Where this Economic Crisis Began

November/11/2008 22:56PM
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Business people know about putting umbrellas over a market. The term connotes a market where margins are just too good and profits are too easy to take. 

Organized labor hoisted an umbrella over the entire USA. Remember dumping? The big political issue of the 80’s and 90’s. High hourly wages in manufacturing caused price run ups and foreign competition came in and dumped products in our markets while putting tariffs in their markets making it impossible for our companies to retaliate. Japan dumped cars , steel, and electronics here and did serious damage to all three industries. When things got too hot, they built plants here to vent the situation. 

The average wage at GM is $78 an hour. The average wage at a Toyota plant in the U.S. is $38 dollars an hour. The average wage at a Hyundai plant is reported to be less than $10 an hour. Plus the GM wages go to an estimated 15,000 employees who are neither retired nor working.

Now the pressure is to make smaller less expensive fuel efficient cars. Product mix is part of the umbrella. Initially, the Japanese were dumping small cheap cars here. Remember the Toyota Celica? Then they went after the luxury car market. First, the Acura, then the Lexus and Infinitiy. This was the market GM needed to cost average their high wages. If GM just made Cadillacs, they might be able to eke out a profit. Making small ,cheap, fuel efficient cars and paying $78 an hour just won’t fly. Giving GM billions of your tax dollars to prove this is something only our government would do. Then when the government owns GM, how bad can it get?

The point being, dumping started this recession/depression. It took our heavy manufacturing out of the country. We replaced it with finance. This was Clinton’s dream and the dream of every environmental zealot in America. They want to live in a country that is like Hollywood where no smoke is emitted from anything. Many of them are like Ralph Nader, they have never driven or don’t own a car. The get around by cab or limo. Clinton got his dream. Finance grew to 25% of the GDP, where manufacturing once was, and manufacturing dropped to 17% where finance once was. 

Now we have destroyed finance.

I fear we need a national reality check here in America. Our leaders, Democrat and Republican have lost touch with reality. Neither the outgoing nor incoming president ever lived in the real world. All they really know is politics. This may be why Sarah Palin was appealing. She did live in the real world. She recognized we can’t bet the farm on some type of renewable energy yet found. She knew there was no real environmental damage from drilling in Alaska, past or future. She knows the lower 48 will need that gas from that pipeline sooner rather than later. She questions whether freezing the planet will freeze the economy first and we won’t recover.

Like most problems, our economic woes began many years ago. There is enough blame to go around. But, it is now a full blown crisis. Decisions made now and in the next year will determine how bad this gets and how long it lasts. 

It seems like a lot of the plans being discussed will make it worse, not better. I always believed you can focus on no more than 6 big issues at a time and do justice to them. My six would be 1.Two wars, 2. energy 3.restoring our manufacturing here in the U.S. 4.cutting the cost of government 5. Reducing the government actions that hinder our ability to create jobs in the private sector 6. Stop buying business with government money.The government can barely run government

The focus I see for the incoming administration 1. Global warming 2. tax increases on the rich and corporations. 3. health care 4. labor unions 5. two wars 6. education

Our differences, to me, lie with my belief that a failing economy trumps other social issues. If 25% are unemployed they can’t worry about education, health care, union activity, and taxes will be in the tank anyway. 

I see global warming and increased labor unions as umbrella raising activities that will reduce the manufacturing sector.  

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