Posted 12/21/2010

UNEMPLOYMENT: THE SOLUTION

The USA is a big, rich country with abundant resources. But Washington fails to mobilize them to solve our unemployment problem.

Singapore is a tiny island country (five million people) with no resources outside of fish. But it has mobilized what it has to become one of the seven richest nations, according to per capita GDP (gross domestic product).

A true story will explain the difference:

An American start-up was granted a patent on a new electronic device. A factory was built and American jobs were created. Then South Korea stole the patent, built a factory and created South Korean jobs.

The American company went to Washington seeking help. The Commerce Department wasn't interested. The State Department refused to take any action. No one in the executive branch offered help. Contacted directly, the South Korean government insisted they needed the American patent in order to create jobs. The American managers were very discouraged.

Then something startling happened. The Singaporean government contacted the Americans and offered them one of those deals that's hard to refuse – move to Singapore and enjoy a tax holiday of ten years or so.

When the Americans told of their difficulties with South Korea, the Singaporeans laughed and said, "Don't worry about South Korea. We know how to handle them."

The world's largest superpower doesn't know how to handle crooked South Korean behavior, but little Singapore does? What kind of people are we sending to Washington?

When American presidents travel around the world, they seem to come back with "productive discussions." But they rarely return with really big, job-creating deals.

But when President Hu and Premier Wen of China travel abroad, they always seem to return with huge multi-billion dollar deals which create Chinese jobs.

The unemployment problem in America is fundamentally due to lack of interest and lack of competence in Washington. This means that our unemployment problems can be easily solved if Washington would begin to act like China, Singapore, Taiwan, India, Japan – yes and even South Korea.

Here's what we need to do:

1. Eliminate unproductive federal departments like Energy, Homeland Security, Labor and Environment. Replace them with a new Department of Job Creation.

2. Give the new Secretary of Job Creation the authority to block the Departments of State and Defense from designing treaties with foreign countries which would have a negative effect on American jobs.

3. Immediately cease lecturing foreign governments about human rights, the environment, labor rights and other issues which force many nations to reject American deals. Our "schoolteacher" attitudes have resulted in the continent of Africa turning to China for purchases of engineering services and manufactured products which could easily be supplied by the USA. Our current Secretary of State seems to prefer hectoring to selling.

4. Restrict Presidential foreign travel that does not go after the money – and American jobs.

5. Restrict Congressional foreign travel that does not go after the money – and American jobs.

6. Alter our trade reports to reflect jobs – not dollars. Over 70 percent of our exports are capital intensive, and feather-light on jobs. How many American jobs do you think are created by shipping corn, wheat and soybeans to China in exchange for clothing, toys, shoes and electronic wares? Drive around the Midwest, where you will see oceans of corn but no people, no jobs. Tour a shirt factory and you will see all kinds of people and jobs.

7. Rethink the way we look at corporations. They are not national companies. They are global beings with no interest in job creation. In fact, the attitude of most CEOs is to favor job reduction in order to lower costs, increase profits and expand their bonuses. Honda, a Japanese company, has built American factories which created American jobs. Nike, an American company, has outsourced its manufacturing to countries in Asia, which creates no manufacturing jobs in the USA. The iPhone provides a huge number of jobs in Japan and China – but very few manufacturing jobs in the USA. From a jobs standpoint, Honda is to be admired to a far greater extent than Nike or Apple.

8. We must create a new corporate tax policy. One which rewards American job creation and penalizes foreign job creation. Thus, corporations would confront a two-tier tax rate determined by job location. If a corporation creates 100 percent of its jobs overseas, the rate would be 40 percent. If a corporate has 50 percent of its jobs in the USA and 50% abroad, the tax rate would be 30%. If a corporation has 100% of its jobs in the USA, it would pay a rate of 20%. The two-tier system would create a powerful incentive to build the next new factory or facility in the USA.

9. Corporations would no longer be allowed to "house" their foreign profits abroad in countries which have lower tax rates. All earnings must be brought home.

10. Reject the approach of the political parties to tax corporate earnings at an equal rate while creating all kinds of loopholes for favored lobbyists. No company should be allowed to pay a rate which is lower than what its domestic/foreign jobs ratio calls for. (The tax break granted General Motors by the current administration borders on the criminal. Past losses mean that GM may never have to pay taxes again.)

This plan will cause everyone to scream. Republicans and Democrats. Corporations and investors. Profits and Non-profits.

They will scream because they have never been interested in providing good jobs for the American people. Both the government and business have been all too focused on CEO pay, stockholder returns and campaign contributions.

Sadly, most businessmen know the cost of everything but the value of nothing.

Ask the question: How much can you sell to someone who is out of work?

Business and political leadership has fallen a long way since Henry Ford offered his workers an unseemly high daily wage in order to create a middle class which could afford to buy his "Model T" autos.

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