UNEMPLOYMENT IN AMERICA
UNEMPLOYMENT IN AMERICA
Steve Boehne – 2011
Back in 2008 the worst recession in decades hit the USA. By 2011 the banking industry was in a crisis and unemployment was the worst in years. Like most industries in America, the surfboard industry was in a slump. I wrote this article then explaining my thoughts about this unemployment problem and sent it to several TV stations including ABC, NBC, CBS and PBS. I got a response back from PBS that their economic correspondent on the PBS News Hour, Paul Solomon wanted to interview me at my business; Infinity Surfboards. The first show was aired in 2013 and a second follow up show was aired in 2016. I was surprised after watching the show that the economic experts that Paul also interviewed actually agreed with my uneducated statements.
I am a small business owner with about a dozen employees. We manufacture surfboards, which we sell in the U.S. and around the world. I am confused when I hear TV commentators, columnist and the 2011 Wall Street protesters blame our poor economy on the banking industry, Wall Street, taxes and Obama. These entities have no direct effect on my business. Taxes are not a problem and to be honest, my industry as well as all others need to be regulated. I do know however, exactly what has decimated my little industry as well as many others: IMPORTS! For example: Now the biggest surfboard distributors in the U.S. sell exclusively surfboards made in China. Now perhaps only about 20% of surfboards sold in the U.S. are made here, and we invented surfing.
The 1970’s free market economist, Milton Friedman had it right in the short run, but woefully wrong in the long run when he said that the U.S. can only benefit when as consumers we buy cheap products from other countries who’s labor force work at a fraction of the wages that we do. This seems to have worked to our benefit in the 70’s and 80’s as we gorged ourselves on clothes, appliances and all products made for less around the world. But, the American worker now competes in a global labor market against workers with a much lower cost of living. Slowly but surely, competition created from our short sighted import policies forced our manufacturing companies one by one to move their production plants to lower cost labor markets. The problem is not authentic foreign products coming into the U.S. the problem is “American” products coming in to the U.S.
The United States has set itself up as the loser in this worldwide manufacturing competition through naïve tariff agreements. These tariff policies were born of the free market philosophies of the past and lofty ideals of bringing our neighboring countries along in our national journey to prosperity. The problem is that now our trading partners are laughing at us. Through higher import duties, they restrict imports from our country into theirs as we import their products with much lower or nonexistent import duties. In my industry for example, all surfboards imported in the U.S. enter duty free: (HTS duties, chapter 95, #9506.29.0030) However, when I sell surfboards to virtually any country in the world there is a duty charged, examples: Japan; 8%, Australia; 15%, France; 20%. Israel; 37%, Taiwan; 50%.
Big business, through lobbyist and political contributions has manipulated “our” congress to forsake American jobs for short run corporate profits and long run unemployment. You know, at a local level, it is illegal to influence with any kind of payment, your city council or mayor in order to affect their vote on a law that may benefit your business. But the U.S. congress has legalized a system of influence peddling called lobbying and campaign contributions. Congress has enacted import laws that have devastated the American manufacturing base.
I am an employer, so I am philosophically not a union advocate, but I can see labor’s objection as congress has recently passed a new free trade agreement with South Korea which the U.S. labor unions oppose because of the job losses that they suffered as a result of previous free trade agreements. Free trade agreements are job killers for Americans because the low wage earners in other countries cannot afford to buy our expensive products. That is why our balance of trade is always negative with any free trade partner. What free trade does is create a process where American companies can outsource the production of “American” products into other countries with a cheaper labor force and then bring them back into the U.S. duty free and then sell them at a higher profit. After a while, the customers for those products become unemployed and can no longer buy the products thus creating a recession. This reminds me of a picture I have seen of a snake curled back on itself where the head is eating the tail. By following bad government policy created by our congress, the USA is exporting jobs, not our products.
True, our government policies are great for the nations of the world, but they are at a direct cost to America and to my business. We have created a global “uneven playing field” and we are losing the game. We have placed our workers into a global market of impoverished workers and we are falling to their level, perhaps worse, they are employed and we are unemployed.
This sounds extreme, but powerful, extreme changes are needed. It would not be enough for the U.S. to just match the duties that other countries charge for our products, we must charge import taxes that would make it just as expensive for our companies to make something overseas as it would to make it at home.
I am not an economist or a mathematician, but some “REPRESENTATIVE” in our congress should be able to design a logical, powerful wage equalizing formula for import duties on ”American” products, services and intellectual efforts produced in another country. Since the year 2000, thousands of computer jobs have been lost to overseas workers.
You may say: We can’t have “protectionist” trade policies; the nations of the world would boycott us. Well, if we are the biggest market in the world, what do we care??? Let’s just make everything here and sell only too ourselves. This worked well for our first 200 years! In this way, the tail of the American snake would be holding a nice manufactured dinner while the head eats and the whole snake prospers.
NOTE: By the year 2020, both of the two large U.S. surfboard distributors mentioned at the beginning of this article have gone out of business. Apparently most American surfers appreciate an American made surfboard.
Links to the PBS News Hour shows on Youtube are below:
Part 1: Not able to embed please CLICK link below:
Part 2: 2016 From Youtube