It's the Economy, Stupid!

By Alan Caruba

It is interesting to see how intently foreigners are watching the run-up to the 2012 national elections, particularly as regards whether President Obama could be reelected. Hardly a day goes by that I do not receive inquiries from places like South Africa, Israel, or England. Some offer comments on my Facebook page, but the concern is the same, can Obama be defeated?

To borrow a phrase from Bill Clinton’s 1992 race, “It’s the economy, stupid.” That will be the deciding factor as Democrats , Republicans, and independents go to the polls in November. The news for Obama is bad. Unfortunately, the news for millions of out-of-work Americans it is even worse.

On February 28, the National Federation of Independent Businesses and a coalition of business groups were in the D.C. Court of Appeals to argue their challenge to the Environmental Protection Agency’s rules regarding greenhouse gas emissions. The fact that there is no correlation between such gases—mainly carbon dioxide—and a non-existent global warming probably won’t even be discussed. A spokesperson for the NFIB said, “For the small business community, the constant churn of costly and carelessly promulgated regulations has become too great a burden to bear.” Guess who all those small business owners will be voting against in November?

The Congressional Budget Office (CBO) keeps doing something that is unexpected from most government agencies; it keeps telling the truth. In mid-February it issued a report which said that, after three years of Obamanomics, the nation has seen the longest period of high unemployment since the Great Depression in the 1930s. Trust a Democrat President to repeat all the errors of Franklin Delano Roosevelt who prolonged the Depression for ten years while he held office.

The “official” unemployment rate has hovered around or exceeded 8 percent and this is expected to continue through 2014. The CBO noted that the level of long-term unemployment—those looking for work for more than six months—is over 40 percent! That is the highest since 1948 when the data was first collected.

Hans Bader, Counsel for Special Projects with the Competitive Enterprise Institute, recently noted that “The official unemployment rate is going down, but that’s partly because many long-term unemployed people went into Social Security Disability, citing ailments such as depression. Now they have a monthly government check, they are never, ever going back to work, and they are no longer treated by the government as unemployed.” This is governmental slight-of-hand to lower the rate of unemployment while contributing to it.

Writing in OpenMarket.org in February, Bader noted that a good part of the unemployment problem in the nation is a severe shortage of skilled factory workers. “In recent years, government officials have depicted white-collar jobs for college graduates as the way to go,” said Bader who noted that, while seeking to increase spending on colleges, the administration has been “slashing spending on more useful vocational education that could lead to work in manufacturing.”

An indication of how poorly the government solution to the need for skilled manufacturing employees has been is the fact that the private sector has stepped up to solve the problem. The National Association of Manufacturers has endorsed a National Manufacturers Skills Certification System to fill the gap. In partnership with community colleges and trade schools, the program offers “a relatively inexpensive path to meeting the human capital demands of U.S. advanced manufacturers.”

It has not gone unnoticed that Obama’s stimulus billions did not produce any “shovel ready” jobs and wasted public funds on a range of “green” industries, many of whom, like Solyndra, have gone belly up. Overall, the “green” industries involving solar panels, wind turbines, and electric cars have proven to be sinkholes of money that generate few jobs compared to the rest of the nation’s manufacturing sector.

Finally, after three years of the most anti-energy administration since Jimmy Carter, the rising price of gas is going to have a devastating affect for Democrats and Obama on public perceptions on Election Day.

To those foreign correspondents asking whether Obama will be reelected, I keep saying that the present economy with its slow “recovery” and the high rate of unemployed, combined with the government’s crushing load of irrelevant and odious regulations, is as good an indicator as any regarding the outcome of the November general elections.

If foreigners are as much concerned with U.S. elections as Americans, all the debates, daily silliness of political news coverage, and largely irrelevant social issues suggest that November will represent, like the 2010 elections, a massive voter movement away from “hope and change” to a Republican candidate that offers an alternative economic policy to four more years of the disaster called Barack Hussein Obama.

© Alan Caruba, 2012

Signs of U.S. Decline

By Alan Caruba

Let me begin by saying I am not an economist, but I have had a rather unique “education” in the way American’s make a living, thanks to a long career as a public relations counselor working with corporations, trade associations, and others across a broad band of manufacturing and other activities, including agricultural.

My working philosophy was that, if I could understand what they were doing, anyone else could as well. Along the way I learned that farming has got to be one of the hardest ways to make a living. It is just dawn to dusk work. Next to that is manufacturing anything.

So, naturally, when Business Week magazine asked on its cover, “Can the future be built in America? Inside the U.S. Manufacturing Crisis”, it caught my eye. As Pete Engardio, the reporter, put it “The good news is that the U.S. is at or near the cutting edge in most of the emerging product areas,” particularly high tech, the bad news is that “Unless the U.S. can magically resurrect its manufacturing base, the good-paying jobs from these breakthroughs will be offshore.”

The irony is that the high tech breakthroughs were paid for with billions of U.S. taxpayer dollars that funded research at federal and university science labs, going back to the 1960s when the new products were just in the idea stage.

The numbers, too, tell the story. “In 2000 the U.S. exported $29 billion more high-tech products than it imported”, but “by 2007 that had turned into a $54 billion trade deficit.”
This is attributed to “two decades of unconstrained out-sourcing to Asia” that has “hallowed out much of America’s base of suppliers, factory managers, and skilled technicians.”

Not mentioned in the article is the way America’s schools have since the 1960s been turning out students with poor math and science skills, along with writing and reading skills. The average freshman college student spends time in “remedial” courses for things earlier generations routinely learned. Add to that the crushing costs of a college education and you have a recipe for a dumbed down and debt-ridden work force.

While we’re being told that the recession is “technically” over and jobs are a “lagging indicator” of recovery, my own worst suspicions are that jobs in general are going to be lagging for a long time to come, especially the skilled ones that nations like China and India are developing with rigorous educational systems.

“Nations in Asia and Europe aggressively court strategic high-tech industries with generous tax breaks, cash grants, cheap credit, low-cost utilities, and speedy regulatory approval.”

“By comparison, the U.S. has been indifferent to manufacturing; even when tax breaks are factored in.” Philosophically, the Obama administration appears to regard both Wall Street and corporations as an enemy that must be subdued with greater and greater regulatory oversight.

The fact that the existing oversight agencies failed in their duties does not seem to be understood. That’s why ponzi schemer, Bernie Madoff, and others were able to get away with it for years.

“Also, it can take two years to obtain all the environmental, health, and safety permits for a modern electronics plant—a lifetime in the tech world.” It’s a lifetime in any business enterprise. The U.S. manufacturing base may be the most heavily regulated segment of society of any nation with which we must compete.

Consider, too, the guiding philosophy of the Obama administration. Anything that contributes to the provision of energy is bad. Coal mines, bad. Offshore oil and natural gas drilling, bad. Anything, too, that uses energy is bad.

America’s auto manufacturers (the federal government and the unions now own General Motors and Chrysler) are being told they must get more mileage out of a gallon of gas, forcing them to modify automobiles in ways that simply make them more dangerous to drive.

In response to a survey by Deloitte Research and the Manufacturing Institute, U.S. executives said they believe that America’s competitiveness will decline further by 2012. An overhaul of the corporate tax code would be a good place to begin to reverse that. U.S. corporations pay higher taxes than just about anywhere else in the world!

These and other indicators are signs of decline in what used to be the greatest economy the world had ever seen. Other nations have watched and learned the lessons we have forgotten or reject. They are going to eat our lunch.

A Trip to the Mall

By Alan Caruba

A trip to a local mall today was instructive, if not a bit enervating. What is most obvious is the astonishing amount of merchandize there is for sale; clothes, clothes, and more clothes, followed by all manner of other goods. I was there to check out flat-screen televisions. I could say I thought it was my patriotic duty to buy one, but the truth is I was looking for sales.

The really big ones are still pricey, but the smaller models are within most people’s budgets and I saw a fair number of fellow patriots checking them out.

The mall is the quintessential American invention, not unlike supermarkets. Ours is a consumer society, but a lot of people are asking if we have forgotten how to manufacture anything any more. In truth, Americans still manufacture lots of stuff.

This thing called “globalization” is just capitalism at work as corporations and others look for the most competitive, best price to get their goods made. As much as I would like to see “Made in America” on anything I purchase, I must confess it no longer matters that much to me. Perhaps the most unexpected result has been the co-dependence we now share with China.

Herbert Meyer, a former intelligence analyst during the Reagan administration, has pointed out that American business has been going through a major restructuring for a long time. “A generation ago, IBM used to make every part of their computer. Now Intel makes the chips, Microsoft makes the software, and someone else makes the modems, hard drives, monitors, etc. IBM even out-sources their call center.”

IBM, like so many U.S. corporations, has become an aggregator as opposed to a manufacturer. It creates a vast network of companies, some here in the U.S., others overseas, all of whom are dependent on the other for the ultimate success of the product. It’s a very good reason for reducing the endless regulations imposed on American businesses, large and small, to the tune of costing a trillion dollars annually. It’s a good reason for tax cuts to encourage consumers to consume.

After wasting a lot of time trying to make communism work, the Chinese have embraced capitalism. By 2020, they will be producing more cars than the U.S. They have a billion people, compared to our current three hundred million. That means a lot of Chinese are going to want to drive to work and elsewhere. Unlike the U.S., the Chinese are building and upgrading their infrastructure of highways and bridges while ours are full of potholes and bridges that occasionally collapse. Investment in our infrastructure would be good for a dozen reasons.

The urge to have the federal government “bail out” companies that have been poorly managed is strong, but it is not the way capitalism is supposed to work. On the other hand, when the U.S. Postal Service makes ready to lay off 40,000 workers, it is an example of how new technologies drive out earlier ones. It’s sad for the workers, but then we no longer get around in horse drawn carriages, and milk and ice are not delivered to one’s home by horse drawn wagons.

I needed to actually see and compare the flat-screen television sets competing for my dollar. Proof, I guess, that sometimes, you just have to go to the mall. And sometimes, while you’re there, you realize how the world has shrunk and how our American style of doing things has been embraced by the world.