Delivering the Goods

The United States rose up from a handful of rebellious colonies to become the richest and most powerful nation in the world. Why? Because we led the world in production. For 200 years, America delivered the goods.

But, in the 1970’s, all that suddenly changed. For the first time in history, the U.S. started having trade deficits. That means our net consumption exceeded our net production. And, every single year since 1975, our nation has consistently consumed more than it produced. It doesn’t take a rocket scientist to know that’s not sustainable.

The depressing truth is America is no longer a world leader in production. We are trailing the pack. We are now a debtor nation, and our biggest creditor is China. — What the hell happened? And how will we ever recover? And, the more disturbing question is, what will happen to America if we don’t?

If we ever want to restore America to its proper place in the world, the first thing we need to understand is why we no longer have a productive economy. It’s pretty simple, really. — Because we no longer produce. Why not? – If we take a good hard look at the nature of production, maybe we can figure that out. The three key elements of production are capital, labor, and raw materials.

First, you need capital for research and development. To develop a new product that meets a real need in the marketplace takes a lot of research. It may take many years to develop. Research and development is extremely expensive, and there’s no guarantee of success. There has to be an enormous potential return on investment to justify that kind of risk.

That kind of return on investment is what our current administration refers to as “excessive profits.” And they have this notion that “excessive profits” should be punitively taxed. When government puts a lid on the potential for return on investment, what happens? The investors take their capital and invest it someplace else, — someplace that welcomes production, and wants to build up their economy and provide employment for their population. (Unlike the United States, it would seem.)

The second thing you need for production is raw materials. No matter what you want to produce, you need some combination of raw materials to produce it, whether wood, paper, metal, glass, fiber, or petroleum products. All raw materials come from the earth; they don’t come out of the air, or some genius’ imagination, or the printing presses at the Federal Reserve. They all come out of the ground, either through timber, mining, or agriculture.

Here, in Southern Oregon, we live in one of the richest areas in the country, in terms of natural resources. We’re rich in timber. We’re rich in minerals. But, if this part of the country is so rich, why is it so poor? Why is unemployment so high? Because we’re not allowed to use the natural resources with which we’re abundantly blessed. Overregulation, and the endless environmental litigation it has spawned, has all but curtailed the timber and mining industries, — the very industries that provide raw materials for every sort of production on which our economy relies. And the overregulation doesn’t stop there. It’s hobbling the manufacturing industries, too.

The third thing required for production is labor. We’ve actually got a surplus of that. Look at our unemployment numbers, nationwide. Private sector jobs are steadily declining because our industries are stymied by excessive regulation and punitive taxation. So how does our government address that issue? It tries to replace the jobs lost due to declining production by creating new jobs in the public sector.

The trouble is those jobs do nothing to restore our national productivity. Public sector jobs and service jobs don’t create any new wealth. They just swirl money around in the economy. And, as that money swirls around, more and more of it leaks out to other countries, as we buy foreign-made products because we can’t or don’t produce enough at home.

As the real wealth leaks out of our economy, the Fed prints up more and more new money, which only dilutes the value of the money we already have in circulation, leading to higher and higher inflation. As long as we consume more than we produce, there is no way to add real value back into our economy, and our currency will continue to lose whatever value it has. We must restore production to have a sustainable economy.

This country was founded on the sacred principles of liberty and freedom. Not just individual freedom, but economic freedom. America became a world leader because America delivered the goods. That’s what it’s all about. That’s what it’s always been about. We have to stay solvent to preserve our liberty. If our economy fails, we’ll lose our freedom. Stifling production smothers the economy. And that’s what our government is doing.

Contact your Congressmen and Senators and tell them we want our economy back. Government can’t solve this problem. Government is the problem.


Bookmark/Rate this post: Digg it Stumble It! add to del.icio.us
Advertisements

A Free Market Approach to Illegal Immigration

I applaud the work ethic of anybody who comes here seeking to do honest labor because there isn’t enough work to support their families in their own country. But I do not support amnesty, nor do I welcome with open arms all who wander across the border for whatever reason.

From a free market perspective it’s clear that, if the marketplace is providing jobs for illegal immigrants, there’s a need that they’re filling. Employers hire them because they’re willing to provide a service at a fair market price that Americans either will not provide at an equivalent price because it’s easier to collect welfare, or cannot provide at an equivalent price because labor laws and unions require greater compensation and benefits than the market will bear.

Some insist that it’s not a “fair market price” because it doesn’t satisfy U.S. labor laws, but labor laws are not what determines a fair market price. A fair market price is the price at which both parties are willing to freely engage in a transaction. If the workers were not better off accepting these jobs at the wages and conditions offered than they would be if they remained in their own country, they would not be so eager to come here and take these jobs. By eliminating the jobs, we hurt the workers as well as the employers. How is that more fair?

By hurting the employers, we also hurt the economy. The significantly higher labor costs would have to be passed on to the consumer and food prices would rise dramatically, driving up the cost of living across the nation. Food being, literally, at the bottom of the food chain, when food prices go up, people at the lower end of the economic ladder need to get pay increases (or apply for public assistance) to feed their families. This necessarily sets off a chain reaction up the economic ladder leading to overall inflation.

Nevertheless, I don’t support amnesty. One reason is because granting amnesty to illegal immigrants is unfair to all the law abiding immigrants who have gone through the long and arduous process of obtaining citizenship legally. The other reason is because I don’t believe it will solve the problem. In fact, I believe it will make it worse.

As soon as the illegal immigrants become legal, they lose their competitive advantage. As citizens, they’d have to make at least minimum wage, and the employers would have to provide benefits and pay employment taxes. Once the unions get involved, the stakes become even higher. The reason agribusiness employs illegal immigrants is to avoid those costs. So, once the workers gain legal status, what’s to stop the employers from dropping them and bringing in more illegal labor from across the border?

Then we’d have a bunch of new citizens with no jobs, tossed into the already overloaded social services system, and we’d still have a problem with illegal immigration. Our social welfare programs would suddenly be flooded with hundreds of thousands of poor, unemployed (but legal) immigrants who can’t find work because the only jobs they’re qualified for have been given to a new crop of illegals. It’s a bad idea.

What I do support is a guest worker program that provides temporary permits for people who enter the country to work and leave when the work is finished, deportation of anybody who’s in the country illegally,  starting with the immediate deportation of anyone who commits any kind of crime, and a constitutional amendment to cease granting automatic citizenship to babies born in this country to non-citizen parents. I also support anybody who wants to become a citizen getting in line and going through the citizenship process.


Rate this post: Digg it add to del.icio.us Stumble It!