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- Almost 50 years have gone by since D-day captured our imagination. If you were not a student of history, you might believe that the Normandy invasion was solely responsible for the defeat of Germany and Japan. Once again, the press has hyped the significance of that event beyond its importance.
Yet, here we are . . . looking at the future and wondering . . . what was really accomplished by the sacrifices of those who died on both sides of the conflicts in Europe, Asia, Africa and on the oceans.
We labeled the Nazi regime as butchers because they destroyed over 6,000,000 people in their concentration and forced labor camps. The Japanese were considered inhumane for striking at Pearl Harbor in a sneak attack and for the cruelties incurred during the Bataan death march.
Yet, earlier in history, the Jews that followed Moses into the Sinai in returning from Egypt later slaughtered almost all of the Canaanites after they crossed the Jordan river. But how often are we reminded of that? Percentagewise, the destruction of the Canaanites far exceeded the Jewish extermination in the concentration camps.
Since time began, various homosapien groups have tried to inflict their religion, ideology, and economic systems upon others less powerful than themselves. Conflicts have been around since before recorded history. Someone is always trying to use force to gain an advantage.
With the demise of the Cold War, many legislators are intent upon dismantling our military under the belief that the world has changed.
Today, the war for advantage has shifted from the military to control of the financial and market complexes. NAFTA, GATT, and the European Common Market are all battlegrounds for economic survival. The American dollar continues to be under attack in the world financial markets. Congress does not realize that the long-dominant dollar is losing its role as a refuge of safety and continues to spend billions more than it taxes.
Politicians point with pride to reducing the yearly budget deficit largely through future spending reductions and fail to understand that the total amount of debt is the real culprit.
Many international companies are beginning to hedge their currency exposure against the dollar. Recently, a Southeast Asian furniture manufacturing company refused to accept payment in dollars and began demanding that all of its transactions were to be paid in either gold or Swiss francs. Ten years ago, the multi national companies were hedging other currencies towards the dollar. How times have changed. The international currency traders have lost confidence in the stability and strength of the dollar. The downward slide has only just begun!
For the past few years, the "down size" syndrome has become popular with large and small corporations. The scenario seems to be -- reduce costs, become more competitive, get out of labor intensive operations in the U.S., sell off assets to reduce debt incurred during the redeployment of assets binge during the 80's and in general, try to become mean and lean.
The greed of Wall Street's manipulators sapped the financial strength of many American companies. As corporations reduce their work forces, restructure their strategic objectives and attempt to remain competitive, the stockholders and their representatives, the board of directors, fail to see the results of their decisions on the long-term economy.
Advocates of "down-sizing" do not understand that the most important asset of a company does not appear on its balance sheet. That asset is the knowledge and morale of its employees and their willingness to create and innovate. More importantly, when the work force is reduced in size, the payroll decreases and the country's purchasing power is also reduced. As factory jobs have declined, the ability of our economy to compete overseas has also diminished.
While I don't often agree with Jesse Jackson, his observation is correct that one of the major problems in the Afro-American community is the lack of factory-level jobs that pay a decent wage. Many Afro-Americans would like to provide for their families but the system requires them to work two and three jobs just to subsist and survive. Is it any wonder that these fathers and mothers are not able to supervise their children when they have to work 80-90 hours a week.
In February 1993, Secretary Bentsen and the Clinton administration made a decision to let the dollar seek its own level. The concept behind the decision was that by reducing the value of the dollar, our exports would increase and the balance of payments would decrease. Nice economic theory, but the results of the past few centuries hardly prove the theory. In fact, when the dollar was the strongest, our exports were the highest and the balance of payments was also positive. Outside of high-tech electronics, agriculture, military weapons, and airplanes, the prospect of a weak dollar won't really affect our exports. The main reason is that we don't make many items that appeal to an overseas buyer.
Since the 1960's, our copper, steel and aluminum industries have lost market share. Our machine tool industry has almost vanished. While lumber exports to Japan have increased, the growth of the Russian lumber industry will soon eliminate our current competitive position. Domestic automakers have transferred production of major components, i.e., engines, transmissions, etc., to off-shore sites. Today, you might buy a Ford and find that 70% of the automobile is made overseas.
The Clinton administration states that they have created 4 million new jobs since 1992 . . . but forgot to state that most of those jobs are barely above minimum wage. As downsizing occurs, the tendency is to eliminate the middle management jobs. In time, I wonder who will be able to afford to buy a $20,000 Chevrolet. Certainly, not the $6.00 per hour laborer.
During the past five years, union membership jobs and defense jobs with relatively higher pay than service jobs have declined. With them, goes the purchasing power that enabled many families to have two cars, three TV's, a VCR, a camper, and vacations.
For three decades, our economy has been moving into a service-oriented mode. The major problem is that service jobs generally pay less than production jobs. As discretionary purchasing power vanishes, the economy contracts. During this period, taxes as a percentage of GNP has risen from just over 22% to over 38%. The result is that the standard of living is going down. Good ideas - - - but who pays?
The environmentalists have eliminated over 200,000 jobs in the lumber industry in the Pacific Northwest. In a feeble attempt to put people to work, Oregon has passed a law prohibiting motorists from pumping gas into their vehicles. But the unemployed lumberjack who used to make $30,000 a year is now only making $4.65 per hour. And after retraining for six months in a state sponsored program. Only a government program could make a six month training program out of pumping gas.
During the past twenty years, business has seen an increase in the amount of regulation through laws covering the environment, worker safety, and equal opportunity. During 1994, the federal government has a goal of doubling the amount of fines which it collects for violation of the new rules and regulations which have been written. In fact, as the federal government has acted, the states and local authorities have chosen to enact even stiffer conditions in many cases.
The American Regulatory Compliance Association has found many instances where its members can be in compliance with one agency and found in violation by another using the same set of facts.
The Federal Reserve, concerned by the prospect of future inflation, continue to increase interest rates. When interest rates were falling at the end of the Bush administration and the beginning of Clinton's, Treasury Secretary Bentsen was taking credit for reducing the cost of financing the debt. Well, the national debt is about $300 billion higher today than 1992 and the interest cost is rising. With the stated federal debt at $4.5 trillion and rising, each 100 basis points causes the federal debt interest to increase or decrease by $45 billion per year. Funding the federal debt takes an increasing amount of the nation's available cash flow.
As overseas investors become uneasy as evidenced by declining investment inflows and a weak dollar, the economy may be thrown into another recession by the end of the year.
As interest rates increase, home building permits slow down, the furniture and appliance industry are affected adversely, and large purchases such as automobiles, and hard-goods decline.
As the Clinton administration continues to feel the impact of Whitewater, sexual harassment lawsuits, and general indecision about Haiti, the Balkans, Rwanda, etc., the real battle field is being fought in the world financial markets.
When the dollar broke 100 yen, it should have served notice that the New World order was changing the way the world worked. For instance, Japanese companies are organizing to be competitive at 80 yen to the dollar.
Isn't it amazing that those countries which we helped rebuild after WWII, Japan and the western European countries including Germany, could have climbed back from the brink of disaster and now find their currencies much stronger than that of the U.S.
Perhaps, we should have surrendered to Germany and Japan and let them build us up.
Yes, it is 50 years after D-day. However, the war continues . . . it did not stop.
But then - - 'Tis Only My Opinion!
Fred Richards
June 1994
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