A dumb economic question

[ayeshahaqqiqa]

Here's what I don't understand about globalization and the chase to find the cheapest way to make things: if workers lose their jobs and cannot find jobs paying a decent wage, just who is going to buy all the cheap goods that these companies make? And if the companies don't make a profit, how can they stay in business and pay the CEOs their outlandish salaries?

Help is needed, please. My thought on it is that the CEO types don't care-they are in it for the short term and their golden parachutes.

[Az]

1. That is a long term consideration

Corporations cannot plan in the long term. Any attempt to do so will cause a short term loss which will enable a competitor to overtake them and eventually consume them.

The Corporate/Capitalist system simply cannot do long term. This is why regulation and control by the people is required. They must not turn us into their servants. The purpose of all economic considerations is to increase the welfare of the people.

[Vincardog]

2. AZ you seem to think the government has a function to provide for the

Common welfare or something. You socialist. That might get in the way of Corporate welfare. Don't forget the lesson of aWoL's Coup The world exists only to benefit the 'chosen' 1% at the top. /sarcasm off/

[Az]

8. Its that pesky Constitution

It goes and talks about providing for the general welfare and such silly notions as a more perfect union. Such antiAmerican drivle.

[Joe Chi Minh]

13. I'm not sure it is

only a problem in the long term, Az, at least, in the UK.

I believe that the retail consumption figures for the Christmas/New Year period were very poor over here, and that it is a direct result of the ever-widening spread of poverty.

There are ever-growing personal credit-card debts running into many billions of pounds, of which a large proportion, I suspect, will be unpaid, due to the penury of the cardholders (including myself, as it happens). Literal impossibility.

On the other hand, the banks are making record profits - always finding new ways of screwing the customers.

When La Thatcher destroyed the coal-mining industry, hundreds of thousands of well-paid jobs were lost to the economy, including in the ancillary sectors - with the loss of all the associated tax revenues. The community shops and other businesses were severely hit, as well. And indeed it epitomised what was to happen to the rest of the country.

So the synergy created in a country by enlightened socio-economic policies are both astounding and widespread. We need only look at the Scandinavian countries, France and Germany. Tax is high, but much more proportionate to the individual's income. While the income ratio between the top and entry-level earners in companies in the USA (and to a slightly lesser extent, the UK - though they're working on it), are nothing short of lunatic - completely off the scale.

On the other hand, the spread of wealth among the Japanese is staggering, because of McArthur's stipulation that that ratio should be quite minimal. We're in the thrall, if not the maws - as if you didn't know it - of the largely anonymous, shadowy corporatist/fascist movers and shakers of Western high capitalism.

[ultraist]

3. Expanding the market worldwide is more profitable

Perhaps the corps are not concerned about maintaining sales in the US but are looking to expand across the globe to places such as India, which has the second largest growing retail market. Corps do consider the long term implications of their growth and sustainability and have seemingly concluded that keeping things here in the US is not as profitable for them. This is just a guess! I have no background in ecomomics. ;)

excerpt:
http://sify.com/finance/equity/fullstory.php?id=13578254
"Experts attribute this phenomenal growth in the retail market to rising income levels, a large segment of young population and a rapidly expanding middle class.

A T Kearney's Global Retail Development Index 2004 has placed India as the second among the emerging markets in the world.

Consultancy major IBM Consulting has also outlined India's potential to become the leading player in Asia.

Because of India's status as an outsourcing hub, more and more organisations in the US and Europe are relying on India not only for IT Infrastructure Management services but also for R&D, telecom, banking, diagnostic, pharmaceuticals and automotive outsourcing.

EDITED BY ADMIN: COPYRIGHT

[Moderator]

14. ultraist

Per DU copyright rules
please post only four
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Thank you.


DU Moderator

[BornaDem]

4. In the short term, the workers who still have jobs...

will continue to buy the cheaper goods. Supposedly the laid-off workers who lost their jobs will get re-trained for higher skilled jobs and return to the workforce. (Sure they will at 55 and may I sell you a bridge since you still have a job!) At some point the whole thing becomes unsustainable. Where that point is, I don't know because the people who still have their jobs are able to buy more and more stuff as companies move from 3rd world country to cheaper 3rd world country.

In the long term, I believe that countries like China and India will become the consumers for the goods as we build them up and destroy ourselves. I also believe that this is the purpose of "free trade," but that's just my opinion.

[Melynn]

5. A great question

And one that I too have thought of.

I think that you have answered your own question. CEO's don't care about the long term health of the company, the economy or the country as long as they get their millions to retire on.

These are the people who are backing Bush and stealing as much as possible while the Neo-Cons are in office.

[aquart]

6. A corporation that declares a profit while debiting the nation

Is a parasite. Parasites destroy the host.

Our corporations have turned parasitical. They are killing us, not helping us. To return them to a symbiotic lifeform, they must be heavily reregulated or reconstituted.

As yet, there is NO national debate on the purpose of this nation. I've heard that "the business of America is business" but I have yet to hear a discussion of the purpose of America. Is our purpose to facilitate business? Or is the purpose of our business to do facilitate......what?

[Karenina]

7. At this juncture in history

"Amerikkka's" bidness is facilitating death-dealing bidness.

[Warpy]

9. It sounds like you understand the process very well.

What you might add to that is the fact that offshoring jobs and whole industries has weakened the US's strategic position in the long term. Not only are we choking off the 66% of the economy that is consumer driven, we're also putting ourselves in the position of losing the next big war.

For instance, we don't make cloth or shoes, and we don't make the electionics components our military is absolutely dependent upon, from gyroscopes to semiconductors. We don't even make enough bullets to supply the troops now in Iraq.

We can't even retool, since the equipment was often offshored with the jobs, either to supply factories overseas or to be melted down as scrap.

Congress has some very tough decisions to make in the not to distant future if they want to avoid depression followed by a losing war. They have to figure out how to preach globalism while ensuring that every good or service produced for the American market is made in America.

Ignoring this problem (which the DLC Democrats have done very nicely) is not going to work much longer.

[Taxloss]

10. The key element here is a "captive market".

This can mean two things; either a captive labour market, where workers are at the total whim of their employers, or a captive consumer market, where choice is denuded and abused by monopolies. Corporate republics tend to provide these; so do fascist states, one of those eerie similarities that "aren't important".

What one has to imagine is that the ideal labour market for a corporation has achieved a perfect balance between low wages - to save expense - but not so low that consumption is damaged. This balance is near-impossible to achieve, and certainly impossible to sustain, which is why all long-lived right-wing governments terminate in economic crash. Either inflation takes off, or consumption collapses.

It's interesting that the focus of the left wing is the protection of the poor - maintaining workers' rights - while the obsession of the right wing is control of the money supply. This is because, put in absurd simplicity, money would be worth less if everyone has more. The entire system has abuse of workers, inflation, and poverty built into its DNA. Astonishing how exchange collateral has wormed its way into the epicentre of political philosophy.

Edited for typo.

[Telly Savalas]

11. It's a collective action problem.

If I'm the CEO of a large company and I outsource 50,000 jobs to some other country, then that still leaves hundreds of millions of Americans that I haven't fired. Presumably these still-employed folks are the ones to whom I'll be marketing my products. If every CEO does this, then perhaps the problems you mention will arise. However, as a CEO I stand to gain nothing by being the only guy not to export jobs. So what choice do I have?

[Az]

12. That is an important concept

The CEO does not have an effective choice. They are constrained by the rules in play. Thus it is the structure that defines the problems. If the structure is left to its own it can only do what comes naturally to it. And it is not naturally suited to serving or bettering a social structure. It is specifically geared to increase its profits at any cost. With no restrictions it will eventually turn on those that it was supposed to serve.

[Vincardog]

15. Telly your choice is Weather or not to become a Parasite and kill

the American Dream or make a true contribution to the greater society. The myth is that the COE's sole responsibility is to maximise shareholder returns in the short term. I do not believe that is a valid point of view.