Q&A: HENRY FORD: Consumer Worries Overshadow Profits - WSJ.com:
Question:
"We seem to be regressing to a pre-Henry Ford economy, in which business delights in selling to business.
Remember Henry? He discovered that, if you have something useful to make (in his case cars), if you pay your workers a living wage, and if your treat your customers fairly, then your workers and their peers become your customers, markets grow, and everybody wins.
Our business leaders, especially in finance, seem to have forgotten all about Henry. They're unwinding his discoveries and, in the process, the American dream.
When the pie gets smaller, everybody loses. Isn't something wrong?
Answer:
One needs to look at the big picture and what has happened as government has grown bigger since Henry Ford's day.
In Henry's day the government didn't come in and say that for every $1 (remember the old $5 a day wage in 1914) that the government wanted $4. So Henry would have said - "Gee, I'd like to pay you $5 but the government is going to make it cost me $25".
And, then the worker, who is 'maybe' getting $5 is going to find that the cost of the car has had to go up too! So instead of, say $400 (I don't recall the car cost then), the car might cost $2,000.
And, then of course there are taxes and regulatory changes that are now impacting the cost of capital - so, maybe Henry has to add another $1,000 to the cost of the car to cover that. (Think heavy government borrowing, the 'blame Wall Street and the banks for everything' attitude and the new regulatory bill.)
So yes, Henry was able to let the free market work; but, Obama has been taking to new levels the government's distortion of the free market. Supply and demand is grossly distorted.
So, don't blame business - look at the real source of the problem -> government and unions!
Wednesday, July 28, 2010
Consumer Worries Overshadow Profits - WSJ.com
Q&A: BUSH?:Consumer Worries Overshadow Profits - WSJ.com: "*
Question:
Why was there not huge job growth (other than the housing construction bubble) created by the pro-business Bush administration?
I'm in the electronics industry where jobs have been shifting overseas since LONG before Obama came to office.
Answer:
The economy has been changing and Bush's tax cuts helped to create new jobs to replace old ones.
However, Bush didn't want to take on the unions and entitlements (which of course are now blowing out of the water under Obama, Pelosi and Reid).
The fact that Bush didn't do enough (including handling making the US a more business-friendly environment) shouldn't obscure the need for this to be done.
Right now, under Obama, the situation is vastly worse. What Bush may have ignored, Obama is culpably exacerbating.
Question:
Why was there not huge job growth (other than the housing construction bubble) created by the pro-business Bush administration?
I'm in the electronics industry where jobs have been shifting overseas since LONG before Obama came to office.
Answer:
The economy has been changing and Bush's tax cuts helped to create new jobs to replace old ones.
However, Bush didn't want to take on the unions and entitlements (which of course are now blowing out of the water under Obama, Pelosi and Reid).
The fact that Bush didn't do enough (including handling making the US a more business-friendly environment) shouldn't obscure the need for this to be done.
Right now, under Obama, the situation is vastly worse. What Bush may have ignored, Obama is culpably exacerbating.
Tuesday, July 27, 2010
Uncertainty Stifles Business Spending and Hiring. - Barrons.com
DOING JUST ABOUT EVERYTHING TO DESTROY JOB CREATION: Uncertainty Stifles Business Spending and Hiring. - Barrons.com: "- Sent using Google Toolbar"
Let's see?
Obama's policies raise the cost of labor (when it needs to be reduced).
Obama's policies raise the risk level for any investment (which means the projected return has to be higher).
Obama's policies keep taxes high and raise them when, corporately, the US had too high a rate.
As for personal income taxes, again, for the entrepreneur US taxes are too high (except compared to Europe and look at business in Europe).
As for the ease of bringing in workers from overseas, Obama's policies are akin to Bushes - i.e. very discouraging for expansion in the US.
So, net, labor costs, finance costs, risk adjusted returns are all going in the wrong direction. Adding in the fact that the world has competitor nations and economies that are going in the opposite direction to the US, the picture for the US economy looks worse than stagnant - it looks to be heading down.
After all, if labor, capital and regulatory risk are reduced for competitors to US domestic manufacturing, what choice do US companies have? The result is exactly what is seen - both official unemployed and acknowledged discouraged workers, stagnant at best wages, fear, etc.
Hello brave new socialist paradise.
Let's see?
Obama's policies raise the cost of labor (when it needs to be reduced).
Obama's policies raise the risk level for any investment (which means the projected return has to be higher).
Obama's policies keep taxes high and raise them when, corporately, the US had too high a rate.
As for personal income taxes, again, for the entrepreneur US taxes are too high (except compared to Europe and look at business in Europe).
As for the ease of bringing in workers from overseas, Obama's policies are akin to Bushes - i.e. very discouraging for expansion in the US.
So, net, labor costs, finance costs, risk adjusted returns are all going in the wrong direction. Adding in the fact that the world has competitor nations and economies that are going in the opposite direction to the US, the picture for the US economy looks worse than stagnant - it looks to be heading down.
After all, if labor, capital and regulatory risk are reduced for competitors to US domestic manufacturing, what choice do US companies have? The result is exactly what is seen - both official unemployed and acknowledged discouraged workers, stagnant at best wages, fear, etc.
Hello brave new socialist paradise.
Home Prices Rose in May - WSJ.com
Q&A: Can't we blame the rich?: Home Prices Rose in May - WSJ.com: "- Sent using Google Toolbar"
Question: Shouldn't we blame the rich for all our problems? After all, before Obama, Bush gave every tax cut known to Republican kind while business and the wealthy who prospered from it drove the economy into the ground in the name of wanting more.
Answer:
You certainly believe in an ax to grind that lacks any understanding of basic economics.
To wit, you might consider that the US is in a globally competitive economy with vast numbers of better educated, harder working people who work for vastly lower salaries and benefits.
As such, how do you expect those Americans who earn outsized global salaries and benefits to keep their jobs?
You may feel that those who retain globally competitive jobs are cheating those who don't - but, it's still a reasonably free market where people compete for jobs (even in the US). This is rather evident from the number of applicants per job as reported in the press.
You may also be unfamiliar with the concept of the average amount of capital behind an average job in a society. In the 1970's the figure for the US was about $50,000. (I don't know the current figure.)
Clearly as the cost of non-salary compensation (e.g. retirement pay, healthcare, workmen's compensation and unemployment insurance) escalate, the cost per job increases and the employee has to produce more and more value for the employer. (Look up the "labor conundrum" to see how this distorts economic and labor productivity.)
The biggest problem you should be concerned with isn't rewarding investors and business people but the fact that the laws and regulatory environment are raising the costs of investing and doing business in America while the little guy (the one who wants a job) is being lied to about why businesses don't want to locate in America.
Take a look at someone you pay for a service or a product you buy. Now double or triple the cost and ask yourself if you'd still buy the same good or service (or could afford to). This is the problem the government is presenting to the business person in America. Labor is too expensive (particularly indirect labor costs) and the net, after tax, risk-adjusted return on capital cost has risen to the point where investing in America (compared to other parts of the world) keeps going up.
Just consider that Europe faces an even worse situation in old Europe than in the US due to the high taxes. But other countries, such as the new Europe (e.g. Czech Republic) recognize they want jobs and entrepreneurs to come to the country and flourish - so they have a maximum income tax rate of 15%.
Frankly, I see the US as punishing the rich and investors and, as a result, they are being forced to look elsewhere.
(Consider the case of 2 entrepreneurs, 1 in America with a 50% plus tax rate and 1 in Asia paying 15%. After a few years, who is going to have the greater resources left to invest in their business, pay for research and hire employees and sell their products for less. Unless you have total blinders on, you'd have to say the entrepreneur that keeps more of their money.)
Sorry, you've bought the Administration's line about the problem being someone other than the government. The US is getting what it's policies are asking for - fewer jobs and likely a second dip in the economy.
Question: Shouldn't we blame the rich for all our problems? After all, before Obama, Bush gave every tax cut known to Republican kind while business and the wealthy who prospered from it drove the economy into the ground in the name of wanting more.
Answer:
You certainly believe in an ax to grind that lacks any understanding of basic economics.
To wit, you might consider that the US is in a globally competitive economy with vast numbers of better educated, harder working people who work for vastly lower salaries and benefits.
As such, how do you expect those Americans who earn outsized global salaries and benefits to keep their jobs?
You may feel that those who retain globally competitive jobs are cheating those who don't - but, it's still a reasonably free market where people compete for jobs (even in the US). This is rather evident from the number of applicants per job as reported in the press.
You may also be unfamiliar with the concept of the average amount of capital behind an average job in a society. In the 1970's the figure for the US was about $50,000. (I don't know the current figure.)
Clearly as the cost of non-salary compensation (e.g. retirement pay, healthcare, workmen's compensation and unemployment insurance) escalate, the cost per job increases and the employee has to produce more and more value for the employer. (Look up the "labor conundrum" to see how this distorts economic and labor productivity.)
The biggest problem you should be concerned with isn't rewarding investors and business people but the fact that the laws and regulatory environment are raising the costs of investing and doing business in America while the little guy (the one who wants a job) is being lied to about why businesses don't want to locate in America.
Take a look at someone you pay for a service or a product you buy. Now double or triple the cost and ask yourself if you'd still buy the same good or service (or could afford to). This is the problem the government is presenting to the business person in America. Labor is too expensive (particularly indirect labor costs) and the net, after tax, risk-adjusted return on capital cost has risen to the point where investing in America (compared to other parts of the world) keeps going up.
Just consider that Europe faces an even worse situation in old Europe than in the US due to the high taxes. But other countries, such as the new Europe (e.g. Czech Republic) recognize they want jobs and entrepreneurs to come to the country and flourish - so they have a maximum income tax rate of 15%.
Frankly, I see the US as punishing the rich and investors and, as a result, they are being forced to look elsewhere.
(Consider the case of 2 entrepreneurs, 1 in America with a 50% plus tax rate and 1 in Asia paying 15%. After a few years, who is going to have the greater resources left to invest in their business, pay for research and hire employees and sell their products for less. Unless you have total blinders on, you'd have to say the entrepreneur that keeps more of their money.)
Sorry, you've bought the Administration's line about the problem being someone other than the government. The US is getting what it's policies are asking for - fewer jobs and likely a second dip in the economy.
Monday, July 26, 2010
Health Law Augurs Transfer of Funds From Old to Young - WSJ.com
LESS OF A FUTURE: Health Law Augurs Transfer of Funds From Old to Young - WSJ.com: "- Sent using Google Toolbar"
What everyone (almost) should be irate about (of course they can't see it and aren't being told about it) is that by expanding the role of government in society, the ability of the society to grow is reduced. Thus, the pie may shrink absolutely, shrink on a per capita basis or it may grow way below its potential.
In this way, all young people will have fewer opportunities and, as now, the inability to live as well as their parents.
Will people see that their entire lives become circumscribed? Who knows.
What everyone (almost) should be irate about (of course they can't see it and aren't being told about it) is that by expanding the role of government in society, the ability of the society to grow is reduced. Thus, the pie may shrink absolutely, shrink on a per capita basis or it may grow way below its potential.
In this way, all young people will have fewer opportunities and, as now, the inability to live as well as their parents.
Will people see that their entire lives become circumscribed? Who knows.
Thursday, July 22, 2010
The Markets & The 'Teen Drama Economy' - MarketBeat - WSJ
The Markets & The 'NON-SEX-ED ECONOMIC POLICIES: Teen Drama Economy' - MarketBeat - WSJ: "- Sent using Google Toolbar"
Isn't the question more like that of the (idiotic) parent who believes they can tell the kid not to masturbate and think the message gets through?
There are tons of things that the masters of the economy and the law need to address - all of which are geared to support the unproductive and the 'entitled' (read: religiously prescripted) vs. those with a hand on reality and producers.
It reminds me of the Chicago school program years ago that didn't want to teach sex education amidst an upswing in teen pregnancies. A 16 (or so) aged girl was interviewed on TV and her comment was something like "well, my boyfriend said I wouldn't get pregnant 'that way'"!
Oh yeah, we'll create jobs with current Democratic policies!
Isn't the question more like that of the (idiotic) parent who believes they can tell the kid not to masturbate and think the message gets through?
There are tons of things that the masters of the economy and the law need to address - all of which are geared to support the unproductive and the 'entitled' (read: religiously prescripted) vs. those with a hand on reality and producers.
It reminds me of the Chicago school program years ago that didn't want to teach sex education amidst an upswing in teen pregnancies. A 16 (or so) aged girl was interviewed on TV and her comment was something like "well, my boyfriend said I wouldn't get pregnant 'that way'"!
Oh yeah, we'll create jobs with current Democratic policies!
Bernanke Signals Continued Low Interest Rates - Barrons.com
MR > TITANIC BAND LEADER: Bernanke Signals Continued Low Interest Rates - Barrons.com: "- Sent using Google Toolbar"
Seemingly, what Bernanke can't say (and perhaps has to block form his mind) is that the policies from the Congress and White House will be accelerating any jobs created to move outside the country.
Yes, companies may do reasonably well. After all, they are nothing but abstract impersonal entities that are charged with providing affordable goods and services to a global (and globally competitive) market.
But, the angst resplendent in comment after comment in the WSJ is that these companies should care about American's who need (good paying) jobs.
However, when people buy goods and services they are looking for value for money, which usually means the lowest priced equivalent product.
The US tax, regulatory, immigration and labor policies make this a joke. Bernanke doesn't say it; much of the world is still thinking about the US as it was, not as it is.
But, the true job picture tells a different story. (As friends from Europe say, the US calculates unemployment statistics in an almost opposite way to Europe - i.e. in the US, if you've given up hope, you're no longer unemployed; in Europe, if you can't get welfare anymore, then you register as unemployed and have to take jobs the labor office finds you.
One does feel that in the US one is listening to the equivalent of the band on the Titanic, an hour or so after it struck the iceberg - but, high on cocaine (or similar) everything seems a-ok.
Seemingly, what Bernanke can't say (and perhaps has to block form his mind) is that the policies from the Congress and White House will be accelerating any jobs created to move outside the country.
Yes, companies may do reasonably well. After all, they are nothing but abstract impersonal entities that are charged with providing affordable goods and services to a global (and globally competitive) market.
But, the angst resplendent in comment after comment in the WSJ is that these companies should care about American's who need (good paying) jobs.
However, when people buy goods and services they are looking for value for money, which usually means the lowest priced equivalent product.
The US tax, regulatory, immigration and labor policies make this a joke. Bernanke doesn't say it; much of the world is still thinking about the US as it was, not as it is.
But, the true job picture tells a different story. (As friends from Europe say, the US calculates unemployment statistics in an almost opposite way to Europe - i.e. in the US, if you've given up hope, you're no longer unemployed; in Europe, if you can't get welfare anymore, then you register as unemployed and have to take jobs the labor office finds you.
One does feel that in the US one is listening to the equivalent of the band on the Titanic, an hour or so after it struck the iceberg - but, high on cocaine (or similar) everything seems a-ok.
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