level to seek out needed education and skills to obtain the next level of wages. Sports and general overall business is competitive, so why not wages? If anything the cost of doing business in America may actually decline.
These are just two issues as it relates to American commerce and Democrats that will be met in the near future. While the leadership of the Democrat Party is content to simply apply their shortsighted solutions to these pressing issues, in many ways responding to them with conventional knee jerk reactions, what will be the cost? Although short-sided in their thought the long-term impact could prove to be disastrous. Something tells your author that they haven’t read Friedman.
