Race To The Bottom

[discocrisco01]

I never thought that I saw consevative literally stated they want the wanted the race to bottom. But they do <[br />

There is a big argument going on right now over whether our government should put forth another stimulus package. With unemployment remaining near levels reached during the worst of the current downturn and evidence mounting that the U.S. might drop back into recession or, at best, grudgingly grow at meager rates for years to come; Keynesian economists shout that we need more stimulus!

The problem is that the first round of stimulus didn't bring hiring back in the United States and neither will trillions more. What these Keynesians fail to realize is that liquidity is not the problem. In fact corporate America has significant profits, and a great deal of cash to go with it. The problem is also not the uncertain path of taxes and regulation (though that certainly doesn't help either).

The problem is that doing business in America is simply too expensive. Our nation is not competitive in the global economy. Corporations are pursuing growth right now. They are hiring right now. They just aren't doing it here. When a company wants to manufacture something, there are many more cost effective locations around the world than the United States. When companies search for growing markets, they look elsewhere. The reason is simple: The emerging world sports labor costs that are far lower than ours (I've heard roughly only 10% of our cost). This significant imbalance means their costs will draw the lion's share of investment dollars.

This money flow will push up their labor costs while the lack of investment will push ours down, but until they close the gap and become relatively more in-line, this dynamic will continue, drawing away even the majority of the money our own government forces out into the marketplace. Most of our stimulus dollars never get near the average American.

This wage disparity is systemic. It is not confined only to manufacturing and the export segment of our economy. In fact excessive costs for labor in manufacturing are not the actual root of America's problem. The problem lies in the overhead costs of our nation. Three segments of our economy have far outpaced inflation and taken ever larger protions of American's income. Healthcare, government, and education. All three have grown without the necessary restraint of a free market. Instead government interference has removed the normal buyer/seller relationship in all three segments of the economy and replaced it with something in which no one has any concern for cost. Insurance pays healthcare, so the patient doesn't care what it costs. Grants and loans pay for college, so again, tuition becomes less of a concern. Public employees are paid for by taxes, not out of the pocket of the politicians who determine their pay.

Now, median household income in the U.S. is only about $46,000. After the tax bite (total gov. spending amounts to some 44% of GDP), healthcare costs (17%), and education (5.9% - lower, 3% - higher edu.), it is difficult to see how the average family even has enough money left over to pay for things like housing and food.

Wait, maybe they don't actually have enough to live on. Afterall, the average consumer has been spending more than he was earning for decades, making up the difference through borrowing. Now that borrowing is no longer an option we have a problem.

Throwing money into the economy to prop up prices is exactly the wrong thing to do. This nation needs deflation. We need lower prices. We need government workers to earn less. We need doctors to earn less. We need colleges to cost less. We need CEOs to earn less. Then average Americans can earn less and our nation can actually become competitive again. We've got a top heavy economy that has priced us all out of the job market. Does earning less sound bad to you? Just think back to your grandfather's time. They earned less, but the economy was far more balanced. Most families had only one breadwinner, little debt, and a significant amount of free-time. Compare that to the two worker household of today that needs debt just to get by and has a hard time finding time between jobs. The difference is wage disparity.

I am totally against the government interferring in wages and earnings, but that is exactly the point. Everywhere they have interfered in the economy they have caused imbalances. More government spending will only cause more imbalances. Bank Bailout = record compensation in that sector. Housing Stimulus = record housing inventory because houses remain overpriced. Stimulus money = protecting some politically connected overpaid industry. And already overburdened average Americans are left even more overburdened than before. STIMULUS DOES NOT HELP THE AVERAGE AMERICAN! It only serves to maintain the status quo of the protected classes.

As long as public employees make twice what private employees make, we have a problem. As long as an average radiologist is earning half a million dollars a year we have a problem. As long as CEOs can make tens of millions of dollars running their companies into the ground, we have a problem. I don't begrudge anyone their pay, but let the market actually work and their pay will come more into line because people can't afford it anymore. Stop taxing us to prop up an overpriced America! NO MORE STIMULUS

It is the race to the bottom and these guys needs TO BE STOPPED ANY COST. PERIOD. When you rely on diverse news source, you get them admitting it in the open without the BS that goes on Fix News.

I am never going to support the Republican party ever, ever, and ever.

[TheMuse]

1. This is all a rant to say we need to lower costs for business

By all of us making less, expecting less. Basically, lets go back in time since some country that doesn't care about it citizens is willing to have relaxed labor laws that allow them to make pennies as compared to Americans, we need to take pennies too! We should all strive to be Chinese slave laborers, because that will make us competetive?

What a croc of shit. They way businesses behave, I am very confident (umm not at all) that of course once we all take our pay decreases and corporate profits again rise, CEO's will take a pay cut and pass on the savings in more jobs here.

No, it will flow upwards. As it has the past 30 years. We are coming to a tipping point. I think we are finally at the time were we will say enough is enough. The diparity between the rich and poor is growing at an astounding rate. Not seen since the gilded age. We all know how that turned out.

[The Northerner]

2. Sounds like something I'd hear on Faux News

[SheilaT]

3. Public employees make twice what

private employees make? Really. Where is the proof of that?

Some public employees make more, some make less. Depends on the job, and which public entity is involved.

The real huge, looming problem is that public employees typically have very generous retirement packages, often because they willingly earned less money for that. But the retirement is usually unfunded, meaning it always needs to be paid for out of current revenues. I remember reading several decades ago that this was going to be a huge problem in the future. And it is.

Every single entity that promises retirement benefits, public or private, should be required to fund those benefits fully. Plenty of companies have abrogated their responsibility in that department. Certain major airlines come to mind. People usually work very hard and delay immediate compensation for the future. I wouldn't be all that surprised if twenty or thirty years from now the situation with the older generation looks a lot like it did prior to 1960, when few people had any kind of pension, Social Security still wasn't reaching a lot of people, and the elderly often lived in poverty.

[TheKentuckian]

6. of course they refuse to look at apples to apples to tell this lie.

In general when comparing education levels and experience required for a post (or the same job in a private setting) the private sector makes significantly more.

The exception is probably folks at the low end, because the government will pay a living wage for basic skills. Even there though you are talking struggling to get by on 18-21k instead of dying slowly at 14-17 with no benefits.

I suspect even to tell spin their yarns they are including the pensions which is the incentive to be a career military person, get a masters to make 35k, or save people from criminals and fires.

Lying fucks.

[The_Casual_Observer]

4. The high costs of all those things are "market driven". that author

is very confused.

[LiberalLoner]

5. I will grudgingly c oncede a couple of points -

I think he is right in saying things cost too much and most Americans can't make ends meet, even with two workers working full-time (often more than full time, with several jobs). I also remember there was once a time when the basics could be paid for for most middle-class families by having only one wage-earner. So I think he is correct in saying there was a time like that.

But - I don't think that making our wages in line with what they make in Bangladesh is going to work out for the 99.9 percent of us who aren't billionaires.