Off and Out With Mitt Romney — MY COMMENT

by John Brian Shannon

MY COMMENT ON PROFESSOR PAUL KRUGMAN’S ARTICLE BEGINS…

Although I take pains to not indulge in partisan politics especially the internal politics of other nations (which is just bad form for a Canadian citizen), I just couldn’t help myself this time around.

Professor Paul Krugman has written another astonishingly logical article in the New York Times describing how the neo-cons in America keep giving all the jobs to China AND THEN they tell all the NON-neo-con people how good it is for them! Read Professor Krugman’s article here…

Of course, no one on Earth can seriously dispute the fact that corporations make more profits when they send American jobs to China. And, to be fair, eventually those profits DO come back to America. All good there.

The trade-off here is that instead of millions of Americans collecting a decent paycheque, contributing to the economy, paying taxes and living the American dream – what we get from this change-down is comparatively few thousands of corporate stock-holders receiving better corporate dividends.

Compare that to the huge overall boost the American economy gets when everyone IS working.

Since the 1970’s this paradigm-shift has been at work in the U.S. and has constantly – and at an ever-increasing rate — greatly enriched a small number of American people — at the expense of making significant millions of Americans less wealthy.

No leading economist seriously disputes this trend.

Nowadays, Europe is now only slightly behind the U.S. when it comes to off-shoring jobs to China – and is experiencing the same, predictable result that has plagued America for the past 30 years.

The point of confusion is that there is simply no “bad-guy” in this equation. Something is definitely wrong, so there must be a bad-guy. But we are told there is no bad guy. How can this be?

For one, corporations exist to make profit. That is their raison d’être and that is what we and the government have empowered them to do.

Two, who could blame corporate leaders for wanting to make more profit? That is what our system was, and is, built on.

Three, it’s not China’s fault. They are simply doing what our corporations are asking them to do. And frankly, they need the money. Developing nations are growing exponentially these days, which means they need money to build roads, schools, effective legal systems – and so much more.

It’s profoundly in our best interests for developing nations to become more stable, better governed and for them to eventually raise up a middle class able to purchase our decidedly up-market Western goods and services in heretofore undreamt-of volumes. Ka-Ching!

All of which takes time. Maybe a decade or two. In the meantime, we are supposed to suck it up and not complain.

With me so far? If you are, you must be thinking similar thoughts to mine. “There must be a better way to accomplish our shared goals.” And, there is.

It’s a given that our corporations must make profit, off-shoring production can improve profits for corporations, that the profits eventually do come back to the U.S. and that relatively few share-holders benefit from this change-down — when compared to the vast numbers of employable Americans who have become unemployed by virtue of the present paradigm.

How to make it work for the millions of unemployed and under-employed Americans you ask?

There are ways. It should be the next big discussion that we, as a society should be having — and soon.

My next few posts will discuss those very topics. There are a few examples of nations that have dealt with similar challenges and have done so successfully.

John Brian Shannon writes about green energy, sustainable development and economics from British Columbia, Canada. His articles appear in the Arabian Gazette, EcoPoint Asia, EnergyBoom, Huffington Post, the United Nations Development Programme – and other quality publications.

John believes it is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.

Check out his personal blog at: http://johnbrianshannon.com

Check out his economics blog at: https://jbsnews.wordpress.com

Follow John on Twitter: https://www.twitter.com/#!/JBSCanada

JOBS: The Key to Capitalism’s Success

by John Brian Shannon

As we all know, several political/economic models are in use in the early 21st century. A little refresher for you first, if your high-school political science classes didn’t especially thrill you.

The capitalist system employed by the Western nations and some other nations, is often referred to as the Free Enterprise system, the Free Market system, Wealth Accumulation, Capital Accumulation or the Open Economic model – depending on the context of a conversation. Politics can vary within capitalist systems – which are often a variant of democracy (civil rights enshrined in a constitution, the right to vote, rights to property and person and freedom of expression) form part of this model. Socialist parties represent the “left wing” and conservative “right-wing” parties are represented along with independent candidates as elected by the registered voters.

In the capitalist system, greed is the primary agent of economic change. If you want to eat, you work for money to buy your food. If you would rather drive to work than walk, you work for money to buy a car and insurance. An individual “works” to earn “profit” to purchase goods or services. The underlying premise being, that if an individual has a decent education and works “smart” and “hard” you will accumulate wealth over time. Western corporations and governments operate in a similar fashion.

So, why isn’t it working?

“It IS working!” wealthy Western individuals emphatically state.

“It IS working!” Western corporations emphatically state.

“It IS working!” Western governments emphatically state.

And in those cases, it most emphatically IS working!

But the rest of us are not. Working, that is. You know… jobs, working, making a living, paying the bills, making the rent… and all the rest of it.

You will recall my words from a previous paragraph; “An individual “works” to earn “profit” to purchase goods or services. The underlying premise being, that if an individual has a decent education and works “smart” and “hard” you will accumulate wealth over time.”

All good there. Except what happens in the capitalist system when there aren’t enough jobs?

The short answer is; A failed economic system. Ever more wealth becomes concentrated in a ever smaller percentage of the general population. You guessed it — 1% of the Western population will always agree that the Open Economic system works well for them.

For Western nations it is death by a thousand cuts and only in the interests of economic survival will our present system evolve into something very unlike the present model and it may take as long as 50 years to do so.

Let me back up a bit.

I promised you a political science refresher and here is the other half of it. The Communist system, sometimes called the Statist model, the Centralized Economic model, or the Closed Economic model, does not employ greed as the primary driver of human activity. Profit, either at the individual or corporate level is unknown and all economic activity is considered the property of the state. The only things that really matter to a communist is the national GDP and the sovereignty of the country. Of course, civil rights and personal freedoms are enshrined in the constitutions of communist countries – although at the end of the day personal rights can be and often are subjugated in the best interests of the state.

For one example of this, in the former USSR alcoholism rates were astonishingly high. But this was never reported in the Soviet media as it was thought that publicizing this knowledge would emotionally depress workers across the nation – and thereby suppress economic output. Therefore and officially, in the former USSR there was no alcoholism – and hence, the government-owned hospitals failed to devise a treatment for a disease which only occurred in the decadent West! If a citizen of the former USSR arrived at a hospital or doctor’s office for treatment of his alcoholism, he was told that he suffered from “an imaginary disease” and was counseled to stop “trying to get attention” by emulating Western behaviors. And no doubt put on some sort of watch list for good measure.

Eventually the former USSR collapsed mainly due to internal forces. However, some communist nations remain and are thriving. China has surpassed India, France, the UK, Germany, Japan and every other country except for the United States in GDP and accumulated wealth – and has done so by employing the statist economic model. According to most economics Professors, China will surpass the United States GDP by 2040. That’s 28 years from now in case you are a Chinese economist counting the days.

The main reason for the dramatic growth-driven economic performance in China is that many Western corporations have chosen to do business in China rather than the West – due to lower land and construction costs, lower labour rates, the lower costs associated with a relaxed or non-existent regulatory environment (depending on the industry and region of the country) and other cost-lowering factors associated with operating a business in China.

Beginning about 1999, U.S. corporations especially, have embraced the opportunity to lower their costs by closing their North American factories and building brand-new factories in China – sometimes with significant communist Chinese government assistance! Other western corporations too, have been closing our factories by the thousands in America and Europe and relocating their manufacturing operations to China – and on account of this economic activity, the Western economies combined are at present, 150 million jobs short of full employment. This trend of creating jobs in communist China whilst simultaneously creating higher unemployment in the Western democracies will continue as long as Western voters don’t complain too much.

By 2030, the Western democracies will be much-weakened in comparison to a still-booming China and the other Asian nations. At that time, Asia will be supplying almost all the manufactured goods for the Western economies which will by then, have lost 300 million jobs to Asia.

Also by 2030, perhaps as many as 700 million Westerners will be retired persons receiving some form of Social Security – while millions of younger people won’t be old enough to join the workforce. It will be a time when less than half of the West’s population will be employed and able to support the Western economies. From the Western point of view, this trend gets worse until 2060 when economic performance is expected to plateau in Asia.

A paradigm-shift has been taking place right under our Western noses for three decades now and we have just now begun to notice. China will soon be the dominant world power – and we handed it to them in exchange for higher profits for Western corporations.

It’s said; “He who has the gold makes the rules” – and it is shaping up to be a very different world indeed.

Follow John Brian Shannon on Twitter: https://twitter.com/#!/JBSCanada