Monday, April 6, 2015

An Interesting Question

Author John Pepple, in his book The Left's War Against the Poor, proposes the left has hurt the poor for decades; exploiting their vulnerabilities in the name of a liberal agenda pushed by the rich, an agenda that seeks to destroy capitalism and redistribute wealth by the state.  He proposes that a leftist agenda developed by the poor would look significantly different than the one we see in America today.  I wonder?

What are the impacts from the growth of government, the increased regulation on society, and the creation/expansion of state managed social programs?  Have we actually seen them leading to a smaller group of poor and a larger, more vibrant, middle class?

 For all the talk by the left of how the rich are getting richer, what do we actually see with the creation of work that will lead to a future for the worker?

Let’s start with the establishment of minimum wage, or living wage if you prefer.  Historically we expected to see individuals enter the job market with few skills and employers would hire these individuals for less than what they paid their experienced workforce in a sort of apprenticeship approach.  Then we collectively decided everyone should have a minimum wage, based not on the economics of the marketplace, but on what the politician’s thought fair.  There are three possible outcomes for this:  the cost increases to a business would be passed on to the consumers, the business costs would be maintained by reducing the workforce, or the business would become non-competitive and fail.  In all cases the poor and middle class are the ones affected.  In the short term the minimum wage employees see a positive outcome, but that benefit is short-lived.

This is becoming increasingly apparent today as we move forward with automation using intelligent and adaptive robotics.  One has only to ask, as the cost of a worker becomes more than the cost of a robot, how long before a worker is replaced?   Take, for example, the auto industry.  At its peak, the United Auto Workers union had almost 1,500,000 employed members, working for the “Big Three.”  Today union membership is down to around 360,000 with about 600,000 retired members drawing their pensions.  Granted, with the foreign competitors entering the market with US manufacturing facilities there are more employed in the industry than I note here, but I use these numbers to illustrate that as the cost of the manufacturing process went up and demands for quality increased many have been replaced by the robots we see so frequently in the auto commercials, displacing these skilled workers who were making good salaries.

I make the point of worker displacement, not to condemn unions, for I believe they serve a useful purpose, but we must understand they serve a selfish interest first, just as Corporation management does.  The fact is, American unions have selfishly placed all their support behind the liberal agenda that will make union leadership secure, while sacrificing the rank and file as necessary.  Was it the unions that drove GM and Chrysler to bankruptcy?  No -- it was short sighted management who could not foresee the shift in economics, or if they could, they had limited options to deal with them due to earlier decisions not to allow the unions to share in the decision process and develop a stake in the companies survival.

Robert Reich, a stalwart of the liberal elite leadership, opined recently that economic recovery was stagnant because the workers were not getting salary increases; instead that money was going instead to the 1%.  Until we took money from the rich to give to the poor there could not be a recovery.  A wonderful idea clearly in line with what we expect to see from an individual who would have the state own all business, but as we cease being a entrepreneurial center where will capital be created?  Surely even Mr. Reich understands government does not create wealth.

While I was writing, a friend posted this story on Facebook, An Engineered Drought, talking about the current California water crisis.  It links most appropriately with the next point I’d make about the elites leading the liberal movement.  In the name of environmental protection they have for years blocked the development of the infrastructure necessary to support the demands of a growing population.  We can all get on board with the idea of saving the California Condor, or perhaps even the snail darter, but if we are going to move into areas that were historically barren and then expect we will have all the water we want, what sacrifices must we make?  Again, as this drought develops the politicians whose failure it was to recognize and plan accordingly, will find the scapegoats they need to shift blame, but at the end of the day the liberal elite will not suffer, it will be the poor and middle class that have been brought to support those illusions we have created.  We need look only as far as Berkley to see who will suffer when the water is turned off and businesses close or just to the North in Marin County to see who won’t.  Somehow the elites (on either side), and the politicians they buy, never seem to feel the affects of their failed positions.  It is always the poor and the middle class.

Along those same lines we are now engaged in the discussion on global warming, or climate change.  Granted -- most conservatives have done a miserable job understanding the issues, articulating alternatives, or perhaps understanding how close we are to a tipping point, if there truly is a tipping point?  But the hypocrisy of the elites who will condemn the right and then step aboard their own 747, while their wives fly on a separate 767 from the east to the west coast for a party kind of boggles my mind.  If there is ever an example of that cliché “do as I say, not as I do” this has got to be up at the top. Elites, whether liberal or conservative, quickly develop a sense of entitlement that moves them beyond understanding.

But let’s stop for a moment and talk about the human impacts of the regulations the government has implemented in the name of the greater good.  Clearly we need to abandon coal, whose use is a great offense to environment and is, in the opinion of the government-funded researchers, probably one of the biggest contributors to green house gases.  If we abandon coal, we will put out of work sizable portions of the Appalachian work force that make their living in this industry, we will close a significant number of power generation plants, and we will drive up the cost of most products made in the United States because of the increased energy costs this decision will force.  That is unless there is an economic replacement.  So tell me what is that economic alternative? 

Who is affected by this decision the most?  Is it the corporation or the worker?  The corporations, if they are to survive, will not absorb much of these costs, they will either find a way to reduce in other areas, like employee compensation or by increasing their product costs.  The later will depend on the global market and when we compete against a country like China who has not made the decision to abandon coal the question will be “are we competitive?”  I think the answer to this is obvious, but if not -- I would point out something said by the late Steve Jobs when asked why his products were manufactured in China.  The answer was along the lines of he could not find affordable place in the US with the necessary workforce or infrastructure. We move even further away as the cost of energy goes up.

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