Buy American

I just read an article that made me somewhat upset. It reminded me of why this country is losing the economic battle on a worldwide scale to Japan, China, and India, and I can sum it up in one word; unions.

Since the dawn of capitalism, industrial might has been based not upon the availability of cheap natural resources, the ability to move those resources from the point of inception to the mill, or the existence of infrastructure to move finished goods from production to market, even though those factors all play a part in the total package. The largest factor by far in any industrial enterprise (or agricultrual enterprise, for that matter) is the availability of cheap labor. Inexpensive labor leads to competitively-priced goods and allows the country of inception to compete on the world market on an even basis. The country with the lowest labor costs will inevitably win that battle, because no other expense adds or subtracts more from the cost of the finished product, regardless of what that product is.

The article I read talked about labor negotiations between GM and the UAW and the greatest sticking point in the talks is the provision of health care costs for retirees. For years, American auto makers have been bound by contract to pay retirement pensions for retired employees, including health care expenses. Japanese auto makers have no such expense, which means that they can produce a car for much less than their American counterparts and sell that car for whatever the market will bear. What that means is a much larger profit per unit than what American auto makers can expect. Since the Japanese make much more per car, their total revenue is huge compared to that of GM, Ford, or Chrysler, giving them the ability to reinvest in their plants and improve the product and the machinery that produces it. The costs of production for the Japanese therefore are reduced while costs to produce an American car keep going up. It's a negative spiral for America, and Japan is reaping the reward. Are American cars as good as their Japanese rivals? I think they are, but the perception is that Japanese cars are produced with higher quality standards, get better fuel economy, and last longer than American cars. It's time for the UAW the wake up and realize something very simple; if you kill the cow, you won't have milk any longer! The UAW needs to make significant concession to American auto manufacturers and it needs to happen now, or there won't BE any American automobile manufacturers left to pay those contracts! No cow equals no milk!

Cheap labor is hampering the American economy from every angle of the economic spectrum. China and India are two great examples. Now, don't get me wrong. I don't advocate employing slave (prisoner) labor in factories like the Chinese or paying people 0.25/hr like the Indians, but we've got to realize who the competition is and understand that any industrial giant MUST have labor costs that allow manufacturers to compete on the global market or the competition will be skewed toward those who have low costs against those who do not. Traditionally, the United States has always had a source of cheap labor, typically from immigrants who seek to better themselves in this country. African slaves were the first, but they were supplanted by wave after wave of others; Chinese, Irish, other Europeans, and now Mexicans. When Mexican immigrants better themselves and rise above the level of entry-level worker (unskilled labor), who will supplant them? Frankly, it may be too late. Manufacturing concerns have been moving oversees for years because of the very factors I describe here. Oh, we call them unAmerican or unpatriotic, but the fact is that they cannot compete on the global market without cheap labor, so they move to where cheap labor is available and then "import" the goods produced to sell on the American market. Oh, sure, some American laborer lost a job because of the move, but without the survival of the enterprise, that laborer would have been without a job anyway. There are certain basic facts that do not change. The law of supply and demand waits for no man. Lower production costs mean lower prices. The least expensive goods are the ones most in demand. Higher demand creates a diminished supply and drives the price up. When Americans are willing to swallow their pride and work for the good of the whole rather than the wealth of the individual, we will be able to compete on the global market and then those very economic facts that work against us now will work in our favor.

Make those concessions, UAW, and make them now, before the cow is dead and all of the milk has dried up. - Dan