I was watching Shark Tank a few days ago. A guy from the middle of America came in with an invention for small trucks.
The invention was a useful one for truckers (I am not one of them), but required some serious investment.
The guy was adamant about producing his invention in America. He was talking about his hometown, where all the big employers have left, and unemployment and poverty are rampant. He was talking about his love for OUR country and that he dreams to contribute somehow to OUR prosperity, and to that of his hometown in particular.
The Sharks raised the issue of the costs of production in the U.S. (US) being much greater than that of overseas.
The guy countered, raising quality and trustworthiness issues with overseas production, citing some examples.
There was no doubt that the Sharks were impressed with the guy and his position. One of the Sharks actually cried remembering his dad, a factory worker, who was so proud of being a factory worker.
But none of them chose to invest in the guy’s invention out of concern that manufacturing it in the U.S. (US) would cost them more than that of overseas.
I understand their position, being a business woman myself, no matter how morally wrong that might be.
When I choose my contractors for a job, their rates are one of most important factors in my consideration. After all, I am in business to make money
Of course, the money I make are so slim (barely keeping my family above water), that I am in no position to follow my principles.
But the Sharks are. The Bush’s tax cuts, financial deregulations, and the NAFTA agreement (signed by Clinton) made them so much richer while the rest of us are so much poorer.
Yes, it’s true that the economy now is global and the labor market is in particular. Yes, Americans now compete for jobs with Chinese, Russians, Indians, etc., who can afford much lower wages. So the whatever jobs in America are left also offer lower wages (and that is how we get poorer).
As we get poorer, our government gets poorer (it’s income is our taxes). It can no longer offer comfortable retirement plans, etc., and must borrow to keep the poorest of the poor from hitting the pavement and rioting.
Talking to that guy, the Sharks cited Apple as an example of the company that manufactures offshore, yet employs 45,000 people in the U.S. thanks to great long-term planning.
But these 45,000 American employees are mainly salespeople who sell Apple products to us. As we get poorer (and we will – until the global labor market’s wages get equal everywhere, we are going to see our incomes slide), we would be able to afford iphones, Macs, ipads less and less (I cannot afford neither of them as we speak). Apple would have to then reduce its American sales force more and more, until it may get out of American market altogether. As its market shrinks, so will its production, and Apple itself will get poorer and poorer.
But that is really long term planning, and no business nowadays plans that far ahead.
Our “truck” guy is but a Don Quixote of our times. He is fighting the tsunami of changes that swept our world with the onset of the global economy.
I see Obama as such a Don Quixote as well. He is fighting the losing battle too, as he believes in compromises with the other side of the political isle to the point that he almost committed political suicide last August (remember the deficit ceiling debacle?). He seems to ignore the political reality, where Republicans are being ruled by 1 person, Grover Norquist, who is financed by the likes of brothers Koch, and the policies Republicans endorse and push are being carefully prepared and fed to them by ALEC, the group of 18 large corporations.
In such political reality, the welfare of the U.S. (US, the people) is pushed aside for the sake of winning the power and making more money for ALEC and the likes of Koch brothers (even though it is ultimately short-sighted goal).
One cannot even blame them. We all are faulty in that we want our prosperity now, counting that the future would take care of itself. This is true for Democrats like me just as much as it is true for Republicans.
Even though our money bills say “In God we trust”, we trust in money bills so much more.
It takes people with more money than their possible life span may require, like Warren Buffet, to raise above the Green God and put the welfare of their country first. But their voices are the lonely voices lost in the wilderness.
Everybody admires them and aspires after them, but no one hears them.
When Warren Buffet said that Bush’s tax cuts were intended to create the tide that lifted all boats, but in reality only all yachts were lifted, the yacht owners chose to ignore their idol.
The GOP now is months from nominating Mitt Romney, one of these yacht owners. He would surely uphold the policies that lifted his yacht. Even though his background shows more concern for the fellow Americans (like his health insurance reform in Massachusetts, for instance) then the greater majority of GOP leadership, one cannot forget that he is a Shark. He too would cry out of sympathy with a trucker and then send him away with nothing.
I’ve heard Obama talking about the same tax reform I’ve been screaming in the wilderness on these pages for years now: the reform where companies get financially rewarded for keeping jobs here and financially punished for sending them overseas. I am not counting on these reforms even if he gets to them (if he wins the election and has enough political capital to get the ball rolling), because he may compromise the life out of these reforms too – just as he did with health care, financial regulations, etc.
I think if our leaders cannot or are unwilling to take care of our country, we, the people, should start doing it ourselves. Please read New Economy, or Buy American, Stupid!
Posts Tagged ‘Warren Buffet’
SHARK TANK
Posted by Ella Moss on April 8, 2012
Posted in American economy, economy, FINANCES, global economy, labor market, opinion, personal finance, politics, predictions, Uncategorized | Tagged: ALEC, economy, Grover Norquist, labor market, Mitt Romney, Obama, politics, Shark Tank, taxes, Warren Buffet | Leave a Comment »
SHRINKING DOLLARS
Posted by Ella Moss on June 25, 2010
A few days ago a friend of mine confided that she did not have a raise in 10 years, and now her company is cutting her hours.
My friend is a physical therapist.
I am an owner of a tiny business in a completely different field. My income is neither wages nor salary. It is the net profit from my business. Yet I have the same predicament. My income remained flat for 12 years.
When I was single, living in a posh building in a posh part of town and paying $900 in monthly rent, which included utilities, that was a pretty good income, and I was certainly a middle class girl.
Moreover, my income increased steadily through the nineties, and I was certain of a decent future for myself.
I was so certain, in fact, that I did not bother to save for a rainy day.
I did whole a lot of traveling, skiing, and other fun things.
Then I got married, had a kid, moved to a cheaper part of town where I got an apartment twice as big for monthly rent just a bit higher than my previous digs.
My income remained the same because my subcontractors kept raising their rates but my clients began to cheapen out. Excuses were understandable: we did have a recession in 2000, then in 2001 (“9/11″), then in 2003, etc.
I probably could get out of my shell and get more clients to increase my income, but my kid and failing marriage kept me busy.
Then in the fall of 2007 I finally became a single mom, and 2 months later the FINANCIAL CRISIS hit me (my business is closely related to the insurance industry so I’ve experienced the crisis long before the rest of America did).
In 2008, my income went down significantly. So now I had no choice and got out of my shell, and got myself many more clients. I have also reduced rates of my subcontractors.
Yet my income did not jump. It simply went back to the pre-crisis level, because I had to cut my rates also. Everyone is in the bind.
I am not even talking about payment time-table that is now 4 times as long. Before the crisis, if a company took 2 months or longer to pay, I was on their case already. Now I don’t even bother with inquiries till 4 months past due.
It is my flat income that gets me, because my life is twice as expensive now. My rent now is $1510/mo, plus utilities that are twice what they used to be in 2000. My ground phone line that I use for fax only is also twice of what it used to be in 2000. So is my transportation expense, internet, my cell phones, etc.
My monthly grocery bill has grown now more than twice, even though my son and I eat much less than my ex (it used to be that half of my monthly grocery budget went to his propitiation).
In other words, it takes now twice the amount of dollars to cover living expenses, and they say there is no inflation.
There is no inflation, because our incomes have deflated.
It used to be that incomes would grow almost at the same rate as inflation of overall prices. It was called inflation, and was supposed to be a bad thing for economy.
Now I miss inflation. Because the value of my dollar has shrank 50% or more, but I don’t have more paper in my wallet to make up the lost value. My paper income remains flat, but the real income has shrank.
I am no longer a middle class girl, I am a working poor one, and my future looks pretty bleak. I have no extra dollar to save, I have no pension coming, and as an entrepreneur I have no other safety nets like unemployment benefits, which my ex is enjoying now.
Instead, I am working 3 times as much as I used to, and spend so much more just to get the same shrinking dollar.
I would not be writing about it, if it was just my predicament. I am writing about it, because 90% of Americans are in this shrinking boat.
Even the super-rich (like Warren Buffet or Bill Gates) have lost some dollar value thanks to real estate and stock market deflation. I am sure though that they are offsetting their rising living expense by paying less those who work for them or do business with them.
The simply rich (like Donald Trump) may actually feel much poorer because they lost just as much on stock market, real estate, Bernie Madoff and their leverage in reducing cost of business / living is not as great.
The upper middle class is now, for most part, is what middle class used to be, for the same reason.
Middle class… What middle class? Unless you are a civil servant, you would no longer fit that category. I bet your 401K keeps you awake at night.
There are so many things that went wrong for the dollar that there are not enough fingers on a hand to point them all out: derivatives, run-away credit, the cost of oil, global labor market…
Honestly, it is the global labor market that is the main culprit in stagnation of American income. But that is 10,000lbs gorilla in the room that no one is talking about. Trust me, immigration is the least of our problem. It is competition with the guys safely in their native third world countries that is doing us in. No one is talking about it on CNN, because business is happy with reduced labor costs. Except that most businesspeople don’t realize yet that spending their dollars in China or Africa shrinks consumption in America, which, inevitably, leads to their profit remaining flat too despite the reduced labor costs.
Simple economy101: wealth is produced where goods are produced.
The great minds who decided to open the labor market in 1990s must have thought as follows:
As other countries get richer, there are going to be more markets for American goods, so America would get richer too.
They did not take in consideration, however, that American production would not be able to compete with cheaper labor costs elsewhere and would shut down, impoverishing our country for the sake of China, Uganda and so on.
The only reason we did not feel the pinch right away was the inflated real estate market that was still producing local wealth. With wind taken out of real estate, we are finally facing reality.
And, since Obama Administration was not able to push through another emergency unemployment benefits bill, we soon are going to see the third world reality right here at home.
These changes cannot really be amended anymore. With the advent of the internet, Jinny of American wealth has completely left the bottle and cannot be re-captured. We are looking at the dawn of new world, where Russia (the richest country in natural resources), China (the richest country in labor resources) and India (the richest country in intellectual resources) are going to compete for new super-power title (my money is on China, since it is much more organized); the U.S., Europe, Canada, Australia and Brazil are going to be the second world, and the rest remain in the 3rd place. The jury is out on Arab countries rich with oil. If the green economy takes hold, they are going to be pushed back into the third world. They may also simply kill themselves with suicide bombers, expanded Taliban, etc.
SO, PLEASE, AMERICA, BUY AMERICAN PRODUCTS AND USE LOCAL SERVICES!
But, then, again, who can afford American products now when American dollar has shrunk so much…
Well, I am griping now, yet I know there is going to be more to gripe about a month from now… Read my previous article on that.
Posted in American economy, economy, FINANCES, global economy, labor market, personal finance, predictions, Uncategorized | Tagged: 401K, American economy, Bill Gates, Brazil, budget, business, China, deflation, dollar, Donald Trump, economy, economy solutions, Europe, expense, financial crisis, global economy, immigration, income, India, inflation, labor market, living expense, money, Obama, Obama Administration, predictions, Russia, savings, suicide bombers, supeer-power, unemployment, unemployment benefits, value, Warren Buffet, wealth, worry | 5 Comments »
