Posts Tagged ‘money’
How did this administration try to fix this country when it went down the tubes two years ago? By bailing out Banks, Investment Firms, Insurance Companies and Automakers. The closest time they came to American Workers is when they bailed out the auto companies. Yes, there was some stimulus money to build roads and infrastructure, but that really hasn’t pushed us over the top to recovery has it? No, it hasn’t. We’re stuck in the doldrums.
Let’s talk about the housing market for a little bit. The Democrats blame Bush and the Republicans for the housing market crash, but it was the Democrats that wanted everybody to own a house. The Republicans wanted to create an oversight committee to watch Fannie Mae and Freddie Mac because of questionable lending practices, but the idea was kaboshed by the Democrats. Houses for everyone, no credit and no income necessary! Crash. So what do we do. We (the now Democratic run government) give money directly to the banks so their balance sheets look good. That sounds like something the Republicans would have done. Couldn’t we have given that money to the banks through homeowners? Now, the banks’ balance sheets look good AND they own the homes! Now I wasn’t necessarily for helping people who couldn’t pay their mortgages because they got in over their heads (no thanks to the banks). I would have liked to have seen some help for homeowners like me, who were making their payments, but could have used the extra money to keep the economy going. If I got help paying my mortgage, I could have spent some more money expanding and keeping my business going. Instead I had to take the money out of my retirement account and get penalized by the government because I’m not over 59 1/2 years old. I ended up selling my business for half of what it was worth and then selling my home for two thirds what it was worth. I now live in Arizona and have to work to pay my mortgage here, instead of moving here with the mortgage paid off and the retirement fund intact! I know! Your heart bleeds for me. There are a lot more people out there that are worse off than me! But here’s something I have in common with a lot of homeowners, I’ve got a lot of equity in my home. But if I miss some payments, the bank gets the home and that equity is gone! I’m in the poor house! And banks don’t care. They’re the nicest people around when your there making a deposit, but miss some payments on your mortgage and its “buh bye” time! And don’t let the door it you in the back! There should be some kind of law that if a home is foreclosed on the homeowner gets his/her equity back. That would sure take the sting out of losing your home and maybe the banks would be a little more flexible in working with you in hard times. Yeah, Obama try and pass that law “for the people”. I’d like to see how far you get with that!
Now let’s talk a little bit about the economy. You should take a look at my article about “The Death of the American Middle Class” and Michael Snyder’s article The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove It that are mentioned elsewhere in this blog. Those articles focus on jobs leaving the US because of the world economy in which we now live and can’t compete with countries like China that on average pay their workers $1 a day. But what can we do for ourselves here in America? Remember your history lessons about the Depression of the 1930’s? FDR creating all those public works programs to put unemployed people back to work? It all got mixed reviews and some didn’t think it helped at all. But when World War II broke out there wasn’t much unemployment. Now I’m not suggesting another all out war with half the world, in fact wars now-a-days put us deeper in debt, so forget that. We don’t have many more trillions of dollars, do we? Anyway, let’s get people back to work somehow. Remember programs like Vista and the Peace Corp? Vista programs were in the US and the Peace Corp was in foreign countries. You volunteer to help with a project. The project assignments were usually 2 years. You got your room and board paid for and $100 per month in the bank. So, when you got back home you got some good real world work experience under your belt and you had $2,400 in the bank. Not bad back in the 70s. Now the outside world is a little scary these days, so I would emphasize the Vista program for right here in the good old US of A. Remember Selective Service? Otherwise known as the Draft! But instead of going into the Army, you go into a Vista program. Let’s say a teenager drops out of high school. Bam! Vista. Let’s say you graduate from high school, don’t go to college and you don’t have a job. Bam! Vista. Let’s say you’re over 18, under 21 and have no job. Bam! Vista. Put kids to work. Get them off the streets. Break up gangs. Move them around the country doing community service, don’t let them have cell phones so they can’t keep in touch with their homies, teach them a trade. Maybe they can get a job when their “tour of duty” is up. After age 21, Vista is voluntary. Use old, abandoned military bases to work out of. Have them fix them up if they’re in bad condition. I can hear the bleeding heart liberals and the ACLU now, forced labor camps! Come on. Kids were drafted and sent to Vet Nam in my day, this would be a piece of cake and they would get paid for it! Maybe even make it illegal for someone under 18 to have a job! Concentrate on high school for goodness sakes. Be a kid while you can. So who’s going to cook your fries at McDonald’s? Other people that are now out of work, or at least they’d be 18 year old! That takes care of people under 21, but what about older people with families to take care of? The wave of the future is alternative energy sources. Countries like China and India are working on it hard, are we? There’s got to be something we, as a nation, could do? Something on the order of President Kennedy’s promise to put a man on the moon before the decade was up. We did it then, and we got to do something now to ween us off of our dependence on foreign oil.
Now, let’s talk about small businesses and about businesses in general. What kind of relationship does Congress and the politicos in Washington D.C. have with the business world. Anti-business to say the least. I think that’s mostly coming from the Democratic party. Usually, the Republicans are pro business. I’m not saying to let the BP’s of the world slide. Hit them and hit them hard. But you’ve got to lighten up on businesses in general. Small businesses are the backbone of America. They employ more people than big corporations. If you make the environment for small businesses nurturing, helpful and positive, maybe more will open up. Maybe more will expand. Lighten up on us. Don’t try and squeeze all the money you can out of us. Don’t come up with new taxes. Here’s a tax in Sedona, Az. that is incredibly anti-business. The city of Sedona charges restaurants a seat tax for sewer charges. It doesn’t matter if you have customers in those seats, or how much water you use! Just the number of seats. I was looking into opening a restaurant and was told by the Big Park Water people, that I would have to pay $850 for each seat over 9 seats to “buy” in to the sewer system. That would have been another $18,000 extra. Thanks, but no thanks! How about this for an idea, base sewer charges on how much water is used no matter who you are. Homeowners and businesses alike. Don’t reach into the pockets of business people to make your budgets balance!
Well, these things aren’t cure-alls, but they would be good starts! Wouldn’t it be nice to not have to worry about where our next oil fix is coming from? Maybe then we could pull back our armed forces and let the rest of the world figure out what to do with the “violent gangs” of the international community. I’d love to see a return of the 50s to the United States. The armed forces are home and everybody’s working. The innocence of that era will never return, but hopefully our confidence will.
According to Michael Snyder who is editor of theeconomiccollapseblog.com and his article entitled The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it. Click on it to see it. The basic gist of the article is America can’t compete with the low cost of overseas labor, so we’re losing jobs. People are out of work longer, wealth is being accumulated by a small group of super rich people and the middle class is moving into the poor class. I think that about sums up the article and, I think, the article is right on the money. Excuse the pun. So much for the “world economy”. Maybe those anarchists are on to something after all!
I had an idea a long time ago about equalizing labor costs throughout the world with a labor tax that would be imposed on U.S. companies moving their operations to foreign countries just because the labor costs were lower. The tax would have in effect equalized the labor costs. So if a company wanted to move out of the U.S. to avoid paying workers $30 an hour to a country where it can pay workers $1 an hour, it would be taxed $29 per hour per hour worked for each laborer. So with labor costs equalized, the company would be moving out of the U.S. for reasons other than lower labor costs. Like lower costs of raw materials, or building something in the country the product is sold in to reduce shipping cost, and so on. So, hopefully this tax would have kept companies here, but guess what? They’re all pretty much gone! Could it get any worse? I guess things can always get worse with more companies relocating, but I think there’s a more even handed way to equalize labor cost around the world.
How about a “cost of labor tariff”? The costs of imports coming into a country would be adjusted by the cost of labor in the exporting country. So if labor is $1 an hour in China and they’re are shipping products to the U.S. where the labor cost for producing the same product is $30 an hour then the price of that product is going to be going way up. I can hear you now. Tariff? Trade wars. Everybody loses with that one. But what if the “cost of labor tariff” was a U.N sanctioned law and was adopted around the world by all countries? Or at least by all developed countries that have labor unions. I would think that the Teamsters would love a law like this. It protects high priced labor (America, Europe) and at the same time maybe it would even encourage cheap labor countries to up their pay scales. A win for labor, but not so good for the consumer since they would undoubtedly be paying higher prices. But where would all the tariff revenue be going? It could be used to lower personal taxes, so the consumer would still have money to spend. So the “cost of labor tariff” would just be a way to redistribute wealth by equalizing labor cost throughout the world.
The flaw in this approach is that it would encourage already high labor cost countries to go even higher. To put a brake on this, a worldwide benchmark of labor costs should be used. Doing this by job would be a daunting task. It would be somewhat easier is it were done by industry. So, let’s say on a worldwide average, 100 man hours were needed to make a car and the average per hour wage for an autoworker worldwide was $20. Lets say the average auto worker in the U.S. makes, with benefits, $70 an hour, France $50 and China $1. If the average worldwide labor benchmark for autoworkers is $20, then China would have to pay $1,900 for every car it built and shipped to the U.S. and France. China can get around the tariff by increasing the amount it pays its autoworkers. What if the U.S or France wants to sell their cars in China? Good luck! Or they better start building them in China to sell to the Chinese. But they’re already doing this. As a matter of fact, GM now sells more cars in China then in the US!
Ahhh, the tariff game. It messes around with the free market system, but the inequities in labor costs are profound. It should hurt to be at the bottom of the labor cost ladder. You want those countries to improve the standard of living. But it should hurt somewhat to be at the top too. I think unions cause this problems in more developed countries. Case in point. The town I used to live in in Illinois had budget problems like many towns across the nation during the recession. It was announced that all non-union workers wouldn’t be getting a raise in 2009. The police were scheduled to get a 2% increase and were asked to forgo the increase. They said no. When the budget crisis grew bigger, they were asked if they would like to all take furloughs days, splitting the cost reduction among all members of the force, or have layoffs. They chose layoffs because there was no way anyone was going to go backwards on the pay scale. So much for the free market system when it comes to labor costs and unions. That’s not to say that labor costs haven’t moved down during this recession. The car industry when faced with extinction made the unions come to the negotiating table. And I’m sure a lot of non-union companies decreased wages when it was a matter of survival. But there is a lot of people out of work and that’s because there are no jobs. Those jobs have gone overseas. How will we ever get them back? Labor tariff, anyone?
Looks like the banks that got stimulus money are going to pay it back just in time to hand out gigantic bonuses to their executives. Surprising, isn’t it? I mean they’ve done such a wonderful job. Yeah, right. It would be kind of OK is this was the end of it, but there are some that think the banks aren’t out of the mess they got themselves into and are eventually going to ask for that money back. And I say, “TO HECK WITH THAT IDEA”!
I don’t know why we gave them the money directly to begin with. It would have made much more sense to me to give the banks that money by making mortgage payments for everyone. Not just the people in trouble, but for everyone (including me!). What would this have done? Well, the banks would have gotten their money. The housing market wouldn’t have crashed. People like me would have spent the money normally put aside for mortgage payments on things that would have kept the economy going. Like buying cars. Combine that with the “Clunker Program” and the government might not now own any car companies! And maybe they could have turned off the money presses for a while.
But here we go again. Thinking about giving more money to the same incompetent group of people that caused this meltdown to begin with. I hope the government takes a deep breath and starts thinking about a different approach to helping the economy. And that’s by helping people!