Today success requires possessing a skill set that is in demand.
The current argument over getting a good job and raising the minimum wage has missed the point on what it takes to be successful. Continuous improvement of products, processes and techniques is part of the history of America. Improved methods and process affected an ever-growing complex society and the employment scenario. The transition from agricultural to an industrial economy provided opportunities for many people. They found out they could leave the farm and find a better life in the cities. It also produced challenges and disruptions in the social structure of families and culture. Such is the nature of change.
Today we are involved in a debate over outsourcing our manufacturing to foreign countries and the fact that most products are not made in America any more. Some offer the solution that we should force companies to manufacture here in the USA. Others think we should impose a tariff on goods made in other countries. If we look beyond the emotional argument of what is fair and what is not fair we must face several facts.
Our history is replete with examples of outsourcing. Many farmers left the South to work in the Northern Automobile Factories.
Those same factories eventually had a cost structure that overburdened their profit potential. Rising labor cost, material cost, poor management and short-sided manufacturing techniques made many of the old auto plants inefficient. Moving the factories back to the south and building new plants using automated robots is an example of outsourcing from north to south. I call that Reverse outsourcing.
Modern transportation has created the opportunity to move factories to lower cost countries. It should come as no surprise the companies would gravitate toward the most efficient locales to product their products. It is a basic rule of business that "if someone can produce an equal quality product at a lower cost they will encroach on your market share". The consumer makes the decision, not the producer. Poor quality and cheap prices will not survive. People may buy on price the first time but if the quality is not there they will not buy again and they will tell everyone they know not to buy that product. No amount of advertising can sustain poor quality for long.
In the early 1900's the purchase of an automobile was beyond the capability of a vast majority of the population. Henry Ford, for all his faults, changed that by using an innovative manufacturing technique, which increased the standard of living for a huge population of folks while at the same time lowering the cost of the automobile to a level where more people could afford it.
This brings us to the crutch of the debate. Is the evil pursuit of profit causing all this disruption or is it the increasing ability of individual choice, which forces an increase in efficiency?
In our economy, companies succeed or fail based on a simple age-old formula. They produce a product or provide a service that people willing want to pay for and use. In the absence of a free will to buy the product or service, profit cease to exist and the company will fail.
People will instinctively make value judgement on what is best for their needs. See above.
Is capitalism fair or is it an abusive business practice? Fair is not a tenant of capitalism. The free exchange of one thing for another based on individual choice is capitalism. Fair is not a tenant of life either. Life is not fair, nor is equal results a right. A deeper look at various economic theories may reveal that the most good for the most people is based on the free exchange between individuals and not some government control or mandate of choices.
A society based on care for our fellow citizens and charity for those in need is a core belief of our heritage. Once we abrogate that responsibility to the government, we have lost the moral imperative and control of our belief systems. The government cannot give to someone that which is has not taken from another. But an individual or group can willing give based on their own conscience. If you want to really get an argument started, propose that all religious institutions be removed from tax free status. Is there really any rational explanation why large religious sects should own office buildings and commercial property. As matter of fact why not just eliminate all tax free rules and laws from the books.
Our entire tax system is built around either encouraging some action or discouraging some action. Our biggest mistake may have been allowing an income tax to be instituted. Today there are an estimated 15-20% of the population working "off books". Almost all bartenders and waiters and waitresses are working off books and don't claim any income above the minimum wage. Trying to track income is next to impossible. We are quickly becoming a cashless society. Technology has all but eliminated the need for cash except for the most minor purchases. You should investigate the "Fair Tax". Click here to read about the Fair Tax
We currently have an educational system that does not provide the skill set necessary for surviving in the world economy and yet we have ever-increasing tuition cost which I believe is based on the abusive government student loan scam. For years, we have advocated that everyone must have a college degree to succeed in life. The structure of most colleges today is as a business enterprise instead of an educational institution. Their pursuit of overly generous college loan money has created an entire population of debt-ridden graduates who do not have the prospect of ever paying back the loans. I suspect that education was never the purpose of the loan programs but the transfer of money from one group of people (taxpayers) to another group of people (educators) for indoctrinating them into a political belief. That gives us professors who do not teach, Universities that pursue government research money (Emory $521 Billion in research grants)
over education of students and an ever-increasing campus buildings built for the purpose of attracting alumni contributions. I have not recently researched this but I once saw a graph that showed the increase in tuition and the increase in college loans and the lines tracked each other almost identically.
Automation is not a choice; it is a matter of survival. Automation
in its simplest form is the transition from mules to tractors and the beat goes on. Here is an example of automation in a warehouse.
Since I know most people will not click on the link and watch the video, I will summarize it. Repetitive jobs that require little skill are prime targets for automation. It is not an anti-poor or anti-labor attitude that spurs innovation. It is a reality that anything that can be done cheaper and better is going to eventually be done by automation.
The solution is not to penalize the business for automating. The solution is to provide a system that will educate and train people for the skills needed in the current and future enviornment. Most businesses today that are in the manufacturing sector spend large amounts of money to train and improve the skill set of it's employees. The transistion from an agricultural to an industrial economy resulted in smaller families due the lack of need for free farm labor. Today they are having trouble finding workers to harvest the crops in California. Click here to see WSJ report on harvesting crops.
That is not an argument that has anything to do with immigration, it is an indication that there alternatives to working all day in the hot fields. We will never find the solution if we continue to scapegoat companies and political parties or greedy businessmen rather than matching jobs and skills together to create opportunity.
There were a whole group of people at the turn of the century who believed that the automobile was just a gimmick to drive down the price of horses. There was no way it would ever last, it was just a passing fad.
Ted McDonald just posted a video that expands on this post. click here.
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