Comments about ‘Letter: Free market destroying the conditions that make a free market possible’

"It appears the free market is in the process of destroying the conditions that make a free market possible."

While I totally agree with the premise of this letter - that the "free market" has not been a friend to the American middle class over the past 30 years - I'm not sure I agree with the final statement of the letter. In the truest sense, the free market can manufacture their products wherever they wish and pay their workers whatever they wish. The question we have ask ourselves is what quality of life we want to promote through our government structure. Some say that our current tax system actually rewards companies who move their operations overseas while others claim our coporate tax system discourages those companies from staying here and paying our workers reasonable wages. I suppose both claims could be true at the same time.

What we need are leaders that understand how to get the best of both worlds. Do we really believe corporations will bring good paying jobs back to our shores if we reduce or eliminate their taxes? I don't, but I don't have a viable alternative, either.

There are a lot of things that go into making a business run effectively. It all starts with capital. Somebody has to have money available. All the qualified workers in the world would just laugh at you if you asked them to work and promised them a share of the profits if and when the business made a profit.

When sufficient funds are available to start a business, then the next most important thing is government taxes and regulations, after all, who would invest all of their money if regulations kept them from making their product or if government "redistributed" their hard earned profits to people who where unwilling to work?

Next comes the labor force. Finding qualified people who are willing to work for the value that they add to the company is not the easiest thing. Everybody wants a fat paycheck, but not everyone is worth a fat paycheck. Instead of learning the required skills and adding worth, too many hide behind a destructive union and demand more than they're worth.

If capital or regulations/taxes or wages are not favorable, the business owner goes offshore.

How long will we continue to kill the golden goose?

If you examine all of so called "free trade agreements" they all have ample and very specific protections for capital. They all have zero protections for labor. That means labor is subject to free trade, capital is not.

The top reasons business re-locates in other countries are, Taxes, Law suits, regulations, and Union regulations and perks. (not wages). These are not so difficult to fix. If we seriously want our business to stay or return.

What free market? We haven't had a free market in the US for at least 100 years. That's when congress created the Federal Reserve banking system. Legal tender laws also undermine any freedom in the marketplace. Consequently, we now have a monopolistic controller of the money supply. Baron Nathan Mayer Rothschild summed it up succinctly when he said, "I care not what puppet is placed on the throne of England to rule the Empire, ...The man that controls Britain's money supply controls the British Empire. And I control the money supply."

We won't even begin to have a free market until the money supply is turned back to the market rather than being controlled by a government-created monopoly. That's the root of our economic problems.

I have found the saying: "you get what you pay for." to be completely true. If you want to pay peanuts, you will get monkeys.
Even for lower end work paying someone a livable wage goes a long way in building up company loyalty, morale, and getting more quality employees. Even in lower paying jobs paying just a bit more can get a lot from your employees.
If companies could finally understand the bottom line is not all about numbers, there is more to it, then our economy would recover a lot faster.

Unions are an easy target for conservatives. In reality, only about 7% of the private sector workforce are unionized. The one thing that you cant account for in any economic model is greed. We are a very greedy species, constatnly wanting bigger and bigger, more and more.

See the article in today's DesNews about the Mexican factories that supply parts for the large automakers. The workers make $7.50 per day and live in abject poverty. This is what we are competing against in a market where, as Roland Kayser points out, there are no protections for labor but plenty for capital.

When we remove most of the decent-paying manufacturing jobs from our economy, we are left with basically a service economy. Commenting on the viability of such a system, Harvard business professor William Abernathy asked what we would do, "Get up each morning an press each other's pants?" Or as an economist friend of mine put it, "I'll cut your hair, you'll cut my hair, and we'll both get rich."

"The result is that American workers cannot compete with laborers in China, Vietnam, Bangladesh, Costa Rica,and dozens of other low-wage locales."

We can compete. The problem is, we don't want to compete. Competing means lowering wages and eliminating generous fringe benefits. This means, basically, breaking up labor unions. And we need to do away with the never ending government unemployment benefits.

"Corporations have been shipping jobs off to third-world countries for decades now..."

If corporations can't make it in the American labor market, and they can't, they're compelled to move overseas.

"It has now been over 36 years since the U.S. ran a trade surplus."

It's been about 36 years since countries like China and India found they can manufacture products just as well as Americans... at about a tenth the cost. We are now in a global market.

"There is a reason corporate profits and CEO pay are at record levels, the middle class is in steep decline, and there is a decreasing availability of decent-paying jobs."

There are no decent-paying jobs in the manufacturing industries in America since most manufacturing has moved overseas where labor is cheap.

Years, ago
American businesses found a small backwards 3rd world country in the Far East and began moving manufacturing there for their “cheap labor”.
This country’s new manufacturing based economy – created a new middle class, a higher education, and an economic wealth unparalleled in the world.

From their new experience in buying toys and other small gadgets, they quickly developed bigger and better domestic weapons – and finally turned on their Corporate Masters by bombing Pearl Harbor.

The only difference was in 1941 – America still had manufacturing as it’s #1 industry.
Times have changes...

FYI - China is still Communist, and has been carefully following Imperial Japan for the last 50 years.

There cannot be free enterprise without "even playing field" competition. Monopolies have bought and killed their competition and bribed until now they have taken 40% of the wealth of the middle class. They have bilked subsidies and tax benefits, destroyed unions and still they complain. They have bought our democracy and yet all we hear is that they have too many regulations. They are stashing their profits in banks and overseas to the tune of 5 trillion dollars filling upper management and congressional coffers. They refuse to invest in the future and inovation but yet the Supreme Court can give them extra rights as corporations. Their right to access to Washington is also expetited through Citizens United and as a result we have sold the Republic down the river. American Exceptionalism is just a con folks.

@wrz

"We can compete. The problem is, we don't want to compete. Competing means lowering wages and eliminating generous fringe benefits. This means, basically, breaking up labor unions."

So it is the labor unions that are causing wags in the US to be above Vietnam's level of $50 per month and China's wages of $1 an hour?

Those darn unions. We should all be working for $50 a month. It'll be easy to find a place to rent and easy to put food on the table, right?

@KDave:

"The top reasons business re-locates in other countries are, Taxes, Law suits, regulations, and Union regulations and perks. (not wages)."

Wrong!! Wages are the reason businesses relocate overseas. Wages are by far, the biggest cost of doing business. Overseas wages in competing countries such as China and India are a tenth of the wages in America. And fringe benefits such as SS and retirement benefits are nonexistent.

"These are not so difficult to fix."

Indeed they are hard to fix. It means cutting wages and fringe benefits to the levels of overseas competitors. We could install tariffs on imports to level the playing field... in which case a kid's bike would cost you $500 instead of $75 at Wal-Mart and a cordless drill would cost you $180 rather than $18 at Harbor Freight.

"If we seriously want our business to stay or return1."

Never happen.

@LDS Liberal:

"Years, ago, American businesses found a small backwards 3rd world country in the Far East and began moving manufacturing there for their 'cheap labor.'"

It's worse than that. We invited young energetic business people from Japan to come here and see how we did things. They took copious notes, went back home and developed what is now a major center of world manufacturing... swiping most of America's manufacturing jobs... them and China.

"FYI - China is still Communist, and has been carefully following Imperial Japan for the last 50 years."

Yes, which means they control everything... including unions and union level wages. They also control the value of their money which makes them difficult to compete with.

@SEY. Agreed, we won't even begin to have a free market until the money supply is returned to the market. But how will that address the labor problem/service economy problem here in the US now that we are in a global market place? Can you connect the dots for me?

In my business, I dealt with small manufacturers in Bali, Indonesia. Yes, the factory owners paid very low wages. However, they housed, fed and paid the medical bills for the workers and their family members. On some occasions they even paid damages if an employee was involved in a car or motorbike accident, whether work related or not. Clearly this will never be the situation in the US, so how do you deal with the discrepancy between labor markets?

Is the answer in embracing our emerging service economy? Is it possible to make a living wage working one job in the lower echelons of such an economy, free market notwithstanding?

Alfred,

So communism makes China more competitive in the marketplace? On that basis, we would do well to emulate them, true?

Mr. Bean,

There are a host of reasons businesses move. Wages are certainly important but businesses look at all costs both direct and indirect. Some manufacturing can and will return (if we play our cards right). But not all. We need to focus on where we can best bring value to the table.

SEY,

So the economy of the 1900s was not a free market? Okay. Call it what you want, the last century was pretty good for America and its workers. The previous century less so. I will take the 1900s over the 1800s.

So WRZ, are you ready to allow your employer to cut your pay so it matches the pay scale in Bangladesh? Or would it be better if you were willing to spend your money only on things labeled "Made in America" even though those things might cost a little more?

While I agree with the economic analysis of this letter, I'm unclear as to what solution the author proposes. Protectionism really won't solve the problem of wage competitiveness--we simply cannot compete internationally for most manufacturing wages.

Free trade works when each nation maximizes its strengths. Bangladesh can offer wages much lower than any American could possibly afford to work for. But Bangladeshi universities aren't really magnets for the best and the brightest all over the world. We compete best at the Silicon valley level, imagination, creativity and entrepreneurship.

That suggests, in turn, that we really take seriously education reform. Above all, we have to hire back the teachers who have lost their jobs in this recession--we need to reduce class sizes. We need to reward innovation. We cannot afford a system where teachers teach to the test--in fact, I support eliminating all standardized testing K-12. Look to the best education systems in the world--Finland, Denmark, Australia.

I wouldn't mind looking at regulation reform. But it's one thing to say 'get rid of all government regulations'. Instead, what specific regulations are holding us back. How can those specifics be reformed?

@one old man:

"So WRZ, are you ready to allow your employer to cut your pay so it matches the pay scale in Bangladesh?"

Thank you, but I can make more on federally funded unemployment.

"Or would it be better if you were willing to spend your money only on things labeled 'Made in America' even though those things might cost a little more?"

Can't afford 'Made in America' on my unemployment check. I'm forced to buy the cheaper products.

Twin Lights:

"So communism makes China more competitive in the marketplace? On that basis, we would do well to emulate them, true?"

That's one possibility... But would never fly in the land of the free and the home of the brave.

"There are a host of reasons businesses move. Wages are certainly important but businesses look at all costs both direct and indirect. "

True, but labor costs are the most prominent. Don't forget, even indirect costs contain alotta 'wage' costs.

"Some manufacturing can and will return (if we play our cards right)."

It may... as third world countries begin to emulate our way of life and cost of living.

I wonder how many of these “Anti-Socialist” “Anti-Union” are the ones who made everything to expensive to buy complainers are driving German or Japanese automobiles?

The average German or Japanese auto-worker makes $80-$100 per hour, yet you say it those very Unions and Socialists who drove work to China?

No – The unions and Socialist countries do not allow work to be free-marketed out of their countries.
Yet they still make a better product, cheaper than China.

GREED is what causes it.
GREED by the Managers, not the factory workers.

The Germans and the Japanese already know this.
Americans don’t.