By Vincent F. Safuto Staff writer
November 22, 2002
"Producers are consumers"
Buried deep in one of the boxes I have stored in my garage is the notebook from the college class in macroeconomics I took several years go, where the professor intoned those words and I wrote them down.
The power of the American economy and its rise to global dominance can be attributed, in part, to a recognition that, while it's all well and good to produce things, and produce them at a reasonable price, there must be a demand for those things.
The idea that the people who made products might be able to earn enough to afford to buy them was a long time in taking hold in the United States. When it did, America and Americans benefited from a society where workers could advance themselves economically, buy the products they made, and other products as well, build families, and secure better lives for themselves and their children.
But now we're taking giant steps backward, and many manufacturers are looking to lands beyond America's borders, not for new markets in which to sell their goods, but for new places to make them and thus lower their manufacturing costs.
In and of itself, keeping production costs under control is not a bad thing. But in their pursuit of lower costs, companies are making a tragic miscalculation that will not only hurt Americans, but also the companies themselves in the long run.
If every manufacturer sends its jobs to Mexico or China, it matters little how low the price of the manufactured goods are if no one here in the United States can afford them.
Conservatives decry liberals' complaints about a "race to the bottom," but anyone who is drawing a salary today, and even retirees, should recognize the threat posed by irresponsible exportation of jobs.
Based on what I see on the business wires, the race to send good-paying jobs overseas is turning into a flood, and companies say it will make them more "competitive" since American workers cost too much, no matter how good they do their jobs.
Reality is that some day, production jobs paying decent wages and offering benefits may be quite rare, and those products from a "competitive" manufacturing environment may be unaffordable at any price.
Retirees may believe they're safe, but some companies are pondering ways to save on pensions and medical benefits, and if they're willing to eject the people who do the work, they're even more eager to unload people who used to do the work.
Magazines have raised the specter of deflation, when prices and wages begin a downward spiral. If this keeps up, we may end up in a permanent economic depression that makes the one of the 1930s look like prosperity.
Political solutions to economic problems tend not to work well, and cutting taxes has done little to persuade companies to keep manufacturing in the United States.
It's a forlorn and desperate hope, but only action by enlightened and understanding business leaders, if there are any left in this country, can stave off a dismal economic future for ourselves and our children.
Vincent F. Safuto is a copy editor for the Press Journal. Reach him at Vincent.Safuto@scripps.com
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