SMALL BUSINESS
Small business owners are trying to survive in a hostile economic environment.
We have to stick together and support each other, because it is clear the government is not going to help us. We keep hearing how small business is the engine that drives the economy, but I see little that the government does that genuinely helps small business owners.
Try getting loan that is $30,000.00 or less and see how welcomed you are by most banks. The truth is, most of the banks don’t want to be bothered with small business. For some businesses, having ready access to a loan or a revolving line of credit between $10 and $30,000 can make the difference between surviving to fight another day, or not.
Raise your hands. How many are forced to use bank credit cards to survive? And of course, we all know how fair the credit card game is, don’t we?
We deal with phony teaser rates, due dates changed without any warning, payments received on the due date, classified as late because they posted an hour late. “Sorry, we posted your payment at 4:00pm. Had the payment posted at 3:00 pm we wouldn’t have had to charge you with a $39.00 late fee. Oh ya, we can now raise your interest rate to 29% (or more) because you were an hour late! HA, HA, HA!
What a country . . . this is from the banks speaking, ” you give us your money to use in a savings account and we pay you 2.5 or 3% interest at the same time we charge you 35% on your credit card.” Like I said, what a country!
Wow, how great is that? BTW, we must thank then Senator Obama, now Faux President Obama, for voting against legislation that would have capped credit card rates at 33%! He couldn’t even get that right.
Free Trade Rev 2.0 is that comparative advantage may not be the only variable acting in trade and maybe Free Trade was oversold and may not be a win/win in every circumstance and that is why the way the public experiences it is out of sync with the promise. This hasn't filtered down to the media or even most of academia yet. It will do so slowly becausee they fear that if the public catches on there will be a populist groundswell, an overreaction that will be almost as damaging. BTW, I am not suggesting there was a conspiracy. I have no doubt that most of the promoters really sincerly believed in Freetrade as a great wonder and path to universal happiness and prosperity. It is human fallability, gullability, and hubris in action. They believed because they needed to.
"Yet concern is rising that the gains from free trade may increasingly be going to a small group at the top. For the vast majority of Americans, Dartmouth's Slaughter points out, income growth has all but disappeared in recent years. And it's not just the low-skilled who are getting slammed. Inflation-adjusted earnings have fallen in every educational category other than the 4% who hold doctorates or professional degrees. Such numbers, Slaughter argues, suggest the share of Americans who aren't included in the gains from trade may be very big. Blinder warns the pain may just be starting. He estimates that eventually up to 40 million service jobs in the U.S. could face competition from workers in India and other low-wage nations. That's more than a quarter of the 140 million employed in the U.S. today. Many of the newly vulnerable will be in skilled fields, such as accounting or research—jobs U.S. companies will be able to move offshore in ever greater numbers. "It will be a messy process of adjustment, with a lot of victims along the way," Blinder says.
What I worry about is that the credit liquidity crisis and the housing meltdown get all the attention. Not that they aren't corrosive, damaging, and worse, reached into every corner of society, but they are only part of the problem. I see them as gasoline on the fire of America's industrial decline, accelerating it, exacerbating it and making it harder to get any traction.
I found a reference to HRC's efforts; she is the one of the few public figures who has attempted to address the consequences of free trade. Thought you might be interested:
The American economy is not a singular, integrated, cohesive, domestic economy and hasn't been for 20+ years. It is not that they are venal,just trapped in a time warp. They are lock step with the FreeTrade interests and dare not defy the herd. In fact academic economists, including Krugman, know the downside of globalization but it is not discussed publicly for fear that the public will over react..
"So here's more evidence that our stimulus programs don't work for you–unless, of course, you're a Chinese enterprise". Last sentence from an August 20th article in Forbes, by Gordon G. Chang, who writes a weekly column.
This consequence applies to some of the general income tax cuts as well. Although I have suggested for months that the stimulus benefitted emerging (low cost production economies) more than America, I was focused on consumer goods . But what I didn't know was that , in addition, Chinese steel was used in some of the infrastructure projects financed by the stimulus. Why bother, why didn't the USA just write a check to the China (Indonesia, Mexico, India). This underscores just how naive and out of touch the political class is when it comes to the "New Economic Reality".
6. Industries where America enjoys significant technological superiority tied to local labor pools or educational institutions, a rapidly-shrinking category.
7. Owning capital. Although not really a job, it's at least an occupation, and so long as America maintains a political consensus that rules out significant expropriation of capital, owners of capital gain from consuming cheaper labor and lose nothing.
The problem is, this isn't enough. In particular, it isn't a high enough number of high-wage jobs, as most, though obviously not all, of the jobs in these seven categories are relatively low-paid. And it sure isn't enough to support the government of the United States or the coming retirement of baby boomers (79M over the next 20 years) .
Basically, there is not much left of the American economy that is invulnerable to offshoring.
1. Those services that must be performed in person: cooking, policing, bagging groceries, teaching school, prostitution, and working for the government etc.
2. Those activities, like construction, that are performed on physical objects too large or heavy to be economically shipped from abroad if demand ever returns..
3. Those activities, like agriculture, mining, and transportation, that are performed on, or relative to, objects fixed in place.
4. Those activities, like the practice of law or advertising, that depend upon peculiarly American knowledge that foreigners don’t have. But even this is rapidly breaking down as law firms, for example, start to offshore work.
5. Activities of government impinging upon sovereign power, like the military, or democratic legitimacy, like Congress. But given our use of mercenaries (sorry, “civilian security contractors”) in Iraq, clearly this can be nibbled away at in surprising ways.
"The problem is, as is intuitively obvious to any laid-off factory worker who has contemplated the cheap knick-knacks on sale at Wal-Mart, that the drop in cost of living never matches the drop in wages. Like many free-trade arguments, it is qualitatively true but quantitatively false. "
Bottom line, people would rather have decent jobs.
"As a result, the cozy acquiescence of a majority of Americans in letting free trade destroy American wages sector-by-sector is going to end. The dividing line between the winners and the losers, is dramaticly shirfting as the proportion of of loosers explodes and begins to outnumber the few winners."
Is this what's going on with HR4692. Pols have begun to detect the shift in the winds.
I have come across a writer who seems to be channeling me except he is a pro and has been arguing the case for years. His name is Ian Fletcher and he has pointed out that the doctrinaire Free Trade coaltion may be falling apart because the theory does not match up with the way we the people experience FreeTrade. See his website for the article: " The Coming End of the Free Trade Coalition " or "Things Fall Apart"
"Only Manufacturing workers were supposed to suffer from the competition of cheap foreign labor, everyone else was supposed to enjoy the cheap foreign goods. Everone is happy and then EVERYONE begins to suffer the consequences of a depleted industrial base."
Most important statement follows:
"The reducto ad absurdum of the Free Trade arguement is that if 90% or even 100% of the population is impoverished by competition with cheap labor, we will still be better off because goods will be cheaper"
Reading over these last posts, I think the bottom line is the restoration of manufacturing should have been a priority. Why did it take 18 months? Given the deteriorating news of the last weeks it underscores the bad judgement. There is no excuse for it, HR4692 had bipartisan support. Only a few Texans and Michelle Bachmann voted against it. The legislation is not in and of itself going to do much except maybe get some attention. I'd be happy if it just opened up a dialogue on globalization.
FYI About a third of American exports could be categorized as finished goods and that would be aircraft and components, autos and auto components, some semiconductors, and machinary which is declining. Most exports are ores, raw materials, agricultural products, and so forth. Pretty pathetic.
Sorry for the typo ; it should read "who has" the money not whose. If you can fix it, please do.
Wish I'd said that:
Let's see, the electronic manufacturing jobs went to Japan decades ago, then all the labor intensive manufacturing jobs went to Asia, the rest were automated; half of our IT jobs went to India. Agriculture, construction, landscaping, housekeeping, restaurant jobs went to illegals.
When manufacturing jobs started to disappear, people went into construction, distribution, transportation, retail, or back to school for IT and Finance. Then the dotcom bust and outsourcing killed off job prospects for IT grads, leaving Finance and Real Estate. Now that Wall Street and Real Estate have imploded, dragging with it Retail, distribution, and what's left of manufacturing, construction…what else is left?
The government! and Healthcare; soon to be one! Jane
So off I go, to tell the obvious to anyone who will listen: You can't have a first world economy without manufacturing.
Two wasted years and $800B down a rat hole. Guess who has got the money(incl stimulus and tax cuts) and going to lend it back to us.
I apologize if I have already posted this but I refer to a lot because it is so to the point and should bring the reader to a realization that the wage stagnation and the withering of choice and opportunity has been occurring over decades. The emerging economies should be erecting statues to Clinton, Bush, Obama et al. It sounds like I am anti-free trade, I’m not and I sure don’t want to throw the baby out with the bathwater. But, I do think globalization was oversold and the downside was minimized by the elites, who are of course insulated from the effects. It is an issue like many others, that if you are not lockstep with the herd, you are vilified.
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Edith
I was just checking about Paul Ryan… I'm not a Re-re -re-Republican … hard to get it out! I'm still a registered Democrat … I now call myself a recovering Democrat …
FYI, this morning from Marcus & Millichap:
Slowing but Still Positive Manufacturing Sector Saps Recovery;
Below-Trend Performance in Second Half Expected
*
The already choppy economic recovery will continue its slow advance this year, but growth will deteriorate as its primary contributors — government stimulus and manufacturing — lose steam. Furthermore, no new economic drivers have emerged to propel the recovery into a self-perpetuating expansion, suggesting below-trend GDP growth will persist through the second half. The impact of the government stimulus on GDP growth has declined slowly since peaking in the…
http://blog.marcusmillichap.com/ for the rest of the report.
I surf the Independent and Conservative websites regularly. The importance of manufacturing and decline in manufacturing is a nonissue, to the point that they are oblivious. It makes me wonder who the alliance of Manufacturers surveyed to get such responses with such insight and comprehension.
Sorry, should have been clearer. Some of that $400B are the tax cuts and stimulus leaking out of the bucket. It is also is a signal that there is great demand in the economy just not for stuff made in America ergo no American jobs.
Paul Ryan (R-WI) is supposed to be the rising star among Republicans. He is also mute on manufacturing.
Exports for June were down 1.3 percent, to $150.5 billion, the Commerce Department reported Wednesday. At the same time, imports rose 3 percent, to just over $200 billion.U.S. IMPORTS of goods and services grew 3 percent in June to $200.3 billion, the highest since October 2008, in a show of strengthening domestic demand. Imports of consumer goods hit a record $43.1 billion and imports of non-petroleum goods were the highest since August 2008. Aw darn, that's not going to create jobs, is it, at least not here. Good jobs for cheap goods.
Well, I suppose the Republicans will be caught flat footed when they return to Washington in September.
Paraphrasing an article from Politico:
"The Dems have indeed been hammering out a policy initiative to restore manufacturing. It was driven by the success of Mark Critz, the PA Democratic candidate,who won an upset in a conservative district, with a campaign attacking free-trade. Also, a poll for the Alliance for American Mfg, showed that large majorities have come to realize that manufacturing is the most important industry for our economy and national security and support action to revive it. Two-thirds of respondents reject the view that “high-tech and services” industries can replace manufacturing in a strong U.S. economy."
"The Democrats’ lead initiative now is the National Mfg Strategy Act, introduced by Rep. Dan Lipinski (D-Ill.). "
Where are the Republican ideas? They have to come to grips with the concept that you can't have a first world economy without manufacturing and it is the foundation of a solid middle class and consequently democracy.
If the Dems are hammering out policy initiatives to restore manufacturing, I am unaware of them. Point me to some sources. I'll be happy to review them.
As far as the Republicans, who knows. I do know that they have had many plans and economic ideas that are never reported by the MSM or given credence by the Dems on other side. As far as I'm concerned, our economy, our safety as a nation, etc. shouldn't be a Democratic idea/concern or a Republican idea/concern … it has to be an American concern. If we had grown-ups in Congress maybe this would be a reality and not an ideal that gets lip service and nothing else.
It's already passed in the House, HR 4692. Debbie Stabenow(D-MI) will be introducing it in the Senate. Where was the media on this most critical of issues? This legislation is not particularly noxious and had bipartisan support. I just wish the Reps had been out in front so as to control the message and determine the vocabulary. They now will look reactive instead of proactive.
As for the Republicans, you would have thought that Paul Ryan would have addressed this. I am aware of only one national politician who has sponken on the decline in manufacturing and she got no traction, Hillary Clinton.
What is your business and where are you located?
Don't forget that the stimulus was 1/3 tax cuts. BTW imports into America have increased $200B in the first 6 months of this year compared to the first 6 months of last year. This figure does not distinguish between finished goods, materials, or services. For the fun of it, let's extrapolate to the full year and project $400B+ in imports for 2010 compared to 2009. I wonder how much of it isdriven by the stimulus.
I just looked at HR 4692. Thanks for pointing it out. This is important enough for me write about it. As for the MSM and the cable networks, they are all too busy talking about the Mosque/ ground zero ya da, ya da. They like to kick up dust and rarely, is ever, discuss the substance behind issues that impact on our lives.
You mentioned Paul Ryan. Did you mean Ron Paul? Both have strong feelings about Washington's irresponsible spending.
As for Hillary … she and Bill were sabotaged by Team Obama during the primaries. If HRC were POTUS we would be in a much stronger place … our economy … our affairs internationally… everything. IMHO, had Hillary been handling health care we would have seen a much different approach, dare I say one of elegance and minimal damage to the economic underpinnings of the country!?!
My business is sports marketing and we conduct business all over the country, but primarily in Las Vegas. I can tell you first hand about the damage Obama inflicted on that city when he opened up his mouth and dissed Las Vegas … making it a crime to visit the city. The damage was devastating and the city is still recovering. Ironically, those hit worst were the middle class and entry level workers. If I had the time I'd go over what a joke the ARC program for small business was last year. A joke … pure and simple!
As to whether imports have increased because of the stimulus I find it immaterial. I think a better question is what are the numbers for our exports!!!! What's our trade deficit look like? It's still jobs, jobs, jobs … American jobs!
Another way to say it:
" Stimulus or tax cuts are prescribed as a panacea for recession. In today’s global economy, it isn’t effective and is a risky strategy to counteract the effects of globalization, which is what underlies the economic stagnation of the West now. "
Just as water flows down, stimulus or tax cut benefits the economies of low-cost production (like China or India) regardless of where the stimulus is initiated (Europe/ the US). As the West pours money into the global economy through large fiscal deficits or central banks expand balance sheets, it is the emerging economies that are benefitting and drowning in excess liquidity. " An interesting aside is that the Germans were reported to have taken that into consideration when they designed their stimulus. Maybe that underlies what appears to be a German rebound.
Today (8/22)I have been following the story on the withdrawal of billions from 401Ks and its impact on the stock market. I am among those who partially exited in July. I find the public commentary following articles to be as illuminating as the articles. Please alllow me to refer you to MSNBC or the original article in the NYT : Small Investors Flee the Stock Market.
Also I am very tired of the Supply vrs Demand debate engaged by people who are compelled to look backward. I acknowledge that it might worthy of consideration in the old economy when ECONOMY OF PRODUCTION and the ECONOMY OF CONSUMPTION were part and parcel of the same cohesive, integrated, singular economy. The beginning of the end of that approach happened in the early 90s and has been accelerating since 2000. The economy of production and the economy of consumption are now in separate economies distinguished not just by geography but by culture (incentives) , and the structural economic differences like taxation, regulation, poverty levels. What I am saying is that the supply siders and demand siders have not accounted for this in their thinking and pontificating. Maybe it makes no difference for I am certainly alone in this point of view.
For months I have been posting on Conservative and Independent blogs trying to gin up interest in preserving American manufacturing; by that I mean manufacturing that creates “real wealth” not mardi gras beads or McDonald toys. Mostly I am mocked; I have been accused of everything and called a liberal and pro-union, even though what I bring up is from Dept. of Commerce round tables (2004) and proposed by the people who invest, manage , supply and plan for manufacturing. Go figure.
But I think, fix this and a lot of other stuff becomes manageable. I don’t mean to suggest that it is not difficult, complicated,and a lot like threading a needle with a very fine eye. Today, I was dismayed to learn that Katrina vanden Heuvel has brought up the idea of a five year plan to boost industry especially manufacturing. I happen to think the Obamanomics is antithetical to long term revitalization of manufacturing. You know the drill: protectionism,unionism, subsidies, picking winners, not the long term initiatives that result in solid ROI. They seem to lack awareness that businesses don’t just compete for customers and resources but investment too. Who is going to ante up for capital equipment, facilities, and a distribution network without confidence that it is profitable and long term.
I guess you have to be careful what you wish for. I don’t blame the Dems if they pick up on this (it’s just a trial balloon now). It was low hanging fruit and ready made to fabricate a terrific sounding optimistic narrative. Sorry, I just needed a place to vent.
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Edith:
Don't worry about venting … I'm with you! We desperately need to preserve American manufacturing. Forget the Government, the Dems, and even your critics. It doesn't matter. What is important is finding ways we (the American small business owners and entrepreneurs) can work and support each other developing jobs/markets here.
We need a grass roots movement similar to the Tea Party movement that supports American business and manufacturing.
Here is a visual. There has been tax cut upon tax cut and stimulus upon stimulus since 2000. I visualize these significant monies going into a bucket with big holes in it and the money is leaking out of the American economy to the third world and being used to boost(invest in) the production economies particularly in Asia.
"Trade and foreign direct investment total half of global gross domestic product. Multinational corporations drive both. They shop around the world for the lowest-cost production centers and ship goods to wherever the demand is. Demand and supply are dislocated. So when a government introduces stimulus, while there maybe a temporary increase in demand, it doesn’t necessarily translate into an increase in the domestic supply, so there won't be an increase in jobs. "
The "intellectual" elites foisted globalization on us without any regard for unintended consequences or, even more critically, asking themselves what the US would bring to the trading table. It was a stunning oversight.
Edith:
Great visual with the bucket … agreed whole heartedly with you on this point.
The "intellectual" elites are nothing more than clowns that don't give a damn about consequences (intended or otherwise) … their lack of critical thinking is how one can identify them … along with their obnoxious, overbearing demeanor.
Jim your words are comforting to a small business owner until I another news report that peels another layer off the onion congress is call hr3200. I hope that my business as well as my employees can survive this legislation.
The small business engine survives no matter what congress throws at it; that is because the small business owner must make decision that make his/her business suceed despite the effort of congress to usurp their efforts. I have always said, when I ran my own small businesses, let congress enact a law that affects the productivity of my business and I will find a way, legally, to counter that legislation. In other words change course and set a new direction. My employees were always to important to be turned out into the streets because of congresses action; and many times the employees helped me figure out the new direction or action to take to continue the business in a thriving environment. The biggest issue for me was alway finding a way to provide health insurance coverage for my employees; most of the time I could not. If congress, and here we are talking about congress again, would lift the restriction on small businesses being able to pool together and remove interstate restriction on purchasing healthcare insurance coverage the problem of health insurance coverage for small businesses would be solved. Still congress refuses to address that issue in deference to reforming healthcare insurance nationally. Shame on them! Small businesses may want to self-insure by forming their own cooperative insurance company and reinsure through a reinsurer until the cooperative is sufficiently capitalised. Just a thought from a retired previous business owner.
Is there a way to email you, because I can’t find it.
I can be reached at cetes-45944@mypacks.net.