Habenero

The best idea Henry Ford had was not using the assembly line to make cars. If you make cars that are expensive, you have to sell them at a very high price to the very rich. The rich did not get rich by spending money, and cars that don’t hold their value well are not sought out by them. There was not going to be a huge enough demand for cars unless they could be sold at a cheaper price. The assembly line was the only way to reduce the price, but that alone would not guarantee financial success for any auto maker. Ford’s brilliant idea was to pay his workers a wage that was high enough to afford his cars. The simple act of paying workers more than the going rate for the task gave his employers excess cash that would enable them to buy items (including cars) that were not necessary for keeping themselves fed and sheltered. This kind of liberal thinking fueled the US economy and helped us to prosper. Simply put, you need to have a product or service, and people that want it in order to drive an economy forward.

Liberals put money into the hands of many more people. Unlike the rich, who spend very little, the middle class tends to spend money at a much higher rate than the rich. Most do so because they want enjoyment in their lives, working themselves to death is no longer in vogue. The majority of the middle class do not aspire to become rich, which would require them to forego the pleasures that spending provides. This benefits all people that produce, sell, or provide service. The greater the number of people that can spend, the bigger the GNP can grow. That is why our country prospered whenever the government was in the hands of liberals.

Conservatives do not spend large amounts of money. Individual conservatives can amass large quantities of money, but because they do not spend much, they do not contribute much to the GNP. They like to think that by making “sound investment decisions” and reaping interest on their money, they make the economy work, but they are fooling themselves. When conservatives take control of the government, they immediately try to rein in spending. This starts a downward economic spiral because when less money is spent, fewer people are needed to work and unemployed people do not spend money on frivolous items. When the economic engine is very large, its power loss is barely noticeable and other parts of it may be able to absorb the workers and keep the engine running. But ultimately conservatism is best practiced on an individual basis and left out of government.

Our current crisis started with Reagan’s “Trickle Down Economics”. Placing a very large tax burden on the people that drive the economy, enriched the pockets of investors (those who do not spend money, but try to make their money do work) and in the short term, things looked good. Investors do not like to pay workers, worker pay reduces the profit. In order to make the company attractive to investors, the IATT (Idiots At The Top) look for cheaper labor. This ploy also worked well for the short term. This further reduced the number of people that could and would buy products here. The more IATTs did to improve the return on investment, the larger the reduction in spending power the economy got in return. “Right to Work”

What works well for the short term, does not always work well for the long term. When the Bush tax cuts stole more money from the true driving force of the economy, the investor class was ecstatic. The infusion of cash meant they could reap bigger dividends, but it was getting harder to find places to put the cash that would be “safe”. Conmen, thieves, and incompetence had found a happy home among the energy interests so serious people looked for investments in government backed assets and housing. Our once thriving manufacturing sector has been decimated. Almost all consumer electronic gadgets (TVs, DVD players, video games, mobile phones, etc.) are produced elsewhere. Most car parts are produced elsewhere and only get assembled into autos locally these days. Have you looked for domestically produced clothing or furniture these days? Those jobs and the wages that went with them are a thing of the past. The US became a very large service based economy.

Information technology was looked upon as our future. But there was no escaping the IATT philosophy, out source it to save money. This caused the bubble in the investment bubble to burst fast. The better the bottom line looked to the IATTs, the worse the economy was getting. It used to be that customer service workers had to have very good language skills. Based upon my contacts with customer support reps, fair to poor English is taking over the market. This is probably because the increase in Asian based users that use the service and do understand the speaker is greater than those of us here in the US that need the service and have a hard time understanding the speaker at the other end of the phone. The IATTs at Microsoft, Dell, Hewlett Packard and at numerous other companies rarely here complaints about this, so due to the enormous cost savings and the increasing Asian market, the problem is going to persist.

The only place that outsourcing is not viable is construction. That sector was looking good, so investors looked for ways to increase its profitability. Cheaper labor is one way, so employers were encouraged to hire people at the lowest possible rate. Construction projects are done using teams of contracted and subcontracted laborers. The people that oversee the construction sometimes hire laborers under the table so as to increase their profit. Whether the hired help is here legally or not is not asked in order to provide plausible deniability for the executives of the Architectural firms.

Construction is not the only sector that has found happiness in using abnormally cheap local labor (anyone regardless of their immigration status that is willing to work for wages that are below the normal going rate for the job). If the normal rate for a job is $20.00 per hour and a contractor can find someone willing to do the job for $10.00, he will subcontract the job to the other guy and pocket the difference as his profit. Meat processing plants, landscaping firms, janitorial services, and many other places all look for cheap labor and often exploited illegal aliens to get it. Another insidious ways costs are cut in business all over the place is to cut hours back to the point that you no longer have to legally provided benefits for the employee (a favorite tactic of Wal-Mart and many food stores).

Deregulation opened up another route for investment. Derivatives and short selling made the stock markets crap shoots. Banks saw credit cards as a money making venture through fees and exorbitant interest rates. Legalized loan sharking (without the danger to your life and limbs) took place. To keep the housing bubble intact, banks sought out ways to increase their customer base through less diligence in checking mortgage applicants ability to pay (they figured it would be easy to sell the same house several times if necessary since the housing market looked great). Conmen saw a chance to cash in on this promising target and encouraged people to take out mortgages low starting rates. This last bastion of “conservative” investment became one big Ponzi scheme. By the time it was recognized as such, it was too late.