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article imageOp-Ed: Avoiding the Day of Reckoning

By John Dewar Gleissner     Sep 9, 2011 in Technology
The old tools we used to improve the economy do not seem to work these days. Globalization is a prime suspect in America's current predicament.
It used to be that a dollar’s worth of spending delivered a dollar’s worth of Keynesian boost to the American economy. Things have changed.
When we spend money today to boost the American economy, about one-third of it winds up overseas developing economies in other countries. The globalization of the world economy simply will not keep the whole stimulus dollar within national borders these days. Spending stimulates economies, but the United States must spend $1.00 to get 67 cents’ worth of stimulation. That's not a very good return. Americans are tired of subsidizing the rest of the world.
Globalization of the economy means that countries paying much lower wages attract manufacturing plants while high wage countries lose manufacturing jobs. Americans must be paid the current minimum wage, $7.25 per hour. This is 10 times higher than the average Chinese wage. The disparity is even greater when you compare the average American wage with the average Chinese wage and add in the costs of benefits and employment-related litigation. To really do the United States any good, the stimulated manufacturing employer must decide to spend 10 times more on American labor costs than are paid in China. Stimulated employers are very similar to un-stimulated employers: they both want to maximize profits. The true cost of our wage and hour laws is now seen coming home to roost.
Another problem is spending one dollar to stimulate the economy when about 40 cents of that dollar is borrowed money. While the economy may receive some stimulation from the dollar spent, it is burdened at the same time by extra debt. We are not stimulating ourselves with a full dollar. This used to be called robbing Peter to pay Paul.
Some economists say nations cannot spend themselves into prosperity when the total national debt approaches the annual gross domestic product of the entire nation. The American people do not want to work an entire year for free to pay off the government’s debt. Americans have their own personal debts to worry about. Working for free is a form of austerity called “slave labor,” and it’s worse than antebellum slavery. Antebellum slaves at least received food, clothing, shelter, healthcare and free burials; slaves before 1865 consumed 88% of their own economic production. We cannot get by on 0%, not for a whole year.
Republicans say nations cannot tax themselves into prosperity at any time. Democrats do not necessarily disagree with this general principle, and know the power to tax is the power to destroy. The parties differ about how much blood the host can transfer to the parasite before the parasite loses its host to death or destruction.
The Japanese proved it doesn’t do much good to bail out companies that threaten to fail. Some smart people now say bankrupts, fools, con-men and con-ladies have to take their own pain for the system to work properly. This is the old-fashioned notion of responsibility, which can be suspended temporarily by government policies, but which sometimes has a way of re-asserting itself.
The poor say the rich do not pay their fair share of taxes. To remedy that, and then some, we might confiscate all of the real and personal property belonging to the 400 wealthiest people in America. Someone figured out this would keep the U.S. government going for about six months. That gets us halfway through that full austerity year we have to work without pay. Of course, we could not expect the next Bill Gates or Steve Jobs or any really good self-respecting innovator to come along in America after we took all that wealth in violation of the U.S. Constitution.
The re-distribution of wealth doesn’t move the entire nation forward; it just stirs money in a circle. So what shall we do? History shows four ways for nations to obtain more resources: trade, technology, colonization and warfare. The wars we’ve fought lately did not pay and in fact cost us lives and money. They will not let you colonize anymore. Our trade is always out of balance these days. That leaves us technology.
We’d better get busy developing, manufacturing, selling and using advanced technology or the Day of Reckoning my father predicted might come true.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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