Who benefits?

When you consider the human condition and the progress we have made in technology and labor saving devices, the question that has to be asked is who benefits? I believe we all do to some extent, but some benefit much more than others.

In the 1950s, the great fear was that communism was trying to take over the world, at least in some western countries. Now, it wasn't just communism the economic systems that spurred this fear but also the Government that existed in the Soviet Union and China. The economic system was scary enough, but of course much scarier to those who had the most wealth. The idea that "international" communism would triumph and destroy our American way of life led to the red scare and ultimately the equations of communism to evil.

Then the Soviet Union collapsed and China went to a market economy, although still maintaining a communist Government. Suddenly internationalism was good, not bad, and by promoting free trade and expanding business markets, the world as a whole would enjoy the benefits of free enterprise.

Now what does free enterprise accomplish? Well it allows production to move to cheaper locals, thereby reducing the cost of goods. It increases competition, driving down prices further. These lower prices allow greater access to the good things in life. One aspect though is that over time, the world will tend to level out economically. If you have a large population of people living in poverty, willing to work long hours for subsistence pay, someone will find a way to utilize those people.

Now, there is an obvious fallout from this. The people, who used to do that work, lose their jobs. In order to avoid this, consumption would have to increase so much that demand could only be met by employing everybody to produce product. But how can it? The goods being created are not affordable to those workers barely making enough to survive. Now over time, salaries will increase and consumption will follow. But in the immediate future, the consumption is not going to increase enough and the people who used to be the consumer's are losing their high paying jobs.

So overall fewer goods are needed, at least for high end profitable goods, and we have overcapacity in production capability including labor. This keeps labor costs down and companies start to realize that they can produce less and be as profitable, if they get rid of excess assets and use technology and outsourcing to reduce their costs of production. This is a paradigm shift. The road to profitability used to require growth. Now, profits are being squeezed out of productivity.

Of course, there is still growth in some areas, and most always knew that productivity could help profitability, but if you don't see market growth, you can capture market share by being cheaper and better (or at least the same).

So when are we going to see job growth in this country? Not until we create jobs in the domestic and renewable energy fields, level the playing field so business is not encouraged to export jobs and use the stimulus to create meaningful jobs rebuilding infrastructure.

So going back to the opening of this blog, who benefits. If you have money the things you want are getting cheaper. If you are employed you are part of the haves but if that is the only source of your income, you may be living on borrowed time. If you are one of the wealthy, clipping coupons or collecting dividends, things really couldn't be better, cheaper goods, less crowds filled with those wannabes, and, while your assets had a decline, they have recovered pretty nicely.

So we export jobs to make life better for the rich.