Wednesday, November 03, 2010


The GOP is in a bind

I see nothing but minefields in every direction for the new Speaker. To promote job growth, it isn’t as easy as simply lowering taxes; one must also have products or services that consumers will buy. Today, virtually all of the products are made in China or Asia, not the US, and the consuming public is not in the mood to splurge as before, preferring to reduce debt and save for a rainy day. Another aspect is that perhaps as many as four million manufacturing jobs have been lost forever, never to return.

Services, for a large part, depend on sales and after sale service or product maintenance, which is under several kinds of positive and negative pressures, such as the introduction of new products along with withdrawal of support for obselete or obselescent products, and the current trend to make do for another year or two with one’s current set of products. We see this in diverse fields such as the auto industry, the aircraft industry, electronics, computers, software and others. If that is what’s left for our workers to aspire to, they are rapidly reaching a ceiling in their prospects for growth of income, and hence, their ability to consume at a relatively high rate.

Then, too, we have reached a high level of “throwaway parts” repair along with significant built-in sensors and diagnostics that simplify the identification of the part to be replaced, or the whole unit to be cast out. The parts themselves, of course, are manufactured overseas. Has anyone had the experience of a TV technician saying that it would be cheaper, or almost cheaper, to buy a new TV than to repair the old one? Thus, less expertise is needed to effect a repair or replacement decision, with a parallel decrease in wages for such jobs, and the real profits go to the overseas company.

If, as I have read, we need to generate five million new, well-paying jobs a year just to accomodate the rising generation, can anyone tell me just where such a set of jobs is coming from? If we need the economy (the GDP) to grow at an eight percent rate or better in order to pay the bills, and reduce the debt, it starts with more jobs, right now!

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