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Monday, November 1, 2010

The USA Must Change How We Do Business

Throughout the 1980's and 1990's the American public was told, by the elitists, that offshoring, outsourcing, insourcing, and engaging in reckless immigration to displace American domestic labor would simply free them up to do more sophisticated work and that was a good thing.

They said we could build a much better economy simply by converting the critical mass of the country's citizens into sophisticated knowledge workers.

What they failed to disclose is that at the same time they were telling the American public this, they were doing everything in their power to help foreign countries develop their own sophisticated knowledge economies to compete directly with ours... while they hosted American corporations offshoring and outsourcing designs.

It is a situation that placed and continues to place a material quotient of American innovation and labor into foreign hands instead of ours. Already we see rapidly growing middle classes in their countries at the expense of the American middle-class. Instead of arising organically, like they should have, this new foreign wealth represents a transference of innovation, workers, and wealth from America to overseas. 

Compounding the problem are elitist celebrations over U.S. taxpayers subsidizing foreign students to take seats in our best universities... seats which should go to American students first and foremost. American students end up paying both their own way and then being taxed to pay for more foreign students who upon graduation will be competing directly against them in some manner.

The foreign graduates either go back to their country of origin and work with their government to better their own universities, form firms to compete against ours, or simply seek to become insourced white collar workers competing directly with American white collar workers in this country for our jobs.

So while the elitists promised us that manufacturing, industrial, labor, and agriculture jobs need no longer factor into a dynamic diversified economic base, they sponsored bills before Congress to substantially increase the number of white collar foreign workers allowed into the country to compete directly against American workers at lower wages... a practice that is still occurring.

And they do so despite the hard fact that white collar jobs in this country have already plateaued with experts insisting the number of white-collar jobs currently moving overseas is increasing. This comes as no surprise considering that if you took every single job in the United States, our country has just over 300 million people, and moved them to India and China, countries with combined total populations of over 2.5 billion people, there would still be well over 2.3 billion Indians and Chinese clamoring for more American jobs.

It is a self-defeating paradigm they are pursuing, for short term profit, which will lead to dramatic negative results for the United States of America if not corrected.

Globalization is not new. Historically, globalization started in the 16th century. Even a modern global marketplace has existed for a long time and the United States came to dominate that global economy. It was only with the globalization of the late 1980's and 90's that the United States changed how they did business with the result that the U.S. share of the global economy shrunk to approximately 20%.

It is how we chose to do business in the latest manifestation of globalization that has brought us to where we are today.

The solution is there. It always has been. But now it will require a transformation of strategy and tactics away from the current self-defeating paradigm to one that works for us. It must be a paradigm that works. Pure Austrian economics won't save us, for example (for reasons we intend to cover in a future article): You can trade a worsening situation for a much worse one. No. The paradigm must be one that transforms the U.S. economy back toward global dominance in the nation's and the American worker's best interests.

Obviously, this cannot happen in the reckless political environment of today. An environment of multinational corporations working with elitists to leverage our government for short-term profit without regard to the long term consequences on the nation and the American worker.

How did we get here you probably have asked. As massive investments in infrastructure technology increased, connectivity around the world did also. Computers become cheaper and more dispersed and also productivity software became better and more available. The globalists knew that flattening (lowered cost of entry, technology requirements met, etc...) combined with the current trade paradigm would allow them to exploit foreign labor and lowered operating costs in third world countries so they celebrated it and lobbied hard to get U.S. legislators to pass trade laws to accomplish exactly that. Issues such as fair trade were mostly ignored. Our "trading partners" maintained protectionist policy while we removed ours.

Just because China will allow American businesses to lease their labor at the lowest cost humanly possible and manufacture on practically free land with little regard to the environment does not mean that doing so is in the long term best interest of the United States. Simply saying that an Indian company now has knowledge worker competency at a fraction of what American workers are paid does not mean that moving those jobs to India, sourcing Indian companies to replace American jobs, engaging in unrestricted outsourcing, or insourcing Indians is in the best interests of the United States and the American worker.
That as a leading global consulting firm CEO said, “There has never been an economic discontinuity of this magnitude in the history of the world.” At the current rate of repositioning, the material aggregate of what is done here today, will be done by foreign workers in the not too distant future!

And that will raise not just serious economic concerns for United States citizens but also security concerns. Consider that many of our country's local, state, and federal government agencies (including the Department of Defense) engage in outsourcing and insourcing. Though information can be suppressed before being sent to India, Mexico, China, Russia, etc… errors do occur and sometimes information just isn’t suppressed.

But let's consider how this impacts the average American. Tax returns provide a good example. In 2003, 25,000 US tax returns were done in India. In 2005 it was 400,000. In a couple of decades, most of them may be. Your accountant will do the initial consultation and then farm out your return to the lowest bidder overseas. This means your accountant can have more customers meaning that less overall accountants are needed so many of those jobs will go in addition to the security concerns of your information being sent overseas to the lowest bidder. Eventually as the knowledge economies of foreign nations become more sophisticated, they will end up taking the consulting also.

Though that’s just one of many examples, it’s actually much worse than that. Elitists say Americans do not need these jobs, of course, and tens of millions more like them. They celebrate the fact that every time we think they have found the last job that can be outsourced a new one is discovered. They believe we need to move as many jobs as possible out of the USA to subsistence level labor and knowledge workers in China, India, Mexico, Russia, etc… to free up American workers so we can all become knowledge economy workers in a shrinking knowledge economy. This obvious logical misconstruct is known as a fallacy.

It’s a ludicrous proposition. But even if such a thing were possible, the elitists are actually using your tax dollars to subsidize foreign students in American universities from governments with authoritarian ideologies along with spending their own dollars alongside those same authoritarian governments to build sophisticated higher education centers in their countries to produce knowledge workers capable of developing a critical mass of talent that can construct organizations to innovate and produce the next generation of products which will go head to head with whatever remains of American innovation and manufacturing by that time.

Already India’s business schools produce around ninety thousand MBAs per year while China produces more MBAs than the USA. The Institute of International Education reports that staggering numbers of foreign students (over 600,000 in 2004) are being trained in American universities. And they aren’t here for our liberal arts degrees. They are here to master our realms of science, technology, math, etc… the subjects that matter.

They claim this is necessary because American students don’t want to learn anymore. That it is a necessary practice for our universities to stay in business. That we must subsidize foreign students with our tax dollars and admit them into our best universities ahead of American students even though there are waiting lists full of American students that would jump at the opportunity. The elitists have all sorts of explanations why we must not allow American students into American universities that range from their desire to have the most diverse campuses necessary to American students often have marginally lower scores than the cream culled from billions of people from other countries to American students cannot afford the tuitions (yet foreign students are often subsidized).

We disagree with the elitists and believe the source of the problem is top down and not bottom up. That the American student is not to blame; it’s the elitists who leverage our government and the leveraged government officials themselves that are to blame. They have constructed and maintain a system that is becoming more and more self-defeating for the national interest and none of their excuses change this simple fact. We need to change what we are doing!

Today the K-12th public school system, a system which once produced smart forward thinking citizens that got us through the Cold War and made us the most dominant nation on earth has been flooded in parts of the country with tens upon tens of millions of legal and illegal immigrants in a single generation forcing the educational system to dumb down it's curriculum to the lowest common denominator in an effort to accommodate them; a practice that has not brought favorable or desirable results. In my father’s day, high school students gained measurable aptitudes in higher math, engineering, pre-college science, and solid English courses that led to real competency right along with trades like mechanics and electrical vocational courses.

In the Los Angeles unified school district (LAUSD) in 2007-2008 there were 694,288 students with 73% of its students of Hispanic origin, 11% of African-American origin, 9% of non-Hispanic white origin, 4% of Asian origin, and the rest other. The LAUSD has a reputation for extremely crowded schools, high drop-out and expulsion rates, low academic performance in many schools, poor maintenance and incompetent administration. The drop out rate has spiked to over 40% at times. Try to imagine hundreds of thousands of predominantly unemployed dropouts being loosed in your city every cycle. Needless to say, about all scared teachers can do, in our opinion, is worry if they can read and write English and hope they aren't in a gang before graduating them. This, in what once was a crowning jewel for education in the Southwest. And LAUSD total approbations for 2010 actually have increased to 18.3 billion dollars (USD) over 2009 in this Great Recession (LAUSD Superintendent's 2009-2010 Final Budget page I-45). Note: pdf loads slow.

Let's face it. Public education isn't bringing the desired results. I don’t know any better way to say it. We spend more time and money seeking to turn kids into entitled disparate modern liberals than we do instilling in them with traditional American values, a solid work ethic, and empowering them with a high level of education and a responsibility to make this country something they can be proud of. That's what we used to do and it worked.

What we have today is a system the elitists created. A system they overcharge us for that brings little in the way of desirable results. They ask us to pay for our own demise with the logic that it’s good for us when the only thing it’s good for is their own careers and ideology.

As we try to make everyone in the world comfortable, the Chinese are taking full advantage of our derailment and focusing on leading the world in the next century. They pity us as a country and civilization in decline as they race for the top. We overcame transcendentalized atheistic Marxist-Leninism by disempowering the Soviet Union but we are simply empowering China’s Communist party. They fully intend for their one party Communist authoritarian rule to become the predominant worldview in a hundred years. And we will help them accomplish it. Neither the soothing scenario nor the upheaval scenario preached on the nightly news by elitist globalists will change China’s one party Communist party system.

In fact, China already acknowledges that they have learned all of the processes and steps in manufacturing and are beginning to start their own firms. Firms that will leverage their near slave labor to gain a competitive advantage competing directly with American businesses until those American businesses, in the aggregate, are no longer needed. Meaning this rush to turn over our knowledge and manufacturing to China will simply result in them taking both from us in time. As their level of sophistication and innovation develop they will dominate entire industries the U.S. is now the world leader in. Chinese owned Lenovo highlights this emerging trend. We have to change what we are doing or we will lose. Forcing American businesses into an environment where they cannot maintain their position as global leaders unless they move to China is the problem.

Open borders and one-sided trade agreements that really only benefit foreign governments, elitists, and the short-term profit of transnational American corporations are not the answer. Reducing tort, reducing domestic legal  requirements on American businesses so they can operate more profitably here, dispelling the myth of free trade and negotiating trade agreements that favor American interests, businesses, and workers, jealously ensuring American innovation is encouraged and protected as a top priority, restoring the American education system, ending the reckless offshoring, outsourcing, and insourcing occurring, accurately reporting unemployment, ending our denial so the extent of the problems can be realized, etc... are the tools to fix our broken foundation. 

Complicating matters will be India and China’s emerging sourcing economies which allow them to compete, due to lowered capital entry costs [a result of technology], as virtual insourced labor for American businesses. Whether it is reservation agents in India or Chinese e-tutoring companies, understand that a combined 2.3 billion near slave laborers in those two countries are slowly being empowered by our government, elitists, and multinational corporations to compete directly against you for your job.

Imagine when they figure out how to source many of the retail jobs in the organizations that distribute their products. Even retail jobs will be materially impacted. On top of that India and China’s 2.3 billion plus population is factory churning out and exporting engineers, computer scientists, software programmers, etc… many of which end up right here working for American businesses displacing white collar American workers in an environment where those same jobs are being offshored like never before. And understand, this article doesn’t even scratch the surface as to the deep impact on intellectual property and national interest security concerns associated with what the country is doing.

Furthermore, the largest distribution centers for foreign made products are entering the banking business so that everyone, including populations with large illegal alien demographics, that displace American workers and negatively affect the economy, can take advantage of check cashing, money orders, money transfers, and even bill payment services for very small fees resulting in large amounts of money leaving the United States rather than being spent here making for a better U.S. economy.

Interestingly, even the leaders in some of these mega-distribution centers sometimes express concern with the current CEO of the country’s largest saying, “One of my concerns is that, with the manufacturing out of this country, one day we’ll all be selling hamburgers to each other.”

The elitists make infantile false assertions to justify their position. One of the infantile false assertions made are that by the time things get really bad developing middle classes abroad will start buying American made products and save us. That's never going to happen. They primarily buy and will continue to primarily buy their own products. In fact, as middle classes develop (even as the middle class diminishes here) we see them driving up the cost of foreign made products... a result of increasing demand for them.

Let's restate the argument: Doesn’t the mega distribution centers for foreign made cheap goods actually help the average American by allowing them access to the lowest cost products humanly possible? The correct answer is no. It results in an exodus of gainful employment for American workers and rising prices for those products as foreign demand for foreign made products increases (a result of empowering and enriching foreigners by sacrificing Americans). The end result is not only a failing economy but also higher prices for those foreign made goods.

Understand that if Walmart were an individual economy it would rate as China’s eighth largest trading partner but also understand that America sells more American made products to the tiny country of Belgium with its six million people than we do all of China’s 1.3 billion population. And while China is a great location for multinational corporations to offshore too; it’s a poor one for American workers seeking to compete with 1.3 billion poorly paid workers. The globalists assert that all of this is good for you. Do you still believe them?

Already most American workers are bounced from company to company over the course of their careers. Pensions are a thing of the past for most Americans and many are forced to pay exorbitant penalties as they cash in IRA’s trying to survive between job exploitations. American business broke the contract they once had with American workers leveraging our government and becoming multinational corporations. In their value system, the easier it is to fire American workers the better it is for everyone. Do you still believe them?

If we do not stop engaging in self-destructive economics contrary to the rules of long term economic prosperity for our country and start playing the game to win again, we might be headed toward an absolute decline, not just a relative one, regarding economic power and living standards. If that happens, the power of Democratic ideals in a world increasingly impacted by ever more powerful authoritarian competing political ideologies will be sorely missed.

Elitists go too far when they assert that a specific browser had as much to do with the fall of Soviet Communism as the West’s political strategy. They go too far when they celebrate an open border policy with a world of billions that would quickly drown us in the poorest, least educated, most criminally minded people the world has to offer if all controls were removed. They allow their childlike fascination with political correctness, globalism, and cultural "progress" to hamper efforts to fix our broken foundation.

Restricting tort and creating a saner business environment by removing some of the red tape hampering the profitability of American businesses to operate on American soil is necessary; however, the real strategy must be returning to the paradigm of innovating here, jealously protecting our innovation as in our national interest, and then wielding it on American soil to produce product the world will want and need. That is what we used to do and it made us the most powerful country on earth.

Simply asserting we can out innovate everyone in the current environment over and over ad infinitum is ludicrous as we are educating and empowering them to do that very thing to us. So it then becomes like trying to fill up a bucket that you keep sieving off greater amounts of water from so as to fill someone else’s bucket. No matter how hard you work to put new water into it, pretty soon your bucket is empty but their bucket is overflowing. Our bucket used to be overflowing and it can be again but first we have to fix the bucket. Unfortunately, there is no serious effort to fix the bucket underway.

Our efforts are currently restricted to manipulating credit, trying to increase "consumer confidence," and hiding the real unemployment rate (entire classes of unemployed people, such as those out of work so long they no longer receive an unemployment check, are not even counted).

The elitist argument that the United States can magically continue to prosper after losing its blue and white worker base and our competitive advantage in innovation is absurd. The real future is very different from the blue pill propaganda being fed to the American public.

Banker solutions the elitists have taken are "band aid" remedies that consist of forcing Americans to shoulder the debt burden of failing private/quasi-private institutions and printing money which devalues the dollar and increases inflation (injuring the hard earned savings of American citizens). They have no desire to implement the kind of real reform which leads to economic success for this country and its citizens knowing the political fallout that would result if they tried.

Politically speaking, it's not easy to end illegal immigration, reform legal immigration back to previous levels, end the importation of foreign workers, withdraw from trade agreements that are injuring this country, admit we were wrong and change direction moving to an economic strategy that really works for the national interest and the long term benefit of American citizens. 

The public has undergone heavy indoctrination in politically correct modern liberalism, neo-conservatism, and unfair "free" trade globalism from their earliest memories in the public education system right up through the last time they subjected themselves to propaganda fed them by the mainstream media. As a result the critical mass of them are disconnected from joining real reformers instead trusting the media and the elitists whom they would join in blocking any serious attempt to make necessary reforms. They simply are not ready yet. They still childishly trust the elitists (who are the only ones getting rich off the sell out and sell off of America) to make everything OK.

These elitists admit that proprietary insights, innovations, distinctive competencies, etc… are vital to our survival economically, but then tell us that as the new found power of individuals and communities collaborate around products and ideas reshaping industry that protectionism isn’t a useful tool for American businesses to protect their critical intellectual property. That eventually it won’t even be possible to do so. Yet innovation is key to the success of any economy. American intellectual property must be jealously protected and managed properly so as to ensure American businesses profit from their innovation using American labor.

In this modern global paradigm, the rules of economics still apply. We either change our strategy properly applying them to win or we will lose. Altruism won’t save us. Technology won't save us. The World Wide Web won’t save us. We either fix the bucket and awake the citizens of this country, in order, or we lose.

The smart solution has to be about changing the way we do business for the long term interest of the nation and the American worker. No more hyperbole and no more excuses.

Interestingly, even the elitists and leveraged government officials who created the situation in the first place understand that our nation is in the grip of a "brain drain" crisis. As the steady erosion of America’s scientific, engineering, manufacturing, etc... position continues, our ability to compete and innovate is slowly marching downwards. The stakes are monumental for both this country and the West. But all of their solutions are merely aimed at the symptoms. They are making too much money off the sell off and sell out of America and have no desire to change what they are doing so true recovery can begin. And the longer we wait, the harder it will become.

We have examined how elitists and transnational corporations leveraged our government for their aims and to maximize short term profit and how simply “waking the slumbering giant” will never be enough to restore us to prominence. How seeking to get people to work harder and innovate more to fill a bucket that has an ever widening leak must be eventually a futile exercise arguing instead that we must fix the bucket before pouring more water into it. And we have looked at why they don’t want to (position, ideology, and short term profit).

We see producer nations that are now consumer nations in decline piling up debt as they live on imports that are increasing in price. Knowing the future belongs to producer nations that innovate, protect their innovation, and wield their innovation using domestic labor to make what the world will want and need is key to the future, we call on all citizens to end the Judas relationship between our elected representatives and those who leverage them solely for their own benefit. We urge an abandonment of those modern liberal and neo-conservative policies that are leading us down the road to economic decline and social upheaval for a practical political, social, and economic paradigm that actually works.

Only then can we truly awaken and empower the citizen worker and once again secure our country’s political, social, and economic future for future generations even as it was secured for us. We came from behind once to put a man on the moon, produce the strongest economy in the world, and win the Cold War but it was no accident. We have to change what we are doing or we will fail. And the clock is ticking.

5 comments:

Unknown said...

One of the best columns I've read concerning the serious conditions that middle class Americans face and the dire consequences to all if the present course of our country continues on the same path.

Your solutions seem right.

Your old Buchanan friend....Fran

SRSFinance said...

I've been trying to solve America's problems from the soap box positioned in front of my bathroom mirror for years. You just kicked the soap box out from under my feet and cleared up for me what has thus far been a muddled issue. Bravo!

Unknown said...

your state of the situation is of course correct. And Pat would agree with you 100%
Now, what to do?
I say Draft Buchanan to run again for president!! He is much wiser now than in 1992, 1996, and 2000
Also, we know that Pat lost due to manipulated votes. People have to be urged to demand Paper Ballots and only vote that
Tea Party types need to wake, wise up (read Buchanan) and then act up ie take over their local Republican grass roots organizations , hold a local press announcing their support for Buchanan and then get off their collective assets and start walking the Precincts !!!!
Knowledge is worthless unless we get into POWER!!!

Unknown said...

I agree with this commentary, except that the "elitists" are not identified. I presume it is the economic elite who are benefiting from globalization. Half the S&P 500 production is done abroad, and if you take out retail and health, just about all. No wonder the stock market stays up -- it is international. The question is, who does American industry belong to? The economic elite or the workers?

Help Fix America First said...

"The distribution of our national income has become severely skewed. It is worse than in every single country of the Middle East and approaches Latin America's discord-sowing levels. On the Gini Index, where higher numbers represent higher inequality, the U.S. comes in at 45. For comparison, the numbers in Latin America range from 41 in Venezuela to 59 in Haiti. With a score of 23, Sweden leads all nations in having the most equal distribution of income."

http://rightdemocrat.blogspot.com/2011/03/tea-partyers-should-be-angry-about.html

What it means is that the top 1% became much richer while all other classes (especially the middle class) got a lot poorer. And this is going to continue until the U.S. looks like another Latin American class nation rather than the nation full of opportunity for the working and middle classes we grew up in.