The Rising Fuel Costs - Profits for the WealthyThis morning I sent this letter to my Federal Congressman (Bill Young) and my two Federal Senators (Bill Nelson and Mel Martinez).
The tone is slightly acrimonious, but I was still angry about paying so much for an essential element - fuel for my car.
I'll post the results as I receive them.
Dear Represenative,
This morning while driving to work I had to make a displeasing pit stop to purchase fuel for my car. My car is relatively fuel efficient so fortunately I only need to purchase fuel about twice a month – lucky for me.
The cost of fuel this morning was over $50.00. Yes, I have a fuel efficient car, with a 17 gallon tank and the cost of fuel is over $50.00. Three weeks ago the cost for filling my tank was around $30.00. The difference may not seem like much to you, given your salary and other benefits. But for us, the working people of America, $20.00 is the difference that keeps our economy moving.
The additional amount that I am spending on fuel this month is coming from my discretionary income. This is money that I would spend in a restaurant, in a department store, for admission to a theatre, zoo or museum. This is money that supports jobs in my local community, money that supports the tax base which keeps our roads safe and our schools functioning efficiently. This fairly small amount of money, when added exponentially by each person purchasing fuel, becomes economically significant at the macro level.
So my questions are:
What are you doing to control the rising fuel prices? Why isn’t Congress doing more as an oversight body to control the rising fuel costs? Why isn’t Congress protecting the American middle and working classes from price gauging?
With the profits in the oil industry breaking records, the CEO of Mobil earning over $69,000,000 last year, and the price of fuel rising with little or no justification; Congress should be as outraged as I am!
Please consider this issue in-depth and consider helping the average American with this additional economic burden. Since it is us who keep this economy moving, not the CEO or wealthy investors, it’s time to act.
posted by Van at 4:52 AM
29 Comments:
Van,
You make a compelling case. I differ in your assessment that we are being gauged, however in my position much of my transportation is provided. I guess we can see how I feel after I use my personal vehicle to travel to my vacation home this afternoon.
The main question I have for you is simple, it may not be simple to answer...but the question itself is:
How much is a private company allowed to pay their CEO? What is the $$$ number the government should force upon the companies?
Good question - they can pay what ever they want. I'm not a Marxist. This is an issue of principle.
My point is since the company is so flush with cash, ie. record profits, record CEO pay; then they are not exactly hurting for profits or capital for investments.
Here's the main point - the refinery process has not changed much in the last 3 years, nor has the supply of oil.
So why the huge price increases?
Additionally, why is Congress not using it's oversight ability to investigate this?
I know that there were hearings a few months ago, but the oil executives did not make a compelling argument as to why they are charging so much. At least I'm not convinced anyway.
I don't think that Congress should ignore this problem as the price of oil, a necessary commodity, affects most of what we, the citizen consumer, purchase.
In other words, it's driving up inflation, which will lead to less discretionary spending, which can lead to another recession.
The price of fuel for our automobiles is bleeding our economy.
I can sympathize and I sure don't like paying $50 to fill up my Hyundai either. While the oil companies seem to making a lot of money a lot of their profits are because the government has seen fit to allow them to avoid taxes and other costs with such things as reduced or free leases on off-shore drilling access. We need to fix that.
While it will be painful I think we ought to take a lesson from Europe and tack on additional taxes to gasoline and diesel fuel. In Europe you pay the equivalent of 8 or 9 dollars for a gallon of gas, most of which is taxes since they pay the same as we do on the market for the raw crude.
This would produce incentives to reduce travel by auto and increase investment in public transportation. Not to mention its positive impact on the environment. We are dealing with a finite resource and it's price should reflect that. We are just fooling ourselves with our relatively low prices on fuel. Sooner or later we are going to have to face the music I think it should be sooner.
Monk - you may be right about taking a lesson from Europe, but at least they had a gradual increase and an appropriate amount of time to respond.
This is very sudden for us.
Correct Van, we should have been weaning ourselves over the last 20 years but we still are not taking this thing as seriously as it is. Unfortuneately the situation is going to be either addressed by us proactively or reactively and at least with some forethought and actions on the front end our response can be measured and somewhat controlled. There is going to be a lot of pain either way but I believe the pain will be less if we start biting the bullet now.
Monk -
We'll probably be reactive. Kerry had some ideas, but he didn't make the grade.
Good points.
A major obsticle is that our communities were build for the automobile. To change this infrastructure will cost billions.
A very well written essay, Van.
I agree with you and Angelo Codevilla that G W Bush is NOT a traditional Conservative, by any means.
His father was a Moderate/"socially Liberal," what is commonly called "Rockefeller" or "Country Club Republican," who was completely out of touch with the GOP's Conservative base.
That's why many true Conservatives and many more Libertarians have taken great issue with G W Bush...and rightly so.
I'll also agree that the "War on Terrorism" is a completely misnamed war and because of that, it's been widely misunderstood.
An action against al Qaeda alone could've well been a criminal justice matter, as some folks have maintained, BUT our enemy today is not merely al Qaeda, but the Islamic Jihad, Hammas, the Islamic Brotherhood and a host of other groups associated with "radicalized Islam," or as I call it, Islamo-nazism, sponsored, harbored and supported by a band of rogue states.
A huge part of the problem with that enemy is that since traditional Islam hasn't had a Reformation, it's impossible to tell just how large a segment of the Islamic world is currently radicalized.
Is it 10%, 15%, 25% or much more?
The reality is that for better or worse, Islam itself has become the scourge of the modern world. In Kashmir, Muslims clash with Hindus, in the Balkans Muslim Albanians in Kosovo were the first to practice genocide on the Christian Serbs, in the Sudan, Chad and Nigeria Muslims routinely raid, pillage and rape non-Muslims, and in the Mid-East Muslims have long waged internal war against Arabic Christians and over the last half century, Jews.
In nearly every Muslim nation, Sharia Law (complete with the stoning of adulteresses and gays) and Dhimmitude are the order of the day. Dhimmis, or non-Muslims are forced to wear insignias so they can easily be identified and stores owned by Dhimmis must be adorned with that insignia as well, so Muslims can avoid buying from non-Muslims. If a Muslim slays a Dhimmi, usually at worst, a fine is imposed and that fine can be waived by a magistrate.
Such is traditional Islam!
I don't know what can be done to modernize Islam.
I do accept, however that the current war must be waged against those rogue, largely Arabic and Muslim nations that have harbored, sponsored and supported the international terrorism waged by the radical Islamicists, or Islamo-nazis, though that is certainly a postion that is up for rational debate.
A part of that may also be that I myself am still too close to the after effects of 9/11/01.
I am a fireman in the FDNY.
I worked for nineteen years in the South Bronx and now going on two years in the FDNY's Hazardous Materials Unit.
I knew at least fifty of the guys killed that day personally. Many I worked with and some I'd taught recently at the Fire Academy (I taught Ladder Company operations at the Fire Academy from May to Sept 2001).
I believe we are in a misnamed and, largely because of that, a misunderstood war against a group of rogue states that have chosen to use international terrorists the way the old Barbary States used pirates back around the birth of the USA.
Even though we may disagree on some points, we certainly agree on many others...and I can certainly say, I like your style.
JMK - thank you for coming by.
I appreciate your comments.
I also want to thank you for your service to our nation and for your efforts as a fireman. I admire that occupation and secretly hope that my son, although he's only 15 months, becomes a fireman.
We'll discuss more of this another time, I'm sure.
van/monk,
TAKE LESSONS FROM EUROPE???
I am sorry but are you guys certifiably insane? Please, let's not be taking economic advice from Europe. I'd prefer to not look in the future a few years and see college kids and 20 somethings rioting and tearing the place apart. Or the week prior Muslims doing the same.
Looking to Europe and their stagnant economy is not what I want for America.
Why is it that if something is expensive we have to make it cheap? Then when we do, WalMart, they get hounded! I get lost in this web of what needs to be cheap and regulated, and what doesn't.
jmk,
God bless you and the families of the FDNY.
PS-It didn't hurt my pocket too much when I filled up. It just is not that bad.
I'm sorry Van, it seems I posted these comments in the wrong section. They should've been posted after the following essay of yours.
At any rate, the FD is a great job. I'd recommend it to anyone.
There are a lot of issues we may agree are problems and yet disagree as to the solutions. That's not necessarily a bad thing, somewimes new ways of looking at things stirs the pot. That's whay I'd usually rather exchange views with those I don't always agree with.
For instance, I too feel CEO compensation is out of control and it's unfortunate that a small number of people on the boards of directors of these companies can bestow such out of whack compensation packages on fellow board members.
That said, that's NOT the same issue as, or reason why gasoline prices are so high right now.
It is said that part of the rationalization for Lee Raymond's $400+ MILLION retirement package lies in his "vision," that made Exxon-Mobil so profitable.
Back in the mid to late 1990s when oil was around $10/barrell, Lee Raymond plowed twice as much money as Exxon-Mobil made in profits into R&D, exploring for more and new oil reserves, banking on his view that with China and India both growing and modernizing the pressures on the world price of oil would be exponentially upward.
A good hunch, but I'd bet a ton of investors had the same hunch, as well as a lot of guys working on off-shore drilling rigs at the time. Hardly worth the $400 MIL, in my view, but instructive on two fronts - (1) When they say that CEOs are rewarded on seeing "the BIG picture," that's pretty much all they really mean and (2) that neither CEOs, government officials, nor any other individuals actually control the price of commodities, such as oil.
A huge spike in demand drove up the world price of oil, not greedy CEOs or "hateful Republicans," or "evil Demsocrats."
We SHOULD'VE been transitioning to an alternative fuel like ethanol. Brazil will be 100% oil independent this year as it now uses ethanol to run its cars. Ethanol doesn't have to be made from corn, it can be made from saw grass and other weeds and waste products.
Sure, we can say that Exxon-Mobil and its investors are the problem as they chose to go for more oil in order to rake in higher profits, but it's the changing market that's really to blame.
The world demand for oil is much higher now than it was even ten years ago and that demand has driven up the price.
It is entirely possible that new petroleum reserves under the oceans may once again drive the price of oil down, but some form of alternative fuel would seem a better bet.
Great point MDConservative.
Europe has certainly travelled down a very tenuous and self-destructive path.
People talk about the U.S. being a "Free Market" economy and Europe being "Socialist," though neither is really the case.
Actually most Western European nations, as well as the U.S. are Corporatist economies, with the government heavilly regulating the markets, thereby protecting established jobs creating enterprises.
While the U.S. is certainly a more open and competitive marketplace, Europe has a much broader social services web, neither one is fully Capitlalistic or Socialistic.
Perhaps the worst aspect of the European economy is the same flaw endemic to most government-run economies - they tend to be employee drive, instead of consumer driven - a sure fire path to poor service and inferior quality.
While I certainly don't like the $3/gallon price of gas today, I fully understand it's due to the rising global demand for oil, plus a little "government greed."
How come no one cries for government to reduce their obscene taxes on gasoline when prices skyrocket?!
Federal, State and Local taxes make up over a DOLLAR per gallon in some locales!
To me, that's a real outrage!
P.S. Thanks for the very kind words. I couldn't imagine a better way to have spent my last twenty years. I had more fun than I ever deserved to, that's for sure.
MD - thanks for your comments.
You wrote:
"Why is it that if something is expensive we have to make it cheap? Then when we do, WalMart, they get hounded! I get lost in this web of what needs to be cheap and regulated, and what doesn't."
It's simple really, I posted on this topic and will likely post again.
The protective tariff is designed to sheild an industry from an unfair foreign advantage. It is meant to equalize to price differential - usually the difference is labor and reflected by a lower living standard.
If a company makes a item in New England and a foreign company makes an item in India (where the wages, standard of living, taxes, environmental protections, etc are much lower) a protective tariff will equalize the difference. This prevents New England from losing its industry, tax base, safe roads, good jobs, etc.
The companies compete based on the merit of the product, not just price - people over profit.
Now, this does not stifle compitition because a company in Alabama can make the same item, but cheaper than New England.
The item from Alabama causes a new price structure or shift. Tariff's are lowered, the prices are adjusted.
This system has worked well for our economy from Jefferson to Reagan.
Since we've abandoned the tariff system we have a 800 billion dollar trade deficit, under employment, more poverty and less good jobs.
Our average tariff is about 1.8%. China's average tariff is about 22%. We're getting screwed. Most of our trading partners impose tariff's on the goods that we export, we practically do not.
Yes, it's cheaper to purchase a television, but a cheaper television will not pay your mortgage nor put your kids through college.
See my point?
Protective tariffs have been an element of American Democracy since 1787 - this was taught by Adam Smith.
JMK - No worries. I've done that (commented on the wrong topic) too.
I'd like to respond to your comments later.
Hey, I was wondering if you ever make it to Yonkers? I was born there. I lived on Mclean, near the Hillview Resivour, just up from the Bronx River Parkway.
Mclean Heights is the name of the neighborhood.
I was pretty close to the Bronx.
Loved it there - I'd move back but my wife hates the winter. It's a tough sell since we live in St Petersburg Florida - mild winters.
MD - there is one more component to the protective tariff.
A protective tariff is meant sheild an industry which is native to a certain country.
For instance, the United States does not grow teak lumber very well, our climates do not support that product. So we import that comodity from Denmark and Vietnam. There is no need to put a tariff on teak wood; we do not have a teak wood industry.
Now, this system is not perfect; and like any other system of finance it has been abused and corrupted. But, at it's essence it places people (industry workers) over profit.
The so-called free trade system that we are guided under now is slowly killing our middle-class.
Even if China re-evaluates it's currency -- we'll still be in the hole to them.
Our dollar needs to drop by about 40-50% of it's current value in order to start the sort of exporting necessary to compete with China. In other words we need to get to the point where we cannot afford to import cheap Chinese products.
Some think that if China would only re-evaluate it's inflated currency than our dollar would not need to drop so much. But that's like asking China (which is experiencing 10% GDP growth) to shoot herself in the foot.
So it's more likely that the dollar will have to drop.
This is a price that no politician is willing to pay, so we continue to borrow (sell t-bills) and sell our hard assets (shiping ports) to keep our economy afloat.
Our nation needs to sell over 800 billion in assets a year to keep from economic collapse.
Some day though, if this continues, we'll likely have a very, very long recession.
I hope that I'm not rambling.
A number of the guys I've worked with came from Yonkers, Van, others from Orange County, Putnam and Long Island. It's tough for cops, teachers or firefighters to live within the five boroughs...and getting tougher for the new guys - new cops and firefighters make just $25,000/year until they get out of their respective training academies.
I'd worked in the Bronx before I got on the FDNY, but I was glad to have been assigned up there. Great guys and a lot of work, which is what I wanted. Crazy as it might sound, I figured the "safest" place to be, was the busiest, because those places were filled with (1) guys who really wanted to be there and (2) Companies used to doing the work, so you'd figure they'd be great places to learn.
For me it worked out.
As to economics, in my view, both Europe and America have both chosen to rein in the free market. America less dramatically and more effectively and Europe extremely inefficiently...at least in my opinion and judging by Europe's far less dynamic economy and huge unemployment rates.
One of the things Adam Smith warned about was trade between unequal partners. The marketplace is CONSUMER driven, and as such it is very competitive. Any edge at all can be huge.
Workers hate hearing that "Labor is a commodity," but that's exactly how it is seen in the business model, just another commodity, which has to be used efficiently and gotten at the cheapest possible price.
That creates a tremendous incentive for "labor saving" devices and policies, and when allowed, "outsourcing labor to cheaper venues or importing cheaper labor from elsewhere.
I think those who support Free Trade over Fair Trade are being short-sighted, as the impact only STARTS with low-skill, low-wage workers and eventually runs through the entire labor force.
In my view, Big Labor has fallen down on the trade issue. A Democratic administration, supposedly somewhat in tune and beholden to Big Labor, expanded GATT (1991) and passed NAFTA (1/1994).
The short-term gains are so great from unbridled Free Trade that the investor class loves it...and it certainly DOES bring with it cheaper prices for goods and services.
But as Smith argued, when England uses Colonial labor, it puts the English blacksmith and the English furniture maker out of business, as eventually, that work can simply no longer be afforded to be done in England.
Today, the two people who've made the best arguments AGAINST Free Trade are Pat Buchanan and Indian economist Ravi Batra.
The problem I have with the views coming from the Left is that they are almost always anti-business and come from the standpoint that consmuer-driven, or market-based business IS the problem, and that is simply a bone-headed idea.
Business is what it is. Business, or commerce is a force of nature...a "market force." It is neither good, nor bad, neither moral, nor immoral and must be dealt with and respected the way weather and nature must be dealt with and respected.
Just as the weather can be responsible for either a tremendous bounty in crops, or terrible disasters, business can be the founder of the feast, or when hampered by human constraints (ie. attempts to make it more employee driven), an economic disaster, worse than most natural disasters.
Well, I agree with much of what you say, but business is capable of serving the common good. In fact if you examine the origin of the corporate charter, that was the purpose of the corporation - to serve the common good.
In fact many states still have that clause in their charters.
I am with you completely on the Free Trade Agreements, I blame Clinton - he should have known better.
Corporations are not evil, but if we are to view them as a "person" under the constitution, but “with no body to incarcerate and no soul to save" then it's fair to say that the Corporation is a sociopathic person, not evil. Just look at the concept of externalization and you'll likely agree.
But the market/weather analogy is wrong in that the parallels are not the same.
The market can be influenced, but the weather cannot - at least without disasterous results.
When ever the Fed modifies interest rates, the market is influenced.
But NOAH cannot influence a hurricane - believe me!
My rants against corporations are base on the amount of influence that they have over our legislature. I, a single person, do not have nearly this sort of influence.
This is why I am a supporter of Clean Elections - my anger and despair are focused on a possible solution.
I know that corporations are extremely important to our economy. I'm not a Marxist, nor are most people. But many feel helpless about corporate influence on our government.
The "big bad corporation" is only doing its job - to maximize profits.
However, in many instances these efforts are against the best interest of my family, that's where the government is supposed to step in, but largely, they are not.
Clean Elections may equalize that paradigm.
There is the question, "What is the best way to serve the common good?"
The only answer that makes any sense at all is to "serve the CONSUMER." As it makes sense from a business model, the consumer = business and profits, and it makes sense overall, as we ALL, as consumers want high quality products, affordable prices and prompt, courteous service.
Not all people are workers/employees, some live off investments, but we are ALL consumers. In responding to the needs of the consumer, business has created the most open and workable democracy the world has ever seen, certainly more democratic and far more accessible than any government on earth ever has been.
The basis for the the market is the consumer - pleasing the consumer.
Consumer-driven businesses put "the customer first," and always strive to offer better quality at lower prices, coupled with great service.
Sure, All of that puts great demands on workers/employees, but in this case, a far larger, almost universal group of people (consumers) is favored over a smaller, special interest - workers.
When businesses are employee-driven, the way they are when government tries to run businesses and in Socialist countries, the result is always less work for more pay, which translates into with poor quality at higher prices and with poor service thrown in.
In short, one can only serve one master and business rightly focuses on the consumer.
Business and commerce create the jobs, generate virtually ALL tax revenues, as without them, there'd be no real individual income to tax.
As a side note to the Free Trade/cheap labor issue, one of the ancillary effects of Free Trade and outsourcing has been a slow down in mechanization that used to replace human labor.
Foreign labor is so cheap that companies don't need to elminate the "exhorbidant costs of labor," as they are no longer all that exhorbidant.
Van, in a very real sense, we're our own worst enemies. We, as consumers demand high quality at low prices, while as workers, we demand more pay for less work.
It is not only business that acts as a nameless, faceless "sociopath," the PUBLIC all too often does the very same thing.
Corporate political influence is another matter altogether Van, and one that many Conservatives fail to see as the threat that it always has been.
The Free Market, with all its pitfalls and insecurities - new start-ups coming in and killing off slower moving, established companies and in the process, killing off all the jobs those bigger companies had provided, is still the FAIREST and most productive economy that has ever existed on earth.
The problem has been, that as some companies exploded in growth, starting at the end of the 19th Century, those companies, quite naturally sought to insulate themselves from the viscisitudes of the market and they eventually found their champions in J. P. Morgan and Bernard Baruch, who worked to transform the United States economy into the Corporatist model its become today.
As a result the political system has also been revamped and revised into something unrecognizable to this nation's Founders.
It is rightly said that votes win elections, but money buys votes. That's why politicians pay attention to big donors ahead of even fairly large voting blocks.
The problem isn't merely "Corporate lobbying," it's Consumer, Labor, and various Citizen-group lobbying as well.
There isn't "GOOD" lobbying and "BAD." There's just lobbying, and it's ALL bad.
But what to do?
There are only two possible routes that offer any fairness - (1) eliminate ALL lobbying, or (2) allow it ALL.
Anything else treats some differently before the law and that's not only unfair, but unacceptable.
If corporate lobbying is to be eliminated, so must Labor, education, public health, consumer, etc lobbying, because ALL those different lobbyists represent special interests that almost always put their own personal agendas ahead of the public good, as those groups all too often mistake their own agendas for "the public good."
In fact, it could very well be argued, that just as "more harm has been done in the name of good intentions," more devastation has been done by "public interest" do-gooders who've mistaken their own narrow agendas for "the public good."
At least for-profit corporations KNOW they're lobbying exclusively for their own intersts and don't very often confuse those with any greater good.
Still, now that McCain-Feingold has failed, where do we go from here?
You make several good points about the benefits of a market driven economy.
However, the tariff system -- which protected several industries, provided high quality goods, and was a mechanism to more equally distribute wealth -- was just as effective at creating a middle-class society and ensuring profits for corporations.
Since moving away from this system and advancing our markets to more cost effective horizons - cheaper labor - quality of service and standard of living has suffered.
30 years ago, a telvision would cost more, but it would certainly last longer and was higher quality than the crap that we are forced to purchase today. This was largely due to compition and proud union labor.
I think that you are overstating your point when you say,
"Not all people are workers/employees, some live off investments, but we are ALL consumers"
An overwhelming majority must work for a living. Our livelihoods are worth maintaining and protecting. We are what makes the ecomomy, the economy should serve us, not we serve it.
In fact, China, Japan, Korea, Western Europe and Austrailia use tariffs to protect their standard of living.
At the rate we're moving - losing both blue and white collar industries, losing our trade equities, losing our high standard of living -- we'll no longer be able to afford the cheap tarrif free goods that we import.
I am suggesting a balance, but a balance favorable to the worker, the worker who is the root of consumerism.
Let's face facts, with out our basic needs met and discretionary income to spend, there are no consumers.
Corporations are well aware of this which is why they are expanding their markets - more power to them, but not at my expense.
The idea about labor being a commodity is facilitating a race to the bottom.
When in fact the corporation legal obligation is to maximize profits it is only a matter of time before a good job is one in civil service (a government jog) and the rest of our people will be fighting for positions at the local Walmart - working for sustenance wages, eaking out a meager living -- surviving.
The ultimate logical conclusion to your thinking is Fuedalism.
Where employees serve their wealthy masters and do not dare condsider standing up for their rights and risk losing what little they have.
To some extent this is the world that Russel kirk suggested in his book, "The Conservative Mind".
A world ruled by a wealthy elite. And yes, capitalism.
A "balance" favorable to the worker is a nightmare for all consumers. That's proven out every day by "consumers" of government services, from motor vehicles offices to public health clinics.
Saying that, there's no question that Free trade between First world, industrialized countries and Third world, developping countries can be very harmful to First world workers and ultimately to those economies, by not only limiting and eliminating First world consumers, but by eroding the First world's manufacturing base, some of it, often needed for self-defense.
As much as market economies are consumer driven, they DO require consumers, workers with wages high enough to buy the products in their own country.
That's why I support the view of Buchanan and Batra on this issue and not some of the more Libertarian voices among us.
As far as "labor as a commodity" goes, that IS a reality that must be dealt with.
Business only deals with commodities - it turns raw materials (commodities) into finished products (commodities) and uses both mecahnized and human labor (commodities) to please the ONLY human part of that process - the consumer.
It's not about a "race to bottom."
Government does not have the right to promise its citizens work.
Too many citizens object to that to begin with and its morally wrong on top of that.
Here's why, "jobs," such as they are exist to provide a commodity - skilled and unskilled labor.
Those jobs don't exist for the common good, they're merely a means to an end, in this case, the production process.
Every buisness is duty bound to please the consumer and in so doing, offering better quality at lower prices - and that requires cheap and available raw materials and either relatively cheap labor OR less of it.
What if I really love driving a truck and a better means of transport comes along that severely reduces the number of truck drivers (labor) required to get goods from point A to point B?
It's an easy answer, I have to move on, plain and simple.
I have NO RIGHT to a job as a truck driver. It is up to me to develop marketable skills within an ever changing economy and to market my commodity (labor) in as refined and valuable form as I possibly can.
Government has no part in any of that.
My neighbors (government's paymasters) have no stake in MY driving a truck, they're all faced with the same dilemma I am, to continually refine THEIR skills in order to offer the best commodity that THEY possibly can. In other words, my neighbors are also my competitors in the labor market.
When the car came into being and horse drawn carriges went belly-up, buggy whip makers weren't molly coddled and promised jobs making buggy whips that were no longer needed, they had to quickly assess what opportunities were available and where the skills they had were most valubale and pursue those new opportunities ASAP.
That's what small business owners do all the time - improvise and adapt.
In a sense, we're ALL independent contractors (businessmen) selling a commodity (ourselves/our labors) and it's up to each of us to develop and refine our skills and seek out new opportunities. Each one of us must take the full responsibility for our own fortunes, the way every other businessman must.
A government that could keep that buggy whip maker employed making buggy whips that are no longer needed, must also be empowered to keep that buggy whip maker FROM pursuing any new, more lucrative and satisfying opportunities, should his company claim they still need buggy whip makers.
See?
It would have to work both ways - flip sides of the same coin.
Why can't government keep people employed in jobs no longer needed?
For the same reason we don't allow government to keep workers in jobs that pay less and are more arduous than new jobs that come along.
We OWN our own lives, we control the skill sets we develop and we are responsible for marketing our labors in the most effective way possible.
I see your point, but unfortunately your analogy about the buggy and whip makers are more in common with job loss due to automation, not unfair labor practices.
I guarantee you that when China begins to sell it's automoblis in the US for $10,000.00 at a 1.8% U.S. import tariff, GM is going to push for legislation.
Why? To protect itself from unfair labor practices.
You wrote:
"In a sense, we're ALL independent contractors (businessmen) selling a commodity (ourselves/our labors) and it's up to each of us to develop and refine our skills and seek out new opportunities. Each one of us must take the full responsibility for our own fortunes, the way every other businessman must."
I don't deny this, as an IT guy I am constantly retraining for a new certification on new technology platforms. I am constantly improving my marketing ability.
This is a right of passage. But put me in direct compitition with a guy making $3.00 an hour, and I'll not survive.
I think that we agree on this, at least that's the impression that I get from your writing.
You wrote:
"I have NO RIGHT to a job as a truck driver. It is up to me to develop marketable skills within an ever changing economy and to market my commodity (labor) in as refined and valuable form as I possibly can."
I agree with this, but again, if the government allows companys to import hundreds of thousands of cheaper workers, who will work under scale, you, the truck driver have a right to perserve your way of life. You have a right to petition your government to stop the unfair practices.
That's all that I am advocating.
I realize that Government cannot promise its citizens work, but it can ensure a way of life and it's own preservation. This is the natural order of things.
I intend to read Batra, can you recommend any articles on Globalization?
Holy cow, this post exploded in responses! And discussion.
Van,
As I have said in the past economics are not my strong point. But far above when you said "people over profit." That is one of those phrases that only ends at a slippery cliff.
In theory of course that is how it should be! But in reality a company exists to make a profit. Now most people have their jobs with such companies. If it comes to the point where you restrict the profit they either go bankrupt or take their marbles home. That leaves those people, who you had good intentions for, jobless.
Sure there has to be a happy medium, but I reject the fact that by forcing companies, in anyway, to spend their money in a specific manner will add growth. It will only lead to a dim lit future where every person demands that because they work as a janitor (nothing against janitors) at Exxon... well they are due just as much as the CEO the ran the company and, might I add, worked there for 43 years! How many people do you know that worked for a company or one place for 20 years much less 43? It is not a level field. Some people contribute more to a company than others. I say reward in accordance to the amount you have contributed.
Let the Government in far enough to stop sweatshops, and that is as far. If some of the regulations and demands suggested began to come to fruition, I would be dumping my stocks in those companies knowing they would fail in the long run.
I am not saying that there is an easy answer. But I suppose I do land more on the side of "the company" as opposed to making sure EVERY worker gets what they WANT.
I don't know, correct my errors Van.
Van, as I said, we agree on the issue of Free Trade and "globalization," at least so far as its corrosive effects on working people go.
The solution is going to be a lot tougher to find. Even America's Democratic Party sold out to Free Trade over Fair Trade. Moreover, the proponents claim that not only is globalization very good for investors, which includes anyone in a pension system, or 457 or 401K, etc, but good for workers too, in that as "old economy jobs," which are generally more arduous and difficult jobs die off, they're ultimately replaced by more skill-driven, less back-breaking and higher paid new jobs, in emerging technologies, etc.
Bottomline, I don't support us allowing other countries to import goods into this country, tariff, or duty free, while they tariff our goods to their country.
I'll look for more, but at least one good work on globalization is Tom Friedman's "The Lexus and the Olive Tree."
I have it on CD and am trying to get through it now.
Another is Benjamin Barber's "Jihad VS McWorld (How Globalism and Tribalism are Reshaping the World)."
MD - thanks for your comments.
Just a couple of things.
I don't see a slipery sloap in "people over profit" in as much as "capital over people".
Both require the balance of reason.
Yes, a company exists to make a profit, but a company cannot exist without workers - at least in this day and age.
When an employer gives me a job, the employer is not doing me a favor, the employer is purchasing my services to render a profit. If the job, or my services are not profitable, then the job will not exist. In other words, the employer / worker relationship has a mutual end. Both are required.
No one is suggesting that a janitor make as much as a CEO, but the work that a janitor has dignity, and the service is required. A janitor works just as hard as anyone, and should be compensated.
This is not possible if he or she is competing with third world wages, in this case the compitition would be imported.
I don't advocate that every worker "gets what they want". But they should be able to earn more than sustenance wages.
Finally, a tariff affects an entire industries, not single companies, so you'd have to dump a lot of stocks.
Think about this for a moment. How many industries are safe from outsourcing, insourcing or immigrant labor?
If we the people should allow any and every company to maximize profits at any cost, than there is no room for the American Middle-class.
Nothing is safe from cheap labor, with a few exceptions, relative to all of the job catagories threatened.
Any "new" industry that we create can and will be outsourced, insourced or moved to cheap labor markets.
This is not a slippery sloap, this is the modern business model.
JMK -
You wrote:
"The solution is going to be a lot tougher to find. Even America's Democratic Party sold out to Free Trade over Fair Trade. Moreover, the proponents claim that not only is globalization very good for investors, which includes anyone in a pension system, or 457 or 401K, etc, but good for workers too, in that as "old economy jobs," which are generally more arduous and difficult jobs die off, they're ultimately replaced by more skill-driven, less back-breaking and higher paid new jobs, in emerging technologies, etc."
As I mentioned before, as more and more people are affected by the negative side of our trade agreements the desparity rates will increase.
More and more people will move to fix the growing desparity between those who are outsoured and those who are not. Especially since those affected now by outsourcing are well educated and middle-class and vocal.
I think that these trade agreements, at least in their current forms, have a short life span. Do you remember how slim a margin CAFTA was passed - 1 vote after a record open session. Also, when WTO renewal vote came up last year 141 (maybe it was 41?) congressmen voted not to renew it.
I've tried to read Thomas Friedman, I have a predujice against him. I know that I shouldn't, but.... to me he's the devil - lol.
I found a free online Podcast course on Globalization - it's origin, and it's economic effects.
It's from the University of Iowa. The course claims to not take a postion, just state the issues.
I'll give that a listen first.
If you want I'll send you the link.
I'd certainly like to see many of the Free trade policies be replaced with Fair Trade policies, where we, as trading partners, treat other nations the same way they treat us.
It's absurd that we don't tariff nations that tariff our goods when sent there.
That still doesn't totally get rid of the problem of First world, industrialized nations trading with Third world, developping ones, as the disparity in labor costs, regulatory costs, etc, is too great and basically prices First world workers out of many markets, but it would at leas tbe a step in the right direction.
Now, ardent Free traders will no doubt insist that not only will new opportunities replace the old jobs, in First world economies, but indeed, some jobs just aren't feasable to be done in such places any longer, and that may well be right, but what happens to all those transitioned people during the interim?
You wrote:
"I found a free online Podcast course on Globalization - it's origin, and it's economic effects.
It's from the University of Iowa. The course claims to not take a postion, just state the issues.
I'll give that a listen first.
If you want I'll send you the link."
Sure, send the link, I'd love to see it. It sounds interesting.
JMK -
You wrote:
"I'd certainly like to see many of the Free trade policies be replaced with Fair Trade policies, where we, as trading partners, treat other nations the same way they treat us.
It's absurd that we don't tariff nations that tariff our goods when sent there.
That still doesn't totally get rid of the problem of First world, industrialized nations trading with Third world, developing ones, as the disparity in labor costs, regulatory costs, etc, is too great and basically prices First world workers out of many markets, but it would at leas tee a step in the right direction."
I could not agree more. The Dems in 04 were looking at this issue. They, Kerry Edwards, wanted to examine the trade agreements and demand a living wage with our trading partners. This is a step in the right direction, but... it may be as effective as screaming at a wall unless the provisions are actually enforced.
As I've said, people are catching on. It's a slow process however.
Ardent free traders are generally wealthy and therefore isolated from the negative affects of free trade, with the exception of the rank and file at CATO.
They usually gloss over the fact that losing your job is a crisis.
The Transitional Adjustment Assistants provision with the various trade agreements do not cover many of the categories being outsourced. For instance, if you are a Software Engineer, you have to pay for your own retraining; TAA does not cover most of the white collar job categories.
But even if it did, how can you "retrain" a 40 white collar professional with a mortgage and 3 kids? Many of whom are still paying for their initial education. I think that the maximum TAA amount received is $3000.00 - this is enough to learn to become a truck driver or a dental assistant, not enough to get a masters in BPO or finish a law degree.
These trade agreements are not set up to help the workers. Yet they affect our lives at the most basic level - we have no say here, therefore the WTO is undemocratic at it's root.
Yes, the WTO is undemocratic, though much of our own government's actions, being secretive, are also undemocratic.
The key is balancing the ability of emerging economies to grow with the "transitioning" of workers from the old economy to the new.
A somewhat overlooked reality is that the cmputer and IT industry greatly benefitted from a surfeit of workers, displaced by the loss of America's manufacturing base in the 1960s and 1970s. Of course, so did the burgeoning service industry as well.
There are always going to be people dispossessed in any dynamic economy. I think the problem faced today is that with unemployment rates down under 5%, it's hard to make the argument that "huge numbers of Americans are completely dispossessed."
The argument very well could be made that many Americans have been forced out of outsourced jobs and into lower skilled, lower paying jobs in the service industry.
The WTO SHOULD certainly be more transparent in its operations, and so should our own governments.
JMK - You wrote:
"There are always going to be people dispossessed in any dynamic economy. I think the problem faced today is that with unemployment rates down under 5%, it's hard to make the argument that "huge numbers of Americans are completely dispossessed."
Thanks for bringing this up, I'll be posting on this topic very soon. Blogger has not been behaving for me, I can't seem to publish any post. Hopefully it will be cleared up soon.
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