A few weeks ago when the national debt was being debated (if debated in the correct word for such camera-posturing and close-minded ideological sound bites) our elected jesters on the Republican side argued (again, if that’s the correct word) that raising taxes on businesses would increase unemployment, a tenet quickly dismissed by the Democrats. Since I lean towards the liberal side of politics, you may be surprised to learn that, in this particular case, I agree with the conservatives.
The high wages paid to American workers, coupled with high taxes, make it difficult for our businesses to compete with the rest of the world, which has cheap labor and next to no taxes. High taxes and wages raise the price of our products, which means the public won’t buy them, so businesses go broke. That’s why 70 percent of the merchandise in Walmart comes from China and Mexico. It’s cheaper and therefore it sells. Apparently, Boeing felt the only way it could compete with Airbus, which receives rather large government subsidies, was to move an entire production line to South Carolina because that state offered extensive tax breaks, low wages and no labor union hassles.
Not only do the Republicans desire to lower taxes, but wages as well. You lower taxes by eliminating government programs and you lower wages by declaring war on labor unions, as Wisconsin has done. In either case, the American middle class will be decimated, which has already started to happen.
Unfortunately, we may not be able to reverse this trend, unless we’re prepared to declare war on half the nations of earth. (In case you didn’t grasp the sarcasm, that wouldn’t be a good idea.) In search of profits and a better business climate, many major corporations, especially the really huge corporations like big oil and General Electric, won’t just move to the southern states – they’ll leave the country altogether! They’ll move to Mexico, India or the Bahamas.
You see, the chief executive officers and major stockholders in giant corporations aren’t particularly patriotic. I mean, they appreciate American freedoms as much as the next guy, but when it comes to money and profits they don’t owe any particular allegiance to this country. They can operate just as well in Brazil and make twice or three times as much money.
And they probably won’t have any qualms about leaving America. After all, most of the world’s population lives in relative poverty, one step above starvation, so there’s no need to feel guilty about helping them. Compared to the millions of desperate and hungry people in the slums of Brazil, Americans are fat and spoiled.
Make no mistake, the high-finance, money-changing institutions are internationally connected and tuned in to the rapidly-shifting global economy. Bridgewater Associates is the largest hedge fund on the planet. It’s board of directors watch the exchange rates, inflation and growth rates in various banks and countries 24/7 and then, based upon computer-generated investment programs, will buy or sell Japanese bonds, copper in London, Brazilian currency contracts or shares in Peruvian gold-mining stock. And where does American business fit into the equation? It’s just another country on which to gamble an investment.
American wealth and middle-class are still the envy of the world, but this is going to change. And I think it will happen much more rapidly than we expect. Indeed, Ray Dalio, the 61-year-old founder of Bridgewater, predicted a drop in America’s credit rating by Standard and Poor’s several months ago. He now predicts the U.S. currency and bond markets will eventually collapse, probably within the next 10 years. Our children will inherit an America far different from the one we’ve known.
So, there you are. A tad more about this topic next week. In the meantime, put your money in the Saudi Arabian real-estate stock market. It already owns half of our country.