The Dreary Presidential Election
 

Editorial

      The United States entered W.W. II because of the Japanese attack on Pearl Harbor December 7, 1941. Japan was in need of oil and other raw materials and was hunting for oil fields. U.S. officials had broken the Japanese diplomatic codes and expected attacks in the Indies, Malaya and the Philippines, but they did not expect an attack on Pearl Harbor where five of eight battleships were sunk or were sinking, Hawaian-based combat planes were knocked out, and more than 2,400 Americans were killed. It was said that Roosevelt knew of the impending attack on Pearl Harbor but did not inform those in charge. He was looking for an excuse to bring the United States into the war, it was claimed. Campaigning for the presidency in 1944, Gov. Thomas E. Dewey did not question the sincerity of FDR, and neither has the dispute been taken seriously since the end of the war. The political dispute during W.W. II was between advocates of centralized government and those opposed to it. The United States was different from today. Our dreary presidential election campaign continues with personal abuse, a contempt for accuracy, and personal glory as a substitute for patriotism.

      Senator Kerry says that he has supported the development of technology for many years and has been out in front in the development of the internet. He does not claim he invented the internet, as did Mr. Gore. He says that Mr. Bush has deliberately retarded technological growth. His email on this question ran to five pages! I hope Senator Kerry has done what he says to advance technology but I dismiss as nonsense that President Bush has limited the growth of technology.

      Senator Kerry trashes President Bush for the transfer of jobs outside the country and says that, if he were president, he would stop the outsourcing of jobs and create ten million new ones. How he does not explain with clarity.

      Kerry would “end tax breaks that encourage companies to send job overseas.” The sentence needs explanation. Senator Kerry would give a new jobs-tax-credit to business. That means the government would subsidize business! Mr. Kerry would “enforce our trade agreements and trade laws to ensure that our partners are playing by the rules, and that China and other countries do not manipulate their currencies.” Does the enforcement of the internal affairs of other countries’ domestic policies include threats and/or acts of war?

      We have lost jobs overseas for a simple reason. We have priced ourselves out of the market. Some years ago when the price of a new Ford was almost $3,000 I asked the owner of the Ford Agency how he could sell new cars. The answer is easy. By inflation. Some twenty or thirty years ago, I am not sure which, the average wages for GM was around $50 an hour. What it is today I do not know but assume it is handsome. My Dodge service center charges $80 an hour.

      A simple fact not always recognized is that every wage increase for Joe Brown is paid for by Mary Jo. To make up the loss by Mary Jo and her friends, they demand an increase in wages. The movement runs through society until the country runs out of money. An increase of wages every year is demanded by all workers whether or not money is available for these increases. Under these circumstances, the Fed has the choice of raising interest rates to slow the gallop for more money, creating unemployment, or printing money to promote inflation, making money available. Inflation is the popular choice because spenders are more common than savers. Those in the working force do not get more purchasing power because of their increased income, only more coins to jingle, the poor who are without clout are made poorer, the retired have less income because no union can bargain for them, and they lose their ability to live within their pensions.

      Unions are not as violent as they use to be. There was a time when the unions for automakers pitted Ford against General Motors and against Chrysler. If one did not give way, they lost to those who had not yet suffered a strike. Perhaps the invasion of Japanese cars has made a difference. I suspect unions are more intelligent than they were twenty years ago and know that wages come from earnings. The old-fashioned union mentality is still with us, however. St. Paul’s Metropolitan Council recently had a strike of bus drivers. They wanted money St. Paul did not have. The strike lasted forty days. Expenses saved from not paying wages were enough to almost meet the union’s demands. The same pattern will be repeated in a couple of years.

      The schoolteachers in our district are not on strike but they have given notice they will be. The average salary is $51,000 plus full health care for the family. There is also retirement income, but the amount is a secret. It is generally believed that if it is not totally subsidized the difference is not much. Male teachers in our district have to be tall, dark, and handsome to qualify. Female teachers must have a trim figure and a classic profile. Because Minnesota ran out of money this year, state subsidies to school districts have been cut. Teachers without seniority have been dismissed and class sizes increased. The problem could have been solved if the teachers took a cut in salary to reduce expenses to income, which is a necessity in the private sector but not in a public monopoly. The demand for more money is necessary to get good teachers says the teachers’ union. On the contrary. Our pupils would be served better by those who regarded teaching as a vocation rather than a door to wealth. Educationists, of all people, should realize there are values of greater importance than wealth.

      While we are sympathetic with any who are unemployed, the fact is that the present 5.7 percent of unemployed is a natural quantity. The variation goes from around 10 to 5 percent, so we are presently at the low end of the variation. Job growth is widespread in construction and the service area. The labor force is 138 million with 65 percent in the labor sector.

      Unemployment in Europe in the last ten years has averaged about 2.5 percent more than in the U.S., varying from almost 11 percent to 8 percent. In the U.S. the variations have been from 6.5 to 5.8 percent. There is a longer period of recovery from downturns in Europe because of the greater participation in the economy by politicians.

      The United States has an $11 trillion economy employing 138 million people. During the last decade, we created an average of 32.8 million jobs a year while eliminating 31 million. “Jobs lost to outsourcing are but a small channel in the torrential ‘job churn’ normal for a market economy.” (See “Outsource Some More” by Daniel T. Griswold, National Review, May 3, 2004.)

      The complaint is that we have lost jobs by outsourcing. So we have, to the tune of $3.9 billion. On the other hand, we have imported $14.8 billion worth of computer, data-processing, research, development, construction, architectural, and engineering services. In 2002, for every dollar the U.S. sent abroad for outsourcing, the world sent more than three dollars for “insourcing.”

      We are told we are losing information technology to India, and some other countries. So we are. On the other hand, the Labor Department projects that the information technology sector of our economy will grow from three to four million in the next decade, twice as fast as in the rest of the economy, and these jobs will pay an average of $67,000 a year.

 

      Indian workers in technology receive about $8,000 a year, a trivial amount compared with us; but their money goes further than ours. They buy American goods. They admire America and want to be like us. In a world of envy, they are friends. The relationship is mutually beneficial.

      The American pie has grown because we have used information technology to make more with less, and the present outsourcing and insourcing is a part of this progress. We do not have to be alarmed. Some years ago we were worried that Japan would overcome us. They have become stagnant but have improved their economy by outsourcing to us. We are glad they moved Toyota to the United States and that they do not complain about lost jobs. They have become stagnant not because they outsourced to us but by foolish loans. Europe is stagnant compared with us because of the entrance of politicians into the marketplace. Politicians spend almost half of the GDP, and  two-thirds of that expenditure is for welfare. If we can keep politicians out of business and continue with creativity, we have nothing to fear.     Ω