GEORGE TEMPLETON:
COMMENTARY
By George Templeton
Gazette Columnist
China Nights
Twenty years ago we went to lunch with the management of a
Communist Chinese company. We traveled rutted dirt roads, lined with
irrigation ditches, rice paddies, farm animals, and little wooden shacks
looking much like campground outhouses. They were actually barber shops, blacksmiths,
and farmers’ markets. A rusted 3 wheel vehicle looking like a cross
between a motorcycle and a tractor waddled slowly in front of us towing a small,
rickety wooden cart filled with still valued garbage. Fifteen
mph was too much for this bumpy ride.
Inside the restaurant, a beautiful young waitress, lacking dental
care, tended our meal of eel, brought live to our table to show that it was
fresh. It escaped under our table, causing us to rapidly jump back while
the restaurant crew violently subdued the angry critter.
As we left the restaurant, going out into the dirt parking
lot, we noticed that the factory executives drove 150 mph V12 Mercedes Benz
cars. In China,
because of taxes and tariffs, that car at today’s prices would cost more
than half a million dollars. This was in a country where the factory
worker rode a bicycle to work through typhoon rain.
Following dinner, we talked about Chinese capitalism.
Our observation was that it had brought the inequality that the Communists had
warned about and that we avoided by bending Capitalism to fit our morality.
Today politicians twist morality to fit Capitalism, benefit the wealthy and
justify greedy self-interest.
Middling
We created prosperity in emerging countries by outsourcing
our jobs, but we must not ignore its consequences.
In 1955, rural families lacked hot water and indoor toilets
and other accouterments, and they did not feel disadvantaged. Now, the
consumption our economy runs on is threatened by more than inequality of wealth
and income. Our values, priorities and politics are dysfunctional.
The politics of anger, hatred, and bitter envy will destroy government, nature,
and society to have “more”.
Health, wealth, and opportunity are necessary for prosperity
and growth. Power and freedom are distributed by wealth. Only a
transparent, secular politics will promote broad public goals. An
alarming forty year trend is becoming clear. It is a result of wealthy,
special interest politics, and it threatens the American Dream. The
public must control super-packs and confidential political money instead of
them controlling us.
Released in August, Jacob Hacker and Nate Loewentheil’s
Economic Institute Study report Prosperity Economics
can be downloaded from the web at www.policy.net. It provides a big
picture view and still dreams the American Dream.
Dreaming
A young man can have a dream about a better world and
improved ways of doing things.
I referred to my school-books throughout my career.
It is old technology, but so are hammers and nails. There is a nostalgia
associated with books that are old friends, and they bring back memories and
feelings.
Our company had a library containing thousands of advanced
technical journals and the research work of experts who gave their life and
careers to make the jobs of well-paid company employees possible. The
librarians were the first to go. Then, surprise! Unannounced to
anyone, they were making the library into cafeteria napkins. The
dumpsters lined the hall. I instructed my crew that now was their chance
for free books, but it was too late. The cost of the floor space had
become too great to justify keeping the library.
The dream died on that day. Yankee ingenuity and the
American ethos came to nothing more than accounting. Private expediency
ignored public interest. Common knowledge and technology drives progress,
not just the rich and not just talent. When value becomes only price, no
job, no business, and no industry will be immune to outsourcing.
Reality
We dreamed that global, free-market ideology would lead to a
friendly, prosperous, democratic world. However, developing nations
don’t compete, aim for a free market economy, or worry about monopolies.
They target, engage, and exploit to become powerful. We hoped to export
to them but instead were encouraged to shut down capacity at home and move jobs
overseas.
Your job could be outsourced if you cost too much.
Middle management, proud to be indispensable, discovered that they were no
different than direct labor. When we relinquish our tools and our
industries for cheap products, we lose our ability to innovate. Because
of a lack of regulation, incentives, and the movement of American capital
overseas, there is no reason why corporations should invest at home. The
profits are better elsewhere.
What we face is a low cost, high-quality, disciplined,
multilingual foreign competitor, trained, educated, and facilitated by
us. Nations target industries for takeover through massive government
subsidies, trade, and tax policies. We have outsourced millions of
American jobs since 1975, and they exist in factories larger than many
towns. We let those jobs go for cheap goods, not realizing that we
were destroying the synergism that comes from clustering of technical resources
and schools and that we are trading our independence and self-sufficiency for
complexity and materialism. No “made in America” corporation can
survive for long without the backing of government. Now that most large
corporations have overseas assets, we can expect them to oppose tax and trade
policies that are needed to make good American jobs.
Jobs
Unashamed Republicans tell us that the market knows best,
self-regulates, and that too much government is the problem. The opposite
is true.
Our government creates both wealth and jobs. It was
government, not private enterprise that built the sewers and water systems
responsible for stopping the spread of life threatening illness.
Government built the roads and schools and backed the major technical
developments that we take for granted.
Fear, war, and government have accelerated mankind’s progress
more rapidly than necessity, the mother of invention. Defense is an
industry of unquestioned American superiority that supports lifestyle-altering
research and development.
If you don’t want airplanes to crash, you should
appreciate government promulgation of standards and regulations. Left to
ecstatic marketing, misunderstandings, confusion, crashes, fires, and unreliability
would be rampant.
A congressional representative explained, on the unbiased TV
channel, that her husband’s snow removal business would be freed by undisclosed
deregulation. It won’t fix our economy! In semiconductor
manufacturing there are many “inconvenient” but justifiable OSHA
regulations concerning dangerous processes.
Big money tries to sway
public opinion by focusing on petty annoyances.
The government’s Small Business Administration supports
and participates in the financing of small business start-ups. Government
is responsibility to the consumer and care for ethical, socially responsible businessmen
who should not bite the hand that helps them.
Moral Taxes
At the lunch table the talk turned to ways of cheating on
taxes. It was a badge of honor, a sign of a shrewd businessman, to
identify ways to cheat and then brag about them.
Our national debt, a result of no-tax ideology, has siphoned
trillions of dollars that should have been used for productive private and
public investments and created the deficit that we now have to pay down.
Pat Choate, in his book Saving
Capitalism recommends sweeping tax code changes that would:
1. Provide
sufficient revenue to fund necessary current and future expenditures. Pay
as you go instead of borrowing.
2. Rich
or poor, everyone pays. Eliminate hidden overseas tax shelters.
It minimizes tax rates while underpinning our mutual responsibility.
3. Reduce
paper work, complexity, fraud and improve transparency.
4. Permit
no special exceptions and subsidies.
5. Change
tax structure gradually in stages adhering to a stated plan with measurable
objectives.
6. Qualify
exporters for benefits under World Trade Organization policies. Produce instead
of consuming. Keep the jobs here. Target global competiveness and
“made in America”,
not just cutting taxes.
What kinds of tax systems would satisfy these objectives?
We can choose from the Value Added Tax, Flat Tax, and Fair Tax. Choate
argues that a value added tax would reduce corporate taxes while simultaneously
reducing tariffs and the cost of our products abroad. All would greatly
simplify taxes, make jobs exporting, and improve international competitiveness.
Investing
Finance, pension and mutual funds, credit, and insurance,
much more than government regulation, govern our lives.
Computerized trading and the internet have led to a
hyperactive, unstable stock market. Certificates fail to foster the moral
responsibility that comes from tangible ownership. Investments are
not going to companies. They go to previous investors through
trades. The derivative and secret, big business 300 trillion dollar
“swap” market is “phantom wealth”, not for solid
growth.
Finance has replaced manufacturing as America’s dominant economic
force. Even big business CEOs answer to it. The money industry,
obsessed by a gambling culture, staffed by PHD statisticians and supercomputer
economists, are insulated from real-world consequences. Bailed out and
immune to the law, they will create another world wide depression.
Republicans argue against Frank Dodd and the Volker
rule. Bankers have their lobbyists, lawyers, and consultants, and they
can document how much regulations cost them. Can they document how much
they cost you?
Now we have the opaque Libor interest-rate fixing
scandal. Banks profited at the expense of customers and financial market
integrity. Add to that, HSBC laundering of drug cartel and terrorist
money plus JPMorgan Chase’s 6 billion dollar speculation “oops”
and now the Standard Charter Bank’s 250 billion dollar hidden transactions
that support the development of the Iranian bomb.
Infrastructure
Now our unmaintained 50 year old infrastructure (roads,
bridges, dams, parks, national forests, public transportation, education school
facilities, energy, sustainability, water, waste, sewerage, the internet,
communications) is obsolete or wearing out. Notice that these jobs cannot
be outsourced.
Funding as a percentage of Gross Domestic Product has dropped
by 43 % while our population grew by 66 percent. Infrastructure requires
a food chain to provide needed material. Consequently, it is more
efficient at creating jobs than corporate or individual tax cuts. When we
buy American we get to keep both the material and the dollars. Infrastructure
is an ideal tool to grow jobs but it has been blocked by the Tea-Party House to
confound economic recovery and defeat our president.
Education
All Americans who have the ability and desire should get a
broad college education and apprenticeship that plans for globalization, job
placement and the student’s civic responsibility. Schools,
government, and industry will realize that they are all in the same boat,
education is our future, and that we have to build on what we have instead of
tearing down.
On the Bandwagon
No comments:
Post a Comment