Economic Globalization Part II

In the previous post, we talked about the history of World War 2, and how it left the global stage open for the ascension of the United States as the lone World Super Power. It is true that the Soviet Union was another military power, but certainly not economically robust.

As American troops began to come home in the late to mid 1940's, the landscape of the country began to change. Rather than predominately upper and lower class, there was a growing middle class emerging in many growing metropolitan cities as well as suburban areas. See the 1970's television show "Happy Days", which tried to a recreate a reminiscing idealistic view of the 1950's. (i.e. "oh, those were the good ole days...")

*There were a lot of SOCIAL issues that were ignored during this "golden era" of US history and would later bubble over into what became the explosive, controversial & (at times) revolutionary 1960's.

So, what we are seeing today in economic globalization, essentially, is the world attempting to close the gap with the US. They are in no way close to catching up to the United States, it takes the entire continent of Europe forming the "EU" to make a formidable fiscal foe. I was reading an article in US & World News Reports on the subject, and one economist essentially said, we're still benefiting from the headstart we recieved after WW2. People act like this is just how it always was, or we arose from a level playing field. Under strenuous circumstances, we took advantage of the situation (where others did not) and did great things , but, we were excelling while others were spending their time rebuilding, to be sure. So, as things come closer to normalcy, how will the American economy, and the American people respond? We've benefited so long, do we really have a gripe? How shall we cope? Is there anything to worry about?

The US economy is still the largest consumption driven economy, and there is no one nation that can challenge our economic strength, especially not one of any type of COMPARABLE size.

http://usinfo.state.gov/products/pubs/economy-in-brief/images/2006gdp.jpg
[It must be said we have the most UNEVEN distribution of wealth of all those nations listed, meaning our upper class {is happier than other upper classes?} have a larger share of US wealth than the rich in any of the other aforementioned nations, but that is another topic for another day]

But what have we been seeing lately? We've seen a lot of jobs and companies go overseas where there are no taxes, lower wages and no company provided healthcare. I would like to point out that nations with universal GOVERNMENT healthcare dont have to worry about this issue at all. Competing with overseas automotive companies, GM has laid off a lot of its American workforce, as well as cut the benefits for their remaining workers. Pensions? Scrapped. More and more, you're seeing new deals with worker unions where the pensions for new employees are a thing of the past... where pension packages for vested workers are being decreased... and where wages for new hires are being lowered.

http://www.msnbc.msn.com/id/20996881/
[Industrial unions are no longer the backbone of organized labor]

"You want us to take care of you after you retire? You act like you've spent the majority of your daylight hours for the past 40 years working to make me rich or something. Oh... wait..."

The execs are the guys that usually screw up...

"I got an idea, screw Toyota, noone is into small cars... or gas mileage... lets make a lot of really... really... really big trucks. Yeah... American's like big things. Big gas guzzlers. SUV's! Hummers! And lets make this decision in a time of crisis in the Middle East! This was a no brainer. Stupid workers... they think its easy being me. Thats why I make the big bucks... cuz I make the good corporate decisions. All that thinking was hard. Whew... I need a break. I'll take a vacation... and raise my stock options... I'm sure the workers dont' mind... hell, most of them dont even know what stock options are. Mwahahahahaaa...!"

I never hear about the CEO's, CFO's, COO's, the board of executives and all their upper management cronies taking any massive paycuts "for the benefit of the company as a whole." Its always the regular worker fitting the bill. It is true that the average worker in the US has a relatively good life, compared to most "industrialized" nations... but we're not running away with any awards here.

http://content.answers.com/main/content/wp/en/3/32/International_Median_Household_Income.png

http://upload.wikimedia.org/wikipedia/en/3/32/International_Median_Household_Income.png

Compare that to the jump that CEO's have seen in their pay. 40 years ago, the top guy in the company could make 30 or 40 times your salary. Now CEO's make 250 to 300 times what you make.

http://www.epinet.org/images/snap20060621.jpg

Will they help fit the bill? The board room guys are the ones pulling six, seven and EIGHT figures per year. When GM is on the verge of bankruptcy, do they cut their inflated salaries by 75%? 50%? 25%? AT ALL??? They're not starving. They would do more than just survive. Or does it rest entirely on the shoulders of the American people? And if and when your company feels the pressure of the global market, will your company's executives sacrifice some of their benefits, or start with the workers who establish the foundation of the company?

It is true that the United States, even to this day, continues to have very low unemployment, usually around 4.7% (where nations in Europe may have 8 to 10%). There was a financial article on MSNBC yesterday asking if 5% unemployment would cause us to go into a recession.

http://www.msnbc.msn.com/id/22508860/
[US stocks fall sharply on recession fears]

Most nations would kill (literally) for 5% unemployment, but we take it as a sign of a downward swing in the market. So, our economy is definately one to be desired, however the biggest question relates to the QUALITY OF THE JOBS changing in this country. And no one company is more responsible for the changing in the types of jobs offered in American more than the world devourering corporation known as Wal-Mart.

Did you know that Wal-Mart is the world's largest employer? There are a lot of Americans who love Wal-Mart. When I think of Wal-Mart, I think of some mid 30's caucasian soccer mom with a mini-van full of kids looking for the best deal for her middle class home. Obviously many people go to Wal-Mart, because 5 of the top 10 richest Americans are the off-spring of the man who founded Wal-Mart. Did you know that?

http://money.cnn.com/2004/09/23/news/newsmakers/forbes_400/top_ten_richest_gates.gif

5 of the top 10 richest Americans. FIVE OF THE TOP 10. All work for Wal-Mart. That is astounding. And there are a lot of people who feel that Wal-Mart is good for America. In terms of outsourcing? There may not be one other single thing on this PLANET... which is more responsible for American jobs going overseas. The problem with Wal-Mart is two fold. How it impacts wholesalers... and how it impacts smaller retailers. Wal-Mart offers the lowest prices... PERIOD. There's no denying that. And consumers love low prices. The days of past generations championing "Made in the USA" are long gone. We only care about saving as much money as we can. But how do we get those savings? Well, its simple economics. In order for me to sell my goods cheaper than all of my competitors, Im going to need to procure them wholesale for cheaper than all of my competitors. Thats it in a nutshell. Wal-Mart is the world's LARGEST company. Its very hard to say no to that type of revenue. They have the ability to flex on their wholesalers. As the wholesaler, you want to make the largest profit per unit sold as possible, but these guys buy in such a ENORMOUS volume, you can't refuse their business. And as they demand lower and lower prices... you, as the wholesaler, eventually have two options...

1) take your company overseas

2) lose your largest customer to your competitors (and probably go out of business)

So where there were once thriving middle class manual labor sectors in this nation, a large part of our labor market has gone overseas to factories that offer substantially lower wages, dont have to pay business taxes, and dont offer any benefits to their employees. The largest wholesaler to Wal-Mart is now China. All of the goods that you buy at those cheap cheap prices were made in some Chinese factory. And the jobs created by Wal-Mart are service positions, with wages far below what the manual labor factory was paying, and with none of the benefits. The world's largest employer doesn't offer much of anything in benefits. Just, let that... marinate for a moment. I guess, in the end, it makes sense. How else can Scrooge McDuck get his billions? There are a lot of small American cities that literally have economic crises when Wal-Mart moves into town. Goodbye small self-employed shops... Wal-Mart's doing what you're doing... and guess what... for a whole lot cheaper. Not only that, the consumer can buy a heck of a lot more stuff while he's getting his glasses, what do you offer... a cup of water? At least Wal-Mart offers a lot of $7/hr jobs in return. After putting suburban small business owners out of business, I would think thats only fair. Dont you?

You can go online and see article after article about criticisms of Wal-Mart. Cheap stuff comes at a price. There have been several documentaries. One on PBS and one on CNBC. Wikipedia has a page dedicated to it.

http://en.wikipedia.org/wiki/Criticism_of_Wal-Mart

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/10/27/BUG3JFEL7F1.DTL
{Memo from the world's largest employer trying to cut the benefits they barely have!}

http://www.newsweek.com/id/32624
[Thousands of adolescents work as unpaid baggers in Wal-Mart's Mexican stores.]

Its incredible. And more and more jobs continue to go overseas. They are not the only large company forcing jobs overseas, but they are certainly the largest problem. I believe its only going to get worse. Or... if you live in another nation... closer to some FAINT semblance of.... fair.

http://www.mymoneyblog.com/images/0708/margtax2.gif

http://online.wsj.com/media/info-poverty0608-hhold-MD.gif

For the most part, when dollars have been adjusted for inflation, over the past 40 years, there has been a small but steady gain in the median HOUSEHOLD income.

http://www.msnbc.msn.com/id/18868904/
[Every generation does better? Don't count on it]

Now, the median income for men is actually DROPPING in the United States. The median household income (HMI) is increasing slightly only because there are more women entering the workforce than ever before. But, as "real wages" are stagnant, the cost of living has not been so merciful. The cost of housing is increasing at a faster rate. The cost of energy (heating/electric/car fuel) is increasing at faster rate. The cost of medical. The cost of higher education.

I dont think other nations should feel empathy for any US jobs lost to their countries. Even as the good ole days of huge generational success seem more are more unlikely, there's no place I'd rather be. We still have the best economy of any large nation. Switzerland, Japan and Singapore with land masses smaller than Florida dont count. I just think we as Americans need to get prepared... get ready to cope, as best we can, for the ever-changing economic landscape of this nation (whatever it becomes) as we watch the continued progression of larger modernizing nations such as Brazil, China, and India with extremely large workforces who are willing to work at a lower wage than most Americans.

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