Tuesday, October 16, 2012

Free Market ... National Suicide?

Many free market advocates see less expensive products can be purchased in China and other countries with economies that allow slave labor. They go on to point out how much cheaper the products purchased at Walmart, Target, Sears, etc., etc. are for us to buy.

That is only half of the equation. The vast numbers of unemployed or under employed cannot take advantage of these bargains because no matter how good the deal is, you still have to be able to earn a living to create the income necessary to buy the inexpensive product. This is voodoo logic.

Retailers have absolutely no choice in the matter. They have to compete with each other price wise, or fail. These companies didn't send jobs overseas, the federal government did.  I will explain. There are two major factors in competing with foreign workers. One is lack of a level playing field, or in other words, no protective tariffs which our country for many years relied upon to make our factories competitive with China and others. Currency manipulation is the other. China has kept their money below where it should be so that their products are cheaper in other markets.

The other is the greed of the labor unions who wanted to vault their workers into the upper middle class, income wise. They succeeded. Except now the middle class has been dragged down rather than the laborers being elevated. Higher wages created higher prices which competitively could not match the China man making $3 dollars per day, or the 9 year old child working in a factory.

At that point two things should have happened. One, the unions should have been controlled to the extent that their greed didn't put their own members at risk. Two, Our federal, government can control what is shipped into our country by charging a duty or tariff on the item that is being built elsewhere.

If you start at the bottom of productivity, it would be mining. Mining for iron ore, copper,Bauxite, which aluminum comes from and precious metals that go into high end electronics. Our steel mills have shut down. Here in the inland northwest, Kaiser Aluminum no longer smelts the metal. They buy it from foreign sources then roll it into usable products such as aircraft parts, auto parts, etc.

While we haven't been looking, China has quietly bought up most of the copper mines in Canada as well as Australia and Africa. They also own most of the other precious metals that are necessary to our manufacturers. Recently, a product called rare earth has been cornered by China who now refuses to export the raw material needed for our use. There will be more of the same as some as China corners the market on other raw materials.

Soon, our government will wake up to the fact that control has shifted to the orient. At that point, if the only place a metal can be purchased is from China, even protective tariffs won't work. China can simply say, we won't sell any of these things to you and you can't buy them from anywhere else.

While it isn't too late, we need to grab as much in the metals market that is left unsold to the enemy. Yes, enemy. We are in an economic war and we are losing. Secondly, slap tariffs on products that we cannot match price wise, if it isn't too late already.

In a relatively short time, our country can be enslaved by China without a shot being fired. I remember when it was against U.S. law to ship computers or their technologies to Russia, China and other potential enemies. This was done to protect our lead in military equipment. Now, we buy the computers from China.

Steel beams for heavy construction are made from ore mined in our so called rust belt, shipped to China, manufactured into the finished product and shipped back cheaper than we can do it ourselves. Most lumber is shipped in from other countries. Our furniture industry is now in China as well. The bottom line is for the aforementioned reasons, we no longer make anything. Unemployed workers cannot take advantage of low prices. Food stamps have taken the place of productive workers supporting themselves.

Gasoline hasn't gone up double in the last four years. The dollar has gone down that amount in value.

Our only hope, if in fact there is one is to elect moderate Democrats and Republicans that are not locked in to a political mantra which is a box from which there is no escape. We must strike a balance between radical environmentalists and those that would pollute for profit. Medical expenses can be brought down very simply. We prohibit pharmaceuticals prices in our country from exceeding that which is sold elsewhere. We must enact tort reform. Which is to create limits on class action suits that are draining our resources and cause many doctors to flee their private practices and work for giant health plans that pay the premiums.

At least fifty per cent of a doctors overhead is related to malpractice insurance and government paperwork requirements that require large staffs just to shuffle paper, not provide hands on health care. Good luck on the tort reforms, since a majority of congress is made up of attorneys which wont vote to restrict shark like tactics in the legal ;profession.

It may already be too late to change our fate. Politicians are locked into either union funding or free trade, which large corporations donate from, both of which are extreme positions and are losers either way. We can't cure this ill by governments supporting us because the money the government has we have given them. When we run out of money, the government borrows more and more which it can't pay back. Business as usual is a doomsday philosophy. One we can't survive.

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