You hear the word "Business" all the time and we even have colleges called "Business Schools". Did you ever stop to think about exactly what the word "Business" means. When I was a kid and went to gangster movies, we used here them say, "Give him the business". I don't think it was to help someone make money. Business seems to have a lot of meanings, but I am going to restrict mine to those intended to make money. Again, when I was growing up, it seemed me that to be in Business, you had to "make" something. Later, I realized that "Selling" was the most critical part of a so called business. It is at the sale that the money is made. The idea is to get someone to pay you more for something than you paid for it or it cost for you to make. Once you start from the sale point, it all seems a lot easier to understand. I have also learned that the "Sale" is the hardest part of business and for that reason we find that good salesmen can make a lot of money and I feel that in most cased they have clearly earned it.
I know a few very good business people who have started from the point of the product rather than the point of the sale and have done well, but most have not. From the point of the businessman, he really does not care if he has to make or buy the product that he is selling. He knows that his profit comes from the sale. In a clasic "make or buy", the businessman is neutral. He just want to make the most profit, either way. The problem that we have with all this is that what has happened is that most of what we used to make here in the USA, we now buy from China. The businessman who was making the "Make or Buy" decisions for the past 25 years could make more by buying from China than he could by making most things here. Now don't fault the businessman, everyone knows that he wants to make a profit. Another smaller point is that the businessman judges his profit compared to his investment or return on investment. If he buys his products, he eliminates a lot of his investment and even with a smaller profit, he has a much higher return on his investment and that is what he really wants. All of our business schools teach this concept and most good businessmen work this way.
Now how about another aspect of all this. What is best for the USA in all of this business stuff? If the product is purchased from China, the business man eliminates a lot of USA union workers who can be such head aches. He also eliminates 90% of his legal risk. Profit is profit so again, don't blame the businessman. I think that you can already see that making the product here in the USA rather than buying it or having it made in your own plant in China or Mexico. In the short term, the purchasing of the product from China or Mexico only seems to reduce the cost to citizens here in the USA, without any down side. The problem is that as this trend continues, there comes a point where we have fewer and fewer jobs here and thus fewer and fewer customers for the businessman. I think that is about where we now find ourselves.
Given our current state, how do we get the Genie back in the bottle? Have the government take out loans and give the money to the unemployed so they can continue to buy goods made in China and other countries. Do you really think that this is a good idea. What we need to do is to go back to how we got in this situation in the first place and that is "Why did the businessman decide to buy his product from China?" Be honest when you answer that one and you will have identified the path out of our current mess. I can answer it. The businessman purchased his product from China because it was cheaper!!!! Suprised? You also bought the businessman's product because was cheaper. Been in one of these "Dollar" stores? 100% of the stuff is make in China or some other Aisian country, because it was cheaper. I know that you were looking for some kind of free luch here, but I am sorry to have to tell you that you are only worth the value of what you can produce that someone else whats to buy. What the workers in China did over the past 25 years has been to make each of us worth less and we all need to either get used to it. Right now we are being made worth less every day.
When I was a kid, I used to pick cotton by hand for $0.035/#. I knew a lot of people who picked cotton for a living. They did not make much, but it was a living. In about 1948 cotton picking machines started to arrive in the fields. They were not too good and could pick cotton for about $0.025/#. On my best day, I made $7.00, but after the cotton picking machine showed up, I was only "worth" $5.00 per day. The cotton picking machine got better and could pick for $0.010/#. Now I was only worth $2.00 per day. That was all that my skills and effort were worth. That is what has happened to most of us here in the USA and we have just not been honest about it. The unions know that the hand writing is on the wall. All they are trying to do is to hold on in the only way that they know. The problem is that they are actually accellerating the decline in real workers worth.
In the past, we have had ups and downs. This is "not" one of those ups and downs. It is a paridim change that is here for as far as anyone can see. I have not answered how we can dig out of this have I? We have to become "low cost producer". We only have a few elements to the equation of what defines the "low cost producer", but the most important are: skill and the utiliztion of energy. The problem is that we, our population, is one of the poorest educated in the industrial world. Hey, that's a fact. We have energy in the forms of oil and coal, but our stupid government and the Green movement is doing the best to prevent their efficient use. China is our biggest coal customer. How about that? They know how to use energy, our energy. Even if we accept a much lower standard of living, how low can it go before it bottoms out? Until we settle on thing for which we are the low cost producer, there is no real bottome. Farming and raw materials like wood, oil and coal look like items where we can hold our ground, but I can not think of a lot more. Can you?
Building houses as a means of helping the economy is a joke. I'll hold that for another Blog.
