Mother Government, Outsourcing and Protectionism
Today's Zinger:
Boiling a frog by raising the temperature one degree at a time fools the frog as to its' fate. He just stays in the pan until its too late.
Morning Briefing:
- The Administration needs to focus on facilitating what is needed for business rather than assuming they know what to do to fix it and intervene in the direction and decisions of American business and our individual lives.
- Each day brings new interventions.
The Facts:
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The Administration has taken greater control over the spending and those industries that represent almost half of the Gross Domestic Product (GDP) of the United States economy.
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The Administration has now announced a focus on international business and jobs.
Discussion:
The Obama Administration is aggressively planting roots in just about every aspect of American lives and business. Today they announced that American corporations have outsourced almost 4% of jobs overseas and this is bad for the economy and Americans. As a result, they are looking at ways to make it more difficult for companies to outsource. Sounds like logical wisdom that a mother could buy in to. That is until we start to think through why this is happening and the implications.
America has the second highest Corporate tax rates in the world. Additionally, our cost of labor is much higher than other parts of the world. Our schools are not turning out sufficiently educated workers (there is a 40% high school drop out rate) to take higher end jobs, like technology, that could stay in the United States. They find more educated and lower cost alternatives overseas.
In a global environment we must be competitive. If we can't be competitive in the United States then companies will go where they can be competitive overseas, including moving companies out of the United States to other countries more favorable to business needs. There is no way to stop the globalization. Trying to sustain higher prices through embargoes, price fixing, taxes or other governmental interventions do not work. Anyone suggesting such a thing does not understand economics and is just trolling for votes.
We have difficult decisions to make regarding our world competitiveness. Lower corporate taxes, a better educated workforce and a government that facilitates trade are what is needed. Anything else will prove a failure and is just wishful thinking. A government dictating who or where we must hire or the price we pay is naive.
The Obama Administration is now making decisions for the auto industry, finance industry, insurance industry, mortgage industry and Wall Street. How long will it be before Main Street and the health care industry are under the control of our government?
At the same time the Federal Government is doling out almost $1 Trillion in Federal Spending on education, social services, infrastructure development and of course, the normal expenses on Medicare, Medicaid, Social Security and defense spending. These decisions are being driven by a group in Washington that never met a payroll in their life. For the majority of our elected officials the largest thing they ever managed was a government committee or a community action committee.
The Administration relies on advisers, the "smartest people in the country" according to the President. These are the leading academics from prestigious universities who also have never met a payroll. They have lived in the comfortable world of thought and no action. Each caught up in his or her theories supported by their Nobel prizes or consulting references. But again, never managed anything. As a past academic who has worked extensively in American industry and managed very large organizations and transformational change, I know that academics write fascinating articles and give good speeches but it is not grounded in practical results.
As a country we do not need a mother. We need a government that facilitates what we need, provides reasonable oversight and doesn't try to tell us what and how to do it.



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