There are solutions but a lack of courage

Jesus Christ Is Lord!
12 November 2010

I want to give my thoughts on another instance of socialist type intervention into free markets helping precipitate our economic trouble. This could be subtitled – Currency devaluation, minimum wage for all.

I started thinking about this topic a few days ago when I heard Donald Trump declaring that the answer to our trade imbalance with China was to impose a 25% tax on all imports. I realized at that point just how ignorant even people thought to be economic sophisticates can be when it comes to understanding markets and basic economics.

A 25% tax on imports would have the negative effect of increasing prices to consumers. The end affect would be less consumption at a time when our consumer based economy is lacking consumers. This approach is also lacking in the understanding that any manufacturing that would be created here would be at these artificially elevated levels and would only be for domestic consumption.

Why is China artificially holding its currency value low? Lower prices lead to more consumption of its exports. This is one thing that socialists and social engineers think they will achieve through the intentional devaluation of our currency. The end result they are looking for is a parity of currency values at the lower levels. They think this will able us to compete with the third world exporters.

Where are the roots of us losing our manufacturing dominance? It can all be traced to government intrusion and manipulation into what should be free markets.

While doing town hall meetings over the past year I would explain that any attempt at bringing manufacturing back should be based on a free market approach that increases competition and this will put downward pressure on prices. This is the difference between tariffs that drive prices up and reducing taxes and regulation on business here as a way to allow them to compete at prices lower than imports and thereby reducing prices to the consumer.

Now to the point I started with and more specifically the subtitle. The other reason, the other socialist intervention that has led to the loss of jobs in manufacturing is the minimum wage. Every penny of increased cost of manufacturing is a penny less competitive against competition no matter where the product is produced. Every time the government intermeddles in the labor market and forces wages up they have made our products less competitive against imports.
Now that they have us here rather than admit their policies have been the major contributors they will intermeddle in other areas trying to bring about a reversal of the consequences. The result is only to delay the ultimate consequence of collapse while ever increasing the severity of it when it comes. The minimum wage and the other interventions worked so well for manufacturing that they think everyone should have some.

I have just spelled out the answer that is no longer in question as we have seen the undeniable fruit. If we want to put people back to work you are going to have to get government out of the way and let the markets find their own levels.

As with all solutions to hard problems it isn’t the easy way and it isn’t painless. It is going to be the one that will eventually be forced on us if we wait until after the catastrophic collapse. We do have the option of doing it now but no one has the courage to lead where we need to go. They are going to continue to offer easy ways out when there is no easy way.

You have created an artificially high standard of living through government provision. This standard of government provision is higher than the standard that can be earned in the overburdened labor and manufacturing markets. Every time the government provision standard rises the further apart the two get.

Reduce the tax burden, reduce the government provision, reduce regulation, and lower the minimum wage and it is fixed. It is no longer an argument, this is the end solution.

Tim D’Annunzio
In the name of
Jesus Christ My Lord
Thank You My Father