The Necessity of Captialsim

Thought experiment time:

Suppose everyone in the country woke up tomorrow with an extra $10,000 in the bank (or in a shoebox under the mattress).  What would happen?  Well, everyone would probably go out and buy stuff, pay off loans, and generally flood the market with cash.  Once flooded, supply and demand kicks in as the supply of goods and materials can't keep pace with the demand for them, everything becomes more rare (because it's all gone) and prices sky-rocket as demand soars.  It's the simple reason the government can't just print more money to pay off our federal debt.  Now everything's more expensive because we all have more money, and now we have to spend the same relative amount of cash to attain the same good as we did yesterday.  Now take that same situation and spread it out over a year.  What would happen if every single person made $50,000 a year?  Same end.

See, one of the main concepts of capitalism is that some people need to be poor in order for it to work.  If everyone had job security, no one would worry about losing their jobs (duh).  Sounds common sense, but, alas, it really isn't.  With 100% employment, there's no real worry about getting canned because, number one, there's no one to fill your position, and number two, you could just walk next door and get a job.  No one wants that.  If everyone made $50,000 (a low amount to many, I realize), new cars and houses would no longer be status symbols.  And we all know how much people love their status symbols (read: egos).

This post admittedly was inspired by an article I just read, as 2014 marks the 50-year anniversary of LBJ's war on poverty in which he aimed at raising all impoverished American's into the working middle class. But, again, it really isn't that easy, is it? Consider, if you will, the ramifications of all American's getting a college degree (I say "getting" because it's fairly clear many are rubber stamped...I mean, the Seahawks cornerback, now famous for his tirade after the win over the 49er's in the team's eventual Superbowl-winning season - who, by the way, I'm sure is unfairly maligned and probably truly does good in his community - holds a degree from Stanford. Yes, Stanford.). Anyway, back to the point. If everyone, every single person in the country held a degree, what happens next? We're all told to go to college to get a good job and make a decent living. But if everyone does that exact thing, suddenly graduate degrees become the new bachelors. Which is more or less already happening anyway. Go figure.

So again, we have the necessity of inequality. After all, the basic tenet of capitalism is to turn a profit. If the business owner(s) recognize a greater profit can be realized by closing a factory, they have the total power to do so. If they find that a greater profit can be had by paying employees as little as possible for as few hours as possible, then by all means. So I believe the real question, then, comes down to: can the government impose job creation?  I would say not a chance. Obviously we've been trying for quite some time, and can certainly see the vast difference it makes. So it comes, again, to those with the financial sway. And I doubt that will change anything anywhere any time soon.

A question about policy...

Let's preface with acknowledging that I don't have the answers. And I'm neither endorsing nor condemning (per se...) any of the following. I'm simply trying to look at the current state, compare to the proposed future state, and ask what I think are relatively common sense questions...

So on the one hand, we have some calls for a raise in the federal minimum wage to $15 and hour. Admittedly I'm not an economist, so I'm not an authority on predicting negative outcomes. So let's just go with the loudest detractor: an increase in income will create an uptick in purchasing, which will lower supply (less stuff on the shelves), increase demand (people still want the stuff), and drive up prices. In essence, more money in the economy=higher prices for everything. Fair enough.  Right off the bat, I feel compelled to ask why supply and demand never seems to go the other way.  Prices always seem to rise, but never really fall. Sure, a couple cents on gas here and there, but I don't think the economic doomsday mentality is worried about pennies...

The other big issue people seem to have with a higher minimum wage is that "minimum wage jobs aren't meant to provide a living wage". As one commentor put it, minimum wage jobs are intended to inspire people to work harder and better their position. (Of course, I feel as though I've been fairly open regarding my perspective on this mentality - A Self-Made Man, Just Get a Job, I think I can I think I can etc.)

Okay, either way, let's just keep that argument in mind, that if some people have more money, everyone has to spend more.

Now, let's change gears. Recent presidential candidates have been (loudly) voicing immigration reform, up to and including deporting everyone. A pinnacle argument they make is that these people, this "other", are taking not only our federal support money (read: welfare and subsidized housing), but "stealing" jobs that would otherwise have "hardworking" Americans.

[Just a quick aside on the "other" that's living off the system: funny that the very crowd these candidates are trying to incite with their rhetoric about the sin of handouts are, well...here's the top five articles that address that idea. Since I'm not sure about copyright and such, they're listed generically: first article, second, third, fourth, fifth]

Beside the point.

Anyway, okay, let's roll with the premise. Now, they also admit that these "undocumented workers" have these jobs because employers can pay them less. Five bucks an hour, twelve hours a day, seven days a week with no overtime or benefits? I hate to say it, but that's just the free market at work. Again, beside the point.

So now we can put American citizens into these jobs.with the full protections afforded them (check out Imposed Regulations if you're wondering my thoughts on true free market capitalism. However, the very idea that the same people are advocating imposing more rules on employers while simultaneously touting the free market is just hilarious to me).

Again, beside the point.

So now these workers make at least minimum wage, OT after 40 hours, benefits, maternity leave, the potential to *gasp* unionize... So, wouldn't, um, this, erm, add money into the consumer's pocket? In effect, wouldn't this do the same thing increasing the minimum wage?

Now again, I'm not an authority on the subject. I don't have any answers, only questions.

Back to Unionizing

FYI, this post is a follow-up to a post from quite some time ago.  If you haven't read it, or would like it fresh in your mind, here you go: Unionizing Student-Athletes

And back to it.

So was I in error?  Isn't this the epitome of unionizing?  To organize, unify, and fight for better conditions?  Of course, the contemporary college athletics politics, money, and so on aside, but if we were to boil it down, I suppose I could admit that these students are arguably doing the same as any labor movement.

Of course, let's also take a second to consider that comparison is indeed the thief of joy (Teddy Roosevelt), and what the public does know about the money the NCAA and each university makes from these athletes.  Needless to say, it's a lot.  Several decades ago, the business world attempted to curb the rising salaries of CEO's, thinking that making them public would induce a sort of shame that would drive down salaries and bring about more income equality.  What actually happened, of course, is that now that executives could see what everyone else made, it instead created a competition for a higher income, more perks, and greater benefits.

"Hey! Why is Joe So-And-So over at our competitor making $2 million and gets a jet while I only make $1.5 million?  It's not fair!" And so this guy gets a raise to exceed what the other guy makes, who then, in turn, sees it and demands more money himself.  And to date, the income inequality in the U.S. is greater (by several hundred percent) than it ever has been before, and the gap is growing.  Apparently we're okay with it though.

Anyway, the comparison here is that maybe, just maybe, because the NCAA, coaches, and so on are publicly paid insane amounts of money for the athletes effort, that it may be driving this movement to "get their fair share".  And that's just nature.  Even lab monkeys, when given a treat for pushing a button are excited.  But put two cages side by side (so they can see each other), and task them both to press a button but give them different treats (knowing that one treat is better than the other), the monkey receiving the "worse" treat will throw it away (from the work of Frans de Waal).  Because it's not fair - even though the monkey is getting a treat nonetheless, because the take-away for the same work isn't equal, the monkey refuses the reward.  

I feel it needs to be said that this obviously works both ways.  Executives keep getting more and more perks because they feel they're getting the raw end of the button-pushing deal, but since the rest of us lowly peons don't have the leverage, we unionize.  Hey, it's my job to give you the info.  What you do with it is up to you.

So perhaps if the NCAA wasn't getting the lion's share - if not more - or if they simply reduced the income for these people, this would be a non-issue.  So at the same time, I suppose I can empathize with the players.

And of course, don't bother making the argument because I'm already there - I am well aware that a significant chunk of money streaming into departments and programs at universities that funds education, research, scholarships, and many other things that make a university a university, come directly from athletic programs.  I understand.  So perhaps because players are bringing in money to the school they should be employees paid for their contributions who don't even need the pretense of class.

I mean, then we could give more scholarships to more "regular" students and then soon they can unionize too, after all, student research has been rumored to be plagiarized by faculty advisers and, really, all they want is compensation for their work and maybe a little recognition. 

Unionizing Athlete-Students

A topic in the news for a couple weeks is the ruling that athletes participating at Northwestern University have the legal right to unionize, and it's something I've been rolling around in my head for some time but haven't been able to form a coherent reaction just yet.  Almost as though I'm arguing with myself about how to feel... But I figure at the very least I could sit down and (figuratively) put pen to paper, so I apologize if this reads somewhat stream-of-consciousness-ly.

To begin, I can understand and empathize with where this athletes are coming from. It is true that the NCAA has made bank from their efforts - coaches and executives making millions atop millions season after season, often being paid more than any other person on campus, from professors to the president.  Only a few years ago, Barry Alvarez filled in for the recently-vacated head coaching position of the Wisconsin Badgers football program for the final game or two of the season, receiving a six figure bonus for coaching, and another five figures for going to the Rose Bowl, all on top of his seven figure salary as athletic director.  So I get it.  If I was working day in and day out, seeing none of the fruits of my labors, I would be frustrated as well.  Hell, I'd probably go work for Wall Street where the same thing happens but at least I'd get a paycheck.

That being said, I think this is a systemic issue within the NCAA that needs to be addressed, rather than continue to erode out higher education system.  The title of this post is no mistake. These people are more frequently referred to as "student-athletes", to stress that the "student" comes first, but that's not really the case, now is it?  One of the primary arguments for the team is that they spend upwards of 60 hours each week on football, therefore, it's a job.  But let's think for a second: if they're spending all this time at practice, when exactly are they going to class and/or doing homework/studying?  And going a step further, how, then, are they all pulling 4.0's?

I can't help but feel this movement undermines the entire history of unionizing.  We've all read Grapes of Wrath at some point (at least many of us, or at least know the premise), and I couldn't possibly imagine that this is the same thing.  Hell, even Boy Meets World tackled the issue when the 9th grade students "unionized" after reading the book in an attempt to protest their tests at the school.  Thank you 90's TV for portraying more than any show these days ever could hope to imagine.

But I digress.

The point is that I don't really think this is a positive portrayal of our current system - neither our educations system nor labor movements.  These people are brought to schools for one reason. And when they graduate, chances are they still read at a fifth grade level anyway (and to think that I'm worried about undermining our higher education).  If anyone needs more evidence, simply listen to any professional athlete be interviewed.

And chances are they majored in Communication.  Explain that one to me.

These athletes are receiving a free education, comped room and board, and an almost guaranteed graduation from any number of universities, while the rest of us flounder in student loans for the next two decades.  So could I make an argument that perhaps students themselves should organize?  The masses could fight for lower tuition or better dorms.  I mean, they spend more time at class, studying, and doing homework than many full time careers, so they really should be compensated for it, right?  Not to mention extra-curricular activities like student government, clubs, and the like.  Why are these different than athletics?  Because athletics brings in money?  So now we give more leeway and perks to athletic students while the smart ones drop out and start tech companies.  Go figure.

All in all, I think I would stick with the argument that the NCAA needs to heavily overhaul their entire system, and, at the same time, we need to remember that athletes should students FIRST.  Breakthroughs in human development - medicine, science, economics - rarely, if ever, come from the field or court.  They come from educated, progressive-thinking, insightful individuals.  Believe it or not, their is no Nobel prize for running the 40-yard dash (but those who can run it best call the prize money for winning the Nobel a slow night out.  So at least we have our priorities in the right place).

Perhaps this is yet another case of affluenza.  And the gap widens.  

Mo' Material Wealth, Mo' Problems

Winston Churchill is quoted with

"Show me a young conservative and I'll show you someone with no heart.  Show me an old liberal and I'll show you someone with no brains."

Taking a stab at what he was talking about, I would argue that it's not so much about politics (especially contemporary parties!) or beliefs, but rather about preservation.  I believe he was referring to the basic human reaction to gain: preserve it as best you can, using the same tactics used to get it.  Liberalism - progressivism - is a tool to be used to break the status quo.  It can be, and is, used to disrupt the current state.  Out with the old, in the new.  Young people for generations have served as the foundation (read: not the whole thing.  Please don't argue history with me. Same goes for my use of "liberalism" in the previous sentence.  We'rte talking about the base ideology, not political affiliation.) for ideological change.  "Old" people have, for all intents and purposes, served as the primary pushers and movers of maintaining that very status quo, integration to rock'n'roll.

They say each subsequent generation suffers and solves the problems of the previous one. But it's that preceding generation who still clings on, desperately  to their beliefs they undoubtedly fought tirelessly to institute.

What does this have to do with anything, you ask.  Well, I respond, a trend I've been noticing as I get older is that those peers I grew up with, as we all go about our lives establishing careers, buying houses, starting families, the same people I once recognized as progressives, are now beginning their journey into conservativism.  From this, I've been beginning to think that the more one gains, the more one has, sways their ideological (and inevitably political) persuasion toward the right.  It seems to me that, simply, the more one has, the more one wishes to keep it that way, even at the expense of others getting their's as well.  In case you're new to my blog, please take a second and shuffle through old posts to figure out exactly how I feel about personal entitlement.  Go ahead.  I'll wait.

Back?  Good.  So I'm assuming you've learned that I tend to scoff when someone believes their "entitled" to something.  That I tend to smirk when someone tells me they "earned this! No one helped me!".  That I, frankly, find those things ludicrous.

Now, I haven't quite figured out what to make of my observations.  All I can say for certain is that, form what I've observed, the more people have, the more they tend to think they've earned it all by themselves.  And the more people think they've earned it on their own, the more they will begin to resist any and all change to the society that "allowed" them that profit.  It seems that while one can, on occasion, move from the lower to the middle class, they forget exactly what it's like to be that low on the totem pole.  And those born into wealth, they will never know.

The Honest, Hardworking Man

I recently heard this poem used in a commercial (unfortunately for Busch Light...), and it struck me as very timely. We're entering into an era where the income gap in the world's richest nation is higher than it ever has been, and is still widening.  Somehow, in some way, we seem to accept the growing gap between the rich and everyone else; as executive salaries skyrocket while ours stagnate. We seem to be content allowing the fruits of our labor to line the coffers of billionaires rather than grace our own tables.  In that respect, I find this to be very appropriate:

The Honest Working Man
 Marie Joussaye

As through the world we take our way
How oftentimes we hear
The praises sung of wealthy men,
Of prince, and duke and peer.
The poets tell us of their fame,
They are lauded o'er the land,
But you very seldom hear them sing
Of the honest working man.
They praise the wealthy banker,
The purse-proud millionaire;
Their pockets have golden lining,
So they're praised from everywhere.
Let others sing the praises
Of those darlings of the land,
But mine shall be a nobler theme--
The honest working man.
Let monarchs prize their glittering crowns
And all their royal host,
Let lordlings brag of their blue blood--
They have nothing else to boast.
But what is all their rank, compared
To our hero, true and grand,
One of fair Nature's noblemen--
The honest working man.
His hands may be both rough and hard,
His clothes and speech be plain,
But you will find his manly heart
Without a spot or stain.
And there are some whose clothes are fine.
Whose hands are soft and white,
But the secret records of their lives
Could never bear the light.
May Heaven's choicest blessings fall
Upon that hero's head,
Who bravely toils throughout each day
To earn his loved ones bread.
You'll find no monarch who can show
A record half so grand.
God bless great labor's true-born knight--
The honest working man.
So now of Fortune's favored ones,
Henceforth let less be said,
And more be spoken of the man
Who toils for daily bread.
God bless each hardy son of toil
That labors in the land.
Let us give three cheers with right good will
For the honest working man.

TED Talk on Wealth

I found this fascinating.

The Economics Class Socialist Experiment

As I'm sure many of us have read already, there's a continually circulating tale on the internet about an economics professor failing an entire class through an experiment in socialism.  Just in case you haven't read it (and because I'm not going to transcribe the whole story here), here's a link to several variations: Social Injustice.  Take a second and read through it again so it's fresh in your mind.

Now, I know you may be worried that this post may become a long-winded diatribe about socialism (or capitalism), or even advocating for one economic system over another, but I hope to write this as neither.  This is to be simply my reaction to what I see as an over-simplification of complex systems.

In the story, the professor takes all the students grades and averages them together and provides each student the same grade, regardless of effort.  If he were a true economist, wouldn't he recognize that in any system, at least at the onset, each individual arrives at various levels?  Think for a minute of the ten people with whom you most associate.  Your friends, colleagues, etc.  Are you all on an even keel regarding income?  Home-ownership? Equity?  Net value?  Educational level?  I would image that if this was to be an effective lesson, the professor would have noted that every society has certain systemic inequalities - whether those be income, ethnicity, gender, heritage, and so on.  Should these not be factors in any experiment?  In setting it up, then, I believe the instructor should have provided some students "A"s before class even began because their parents earned really good grades in school already.

I also wonder how he would have constructed this experiment to reflect the benefits of capitalism.  Since capitalism is, essentially, one person selling their labor to another person, would this new experiment consist of 80% of the class studying really hard then providing crib sheets to 20%.  That 20% then gets an "A" and the other 80% gets "C"s.  Now some of those 80% may also study really really hard and eventually get a "B", sure, and more power to them.  But don't forget that because half of that 20% are going to get an "A" anyway because of their parent's really good grades, so it really doesn't matter if some people don't want to study for him/her (although, let's face it, it's pretty much "him").  Oh, and if we want to exalt the American system, for every score of 100% a male student gets, we should certainly award an even proportion of female students who studied just as hard a 81%.  Right? (Source: Bureau of Labor Statistics, page 55)

I believe this to be an incredibly vast oversimplification of a societal system - both mine and theirs - to the extent that the story serves little more than a McCarthyist legend, the same propaganda that has shaded American beliefs of anything other than republic governments and capitalist mentalities.

Am I saying one is better than the other?  I am not.

Do I regardless recognize that any economic system and governmental structure has flaws?  Of course.

But if we are to begin falling behind anecdotes as arguments, then our partisanship surely has completely left the harbor (pun intended).  It's stories such as these that erode our ability to maintain civilized dialogue and empathetic listening.

Just Get a Job!

How many times have you heard this as an argument to reduce government spending on welfare benefits?  Many of the loudest critics of our nation of "takers" claim that spending on programs such as welfare, Medicaid, and Medicare are allowing citizens to develop a something for nothing mentality.  Some figures even estimate that 49% of American households now receive some sort of social welfare.

Well, fair enough.  Why exactly is it that so many people abuse services intended to help them get back on their feet? Why don't more people realize their own "American Dream", work hard, and find financial security on their own?

Because this issue is not in a vacuum, that's why.  If we're to talk about welfare reform (which I believe we should), why would not also, in the same breath, bring up the vast income disparity afflicting U.S. workers?  Wouldn't it make sense to talk about what people are getting paid hand-in-hand with why they need these benefits in the first place?

Conservative estimates put the number of "working poor" in the range of 146 million Americans.  That is, workers - with jobs - generally with no savings, no retirement fund, living paycheck to paycheck and hoping no sudden cost springs up such as a sick child, their car breaking down, or housing repair.  Some businesses thrive on the labor of their low-paid employees, with the typical worker receiving a paltry $13,900 a year.  Executives, on the other, wrangled an average of $9.4 million in annual income, with an additional $175 billion - billion - going to shareholders.  But hey! It's the shareholders that invested in the company in the first place!  Their holdings allow the company to grow and expand and so they deserve their dividend! And the executives set the strategy and vision for the company to post a profit!  They deserve it too!  Ok.  Fair enough.  In that case, since it's the shareholders and executives that make dreams come true, let them roll up their sleeves and stock the shelves.

Wouldn't it, instead, make sense to take care of those individuals that actually do work?  Those that actually make the company move forward?

Since 2008, 60% of the jobs created in the U.S. have been low-wage jobs.  Now, I'm not saying anyone should claim to be "above" certain industries, regardless of education or background.  If you need a job, get a job.  Flipping burgers is a job.  Get out, provide a service to the greater society.

But when 1 in 4 Americans are now earning less that $10/hour, we can't also assume that people are abusing the welfare system.  At some point we have to realize that the system is abusing the people.  Walmart, for instance, has been under the microscope for moving to "Flexible shifts", a move that critics say was designed to force full-time employees down to part-time, losing their benefits at the same time.  One study estimated that workers for Walmart alone cost taxpayers more than $1 billion every year because of the giant's lack of benefits. At some point, we have to realize that when wealthy people set the salaries for other wealthy people, the social distance between rich and poor will only continue to grow.  I say let the employees decide the reimbursement for the executives - then we might see change.

For more fun reading, check out these exciting pages!

A Guide to Statistics on Historical Trends in Income Inequality (Center on Budget and Policy Priorities)
CEO Pay and the Top 1% (Economic Policy Institute)
Fortune 50 CEO Income Compared to Average Worker at Company (Payscale.com)

Imposed Regulations

It always seems strange to me how very contradictory our economic demands are compared to our public demands.  We in the U.S. hold on dearly to our capitalism, maintaining the “American Dream” – if you work hard enough, you’ll be successful.  If you’re not successful, well, that’s your fault.  Our tycoons and kings of the free markets built their empires through smart business moves and the sweat of their brows, fueling the fires of competition to bring the best and least expensive product to the masses.  Capitalism, after all, is spurred on by competition, hence the Mergers and Monopolies commission, which regulates markets to ensure fair competition.

But wait a minute?  How can we be both competitive and “fair” at the same time?  Isn't that the point of capitalism – “I built it, it’s mine, and the government needs to butt out!” – to build and maximize and adapt to survive?  Our economic system and deeply held cultural beliefs stem from Social Darwinism: only the strong survive.  However, we don’t live in a completely free market economy to allow private businesses the wiggle room to manage their own affairs.  We've added government regulations, taxes and tariffs, and publicly funded programs to the mix, hindering the private markets’ ability to self-regulate.

Damn right, some of you may say.  Let Big Brother get out of the picture and leave us in peace.  Let business take care of business and the government to take care of…something else.

Now, think, what would happen if the government truly played no role in public life, allowed for a fully capitalistic system to emerge, free from influence and free from any of those “social(ist)” programs interfering with the balance of power.  Programs such as welfare, roads, bridges, the correctional system, the military, police and fire protection, minimum wage, the 40-hour workweek, labor laws, public education (including the state university systems and tech schools), FEMA, Social Security, Medicaid and Medicare, and tax breaks for businesses, dependents  home-owners, people in school, IRA contributions, work-travel, and charitable donations should all be out the window…

So what do we really want?

It's Still a Global Economy...

As part two of my last post regarding the interconnectedness of today's economy (found here), two big side issues come to mind: outsourcing and off-shoring.  It's important to recognize that these are two different strategies, sometimes overlapping, but not necessarily (imagine a Venn Diagram...I do so like those).

Outsourcing has to do with when one company hires another firm to handle some, part, or all of one of it's production facets.  For instance, many colleges outsource food service and housekeeping, hiring an outside entity to handle those operations.  Another company may outsource logistics and transportation.  Or packaging.  Or marketing.  Anything not done in house is, effectively, outsourced.  Often it's just more cost-effective to hire someone else to worry about those things.

Off-shoring is when a company decides it's more cost-effective to produce their products in a different country.  T-shirts might be distributed by an American company, but it's much cheaper to pay workers in Honduras (where the shirt I'm wearing right now was produced even though it's by Fruit of the Loom, an American company).

So which are we more concerned about?  I've heard it here and there that we should move toward a "buy American" market.  That is, we should buy materials made here in the good ol' U.S. of A.  But what about materials made by American companies?  I mean, eventually, doesn't most of that money stay here in the States?  The company's books are U.S. based, so their revenue counts when the IRS comes a'knocking.  But, and ready for a wrench in the works?  What about foreign companies off-shoring to the U.S.?  U.S. workers, saving and spending in the U.S. Isn't that what we're looking for?  But the argument about where the revenue stream heads we just used regarding U.S. products not made in the U.S. is now used against us.  I came across this article in Bloomberg Businessweek which got me thinking about it.  Unbeknownst to me, Anheuser-Busch has been bought out by InBev, a Brazilian/European company.  Since their takeover, they've laid off a couple thousand U.S. workers as the company grows evermore profitable.  Even still, they've taken other brands they own (notably Beck's, as pointed out in the article) and moved production from Germany to the U.S.  That's good, right?

Even now, I still haven't wrapped my head around the global implications of AB InBev or the dozens of other companies that do the same thing...

So what does it mean to "buy American"?

A Globalized Economy

Spoiler alert: it was my hope to write this as a non-partisan, neutral look at a contemporary hot-button issue.  My thoughts on the matter may not resonate with you personally, or even any reader happening across this page whilst enjoying their morning joe.  What follows is simply a hypothetical consideration; one of many sides to a significant and ever-growing issue.  Happy reading.

For the past several years, the U.S. has been spiraling through the “Great Recession”, and, as such, a central issue in both the public and private sectors has been putting American citizens to work.  But let’s consider for a moment just what exactly our economy allows for, specifically regarding off-shoring and outsourcing.

Here we are, 2012, a world that has become steadily interdependent and globalized economy.  We enjoy everyday luxuries impossible to consider a century ago.  Standardized clothing, mass manufactured and shipped from the Caribbean (Honduras, specifically, for my shirt right now) and produce, far out of season in the Midwest, fresh on the shelves from Jamaica and South America.  Toys made in China.  Steel, mined in Brazil, ships to the U.S., where it’s delivered to a tariff-free zone (an area not technically considered the U.S.) where it’s manufactured into usable materials import-free (meaning the good ol’ U.S. of A. makes zero public profit) and shipped to the Netherlands where components are put together into a product.  A U.S. company contracts an Asian company to create computer processors, which, in turn, contracts Chinese mining companies to provide raw materials and Indian firms to write and install software, and the whole shebang is then shipped to a separate company (probably a U.S. company taking advantage of less-expensive labor and more lax import/export laws as it sets up shop in a foreign nation) to put it all together, when other companies come in to market, pack, ship, stock, and sell the item.  Then, if something happens and you need tech support, the phone is answered by someone halfway around the world, working third shift to accommodate the time difference, whose paycheck is still signed by the American company.  Obviously, “bringing jobs back home” is a little simplistic.

Now let’s think what would happen if all this work arrived on our shores: The labor that we in America get all up in arms about when we hear numbers like “$3 a day”, decrying how terrible it is to be paying workers such a paltry sum, suddenly shoots up to American standards, somewhere in the minimum range of $7.50/hour.  (Side note: what we often fail to consider is the purchasing power parity, or PPP, which links changes in the exchange rate between two currencies to changes in the countries price levels.  This adjustment then allows for a more direct comparison of living standards…for instance, in 2007 the GNI per capita in China was $2,360, but the PPP per capita was $5,370, meaning the cost of living was less in China and that the GNI per capita could purchase as much as $5,370 in the U.S.  I’m not saying I’m for or against $3/day, but just that single number alone doesn’t paint an accurate picture).

Anyway, say we have 100 workers at $3 U.S./day, working for one day - $300 in labor.  100 workers at $7.50/hour, working an eight-hour day for one day = $6000.  Now think about that over the course of a year.  Now, if output remains the same, but cost of labor increases, what logically must happen to the cost of the product?  You guessed it.

I would say our next step is figure out what we can do, and what we can do better than anyone else. We can’t very well consider our economy in isolation from the rest of the world; jobs don’t just appear.  We can spout all we want about job creation, but until we find something people will pay for, we can’t very well work it.  We’re in the midst of a global system, what happens in one place inevitably affects what happens elsewhere.

So what’s the point?  We live in an ever-shrinking, ever-flattening world.  No longer is a single country autonomous and independent of the activities, the economies, the products of another nation.  Now, I’m not saying that I necessarily agree or disagree with the current level of out-sourcing and off-shoring, or even that there aren’t some gigs we could do here, simply that “bringing jobs back home” isn’t as easy as that.