Thoughts on Direct Job Creation

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The government’s primary responsibility is to protect the lives, happiness, and stability of its citizenry. I believe direct job creation programs should become a cornerstone in welfare programs to support unemployed people, in the short run, and serve as the launching pad to reeducate those people in the long run.

Governments can either neglect their citizenry or invest in them.  In a case where  laissez-faire economics prevail the workforce is left to its own initiative to find employment.  I believe this method is inefficient; often people act irrationally, due to lack of education and information, as they pursue employment.  Often they can waste much time and resources and still be unable to obtain a job.  I believe when governments invest in their citizenry the populace is better off.  My reasoning is that unemployed workers with financial support are better situated to find new work, become educated about potential opportunities, and pursue new careers through learning new techniques and skill sets.  Without any income these unemployed workers would be forced to instead starve, turn towards illegal means, or fall into costly debt and permanently injure their financial potential.  With financial support they can concentrate on finding a stable income and forgo significant problems.  This second option makes sense to me, it seems to head off spiraling unemployment where laissez-faire instead permits chaos.

The issue then becomes how to distribute welfare to those who need it.  Blank checks and unmarked bills seem like a short sighted way to provide aid.  People are inherently irrational; while they might be making decisions, with their government aid, that makes them happy they also may be perpetuating their unemployment.  I believe that governments, as the employers of last resort, should be able to step in and give any willing worker employment through direct job creation programs.  It is the job of the government to protect its citizenry, giving them an income is perhaps one of the most concrete ways to accomplish basic objective.  It would not matter if these programs were as simple as planting trees, cleaning graffiti, or being crosswalk guards as long as it transmitted an income to support those who were once unemployed.  The added benefits to the community services are an ancillary positive that helps neighborhoods and gives once unemployed workers a sense of optimism and a bit of dignity when they pick up their paychecks.

It is my personal opinion that direct job creation programs do not go far enough for helping the unemployed citizenry.  Direct job creation does employee workers and stabilize their lifestyles, but it is vulnerable to costly overuse.  Argentina’s Jefes de Hogar program found a solution in its worker training programs.  I believe that community jobs can be essential in alleviate unemployment in the short run; in the long run they become needlessly redundant and potentially wasteful.  I propose that workers with unneeded skill sets should be reeducated so they can pursue a new career, hopefully even one that pays better.  With reeducation programs once unemployed workers should be steered towards higher skilled jobs that need more applicants.  Simultaneously, this action fills hiring holes in the economy while hopefully upgrading the lives of once unemployed workers.  Any loss to the taxpayers, spent in lifting a once unemployed worker to the sectors where new employees are most needed, will be paid for by the higher tax returns of those individuals who increased their human capital and earning potential.

I believe that the government should be an employer of last resort, in the short term.  The steady support of welfare should be able to be counted upon to aid unemployed citizens.  Direct job creation gives short term aid to those who need it most and it hedges against unemployed people wasting time and resources.  It can even provide the means to reeducate once unemployed individuals so that their lives are actually better because they got fired.

Made in China (For Now): Manufacturing’s Slow Return to America, Case Study

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made in china

Made in China (for now)

Outsourcing is the bane of American manufacturing… except for in a little town in Michigan named Saginaw.  The great wrecks of the rest belt dot the town.  Meanwhile one Nexteer Automotive is adding jobs by the dozens.

Who is injecting money into the American economy?  If you were to follow the money trail your answer would be “China.”

In 2010 the national Chinese firm Aviation Industry Corporation bought the factory from General Motors.  The previous owners had been determined to sell the plant or demolish it.  The Chinese are determined to make a profit.  I believe the Chinese are correct in this case, otherwise they would not be investing in new machinery, technology, and above all workers at the same plant that General Motors had given up on.

The lynch pin in the success of the factory under its new leadership has been a stellar relationship with the factory’s union. Careful and respectful negotiations were made concerning wages.  Bloated union contracts were watered down; however, the terms were still generous for the plant’s union.  New employees are paid less than half of what they would have been paid ten years ago.  This matters little to the workers whom are just happy to be employed.  Over 600 hundred jobs have been added to the factory in the last two years.  More are on the way.

Many workers had apprehensions about the foreign acquisition of Nexteer Automotive.  Some worried the firm would be liquidated.  Others were concerned the experience and technological knowledge of the employees would be sponged from the plant and the factory itself would be leveled.  These fears have been unfounded.  Rather than taking away from the plant the Chinese have pledged to invest over 15 billion over the next couple of years.  Nexteer Automotive is quickly putting in cutting edge systems to secure the factory’s future.  The only criticism Aviation Industry Corporation has of Nexteer Automotive is the factory is not expanding fast enough.

While General Motors, the previous owner of the Nexteer Automotive, had seem only a money pit Aviation Industry Corporation found a gem.  The American worker is second to none; it is a proven fact that on average Americans work more diligently and with greater output than any other country in the world.  The Chinese are simply cashing in on this hard-won fact.  In addition, the highly developed infrastructure throughout American and the sunk costs of existing factories means that future developers will also invest in America.  We are the best and most economic choice. In virtually every industry American leads the way with a culture of intrepid determination, it is only right manufacturing is coming back to America.

Have (Anything But) A Positive Attitude!

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Man at Occupy Wall Street

Frowning: The New Smiling?

To proclaim, “Have a positive attitude,” is to tell people to embrace delusions.  I am not advocating for pessimism, instead I am advocating for pragmatism.  It should never matter whether the cup is half empty or half full.  The real question should be, “Waiter, where is the rest of my drink?”

Everyone has problems.  However, there is a nationwide dilemma concerning how people answer their predicaments.  America’s collective  ideology has been stagnated by “positive thinking” [article].  Many believe that if we think our problems are easy to overcome then the problem will be easier to vanquish.  Our capabilities will rise to meet our phantom projections and whatever we imagine will be realized.

This belief seems childish to me; “positive thinking” seems to be something lifted straight out of a kids movie.  When our PG protagonist believe he can emerge victorious, he shall indeed emerge victorious.  When you and I truly believe something we are in fact not granted superpower.  Otherwise, I swear I would be a millionaire by now. (I certainly believe I can be one, so why is it not so?)

This is the difference between ‘The Little Engine That Could’ and Icarus.

We can measure the negative results of positive thinking.  You have to look no further than our latest recession.  Lehman Brothers, Countrywide, and AIG all were swallowed by the willful ignorance of positive thinking.  They believed only good things would happen and bad trends would be absent due to positive thinking..  According to journalist and author Barbara Ehrenreich, in her speech Smile or Die, people in these firms who raised issue with the overly idealized projections were censured and fired.  Those who said the real estate bubble could not indefinitely rise up were told to shut up.

In a world of positive thinking, nobody wants to listen to pragmatic realism.  It is not as profitable as the illusions of positive thinking.  The recession happened because recklessness prevailed over reality until a tidal wave of truth swamped the economy.

Even President George Bush Jr. fell victim to positive thinking.  Members of his staff never voiced their doubts about the Iraq invasion because the president hated to be around “pessimists.”  Those that did, such as one general who insisted that we needed to double the troops in Iraq successfully stabilize the country, was removed from duty.  Today, Iraq has largely fallen under Iranian influence just as the final Americans troops are leaving, [article].  I believe being  realism and pessimism are separate and it is wrong to label anyone as a pessimist simply because they believe the majority opinion is wrong.

Positive thinking has allowed whole communities of Americans to choose walk the easiest path, where life is idealized and inherently flawed, as opposed to best way, where doubts are accounted for.  Journalist Adam Davidson just wrote an excellent article concerning how many of the correct economic predictions over the last decade came from fringe economists.  I believe this miscarriage of math is based the pitfalls of positive thinking and greed.

Mainstream economists, indeed thinkers of every science, favor telling people what they want to hear rather than what the reality may actually be.  This is how they make money.  If they disagree with clients their positive-thinking clients go elsewhere to find a more agreeable, but not necessarily more corrected, opinion.

One example of this positive thinking is the infamous Laffer Curve.  The economics model catered to Reaganomics.  It made men rich; therefore, it became mainstream and widely adopted.    Later, its popularity waned upon the public discovering it was overly idealized and actually hurt the economy.  Many economists had spoken out against the Laffer Curve.  They were ignored because their views conflicted with the positive thinking ideology of where the projections of the Laffer Curve would make reality conform to itself.  The long-term economy suffered because these men too were unfairly labeled pessimists and were ignored.

Fringe economists are willing to disagree with what is most profitable when it conflicts to what is actually feasible.  They become fringe economists simply because of this disagreement; fewer people listen to them because they are willing to disagree with overly idealized projections of positive thinking.  The most reliable projections for the market come from the fringe because they are the realists who are willing to put their foot down instead of caving to what is most profitable.  We need to start listening to men who go against the grain to see the world as it actually is.  Positive thinking is blocking us seeing reality.  It should be censured, just it silenced all those who conflicted with it.

Lightbulbs Will Never Be the Same

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LED light bulb

Second Generation Lighting Finding a Home in Your Home

The average lightbulb lasts for two thousand hours before going *pop*.  In ten years yours lightbulbs will last fifty thousand hours [article].  How is this possible: LED Lightbulbs.  This next generation of lighting, distinguished by their use exciting electrons to create light with maximize efficiency, are poised to replace the incandescent lightbulbs which have remained  mechanically the same since the days of Edison.  They are set to change the world; over the next ten years the LED lightbulbs are projected to take over sixty percent of the world’s markets [article].  The future will be a little bit brighter.

LED lightbulbs are vastly superior to antique incandescent lightbulbs.  They have no filaments which can burn out, nor do they have toxic mercury.  In addition, LED lightbulbs produce almost heat.  This is a drastic improvement over current lightbulbs which are often too how to touch [article].  LED’s currently are not quite as bright as traditional bulbs; however innovators are pushing the envelope to close the gap and surpass incandescent lightbulbs.  Finally, the pricing difference is extraordinary.

One the surface, incandescent lightbulbs seem cheaper.  One traditional lightbulbs costs a mere $1.25 while LED’s are projected to cost $30 dollars.  With a deeper look we see that LED’s are twenty-five times more effective than incandescent lightbulbs.  With every LED lightbulbs you will save a $1.25, twenty-five lightbulb exchanges, and preventing incalculable amounts of damage to the environment from the toxic chemicals of the traditional lightbulbs.  This decision is a no-brainer.

General Electric began with building  incandescent lightbulbs; today, they are once again preparing to revolutionize the world of lighting.  Alongside Sylvania [lightbulbs] and Phillips [lightbulbs] these three American companies are preparing for the next generation of LED lighting.  These three companies will not only save consumers billions on lighting they will also secure a cutting edge market for the United States.

Chicago is ground zero for these three companies blooming LED bulb markets.  A recent think tank report claimed that the cities trifecta of engineering colleges, government support, and concentration of lightbulb manufactures has position this city to oversee an explosion of new lighting across the world [report].  This is one market for that the American economy has in the bag for the economic future.

State of the Union: Afghanistan Edition

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Afghanistan bazaar

A Look at Afghanistan

With the looming 2014 deadline for NATO forces withdrawal from Afghanistan many officials are anxious about the state of affairs in the nation.  Two intertwined issues endanger the unstable fledgling state: drug crops and a president Taliban.  Hamid Karzai, president of Afghanistan and the Obama administration are working jointly to solve these problems and attempt to bring peace to the war-torn nation.

The economic lynch pin of the Afghanistan economy is the humble poppy.  Poppy’s are the plant which produces opium, an addictive drug which had killed millions.  Approximately forty percent [article] of the world’s opium production is grown in the mountains of Afghanistan.  In 2008 a British spearheaded campaign drove the Taliban and poppy sharecroppers out of prime growing land.  Ongoing campaigns to educate farmers, plant wheat and cotton, and enforcing security have reduced the poppy output signficantly.  However, these reforms are suffering from diminishing returns.  The Taliban and their poppy-sharecroppers have established new havens in semi-arable deserts and are reestablishing a profitable trade.  Corrupt officials are additionally undermining the efficiency the reform efforts by protecting drug growers for kick backs.  The food zone’s in Afghanistan are currently are largely secured; however, the drug problem is certainly not eradicated.

The Taliban are still a major player in Afghanistan and pose a threat to the unstable sovereign government.  Every year since the abrupt destruction of their government after the terrorist attacks of September 11, 2001 the Taliban have been rebuilding more ruggedized networks and orchestrating the assassinations of more Allied troops.  Explosive suicide bombers, rouge gunman, and improvised explosive devices are the chief killers of the near 2800 allied casualties [article].  Countermeasures against this terrorism have been slow to mitigate the killings.  Peak levels of Allied casualties were suffered over the summer of 2010 and current levels of casualties are still nearly double what they were five years previously [article].  Many locals believe once the international forces leave then the killings and disruption will make a resurgence.

There are many different programs attempting to defeat this persistent enemy.  The Afghan military is focusing on building up its own air force to replace the American warplanes after 2014 [article].  These ambitious goals of this program are to have approximately 165 active aircraft online by 2016.  Just as importantly, the government is training in total 8,000 personal to keep these aircraft in fighting condition.  These planes will be able to supply isolated outposts, decimate Taliban patrols, and assure the Afghan people who their government can enforce the national security.  In addition, the Obama Administration is taking innovative steps to freeze this possibility and stabilize the region.  The American and Afghani governments have jointly begun to open dialogue with the Taliban [article].  While initial communications are still classified multiple officials have expressed optimistic first impressions.  Peace is a viable possibility.

I personally believe this silver-or-lead policy will stabilize Afghanistan.  Government supporters will be able to farm wheat and common in peace.  The firepower of the Afghan army and the dialogue will corner the Taliban into consenting to peace.  The country will doubtlessly be plagued by isolated extremists for at least the rest of the decade; however, peace will become de facto in Afghanistan.

An (Indomitable) Argument for Protectionism

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Seagate Wuxi China Factory Tour

Protectionism helps us at home and our friends abroad

The expired Multi-Fiber Arrangement left thirty million people across the world unemployed.  These workers were unfortunate victims of globalized free trade.  Free trade leads us to believe that goods should always be produced by the firms competing under pure capitalist conditions.  This idea is not wrong; it is only the dangers of free trade should be mitigated in emerging markets around the globe to give them the opportunity to succeed.  Protectionism, the antagonist of free trade, is the solution to best prepare infant industries and emerging economies anywhere in the world; this policy employees more denizens, produces stronger industries, and cultivates stronger markets than free trade ever could.

Inefficiency creates more jobs.  If the entire world can exploit a market then only those countries with the most efficient industries will be able to sell.  Protectionism erects a wall of tariffs that prevents foreign goods from ever contaminating domestic markets by driving prices up to an inclusive level for domestic products.  Under protectionism, small industries gain a foothold, bloom, and employ more denizens in every country across the world.  There are minor concessions; on a global level less of goods are produced and the cost is driven up slightly as well.  These negligible effects diffused throughout the consumer markets means the world to the now employed workers who can support their families.  Protectionism is more humane than free trade.

Stronger industries are built under the shield of protectionism.  Behind a wall of tariffs the United States built mighty firms of  industry that dominated the world for the second half of the twentieth century.  Preceding the Americans, the British had done the same when the pioneered the Industrial Revolution and built an empire upon which the sun never set.  Since the 1970’s China used numerous protectionist policies, notably keeping its currency artificially low.  It is predicted to have the world’s largest GDP by 2020.  Examples of booming economies that got their start in free trade are scare.  Columbus and Admiral Perry opened up trade to the Americas and East Asia respectively.  In both countries widespread exploitation of natives and complete sterilization of domestic industries ensued following the introduction of cheap free trade imports.  Free trade is a tool of the strong to stay in power and collect wealth; for weaker nations and industries free trade is a poison which cripples.

Stronger markets evolve under protectionism.  Protectionist policies protect infant industries and prevent exploitation of weak economies.  In an international market of free trade monopolies are certain to emerge.  Monopolies are established when there is not industrial competition.  This problem hurts everyone.  Consumers suffer from an inferior product; without the Darwinian survival of the fittest threat the producers have no incentive to innovate.  Marginal producers are harmed.  Any attempts to breach the market are squelched under the monopoly.  The monopoly hurts itself through stagnation.  Protectionism is the best means in a globalized economy to give marginal producers and infant industries the time to create a profitable industries despite the monopolies.  Consumers and marginal producers benefit from better products and pay checks while potential monopolies are broken out of self-defeating cycles of stagnation.  Protectionism helps everyone.

Protectionist protects countries.  It harbors citizens and gives them jobs.  It cultivates infant industries under a cocoon of tariffs.  Better products and firms are brought to market thanks to protectionism.  It seems almost silly to even think about introducing globalized free trade to emerging economies; it corrupts infant industries and kills jobs.  If it were not for multinational corporations, who preach fallacious free trade to all for a better profit margin, protectionism would indisputably hold in its rightful place as protector of firms, consumes, and employees.

Of Catholics and Communists: The Christmas Spirit In Cuba (Gives Freedom to 2900 Prisoners)

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Pope_cropped

Pope Benedict XVI fosters big change in little Cuba

Cuba is about to meet with God.

Or at least his representative, the Pope.

Pope Benedict XVI has declared he will visit Cuba shortly before Easter in early 2012.  Approximately eighty-five percent of the country is Roman Catholic so the papal visit is like Santa Claus coming to Christmas Party.  The country is putting its best foot forward for the visit while going to great lengths to cover-up any blemishes.  But like teenage acne, several sins mars country’s image.  Their jails hold dozens of political prisoners and massive economic inequalities burden the population.

Nonetheless, the Cuban government is taking near unprecedented actions to legitimize itself; in the spirit of Christmas they have released  2900 prisoners on Christmas Eve.

The Cuban government’s motivations for this greatest of gifts is tainted.  The released seem to be marginal political prisoners whose initial arrests are unjustified.  Important prisoners have not been released.  American Alan Gross, serving 15 years for subversive CIA-backed activities, has remain imprisoned alongside critical political prisoners.  Cuba still expects to be congratulated for its humanitarianism.

It is like when my sister stole all the Christmas cookies; she expected to be congratulated upon returning the platter, despite every tasty gingerbread man missing at least one limb.

I speculate that Cuba is changing, for the better.  Rather than maintaining the fantasy that Cuba is a socialist paradise its new leader, President Raul Castro, is moving to better Cuba pragmatically.  Freeing these prisoners, whom never should have been behind bars in the first place, is one definite step towards legitimizing Cuba in the eyes of the international community.

Being legitimate is important; both Israel and Palestine are effectively countries, but Israel is de jure while Palestine is not.  That is why Israel is a partner in international trade, operates in global alliances, and has a high standard of living while Palestine is not even on the map.

Already key political figures, such as Pope Benedict XVI, are acknowledging the increasing credibility of Cuba, with publicized visits.

It will take time, however I believe Cuba is now in the opening stages of positive trajectory that ends with it being an integrated member of the international community.  There is corroborative evidence the country is changing for the better. Earlier this month the national banks launched a micro loan program to give every citizen financing to better his home and investments.  There is even an emerging middle class.

It will take hard work and many years, but change is coming.  The Christmas Spirit, inspiring both peace on earth and goodwill to all men, is one key ingredient to ending hardship in Cuba.  Maybe Castro will give even better gifts next Christmas, or at least steal fewer cookies.

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