Dumping On Our Descendants
By Gus Tyler
The Bible says that the sins of the parents will be punished on the children, yea unto the seventh generation. The “sins” we are committing are embodied in the ever-mounting debt that our generation is incurring that will have to be paid off by our kids and their kids and so on and on. The debt is accumulating at an incredible rate.
Official sources inform us that the cost of our war in Iraq comes to $528 billion. There will be a projected $70 billion more for 2009.
Contrast this with the situation when Clinton left office. The budget was almost in balance. Actually, it was in balance if the so-called “off budget” budget was added to the “on budget budget.” The “off budget” budgets are the Social Security Trust Fund and the Postal Department that are independent entities whose surpluses may not be used to defray ordinary expenses.
Our present backbreaking deficits were brought on by two persistent policies of the Bush administration. The first policy was the sharp reduction on taxes from wealthy individuals and corporations. The reasoning of the Bush administration was that by enriching the rich, the beneficiaries would have the money to employ more people and startup or expand existing businesses.
If this “drip down” theory of the way the economy works were valid, the American economy should now be flourishing — which it isn’t. To make matters worse, the Bushies decided to declare war against Iraq, with imulti-billion dollars in additional expenses.
And now the sins of the fathers are about to be visited on their children and children’s generation for who knows how long.
March 17, 2008, 2:35pm
The Wrong And Right Way Out
By Gus Tyler
The American economy is in trouble. It is not the first time. In the 1930s, the American economy sank into a depression. As a candidate for president, Franklin D. Roosevelt described the situation with “one third of the nation ill fed, ill clothed, ill-housed.” He took steps to revive the economy by creating jobs. They were jobs that needed doing but were not being done because, at the time, the private sector of the economy did not find them profitable.
For instance:
There were forests that needed attention. They had been wiped out by forest fires or by depletion for civilian purposes like wood and paper. Under the New Deal, Roosevelt created the Civilian Conservation Corps. It was their job to restore the woodlands, serving a double purpose. It met a national need and also created jobs.
As a young college student, I got a job under the National Youth Act. My job was to go from tenement house to tenement house to find out whether they had internal toilet facilities. This led to a federal housing program that provided millions of jobs.
Right now there are all sorts of national needs. Almost daily we hear of still another bridge that collapsed. School buildings are dilapidated and in danger. The medical needs of children lack proper attention. Put bluntly, there are endless needs that go unattended.
Yet, at this very hour, reports The New York Times, (March 16) “the Fed announced a $200 billion lending program for investment banks and a $100 billion credit line for banks and thrifts.”
September 25, 2007, 8:09pm
Our Topsy Turvy Times
By Gus Tyler
Once upon a time when the sun never set on the British Empire, the crown jewel in the imperial crown was a country called India. There were many agricultural products that the empire derived from India, including opium. When the power loom for weaving textiles made its appearance, the native Indians started up a lively business. To the British Empire this was a direct threat to their textile trade. So the Brits proceeded to destroy the power looms.
The native Indians (not to be confused with the American Indians) turned to knitting textiles by hand. The British imperialists were not deterred. They cut off the thumbs of the native Indians so they could not knit textiles.
Time marches on. British textile corporations are closing down their mills in the United Kingdom to get their work done in India.
What happened?
Four simultaneous technologic revolutions made it possible for British textile manufacturers to get their work done in distant lands where labor is cheap These are revolutions in communications, transportation, materials handling and computerized management. In a matter of seconds, highly skilled technicians in the British home office could see exactly what was happening in their plants in India, They could instantaneously communicate corrections. In short, modern technologies had turned the world into a global village.
But, regrettably, the “village” has no government to check the outrages of the corporations. The answer lies in a sort of global government where the World Trade Organization is obliged to live by the labor standards code developed by the International Labor Organization.
If and when this ever happens perhaps some savvy historian will call it The Tyler Plan.
September 24, 2007, 8:22pm
The Power of a Weak Dollar
By Gus Tyler
For many years, Uncle Sam was the big buyer in the world market. In part this was due to a “strong dollar ” A big buck could buy foreign goods inexpensively. It was also due to the outsourcing of production in countries with cheap labor. The finished product found a heavy market in the United States.
But now, it appears, that the American dollar is weak in global trade. The Wall Street Journal reports, “The U.S. dollar has grown weaker against the Euro, the British pound and other currencies.” This month the Euro rose to $1.39 cents.
But, irony of ironies, our weak dollar has its own strength. The weak dollar finds that imports from countries that have a stronger currency have become quite expensive. So, we import less. And vice versa. Buyers in other countries with strong currencies find American products a real bargain. So we sell more. The balance of trade turns in our favor.
Foreign producers have also opened factories in the U.S. Although the wages paid are high, they are not as costly as they seem because the foreign currency is able to lay its hands on U.S. dollars inexpensively.
To paraphrase Gilbert and Sullivan: “ Things are seldom what they seem. A weaker buck may rule supreme.”
August 25, 2007, 8:46pm
Jatropha to the Rescue
By Gus Tyler
In mankind’s struggle to head off the use of fossil fuels, the U.S., as well as other countries, have turned to the use of energy derived from plants. In the U.S., we have turned to ethanol, a corn derivative. Needless to say, the supply lags far behind the demand.
But now there is a new plant that may go a long way toward meeting mankind’s need for non-fossil fuels. Its name is Jatropha. It grows wild in India. It is an ugly plant. About the size of a golf ball, its seeds contain a yellowish liquid that can be converted into biodiesel.
O.P. Singh, a horticulturist for India’s ministry of railways, bubbles over with enthusiasm. The Wall Street Journal quotes him as saying, “This plant will save humanity. I tell you. Someday every house will have Jatropha.”
If and when the miracle happens, it will be another milestone in man’s progress on earth. Of all the creatures on earth, homo sapiens are the only creatures that know how to make tools to enable them to develop civilizations that thrive in the icy Arctic zones and in the deserts of Arabia.
In a wrestling match with a bear, I would put my money on the bear. But when a man is equipped with a tool called a gun he is the sure winner.
The Romans used to refer to man as homo sapiens — the human with a brain.
We do best when we use the brain as, in this instance — when we cultivate jatropha.
August 24, 2007, 6:08pm
Concentration of Ownership Continues
By Gus Tyler
In our economy that some call free enterprise and others call capitalism, the concentration of ownership in which fewer and fewer own more and more took a giant step forward in late August when Bank of America Corp. acquired a $2 billion equity stake in Countrywide Financial Corp. The meaning of this move, as reported in The Wall Street Journal, “is to dispel a crisis of confidence among creditors and investors in the nation’s largest home mortgage lender.”
But, there is a deeper meaning behind this move in terms of what is happening in the world of mortgages. As the Journal notes, “The move illustrates how among the current shake out among mortgage lenders, some financial heavyweights — including Bank of America and Wells Fargo & Co. — are gaining a firmer grip on the home mortgage business. Even as smaller rivals with less secure financing and capital bases fall by the wayside or are forced to retrench.”
The concentration of ownership in the home lending business means that a handful of lenders will be in a position to dictate the terms of future mortgages. Once more, our nation will be engulfed in a struggle between those who earn more than they own and those who own more than they earn. Karl Marx called it “the class struggle.”
But how can workers call a strike against a company that gets its work done in a factory on the other side of the globe?
August 22, 2007, 6:04pm
The ILO to the Rescue
By Gus Tyler
The world economy is in a dangerous state. In no small measure it is due to the outsourcing of jobs by the leading nations, including the United States. When jobs are outsourced they are moved out of the mother country to lands where cheap, child and even slave labor are available.
What can be done about this? A solution lies in bringing together two international institutions: They are the International Labor Organization and the World Trade Organization. The ILO’s name is misleading. Offhand it can be mistaken as an international organization of unions. But it is not.
The ILO was born as part of the League of Nations, very much at the insistence of our own President Woodrow Wilson who held that there should be an international agency that should protect and promote the conditions of the working people globally. When the League of Nations was replaced by the United Nations, the ILO became part of the U.N.
The way in which the ILO operates is intriguing. Every affiliate country has four representatives, regardless of population. Of the four, two represent their government, one represents the business community and one represents labor. Over the years, the ILO has elaborated a code of conduct covering the right of workers to organize unions, the abolition of slave labor, limits on work hours and on child labor, et al.
The central weakness of the ILO is that it has no power to enforce its proposed policies. What is needed is joint action between the ILO and the WTO because the latter has the power to apply sanctions to any country in violation of the rules of the game.
The ILO will write the rules and the WTO will enforce them.
August 21, 2007, 5:54pm
Our Topsy Turvy Times
By Gus Tyler
Once upon a time when the sun never set on the British Empire, the crown jewel in the imperial crown was a country called India. There were many agricultural products that the empire derived from India, including opium. When the power loom for weaving textiles made its appearance, the native Indians started up a lively business. To the British Empire this was a direct threat to their textile trade. So the Brits proceeded to destroy the power looms.
The native Indians (not to be confused with the American Indians) turned to knitting textiles by hand. The British imperialists were not deterred. They cut off the thumbs of the native Indians so they could not knit textiles.
Time marches on. British textile corporations are closing down their mills in the United Kingdom to get their work done in India.
What happened?
Four simultaneous technical revolutions made it possible for British textile manufacturers to get their work done in distant lands. These are revolutions in communications, transportation, materials handling and computerized management. In a matter of seconds, highly skilled technicians in the British home office could see exactly what was happening in their plants in India. They could instantaneously communicate corrections. In short, modern technologies had turned the world into a global village.
But, regrettably, the “village” has no government to check the outrages of the corporations, The answer lies in a sort of global government where the World Trade Organization is obliged to live by the labor standards code developed by the International Labor Organization.
If and when this ever happens perhaps some savvy historian will call it “The Tyler Plan.”
August 21, 2007, 5:49pm
The Roots of the Housing Crisis
By Gus Tyler
Foreclosures of homes are the big pain of the day. Millions of families who once proudly boasted that they had reached a level of earnings that allowed them to buy a house are now squirming as lending institutions threaten foreclosure. What happened?
The good old days came and departed. Families, mainly middle class, who could make ends meet, saw inflation eating away their income. The breadwinners in many families found themselves jobless as American companies closed down their facilities to get their work done in countries where cheap and child labor were available. So, homeowners had to borrow money to keep their heads above water. The lenders, of course, wanted to know how the borrower could guarantee that he or she would be in a position to pay what was required. The borrowers put up their homes as security.
But, alas, the homeowners, squeezed by inflation and economic decline, a combination that economists call “stagflation,” could not meet their mortgage obligations. Foreclosures have become the order of the day.
Meanwhile, the official figures on the state of the economy coming out of the administration report that all is well. The Gross Domestic Product shows growth. But a close examination of the way in which the GDP is determined and was once correct is now outdated and inherently faulty. The formula is GDP = S-I+E, in which S stands for sales, I for imports and E for exports. The great error in this formula that refers to Sales by American companies assumes that the work done to fulfill the order is carried out in the U.S. That was once true. It is no longer true in the age of outsourcing.
One final factor causing inflation: we live in an age dominated by MA — Mergers and Acquisitions. Almost daily come the reports of two corporate giants merging to form a super-giant. The old saying was “competition is the life of trade.” Concentration of corporate ownership in ever fewer hands displaces true competition for monopolies, oligopolies and cartels.
Is there a remedy? Yes. But not so long as the owners of the economy are also the owners of the government.
August 8, 2007, 8:12pm
Outwitting Outsourcing
By Gus Tyler
At the most recent televised debate among aspirants for the Democratic nomination for president, the subject of “outsourcing” played a prominent role. In goodly part, this may have been due to the fact that the program was sponsored by the AFL-CIO.
Outsourcing is the common practice of multinational corporations, which have, over recent years, shut down plants and fired millions of American workers to get their work done in countries where cheap, child and even slave labor were and are available. Most prominent among such countries are China and India. But there are also countries in Latin America as well.
What can be done to halt this dangerous disease? Some states in our country have laws that deny state contracts to companies that practice outsourcing. It would help if our federal government did the same.
But that would not in itself cure the curse. But do not despair. There is a way to go that will solve the problem not only for the U.S. but for other countries that are plagued by outsourcing as well.
The solution lies in a marriage of two major agents of the international system. They are the World Trade Organization and the International Labor Organization. The WTO spells out a code of conduct that applies to all trade treaties. Countries that violate that code are subject to sanctions. The ILO — an organization established at the behest of our own President Woodrow Wilson — has elaborated a code of conduct to protect the rights and the safety of working people. Unfortunately, the ILO has no means of enforcing its ideas. It is a mouth without teeth.
A marriage of the WTO and the ILO would make the code of labor conduct part of every contract of the WTO.
We live in a global economy. To cure a global economic disease requires global action.
August 6, 2007, 8:17pm
The World’s Richest Man
By Gus Tyler
The world’s richest man, according to The Wall Street Journal, is a Mexican son of Lebanese immigrants. His name is Carlos Slim. He is master of the monopoly. No matter what the field in which he operates, he soon makes it his private domain.
He is the modern refinement of an ancient economic tendency described by Adam Smith in his classic “The Wealth of Nations,” written a couple of centuries ago. In it Smith notes that when men of the same trade get together even for fun and merriment, the gathering will end up in a conspiracy against the public welfare and in some contrivance to raise prices.
The first giant step forward in this process was the organization of corporations. Instead of competing against each other, they pooled their capital in a single company called a corporation — marked as Inc., or Ltd.
But it did not end there. The individual corporations organized into trusts. There were the beef trust, the sugar trust, the cotton trust, et al. What they all had in common was to defy the law of supply and demand and set price by decree.
Busting the trusts became a major political purpose of progressive legislators. Perhaps, the most famous piece of trust busting was the break-up of American Telephone and Telegraph. But then came the Baby Bells that seem to have the same monopolistic tendencies as the original.
Although the U.S. is not Mexico, there is a constant trend in the U.S. toward a concentration of ownership, embodied in monopolies, oligopolies and cartels in which corporations divide up the market to ensure that they will not compete with one another.
One final point: Where you have concentration of ownership, it is difficult for newcomers to enter the field. The giant combines can — and do — wipe out a newcomer by cutting prices below the cost of production. Once they get rid of the newcomer, they revert to their original prices.
July 30, 2007, 8:22pm
Manipulating the Market
By Gus Tyler
In the closing days of July, the stock market began to sag. No one seems to know why. We are informed that the American economy is in good shape. We are also advised that the global economy is also in good shape. Some theorize that it has to do with bad loans on housing. But, whatever the explanation, the assumption is that the sag in the market is due to certain economic factors.
What all these explanations have in common is the assumption that “the market” is an independent factor. But the truth may well be that the market can be manipulated in a game played by bulls and bears where bulls become bears and vice versa over night.
Here’s how:
A handful of brokerage houses advise their clients that this is the moment to sell. Guided by their brokers they sell. The market begins to sag. The individual investor is grateful that he has such a wise broker. Meanwhile, the media carry the news that there are forces at work depressing the market. More investors sell.
Meanwhile, individual investors are granted stock options that enable them to buy a stock at a low price at some future time when the prices on the stock rise.
Yesterday’s bears now become bulls advising their clients to “buy now!”
In short, what happens on Wall Street may have nothing at all to do with what is happening in the economy because the “market” can be — and is often — manipulated.
July 24, 2007, 1:38pm
The Ironies of History
By Gus Tyler
The story of mankind is a story of endless ironies. Thanks to medical science, people are living longer. The result is that governments around the world are confronted with the challenge of providing adequate medical care for their aging populations.
When Bismarck introduced old-age insurance to Germany, he set the retirement age at 65 with full knowledge that few people in his country lived beyond 65.
At present, few people die at 65. As a result, medical science is now taxed with the problem of proper medical care for the aging.
At one time, American companies that were engaged in manufacture employed American residents almost exclusively. After World War II, great scientific progress was made in communications, transportation, materials handling and computerized management. It was now possible for an American company to get its work done in Third World countries where cheap, child and slave labor were available.
The result is that “outsourcing” is almost a universal practice among the great nations of the world, much to the distress of their workers who lost their jobs.
Interestingly, just as seemingly good developments turn out to produce bad results, so is this true in reverse. At the time of the bubonic plague, the killer disease did not show respect for rank. Lords and ladies, knights and warriors were hard hit. Feudal serfs were free to live a liberated life. Peasant revolutions multiplied around the world.
Yes, history goes its unpredictable way, turning good into evil and evil into good — pouring irony on irony.
July 19, 2007, 1:45pm
Dollars Versus Real Dollars
By Gus Tyler
In the last few days, the stock markets have broken all records. Obviously, we must be doing something right.
But a little probing into the situation suggests that the real condition is not quite what it seems to be. Informed economists know that there is a great difference between current dollars and real dollars.
At one time it was possible to ride public transit trains from one end of New York City to the most distant end for a nickel. That sounds incredible in the light of current fares that run into dollars.
At one time you could get a good meal in a Chinese restaurant for 50 cents. As a kid I was able to go to the neighborhood movie for a dime.
None of this is possible today. The evil force is a power called “inflation.”
When we think of inflation today we generally are talking about gas at the pump. In truth, inflation is almost a universal factor in our economy,
In part, our government is responsible when it runs the printing press to print paper money to pay its bills.
In part, inflation is due to the growth of monopolies, oligopolies and agreements among corporations that apportion given areas for given corporations.
Ironically, the Federal Reserve Board also adds to the inflationary pressure by a policy aimed to check inflation. Its policy is to raise interest rates on the grounds that if it makes borrowing more difficult it will cool the overheated economy. In practice what happens is that small businesses may not be able to pay that rate and they go bankrupt. Big business, with deep pockets, picks up the business and there is a further trend toward monopoly and oligopoly, which is, in turn, inflationary.
July 14, 2007, 8:15pm
Wall Street vs. Main Street
By Gus Tyler
As if it were still celebrating Independence Day, the Dow Jones Industrial Average rose to an all-time high on July 12. The Wall Street Journal reports the 284 point surge as “the biggest one day gain in four years.”
This leap took place at a time when the economy is wrestling with some nasty problems, like the slump in housing and rising energy costs to a drop in China’s stock market, as well as growing resistance by banks to extend loans for corporate takeovers.
For most Americans, the question is just how these ins and outs on Wall Street affect their daily lives. A bit of history may be helpful.
In June of 1929, the government reported that the industrial index took a precipitous drop. That was bad news in a country that, at the time, counted industrial production as its backbone, whether in making autos or garments.
But, perversely, the stock market zoomed upward. Why?
One possible explanation was that many movers and shakers in the world of industrial production, facing a threatening future, began to get rid of their involvement with industry and turned their bucks into playing the stock market.
Meanwhile, their former employees joined the army of jobless. By November of 1929, the economy collapsed for lack of a market. The Great Depression hit America. And the stocks that were to enrich the once-rich were now not worth the paper on which they were written.
Query: Are we in for a repeat of 1929?
June 18, 2007, 6:42pm
Dirty Dealing In Detroit
By Gus Tyler
The Big Three in Detroit — Ford, GM and the Chrysler complex — are demanding major cuts in employee benefits as the industry and union get ready for a new contract. This is a reversal of what has over the years been the customary procedure. Traditionally, the union made demands and in collective bargaining has made steady progress so that at present an auto worker working under a United Auto Workers contract earns the equivalent of about $50,000 a year when fringe benefits are included.
The employers now contend that they can no longer continue in the traditional way because Japanese auto companies that produce cars in the United States pay far less in wages and fringe benefits. To compete, American employers claim that wages and fringe benefits must be cut.
The obvious question is why the UAW doesn’t organize the workers employed by Japanese companies in the U.S. Our guess — and it is only a guess — is that the Japanese employers in the U.S. would probably threaten to shut down their production in the U.S. and transfer it to Japan.
What happens in Detroit, however, will affect American families who have nothing to do with the auto industry. In the course of a year, billions of dollars will be lost to the families of autoworkers. The loss of their purchasing power will be a blow to the entire American economy.
June 13, 2007, 1:00pm
Drug Makers Buy Doctors
By Gus Tyler
The story of how pharmaceutical firms buy doctors to prescribe given medication would be unbelievable if it appeared in some publication with less credibility than the Bulletin of the AARP.
Here’s the reported way in which a sales manager at Astra-Zeneca described the filthy operation: “There’s a big bucket of money sitting in every office. Every time you go in you reach your hand in the bucket and grab a handful.”
Little did the teller of this tale expect that his words would turn up on the Internet. But they did.
But even if they did not, the truth about the way in which pharmaceutical firms seek to buy doctors to prescribe their product would have been brought to public attention. A two-year Senate Finance Committee probe has concluded that by funding continuing medical education programs for doctors, pharmaceutical companies “have been able to increase their market for new products” and to illegally promote “off label uses” for their drugs. The committee has expressed concern that persuading doctors to use more costly drugs raises safety issues and most certainly places an additional cost on government funding.
The New England Journal of Medicine reports that 94% of doctors have a relationship with drug companies, 83% get free meals and 35% attend industry events.
They used to call such acts “bribery.” Now, we guess it goes under another name — like friendship.
June 12, 2007, 11:00am
Behind The Big Boom
By Gus Tyler
Just about every state in the U.S. is discovering that unexpected riches are pouring into its treasury. As a consequence, they are quickly catching up with many neglected chores like bringing public roads up to date, doing the same for schools and other public buildings and even putting goodly sums away in savings accounts for a rainy day.
While the public media have given this joyous development a good bit of attention, they seem to have failed to raise and answer an obvious question: Namely, why, of a sudden, do the states suddenly find their pockets overstuffed with cash?
In fact, quite the opposite might have been expected. Congress has enacted recent legislation that reduced taxes for small business. That should have deprived the states of their usual income from this source.
This concession to small businesses was part of a much larger bit of legislation that was aimed at bringing the national minimum wage up to date. For a painful period of 10 years, the national minimum wage was unchanged. The freeze began early in the Clinton administration, when the Republicans won control of Congress. The GOP’s opposition to a federal minimum wage dates back to its origin in 1938.
When the Democrats regained control of Congress, bringing the minimum wage up to date was a top priority. This meant a wage increase for several million workers. In addition, more than a dozen states have enacted minimum wage laws paying more than the federal minimum.
The American economy is a market economy. The combined effect of the federal legislation plus that of the separate states has expanded the American market with multibillions of dollars.
In short, we now seem to be getting a maximum return for our “minimum” effort.
June 3, 2007, 1:00pm
Whither The Wall Street Journal?
By Gus Tyler
The Wall Street Journal, almost from its beginning 125 years ago, has been one of the most highly respected dailies in the nation. As a devoted daily reader of the Journal, for at least half a century, I have increasingly come to respect the Journal for its balanced point of view.
Over this long stretch of time, the Journal has been owned by the Dow Jones company, which is dominated by the Bancroft family that controls 64% of the shares of Dow Jones.
It appears that, in terms of ownership, the Journal may shortly undergo a radical change. Rupert Murdoch’s News Corp. has made a bid of $5 billion to take over Dow Jones. The Journal reports that “the Bancroft family would meet with Murdoch’s News Corp to discuss” the big bid.
In our day of mergers and acquisitions, what is going on in regard to Murdoch and the Journal may appear to be just another act in the ongoing show. But it may be more than that. Murdoch is more than just another journalistic entrepreneur. His publications champion an ultra-conservative point of view. The Journal is not unaware of this danger,
The Journal reports that the Bancroft family will meet with Murdoch’s News Corp. “to determine whether, in the context of the current or any modified News Corp. proposal, it will be possible to ensure the commitment to editorial independence, integrity, and journalistic freedom that is the hallmark of Dow Jones.”
But what if Murdoch says , “of course,” and then goes his merry way?
May 31, 2007, 7:14pm
Top Court Splits Five vs. Four Again
By Gus Tyler
In a decision on wage discrimination, the U.S. Supreme Court divided five to four along predictable lines. There are five conservatives and four liberals.
The case involves a woman who is a supervisor at a Goodyear tire plant in Gadsden, Alabama. She is the sole female supervisor. She was paid less than the other supervisors, including supervisors who were hired after she was.
After twenty years of employment at the same job, she concluded that she had had enough. She filed a formal complaint with the government. The case moved from court to court until it reached the U.S. Supreme Court. The high court ruled that the complaint was invalid because the aggrieved party filed her complaint too late. For the complaint to be valid, it had to be filed within 180 days after the original wage was set.
The court’s decision affects far more people than the woman in the Goodyear case. Between 2001 and 2006, some 40,000 workers have brought discrimination suits. Just how many know of the 180-day rule, we do not know.
But we have a suspicion that we would like to share with our readers. When the law was drafted giving workers the right to sue their employers for wage discrimination, there was a shrewd legislator who did not like the law to begin with but who did not want to go on record as voting against an act empowering workers to institute suits against employers for wage discrimination. So, he (or she) voted for the bill but tacked on the 180-day clause with the expectation that it would be a rare worker who knew about this little obscure requirement..
Apparently, four members of the U.S. Supreme Court realized that the 180-day clause was a trap and did not deserve the blessing of the court. But they were outvoted by the other five members.
May 29, 2007, 5:00am
Feeding Vegetables Into Auto Fuel
By Gus Tyler
The exhaust from autos fueled by gasoline is one of the most potent air polluters in the nation. In many parts of the country, especially where agricultural products are at hand, vegetables have been displacing gasoline as fuel. But, lo and behold, it now appears that a bio-diesel plant will soon be in operation in New York City.
The New York Times reports that when in operation the plant will be able to produce 110 million gallons of fuel a year. If successful, other such plants will undoubtedly follow.
The success of the venture will be far more than a way to reduce pollution. It will also make the U.S far less dependent on oil from the Middle East. The macro-political consequences cannot be underestimated.
There are, however, side effects of the new found source of energy that, in the long run, will require attention. For one, it may cut into the supply of food and the cost of food. It may also lead to deforestation.
At present, we count on our forests to help purify the air we breathe. The carbon dioxide in the air is inhaled by plants that, with their chlorophyll, can convert 6 parts of CO2 and 5 parts of H2O into starch and water.
What is most encouraging is the very fact that there are people in our midst who are aware of the negative aspects of generating bio-diesel energy and who are addressing themselves to coping with these difficulties. A mix of good intentions and good brains should do what should and can be done.
May 26, 2007, 2:00pm
Minimum Wage Hike Makes History
By Gus Tyler
For the last ten years there was no increase in the federal minimum age. When the Republicans took control of Congress in President Clinton’s second year in office they turned their back on any minimum-wage increase. Ironically, the Congress of the United States voted to increase its own stipend in line with the rise in the cost of living. But a similar adjustment in the minimum wage was denied.
On May 23, the House of Representatives approved an increase in the minimum wage by a vote of 348 to 73. In the Senate, the vote was 80 to 14. Which means that the majority of Republicans in both houses voted for the bill. That made history!
But, if the past is a guide to the future, we may expect that the wage hike will have far-reaching implications. Workers who were earning more than the minimum found themselves at the bottom of the totem poll. They demanded increases and generally got them. In cases where workers are represented by unions, contracts are renegotiated to reflect the change in the minimum.
None of this should come as a surprise to those who are acquainted with the history of the minimum wage. In 1938, in the second year of President Roosevelt’s term of office, the minimum wage was part of a “fair labor standards act.” The proposed minimum was 15 cents an hour. The going wage in the apparel industry was about five cents an hour. Employers complained that a 15-cent minimum would drive them into bankruptcy. But it didn’t. The minimum wage raised buying power across the land.
Does the present support of Republicans for a higher minimum wage mean that they have seen the light? Not really. The minimum wage provisions are part of a total national budget that includes continuing support for the war in Iraq.
Once more we are reminded that politics makes strange bedfellows!
May 25, 2007, 12:20pm
The Weak Yuan
By Gus Tyler
China is now being charged with depressing the value of the yuan, its primary currency. With a weak currency, Chinese consumers would find it hard to buy goods made in other countries, and they would find it easy to sell their goods in other lands. Hence, the weak yuan would help promote a favorable balance of trade for China.
At first glance, the American consumer should cheer. Things “made in China” could be obtained at bargain prices with our strong dollar. But, hard to believe, the retail prices of things made in China, India, et al. are not cheaper than things “made in America.”
I discovered this many years ago, when I was the assistant president of the International Ladies Garment Workers Union. Apparel firms in America that were getting their wares made in Third World countries found fault with the union for its higher wage scale. They gave the impression that the same garment made in China, or India, or Mexico was a “bargain” for the consumer. We decided to put this claim to the test. We had committees do some shopping. They found racks of identical garments made for the same company in many lands. We checked the retail price. They were all the same, including garments “made in the U.S.A.”
At a convention of garment manufacturers, a top official boasted that “mark up” is the “name of the game.” If the cost of manufacture was $12, and the selling price was $24, he explained that such a 50% mark-up was fair.
Conclusion: With cheap, overseas labor and a weak yuan American companies can produce garments at low cost, but after the “mark-up” the price is no bargain.
May 24, 2007, 11:42am
Solving The Chinese Puzzle
By Gus Tyler
Last year, the United States ran a trade deficit of $232 billion with China. The Congress of the United States is enraged and wants China to open up its market to products “made in America.”
The first question to be asked is just how it has happened that China has such a huge trade surplus with the United States. The answer is painfully apparent. It was — and is — due to the policy of American corporations that closed their factories in the U.S. to get their work done in China where there was an inexhaustible supply of very cheap labor.
The finished products were made for sale in America. Hence, the huge U.S. trade deficit with China.
In short, the prime responsibility for the huge trade deficits with China was, and is, in the first instance, the policies of American companies.
What can be done about this?
To begin with, China has promised that it will expand its purchases of U.S. products by $30 billion this year. Just how this will be accomplished has not been spelled out. But one way would be for the Chinese to produce more than originally planned for the American market and to sell that surplus in China and remit the income to the U.S.
The U.S. Secretary of the Treasury, Henry M. Paulson Jr., according to The New York Times, proposes to make more room for U.S, passengers and cargo, granting U.S. financial services access to Chinese customers and clearing way for the sale of energy technologies to China.
In short, the mess in China created by the “outsourcing” practices of American corporations is not likely to be cleared up easily. Solving The Chinese Puzzle
Last year, the United States ran a trade deficit of $232 billion with China. The Congress of the United States is enraged and wants China to open up its market to products “made in America.”
The first question to be asked is just how it has happened that China has such a huge trade surplus with the United States. The answer is painfully apparent. It was — and is — due to the policy of American corporations that closed their factories in the U.S. to get their work done in China where there was an inexhaustible supply of very cheap labor.
The finished products were made for sale in America. Hence, the huge U.S. trade deficit with China.
In short, the prime responsibility for the huge trade deficits with China was, and is, in the first instance, the policies of American companies.
What can be done about this?
To begin with, China has promised that it will expand its purchases of U.S. products by $30 billion this year. Just how this will be accomplished has not been spelled out. But one way would be for the Chinese to produce more than originally planned for the American market and to sell that surplus in China and remit the income to the U.S.
The U.S. Secretary of the Treasury, Henry M. Paulson Jr., according to The New York Times, proposes to make more room for U.S, passengers and cargo, granting U.S. financial services access to Chinese customers and clearing way for the sale of energy technologies to China.
In short, the mess in China created by the “outsourcing” practices of American corporations is not likely to be cleared up easily.
May 17, 2007, 2:23pm
A New Breed of Trade Pacts
By Gus Tyler
The Republican White House and the Democratic Congress have reached an agreement on a new kind of trade pact. It applies to pending agreements with Columbia, Peru, Panama and South Korea. What is distinctive about these trade agreements is that they go beyond the simple exchange of goods. They oblige the parties to observe certain labor and environmental conditions.
The current move recalls our experience with the North American Free Trade Agreement under President Bill Clinton. It involved only three countries — the U.S., Canada and Mexico. The immediate impact of Nafta was a flood of jobs out of the U.S. into Mexico by companies in search of cheaper labor. Under the agreement, the U.S. could have insisted that Mexico elevate its labor standards. For whatever the reasons, Clinton chose not to do so.
The pending pacts make it imperative that the governments involved see to it that the rights of labor be observed and that environmental conditions are not endangered. To which we say: Two cheers for the Democrats in Congress and the Republicans in the White House for their proposed trade pacts.
Why only “two cheers” and not three cheers?
We are withholding our third cheer until such time as the U.S. applies the principles of the pending agreements to U.S. trade with China and India.
At the time of the American Revolution, the American colonials “fired the shot heard round the world.” If we and our democratically minded allies applied our joint powers to elevate the status of those who labor in China and India, we would indeed be global liberators.
But don’t hold your breath.
May 16, 2007, 2:20pm
An Incredible Conflict of Interest
By Gus Tyler
Michael E. Baroody has been a senior lobbyist for the National Association of Manufacturers. He has been named by President Bush to head the Consumer Product Safety Commission. The NAM is delighted — as might be expected. What was not expected was a gift of $150,000 from the NAM to Baroody.
Such a gift is rare and suspect. Baroody informed the Commission’s General Counsel that the severance payment was an “extra-ordinary payment,” which indeed it was. Under existing rules, Baroody could not be employed by the NAM for two years. But, he notes, that while he could not do so, he could and would take cases of individual companies until such time when he could serve the NAM. He could also represent sub-groups of the NAM.
In short, he will do his work with members of the NAM although not with the NAM per se. He will violate the spirit of the law although abiding by the letter of the law.
The choice of Baroody to see to it that consumers get good representation was, of course, not a matter of his own doing. It was a decision made by the president of the U.S.
But cheer up. A national election is on the way.
May 13, 2007, 2:21pm
Congress Digging Into Corporate Executive Pay
By Gus Tyler
The overblown compensation of corporate executives has been a matter of major concern to the American democracy as far back as “the Gilded Age” as America entered the 20th century. What could be done to contain this runaway self-indulgence of the mighty moguls?
The corporations found a way. They hired experts in the field of compensation. These experts would make recommendations on appropriate pay and the corporation would abide by their decisions. No longer could anyone criticize the corporate executives of using their positions for self-enrichment.
But now, largely under the spur of the sharp-eyed and sharp-tongued California congressman Henry Waxman, who is chairman of the House Committee on Oversight and Government Reform, the panel is digging into the relations between the corporations and their advisers on corporate executive compensation.
Waxman wants to know what other work the consultants do for these corporations. He set a deadline of May 29.
The New York Times quotes Waxman as saying, “Almost everyone agrees the extravagant increases in executive compensation make no sense. The question I’m looking at is whether potential conflicts-of-interest among compensation consultants and their corporate clients might play a role in some of the irrational compensation decisions.”
All of which brings to mind the ancient Roman saying, Quis custodiet custodiam? Who watches the watchman?
May 9, 2007, 2:24pm
They Are Both Borrowers and Lenders
By Gus Tyler
The classic warning was that “Thou shalt neither a lender nor a borrower be.” At this moment, there are mighty financial moguls who are both borrower and lenders. Here’s the way they play the game:
They are known as “leveraged” take-over artists. The term “leveraged” means that they borrowed the money for their operation. With the borrowed money they buy up enough shares in the desired corporation to establish their control. But — a big “but” — the company is now loaded with the burden of paying interest on the money that was borrowed to get controlling shares in the company.
The May 8 Wall Street Journal featured the many ramifications of the growing trend to take over giant corporations with borrowed money. No longer is it confined to a given country. “Three banks from across Europe have assembled nearly $100 billion to dismember Dutch bank ABN Amro Holding,” the Journal reported.
Ironically, The Wall Street Journal itself is not immune to hostile takeovers. Rupert Murdoch’s News Corp is offering $5 billion for Dow Jones & Company, the publishers of the Journal. Should this happen, the consequences could be ideological if Murdoch turns the Journal into an instrument for his super-conservative views.
One of the most ironic developments concerns the aluminum industry. Alco Inc. has made a $26.9 billion offer to buy Canada’s Alcan Inc. That move, notes the Journal, “would recreate an aluminum giant” of the sort that the U.S. government has for the past four decades been trying to break up.
All of which is part of the ongoing development for fewer and fewer to own more and more of the world’s instruments of production and exchange.
May 6, 2007, 2:25pm
Youngstown: An American Tragedy
By Gus Tyler
The story of Youngstown, Ohio, is the sad tale of a tragedy “made in America.”
Youngstown was once one of the greatest producers of steel in the world.
Today, it is a ghost town. It can no longer depend on its once thriving steel mills to provide employment for its people. In search of a livelihood, its erstwhile citizens have left for other areas in pursuit of jobs.
What happened?
As the world moved into the industrial revolution there was an ever-increasing demand for steel. Places like Youngstown responded. The method for producing steel was basically the same in all plants. Huge plants sprouted up all over the country. Their central feature was a super-heated furnace in which the mix of iron and coal and other ingredients was fed. The work was exhausting and dangerous and costly.
And then, seemingly out of nowhere, came a bright young man who never won great fame and whose name seems to have been lost in the mists of history. His idea was simple: Reduce the ingredients needed to make steel to a liquid and then pour the liquid into desired forms. He approached several American steel companies with his idea. They turned him down. In part, they must have done so because they had made big investments in their plants and were not about to scrap the old plants for the new method.
The young man took his idea to Japan. The Japanese companies enthusiastically embraced the idea. They poured the liquid into molds and shipped the finished product into the American market. That was the beginning of the process that turned Youngstown into a ghost town.
April 30, 2007, 2:28pm
The Stock Market Can Be Manipulated
By Gus Tyler
Almost daily, as stocks go up and stocks go down in our market, the stories of the reason why try to relate the vicissitudes on Wall Street to some current happening that is taking place in the United States or almost any other country in the world. But, without fail, the media relate what is happening to something outside the market.
But there is good reason to believe that the stock market can be manipulated by insiders who know how to juggle the market in schemes to enrich themselves at the expense of the innocents who waste their time looking for the events behind the ups and downs. For example:
A powerful brokerage house advises its customers that the future of the XYZ Corporation is dim. It suggests that its customers sell. Almost overnight, the value of that stock goes down. Holders of the stock begin to sell. The stock falls further. The bears are in control.
When the stock or a collection of stocks is hit in this way, the media begin to talk about the bears whose paws are tearing down the prices on stocks. When the prices get real low, all of a sudden, the bears become bulls.
I had some firsthand experience with this phenomenon. I served for some years as a member of the advisory board of an organization with offices in London, Paris and Antwerp in addition to in the U.S. Once a week, we met for a luncheon followed by discussion. On one occasion I was asked to lead off the discussion in response to a question from the head of the organization. I pointed to indicators of a coming recession.
A fellow discussant said that what I called bad news was really good news. In a recession or depression, he said, we can buy up companies and countries at bargain prices. He spoke for an outfit with deep pockets that made a fortune during the Great Depression.
April 30, 2007, 2:26pm
Whither the Weather?
By Gus Tyler
It was Mark Twain who, many moons ago, said, “Everybody talks about the weather but nobody does anything about it.”
The almost universal assumption was that the quality of the weather was determined by forces beyond human control. That seemingly self-evident view is no longer held either by scientists or by the public according to a New York Times/CBS News Poll. Their consensus is that global warming is a verifiable fact and that something must be done about it within the next 20 to 30 years or life on earth for humans will become impossible.
The threat is embodied in a phenomenon called global warming. As the earth warms up, the glaciers in the Arctic Circle and the Antarctic begin to melt. As a consequence, the ocean levels rise. All areas in the world that abut oceans and their tributaries, like the Mediterranean, are endangered.
The rise in the world’s waterways is, however, just one out of several environmental dangers. The melting glaciers in the Antarctic have, ironically, brought freezing weather to people living east of the Mississippi. Snowfalls that used to be measured in inches are, now, being measured in feet. Here’s why and how:
The melting of icebergs in the Antarctic has lowered the temperature of the Gulf Stream that, in the past, served to moderate the winter weather along our eastern states. Ironically, the inhabitants of states on the Atlantic coast were exposed to wicked winters this year because of global warming.
There are some learned folk who maintain that what is happening is not due to human pollution. They note that way back in time, when Homo sapiens were not around to pollute, there were successive waves of freezing known as “ice ages” attributable to spots on the sun. This may be true. But it is irrelevant. It may be that nature by itself is likely to move from cool to warm and vice versa. But that does not negate the negative impact of man’s polluting ways.
One of the more encouraging developments on the way to pollution control is a decision of the U.S. Supreme Court that held that the U.S. government had the right to ban the use of greenhouse gases.
April 22, 2007, 2:19pm
Who’s Guilty For Mammoth China Trade Deficit?
By Gus Tyler
The U.S. trade deficit with China is a mammoth $232 billion. America’s top trade envoy, Susan C. Schwab, has declared that she will take steps to bring down that deficit. To do so, she will have to go after the parties who are responsible for that deficit.
If she really intends to go after the guilty parties, she will find out quickly that she is a loner in the Bush administration and will be reassigned to a job like trade representative to Iceland.
The people responsible for the gigantic trade deficit are the corporate giants who dumped millions of American employees to transfer the jobs to China where labor costs are only a tiny fraction of what they are in the U.S. The firings were not limited to unskilled laborers; many were top-grade experts in their field.
Several states in the United States have actually taken steps to counter this growing outsourcing. They have withdrawn contracts from companies that indulge in outsourcing. As starters, Uncle Sam might do the same.
When an American company that once employed many workers in the U.S. dumps them to get the job done in China or any other country offering cheap labor, the finished product is intended for sale in the U.S. In short, it becomes an import that adds to our trade deficit.
Advertisements
Advertisements