By Ron Powell
By Ron Powell
Newspapers, television and radio are full of articles on our economic recovery. Much of this prophecy is merely wishful thinking. Had the same media been more up front a few years ago, we might have avoided the economic problems we face today. When many large manufacturers decided that they no longer considered themselves American companies, but global companies, the die was cast. How close is the U.S. to economic collapse? In 2001, more than 40,000 businesses filed for bankruptcy. The last week of January, there were 390,000 new unemployment claims and personal bankruptcies totaling 1,253,444 for the year 2001. American households have taken on $7.6 trillion in credit card and other debt. Service Merchandise Co., a chain with 350 stores, is liquidated, idling 41,000 workers. Payless Shoes closes 104 stores, and Toys R Us closes 64 stores, laying off 1900 employees. Kodak is closing U.S. plants and cutting 4000 jobs, but yet is expanding its work force in China???
Many dont understand the implications of economic globalization. With a global producer of a product such as an automobile, many sub-assemblies go into the final product. The engine might be American, the transmission might be a product of Germany, and the steering mechanism might come from England wherever the labor force can produce the assembly the cheapest. This does not mean that the finished product in the showroom will reflect that fact in a lower sticker price. On the contrary, it only means the manufacturer will have a larger profit margin.
In the early days of the automobile, Henry Ford shocked the industry by raising the wages of his workers to $5.00 per day, which was almost twice the norm. Henry was very shrewd; he knew that by so doing, he would make customers out of his employees as they now could afford the product they built. He also was fond of timing his production line, and when innovation would reduce the time it took to produce a car, he would reduce its price. This increased the number of consumers that could afford to buy his product. Most of the corporation management today just doesnt have the mental horsepower of a Henry Ford. Nor do the leaders in the Congress or Senate, the best that globalist money can buy, who support free trade and interdependence. Utilizing cheap labor in foreign countries, that eliminates jobs that offer a good wage in this country, guarantees that eventually they will lose their market here.
Foreign low-cost labor will never make enough to afford the product they build. The loss of good jobs in the U.S. will shrink the market for product here. As Lee Iacocca said long ago, If you want to succeed, you must sell in America as the market is here. America has lost the textile industry, the shoe industry along with electronics and television, and is close to losing the steel industry. We will see if the recent tariffs will help; they may not, as the number two exporter of steel to the U.S. is Canada, and the number five is Mexico, and theyre exempt from the tariffs. Some years ago, cheap foreign motorcycles almost destroyed Harley Davidson. The implementation of tariffs revived the Harley Davidson Company, and its meteoric rise is now history.The only American workers who are keeping up with an acceptable standard of living are Civil Service workers, healthcare professionals, schoolteachers and politicians; the latter just voted themselves a pay raise.
One of Rockfords old-line manufacturers just gave their employees a 10% reduction in wages and is requiring them to pick up a larger percentage of their healthcare insurance. Another has reduced the workweek to 32 hours, coupled with a 7% reduction in wages. Until we begin to make most of the things we consume in this country at a living wage that will enable all to afford the fruits of their own labor, things will continue to decline.
The countrys founding fathers supported our fledgling government on tariffs. Until we get over our infatuation with free trade, we will continue to be a nation of haves and have nots, and the ranks of the have nots are swelling. Cheap foreign products produced by slave-labor wages might be fine, though selfish, if you have a recession-proof political job. How much better to pay a little more and know that you are using a product produced by a well-paid fellow American who, in turn, can afford the product or service you offer. The NAFTA and WTO free trade agreements need to be scrapped, and tariffs on all imports must be reinstated. The religion of free trade that is supported by globalist plutocrats must be repudiated before American workers are reduced to serfdom. At the rate America is going, we are headed for a society with no middle class. We are fast approaching a great underclass trudging through life supporting our countrys globalist manufacturing billionaires on our backs.
Ron Powell is president of Ronco, a tool and power grinding company.