← Autodidact Archive · Original Dissent · EDUMAKATEDMOFO
Thread ID: 18398 | Posts: 3 | Started: 2005-05-25
2005-05-25 13:38 | User Profile
[I]From a letter submitted to Vdare. Comments welcome. [/I]
Dear Editor,
I have been an engineer for over 30 years and am very concerned about the effect of our loss of jobs overseas. However, I think the problem is more complicated than your articles by Dr. Roberts and others describe. In the companies I worked for, I noticed, even 30 years ago, that the European or Asian divisions always had considerably more engineers and spent more time on research and development than their American counterparts. Our engineers were so busy handling day to day product issues that they had no time to spend developing new products.
In the early 90ââ¬â¢s it became the fad for American Companies to downsize. This was described as getting lean and more efficient. What it really meant was getting rid of anyone who didnââ¬â¢t make an immediate impact on the bottom line; engineers, scientists, inspectors, checkers etc. The result was an improvement in profits which ended up making many CEOââ¬â¢s and even President Clinton look like geniuses. Old timers who had grown up in and understood the business were disposed of and replaced by new flashy business school graduates who knew how to manipulate money and could make Power Point presentations that would make any business look like a success. Of course they didnââ¬â¢t know anything about their particular product or how it was made and didnââ¬â¢t care, especially since it was increasingly made overseas. It was all about image and appearances. Quality a problem since you got rid of your inspectors? Just get ISO 9000 accredited, throw around words like 6 sigma, and make sure everyone 5Sââ¬â¢s their work area.
I could just complain, but that would make me like many other Vdare contributors. I would rather offer solutions and I wish that Paul Craig Roberts would do the same. It is true that much of the job loss issue is the result of economic pressures caused by an overvalued dollar and stupid government decisions. However, I believe much of the problem stems from a system that rewards short term thinking and from a culture of impatience and instant gratification.
It seems to me that the attitude starts with the stock market. Stock holders rarely look at a company as a long term investment, but instead, look to making immediate gains by moving investments around constantly. Some investors buy options hoping that stocks will fall. One would think that Wall street was in Las Vegas instead of New York. Management naturally seeks to satisfy these investors and therefore plans on a quarter to quarter basis. If they did plan for the future it is highly likely they would fired before they could claim the credit for the results. The problem has to be addressed at the investor level. Investment rules need to be changed to give tax breaks to those who hold on to stocks for several years. Stock option trading rules should be limited to those rules that benefit business. Stock holders have to be made to feel a long term commitment to the companies they own.
I am sure most people are aware that the tax system also penalizes investment and development since these items are paid for in after-tax dollars.. I would propose that the dividend tax cut be rescinded, and that tax rates for the rich be increased so that the money can be used to totally eliminate business taxes. Although taxing the rich goes against my general principles, (there is no where else to get the money), the rich earn most of their income from investments, and therefore, would get their money back quickly. American companies would shift more of their resources toward the future. A concerted effort should be made to coerce states to get rid of business and property taxes which also discourage capital accumulation.
Foreign companies are increasingly taking over American companies or moving their industrial production to the states. At first glance, this may seem to be a good thing because manufacturing jobs are created. However, when this occurs we loose the ability to design products on our own as we become dependent on foreign sources which can and will supply the same technology to our potential adversaries. These foreign based firms have an advantage. Since they are starting new manufacturing facilities, they are not burdened with the costs of pension and medical benefits for older workers. General Motorââ¬â¢s problems are a perfect example. Rules regarding pensions should be changed. My understanding is that company contributions toward pension programs are weighted toward the older workers. The rationale for this is that younger workers may leave or die before benefits have to be paid. Therefore as a worker ages, the company is required to increase the yearly contribution. Benefits such as 401k programs should be required to replace pension programs. This would require all companies to have to fund both young and older workers more equally and would remove some of the advantage enjoyed by new transplants from overseas.
It is common to hear leaders of both parties claim that we need to encourage small business because that is where most new jobs are created. Unfortunately, small business generally does not have the best paying jobs, and cannot accomplish such tasks as building tanks, aircraft, ships and other high tech and high volume products that are needed to provide for our defense. It is simply not acceptable to provide incentives for chocolate shops, boutiques, etc at the expense of industries which are necessary for our countryââ¬â¢s security. These incentives only divert resources from where they ought to be.
One of the worst management problems in my opinion is arrogance. People running large businesses are considerably overpaid. Not only does this sap business of available capital, but it creates a culture of elitism that attracts the wrong type of people to positions of power and corrupts those that are already there. Management is often more interested in manipulating the price of stock in order to enlarge their personal wealth than they are in the long term interests of the company. Elitism causes management to ignore advice from others, develops into a separation from the real world and results in poor planning and decision making. It would be an improvement if management were not be allowed to own their company's stock. Rules or guidelines should be developed by the government or a business association that set guidelines for determining salaries and rewarding management for extended success. Business schools need to stress the concept of long term planning, self-sacrifice and service for the greater cause as basic management principles.
These are just some thoughts from a person who knows very little about politics or economics. Surely, people of the intellect of Dr Roberts and others at Vdare could come up with much better and in-depth solutions. Vdare spends a lot of time criticizing the Republican party. However, it is my firm belief that most of those Republicans are honest although occasionally misguided people who want to do what's best for the country, and who have the capacity to change their minds to a more conservative point of view. They are the only ones in sufficient numbers to affect the changes that Vdare is seeking in trade, economic, and immigration policies. You won't be able to reach them by making them the enemy. We need to take a page from Ronald Reagan and use a more positive, solution based approach so that others will open their minds to conservative ideas.
G.M.
Indianapolis, IN.
2005-05-25 14:48 | User Profile
Well, just to add on...
All taxes on business entities should be abolished. This has created all sorts of externalities.
I don't know what to do about the modern, publicly traded corporation. It seems to have become just a hugely successful vehicle for private corruption.
2005-05-25 17:04 | User Profile
Ed....mofo makes some good points, and many thanks for his observations. However, the managerial/welfare state has no interest in encouraging small business, and really considers them pests. They are rightly suspected of being too individualistic and the sheer numbers of them are harder to controll than the monolithic corporate enterprises. The corporations are outfoxing their political predators and are changing the rules of the game, by outsourcing, going off-shore, etc. Government policy has been strongly against the small businessman for many decades, and regulators would like to see them sink altogether. Ask any small timer in the American business sector how the rules and taxes are stacked against him on the state and federal levels. The vast sums spent on defense is an outrage to our country, as is the social spending ogre. The State simply has too much power and money.