Comments on: Will Rapid-Fire Finance Self-Destruct the Economy? http://www.businesspundit.com/will-rapid-fire-finance-self-destruct-the-economy/ Entrepreneurship, Startup Companies and Business Philosophy Thu, 11 Mar 2010 22:10:13 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Jeff O'Connor http://www.businesspundit.com/will-rapid-fire-finance-self-destruct-the-economy/comment-page-1/#comment-2487 Jeff O'Connor Fri, 27 Jul 2007 13:10:10 +0000 http://www.businesspundit.com.php5-6.websitetestlink.com/?p=3251#comment-2487 This is absolutely true, but it isn't exactly new news. Economists have been writing about this sort of thing since at least the late 1980s, when the Japanese started to make serious inroads into the United States economy. I'm glad to see that the racist arguments that Japan possessed a unique "hive mentality" are gone, but I can't understand why Mitchell's argument hasn't gained more traction than it has - and a lot sooner. Doing my best to keep my partisan political beliefs to myself, I just don't see how anyone can objectively look at the United States allowing so much of its industrial capacity to move offshore - to a relatively hostile and theoretically communist country no less! - and not worry about the future of the U.S. middle class. The reason I left the automotive consulting industry is because I watched first-hand how America's premier manufacturers would invest whatever savings or new revenue they could earn by streamlining their processes and creating new products. The money wasn't reinvested in the company; it was spent on CEO perks, media campaigns, and shareholder dividends. White collar mid-management was forced out to make way for consultants like myself, usually employed by large body-shops that have no incentive to actually help their customers; rather they have every incentive to help themselves to all the paid overtime their employees can get away with. When the inevitable crunch came, there was no one left who really understood how the company functioned that had any long-term incentive to help it react in a cost-effective, strategic manner. Finally there's the issue of what's happening to America's skilled trades people. Even the most virulent anti-union business person can't ignore the reality of basic economics, so eloquently summed-up by Henry Ford (himself no lover of labor): "There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible." What's happening to America's businesses today is a perversion of this axiom, and it's a shame. The new rule appears to be: "There is one rule for the capitalist (industrialists are *so* 20th Century!) and that is: Make the lowest quality of goods that are PASSABLE at the lowest cost possible, paying the LOWEST wages possible, and OMIT BENEFITS whenever you can get away with it." You reap what you sow; this is all going to come back to bite us one day. This is absolutely true, but it isn’t exactly new news. Economists have been writing about this sort of thing since at least the late 1980s, when the Japanese started to make serious inroads into the United States economy.

I’m glad to see that the racist arguments that Japan possessed a unique “hive mentality” are gone, but I can’t understand why Mitchell’s argument hasn’t gained more traction than it has – and a lot sooner.

Doing my best to keep my partisan political beliefs to myself, I just don’t see how anyone can objectively look at the United States allowing so much of its industrial capacity to move offshore – to a relatively hostile and theoretically communist country no less! – and not worry about the future of the U.S. middle class.

The reason I left the automotive consulting industry is because I watched first-hand how America’s premier manufacturers would invest whatever savings or new revenue they could earn by streamlining their processes and creating new products.

The money wasn’t reinvested in the company; it was spent on CEO perks, media campaigns, and shareholder dividends. White collar mid-management was forced out to make way for consultants like myself, usually employed by large body-shops that have no incentive to actually help their customers; rather they have every incentive to help themselves to all the paid overtime their employees can get away with. When the inevitable crunch came, there was no one left who really understood how the company functioned that had any long-term incentive to help it react in a cost-effective, strategic manner.

Finally there’s the issue of what’s happening to America’s skilled trades people. Even the most virulent anti-union business person can’t ignore the reality of basic economics, so eloquently summed-up by Henry Ford (himself no lover of labor):

“There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.”

What’s happening to America’s businesses today is a perversion of this axiom, and it’s a shame. The new rule appears to be:

“There is one rule for the capitalist (industrialists are *so* 20th Century!) and that is: Make the lowest quality of goods that are PASSABLE at the lowest cost possible, paying the LOWEST wages possible, and OMIT BENEFITS whenever you can get away with it.”

You reap what you sow; this is all going to come back to bite us one day.

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