Reaganomics – A Lesson in short-sighted Stupidity

Most economists today will tout the values of Free Trade and open markets. This is the equivalent of Federal Reserve Chairman Ben Bernanke flooding the financial markets with additional liquidity and dropping interests rates to fight inflation. Oh well, at one time the smartest people in the room believed the world was flat. Another day, another recall, is the morning wake-up call. There are so many, across all product lines and quality levels that it would take less space and be more efficient to list the products that are not being recalled. The sad thing is that even with all of this attention, the products available in stores for the holiday season will be the same products, the recalls for these versions will occur after the retail stores have made their end of year bucks. “What do you want to do? Recalling all these products would send us into a great depression and cost jobs.”

It is somewhat interesting that the same people trying to make it easier to send jobs offshore, by decreasing our controls and regulations, are justifying the sale of dangerous goods to children to save jobs.

Some will say that CEOs do not knowingly put the public at risk. These are good people, “right… and the Yankees are going to win the World Series in 2007.” Turns out that the management of Mattel, the same guys who prostrated themselves in front of Congress, indicating how they took control of the situation as soon as they were aware, and this would never happen again, knew about the lead and design defaults in their toys over two years ago. They began programmed sale of stock and when a child died they increased their sales to the maximum allowed by law. Oh well, so much for good people in corporate America.

It is not necessary to have these scandals to know that these guys are all corrupt. A good CEO will not take a $ multi-million salary while any of his employees do not make enough money to live on. A good CEO will not do it because it is bad business. A company that has this type of structure will go bankrupt. They just have not received the papers yet.

No matter what you hear about wages, companies shift production offshore because they can produce a lower quality product with lower raw goods costs. These costs most importantly are products that are regulated in the US, paint and lead is one example, DDT and fruit is another. Did you know that 100% of Apple Juice in the US comes from China and that pesticide levels in the juice are higher than US law allows?

Free trade can be a good thing but it must be controlled. The country that imports goods must verify that the imported goods meet all existing quality and regulatory legislation. This is not the case with our modern society. If it is made in China, Korea, Taiwan or anywhere else, where “labor costs are inferior” what companies are really saying is that they do not care about the quality of the products they are selling. They are saying that their bonuses and bottom line are more important than the life of your children.

The current US culture is one of extremes. There is no excuse for the actions of unscrupulous managers and boards of directors. We should not be amazed that corporate profits are more important than principles and human life. How many of our stalwart companies have operations or investments in countries hostile, or even at war, with the US? We serve our country, our children die to protect it and these companies actively support hostile regimes in the name of “the bottom line.”

Reaganomics has not made America stronger. It has eliminated quality producers and artisans. Reaganomics has brought our country to the brink of disaster. We only produce 18% of the goods necessary to keep the economy going. The FDA estimates that over 50% of medicines sold in the US are made in China. Proponents of the unregulated new world will say that Americans must adapt to the smoke and mirrors “service economy”. They contend that any manual labor is something that Americans should not do. Hard work, quality and a fair day’s work for a fair day’s pay is no longer valued.

Free trade can be a valuable tool in increasing the wealth of all nations but it must not be left to corrupt corporate managers to decide how and when. First we must guarantee that products entering the US meet US standards both in the materials and the way things are produced.


Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics