The Truth About The Economy

Posted on December 3, 2016

My dear friend S. Lattman wrote this piece about the reality of 21st century economics. This needs to be read and read and read again. Very well written from a person I admire and who has a window on economics that most people, including myself, do not really grasp. I’ve been so busy working on a micro level, in trying to alleviate suffering one person at a time, that I sometimes miss the bigger picture. Thank you my friend.
J. DePinto

“I don’t know…

I think people are focusing on the wrong things, and the reason that Trump won. Blue collar workers (honestly, of ALL colors) around the country are frightened that the way of life they live and have been promised is gone, and they’re frustrated and scared. They’ve been lied to by both parties for so long that they don’t know where to turn. They keep watching frightening things on TV about things going on around the globe, and they don’t have answers, so they’re blaming everything in the world on immigrants, and politicians, and bankers, and anyone they sense is a power broker, and they’re desperate for answers. The truth is, as Jack Nicholson famously said, they can’t “handle the truth”.

Those factory jobs are never coming back, not in the amount they want, and not at the pay that they seek, and as long as we allow politicians and the news media and the bankers to continue to lie to them, the longer they’re going to lash out, and the closer and closer we are going to veer towards a fascist government.

We’re still lying to them.
For instance, we’re rapidly moving towards driverless vehicles, and we’ll be there within the next few years. When that happens, millions of truck driver and transportation jobs will disappear along with those middle class wages, and no one wants to speak about it, regardless of their political affiliation.
This INCLUDES Elizabeth Warren and Bernie Sanders. Not once have we heard a politician mention this. They all stand up there, and regardless of their affiliation, the lies continue, the fingers point in different directions, and the frightened, huddled masses stand around getting more and more confused and angry.

The world economy has changed, and I know this first hand. This is what I do for a living.
When and if transportation costs rise significantly (and stay there for an extended period of time), companies will find that it’s less expensive to build products in the states, rather than ship containers from southeast Asia (or trucks up from Mexico), and invest in factories and capital equipment. When and if that happens, the factories will be automated, and the number of factory jobs will make it difficult (if not impossible) for unions to regain their dominant hand and force high wages.
In the meantime, petroleum costs have been stable for too many years, and with the advent of fracking in this country, they’re not likely to spike anytime soon. Transportation costs have remained stable.

I’m tired of blaming companies for moving the jobs overseas. Let’s stop this nonsense. Go to a Wal-Mart parking lot and count the cars there. The companies didn’t decide to move the jobs to places where the labor rates were lower. The people did. They voted with their feet and their wallets, and the longer we sit around and lie to people, the more we’re going to tip towards fascism. For years, I’ve been FORCED to close US-based factories, because the public wasn’t willing to pay a few pennies more for the merchandise. It SUCKS to call in workers and lay them off, rather than see the company forced into bankruptcy. Stop blaming the companies. Blame our fellow Americans.

As to opening factories here, jobs with high labor concentration are NEVER going to come back. It will always be less expensive to manufacture overseas, whether in China or elsewhere, and the factories that come back will be in highly automated industries, with low labor concentration, and high cube, as it will be too expensive to ship these products long distances. This includes resin products (plastics), where the industries are highly automated, and where you are shipping low dollar amounts per truckload (so the transportation cost per dollar is higher).

You want to talk about real things?
Discuss the need to invest in our infrastructure, to keep people employed, and to enable companies to reopen factories here when the economic climate is ripe.
Discuss the need to invest in the new economy, which includes clean energy solutions. Make us a world leader, not a follower.
Discuss the need to improve our education system, so that our people are educated and trained and can participate in this new economy. It’s critical to our survival.
Talk about shoring up our construction industry, which employs local labor, and will keep the US economy humming.
Talk about welcoming immigrants and the disenfranchised, who make our culture and our lives richer by their presence. Without them, we are doomed to fail.

Let’s stop getting sucked into these ancillary conversations, and stop allowing everyone, EVERYONE (including Bernie and Elizabeth) from perpetuating these myths about NAFTA and finding scape goats for the problem that plagues us, which is that our world has changed and no treaty, and no pontificating, is going to bring the world back to the 1950’s, where mom sat home raising the children, and dad marched over to the giant factory to work.
Enough already with long conversations about Bernie and Hillary and Donald the Douchebag, and tax abatements to Carrier. This is all white noise, in my opinion.

People are understandably frightened about their future, and the future for their kids. Let’s deal with those issues.”