Solutions for U.S. Unemployment and the Loss of Manufacturing Jobs: 29

[pjhype]

Scott,

I sense that you're thought process is in the middle of a dichotomy with an outcome where you cannot possibly win.

On one hand, you are an engineer, who is (presumably) on the forefront of technology and developing products for the betterment of mankind. This includes making "things" like plasma TV's that people will buy who believe that it will improve their quality of life. Maybe it will, maybe it won't, however, it is not for us (or anyone else) to say -- we are just providing the service (or product) in response to a market need.

On the other hand, you long for "the good old days" and a more "utopian" world. While these are commendable goals, they are not things that you can solve or directly affect by engineering. They certainly are not realistic in today's society.

So there are several things you can do ... you can continue to do what you are doing and keep feeding the "greed" of this economic machine ... you can couple your engineering degree with a degree in public policy and work within the system to start effecting these changes ... or you could drop out and live your life as a hermit in a shack in the backwoods of Montana.

pj

 

[QCE]

PJ

Are you saying we can only engineer things that destroy the environment and not things that save it?

QCE

 

[QCE]

PJ

Sorry about the above statement, it was obviously not meant to be answered. However it is statements like:

"On the other hand, you long for "the good old days" and a more "utopian" world. While these are commendable goals, they are not things that you can solve or directly affect by engineering. They certainly are not realistic in today's society."

To me this says, that engineering can not change the direction of the world and if a person thinks that engineering can, that they are being unrealistic.

Well I would like to say for all the engineers out there that think that they can change the world:

"Keep up the good work! Engineering has been changing the world for 1000's of years and will continue to change the world in the future."

QCE

 

[dporte17]

Just my $0.02.

The US wants to experience the benefits of globalization without giving consideration to the ramifications. If the "average" US citizen buys the cheapest product they will most likely be buying a foreign produced product. If that person is truly the "average" person, he likely works making the product that is the competitor to the product that he bought. That system is going to benefit those citizens up until they lose their jobs because all the other "average" people are also buying the foreign made product.

The bottom line is that you cannot enjoy the cheapest products and the highest standard of living in the world and not have some rationalization to the system over a period of time. Either the US will make itself competitive in the world market by manufacturing things cheaper, or the rest of the world will do it for them.

Dave

p.s. And all the while the unions are crying that the $25/hour for manual labour is not enough!

 

[ietech]

deporte17
I agree, the "average buyer" is contributing to our industrial demise and probably will continue until we have reached the bottom.

As far as your "Union" comment goes; I don't have a problem with the folks doing manual labor making a living wage, In California $25/hr isn't really all that much. I would prefer that CEOs and all upper level management get paid reasonably for their non-manual contribution --- if in fact there is really any contribution by them at all.

Manual labor is what makes the things happen that we dream up or design. Give credit and pay where it is due.

 

[StressGuy]

dporte17,

Indeed, it is likely to become as self fulfilling prophecy. I know I am much more conscious of the price I pay for things now - looking harder for bargains than I did when I was first out of school. Facing the reality that I'm currently training people who make 1/3 my salary to do my job, I find that I'm already trying to adjust to the impending threat of a lower standard of living by lowering my standard of living.

As a result, I become less of an economic engine, which puts more pressure on the companies, which leads to more cutbacks.

The reality is still that America is the major economic engine that drives the world economy due to a strong middle class that has the confidence in their jobs and sufficient disposable income to buy software, DVD players, new cars, etc.

All those people in India, China, and elsewhere who are taking American jobs are still producing products and services for the American market, not their own, becuase they don't make enough to pay the prices that the companies want for those products and services.

With the way things are going, I can't see how we can have anything but a grand collapse at some point as the American middle class disintegrates and with it, the need for all these Indian and Chinese workers.

Edward L. Klein
Pipe Stress Engineer
Houston, Texas

All opinions expressed here are my own and not my company's.

 

[pjhype]

QCE:

No, I never said that engineering cannot change the world. The statement meant that engineering cannot (directly) change people's values. If someone feels that they can improve their quality of life with material things, it is engineering's role to supply these things.

You cannot engineer human nature. If someone can profit by developing a plasma TV, then he will create and supply a plasma TV. If someone can profit by creating a utopian society, then he will work to create a utopian society. The problem is that there is very little money to be made in creating a utopian society, and therefore very little profit incentive to create one ... although many of us would agree that it would be good to have.

The same argument can be made about globalization. While you might not agree with the moral ramifications, globalization is driven by a profit incentive that is firmly ingrained in our society. Since you cannot change the profit incentive, you need to find a way to adapt to globalization. I'll bet that if you thought hard enough, you could find a way to profit off of the problems from the fallout of globalization ...

pj

 

[swertel]

After looking up the word dichotomy I would have to agree with you, pj.

The one thing that often goes overlooked is the fact that we as engineers have a similar oath as doctors do. We realize that we can't change people, so we change things that hopefully change people, knowing all along that the things were changing are not, in themselves, beneficial to society. (I use the term "all" with caution. As I see it, we are in a technological spiral. We created technological goods with the information we had. After time, we learned more and realized that our initial technology was flawed. So we developed new technology to fix it. And so on and so on and so on.)

So until the world has a second Great Awakening, realizing that money isn't everything, we will continue to persue feeding the greed machine in order to advance in a direction we consider forward.

What do we as engineers do?
1) Get involved.
a) Engineers do wonderfully in local politics. Run for your city council, or at least be a member of their advisory council. (By the way, I'm a write in candidate for 2004 presidential elections... Scott Wertel, tell your friends.)
b) Write letters to your elected officials.
c) Become a member of a national society that covers issues such as these.

2) Spend time with your family.
Teach your children proper values. Show by example. It will take generations to redefine the society's motivation of profit incentive, start now.

3) Continue learning.
A little information and a vivid imagination is a very dangerous thing. Educate yourself on things that you don't think apply to you. After a while, you'll realize they do. Spread to others what you have learned.

4) Keep on open mind.
Change isn't easy on any of us, especially when we're the ones standing in the unemployment line. But what goes down, must come up. Don't dwell on what was or you'll miss what is.

That's all I have for now. Time to get back to the greed machine. (I like that phrase. I think I'm going to use it more often.)

--Scott

For some pleasure reading, try FAQ731-376

 

[dporte17]

ietech:

I think that comment came out wrong. Upper management and CEOs are definitely getting over paid. The unionized toolmaker who works for me, doesn't put in any part of the effort or hours that I do gets paid significantly more than I do. On top of that, when times get tight my company pays the union $3000 each to resign the contract, then eliminates 3000 salaried jobs globally and cuts our overtime pay rates and benefits packages.

Don't get me wrong, I am also bitter at the management, but it is my opinion that over time the union has negotiated such a deal for this facility, that we are going to price our products right out of the market. This is frustrating for someone who is just starting his career. I have no problem paying someone an honest days pay for an honest days work. I also have no doubts that there is alot of manual labour that gets paid much less than they are worth. But when a workforce is getting paid 50% more than someone in the same industry in the same town, there is a problem.

Dave

 

[swertel]

MLeow,

The point of my theoretical brain fodder of cutting salaries and prices by half did not intend to look at costs. More to the point, by cutting prices in half even if the costs hasn't been halved, then profit also goes down. Thus, lower the greed machine because less profit is now acceptable. (Remember when 5% gains in stock prices were awesome? Now 14% isn't enough.)

Granted, if costs remain above the half way mark, then most likely it would be impractical to cut them in half thereby losing money on the product; thus going out of business and everyone is in line again, defeating the whole purpose.

--Scott

For some pleasure reading, try FAQ731-376

 

[mloew]

Scott,

So what is your point?

Best regards,

Matthew Ian Loew
"Luck is the residue of design."
Branch Rickey

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[Zapster]

RDK is right:

Like it or not the world is a global economy.

Jobs are leaving the US for one reason and one reason only.

That reason is that the product can be manufactured elsewhere for less money.

I believe that we are the cause of the problem and the solution cannot be found in legislation. Any legislation that is developed to solve this problem will favor one working sector of society over another. In the end, no one wins playing this game. You can’t cheat the other guy and pass the savings onto yourself and call that fair.

An analogy is trying to squeeze a large balloon. If squeezed, it will simply budge out in another area. Legislative attempts may appear to solve the problem temporally; however, it will be soon discovered that the problem has been shifted elsewhere.

I have viewed this problem for my entire adult life, over the last 30+ years. I first recognized it in the early seventies when I mentally calculated how many hours of effort went into the goods and services I received each day. It was and is a high multiple of my working hours. I knew that this game could not be sustained. When I work 50 to 60 hours a week and enjoy the efforts of over 200 hours a week from others, I know that I cannot maintain the illusion of my value for long. Nope, I will just enjoy it as long as I can and try to enrich my children’s life.

 

[swertel]

Matthew,

The point is for clarification. Purely academic. It's just a hypothetical situation to see what brainstorming ideas would come of it. I just didn't want to get into too many specifics about the validity of the idea because I know it would be difficult to accomplish at best. I only thought of it because I know Mexico recently revamped their monetary unit, i.e. dropped a few zeros. I don't know how this effected the global economy and the value of the peso versus other moneys. What would happen if the US did something similar?

--Scott

For some pleasure reading, try FAQ731-376

 

[CanEngJohn]

It is interesting that through this discussion we talk about greed of Companies, Governments and CEO's/executives. We also mention overpaid unions. Pretty good B@#ch session so far.

So lets twist the viewpoint. For arguments sake I'll say that I believe the main reason that companies are so bottom line driven is because we all want "a ton of cash" in our RRSP's/RPP's/RESP's so we can retire at 55. We (being the NA society at large) dictate what we need (by demanding that our mutual fund investors to make sure we have a payback) and they tell that to Wall Street who in turn dictates the Corporate Strategies.

So we pay CEO's big bucks that meet those strategies so that our RRSP grows faster so we can retire at 55.

So who again is responsible for the greed?

 

[swertel]

WE ARE! YEAH! I love being in control of my own destiny.

Thank you, John, for bringing it back to the root cause. It's funny you bring this up at this time because my company is having its 3rd quarter progress report. It's where upper management talks with all the employees about the numbers for the past quarter and forecast for the remainder of the year. Overall, it's nice that they keep us involved. But, being an ESOP company, it's funny that the main questions that tend to come up in these meetings is how these numbers affect (or is it effect) our stock price (i.e. retirement plan).

--Scott

For some pleasure reading, try FAQ731-376

 

[401K]

I suggest reading:

The Lexus and the Olive Tree: Understanding Globalization

by Thomas L. Friedman

In my opionion the communication lines that were once barriers during the cold war and pre-internet/satellite communication era are what has caused this rush to globalization. We have serious issues that need to be addressed and I don't think that cutting taxes for the wealthy did anything for our current situation.

We need a president that is willing to:

REFORM

Healthcare
Labor laws
Trade policy
Tax codes
FBI

Healthcare - Probably the most pressing problem. Americans now DEMAND health care and companies realize that. We need to change our culture from one that goes to the doctor and whips out an insurance card for minor visits to one that has insurance that only provides for emergencies that cost over(lets say) 5000K. This will discourage people from going to the doctor for Zyban to help them "quit" smoking, etc..(why should I pay for a moron who can't quit their dirty habit) Anything under 5000K can be paid for out of the pocket for most americans over a few years. Especially if they are making a lot more money because their salary went up because their employers dropped most of their health care insurance cost.

Tax codes - Tax cuts are fine for businesses as long as they are ear marked for new plant, machinery, and research. Everyone wins that way. Companies get better equipment that puts them on top of their market and more jobs are produced because of this new equipment and research. Also American companies who like to operate off shore in the "free trade" zones need to be brought back into the tax system. This is obserd and we need a president who can take on these people who are ripping everyone off by not paying their fair share of taxes. Just think of what is happening in America now. Bush has strangled our states by cutting taxes and spending all of our money on wars. Has this lowered your tax bill? Probably not. Just like in a company who passes higher taxes onto consumers. The lack of tax revenue was passed on to the states who either cut programs or raised taxes. Neither of which are helping us to stay competitive on the world market.

FBI - I'm not sure if this is the appropiate agency but you'll get my point. We need to start a new agency that specializes in prosecuting corporate criminals. I love capitalism and I encourage anyone to make as much as they want. But when these criminals steal from their shareholders by lying and insider trading I think they should be locked up in the same cell as the guy who stole a DVD player from Wal-Mart.

To sum it all up we need to change our culture in America. As long as our culture accepts these problems then nothing will be done.

 

[RDK]

401k

Here in Canada we have a national health plan. This means that everyone (citizen and landed immigrant) is fully covered for most health costs. Exceptions are some specialists (chiropractors for example), out of hospital drug costs, dental and some other incidental costs. In most provinces there is assistance for these costs for those who cannot afford them (i.e. high long term drug costs).

The result is that we spend almost the same portion of our GDP on health as in the US (around 8-9%). Instead of paying for insurance (even if your employer pays for it, it is still part of your compensation package.) we pay for it as part of our taxes. The wealthy pay more than the poor and everyone gets basically the same service.

The difference is that everyone gets some coverage and at least the essentials. In the US with a significant % of the population not covered, those with financial resources or good insurance coverage get better health care than a Canadian while the rest get nothing.

To get on topic what it does do for us is makes job mobility easier. We do not have to worry about being able to switch coverage or being denied coverage for per existing conditions. This helps our economy adapt to the new reality.




As far as taxes we have the same situation here as in the US. My accountant is a very smart individual. He spends all his time reviewing the tax code to find ways to avoid or defer taxes for his clients. If the tax code were simpler and fairer, his talents would be freed up to become productive in terms of creating wealth. Multiply this wasted effort by all the tax accountants and lawyers in the country and it is a significant drain on our economy.

I am a rare Canadian in that I like our GST. (This is a sales tax on most goods and services. Businesses pay it when they buy goods and services and recover the amount. The formula is tax charged less tax paid to others equals remittance to government.) Currently there are two GST rates in effect 0% and 7%. The 0% rate applies to insurance and financial transactions. The 7% rate applies to almost everything else.

This is a simple tax to administer. It is also one that is difficult to avoid. The end tax burden falls on the final consumer and since the road network was created to bring him those goods and used up when he uses those goods that is where the tax should be. There are GST rebates at the lower end of the economic spectrum.

If the tax rate were set to say four or five different rates depending on the type of good, then the tax rate would also be regressive (that is tax speak for a tax that is at a higher marginal rate for the more wealthy and lower for the less economically advantaged.)

For example, raw potatoes could be zero tax, processed potatoes would be at the first step, potatoes served in a restaurant could be taxed at the next step and those part of a expensive luxury meal could be taxed at the higher rate. Cars less than some amount would be less and luxury cars could be taxed at a higher rate. Thus you could eat, drive and do the basic essentials at a low tax rate, if you want some more luxury then you will pay more taxes.

I think that taxes should be for one purpose and one purpose only. That is to raise money for the common goods and services essential to our economy and society. Common goods in economic terms are those, which benefit everyone and cannot be differentiated to individuals. Examples are national defense, the court and justice system, the public roads etc.

Right now the system of income taxes in Canada and the US penalizes wealth creation. We need wealth creation so that the money of individual investors can be pooled to create an investment source for new wealth creating businesses and industry.

Our tax system should not be used, as it is now, a vehicle of economic and social policy. If the government wants to fund something it should do so in dollars out of its pocked rather than in the form of tax cuts which make the real costs of these programs invisible. For example, corporate tax rate varies greatly depending on industry why should the taxpayer subsidize some industries without a real understanding of the actual costs?



As far as corporate crime, it is not seen to be as much of a problem in Canada as in the US. I would hesitate to set up a new agency for it because this would be inefficient and just create turf wars and duplication of effort instead of solving the problem.





Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[401K]

RDK,
I totally agree with you on everything that you said.

I would support some form of Federal Health care in the U.S. as long as it only covered major things and not small visits(unless you were on welfare or had a very low income). The problem is that most Democrats would come up with a plan in a heart beat but the big business backed Republicans(they control the media) have a lot of ignorant people fooled. They tell lies to people and never mention that if we had some form of federal healthcare then anybody could start a business without fear of not having health insurance. Thus promoting the creation of new jobs and economic growth. Also people wouldn't have to worry about getting hurt and losing their house and business. I think they are able to trick so many people so easily because we still have generations of people who grew up during the cold war era and they were around when the U.S. was spewing all the rheortic about how any type of social programs are bad.

The funniest reality is that the U.S. did not win the cold war. If you really look at it most countries are partly communist. Including the U.S.. In my opionion about half of the most capatilist country in the world is part socialist. We may not call ourselves that but if you look at our government and some of the programs we have I say we are.

If you want to see a good movie about some of the problems with American culture I suggest:

Bowling for Colombine


I love the U.S. but sometimes I would pack up and move to Canada if it wasn't so damn cold.

 

[RDK]

Canada is not that cold. Sometimes in the winter is gets above –40 for several minutes at a time. Seriously though in winter we just turn to indoor activities. With good building heating systems, heavy-duty heaters in our cars and warm clothes winters are not much of a hardship. The having four distinctly different seasons is nice.

You are right, most economies are partially socialist in nature. They have to be so that they provide for common goods. It’s the definitions of what are common goods that determines the limits of how socialist a country is. Canada has chosen to include health care as a common good; the US has not. I happen to agree with the inclusion of health care as a common good.

The US won the cold war simply by out producing the opposition. If you remember the early days of computers there was a text-based game called Hammurabi. The key to winning that game was to find the optimum mix of productivity based on how much land and people you had. You would acquire as much land in the early stages as possible to get through the later stages and maximize your military might.

The same strategy won the cold war. The soviet economy could not sustain the arms race started by Reagan and it collapsed on itself.

The danger to the US economy is now that a lot of the primary wealth building portion of the economy has gone off shore is that is for some reason this was lost to the US (nationalization of the foreign industry, oil crisis pushing up transportation costs or a OPEC like cartel of third world manufacturers for example) the US would be considerably weakened as a world power.

During the cold war the balance of power served to keep small local conflicts small and local. Now with only one superpower the US military might is protecting the world. If the US economy collapses the power vacuum could have dire consequences.

The solution is as I have often said is that the US has to accept a slightly lower standard of living, raise the wages paid to third world countries to be closer to parity to US productive costs and take a more long term view than only next quarter’s stock price. Better to sacrifice some of your standard of living than to sacrifice your son on a distant battlefield.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[dporte17]

401K:

You get used to the cold. If you end up skiing you might actually like the cold. I personally love the winter.

As for Health Care/Taxes. Everyone has their own opinion, and for the most part people have very solid good reasons why they have them. Personally, I would love to travel and experience everything the world has to offer, but I wouldn't really want to live anywhere but Canada. Universal Health Care is a very big reason why. The mix of social infrastructure and market capitalism is a fine line for any country to walk, and in my opinion, Canada has walked that line well.

If there was one thing that I dislike it's the fact that government organizations are typically quite inefficient. The market takes care of organizations that are not efficient, but there is no such force to correct inefficient governmental organizations. In the end I don't worry too much, it will just kill you early!

Dave