- In very simple terms, the economy revolves around consumers. We buy goods and services to fill our needs and satisfy our wants as a society.
- We use money that we earn working at our jobs in the manufacturing industry or the service industry to pay for our goods and services.
- In a healthy economy, earned money circulates through a complex business structure, where it is distributed to the companies and workers within the structure, who in turn use the money to buy more goods and services.
- This earning and spending cycle not only supports our economic system, it creates the tax base for our government and the services that it provides.
- We have allowed the stock market and lobbyist to control our actions as politicians, business owners, and consumers, causing an imbalance in our economy.
- The stock market has pushed a “quarter to quarter” performance standard, jeopardizing the long term health of our companies for short term gratification.
- This has forced questionable accounting practices to raise perceived book value so shares can be sold for a higher stock price. (This is the equivalent of covering a bad foundation with paint and selling the property as a good investment.)
- Companies have resorted to cutting cost from anywhere possible to achieve better quarterly reports. One trend has been to outsource value added content to the lowest cost supplier (off shoring) – this trend will eventually lead to the economic collapse of our country.
“Great civilizations collapse when the haves vs. have-nots is too great” – Rich Dad Poor Dad-Robert T.Kiyosaki
- For Government – Causes a decreased tax basis, forcing the government to raise taxes on American companies and its citizens in order to support itself.
For Corporations – The short term effects are positive, as lower cost add to the bottom line, but long term effects to the economy as a whole and the health of the company suffers from loss of technology, emergence of foreign competition, loss of qualified supply chain, and loss of the consumer base.
- For Small companies – loss of income from sales, means the loss of competent workforce, less money for R&D, less investment, the shift to “survival mode” and eventual loss of the company creating a hole in the supply chain.
- For Individuals – The loss of jobs and lack of new job creation creates the meltdown of the local economic system. The community cannot support itself without consumers and ultimately will need to be supported by government programs such as temporary stimulus jobs, unemployment, and welfare.
By the end of the cycle, the government cannot survive without a strong tax basis and will continue to hobble along by deficit spending until the collapse of government itself.
- “This is a New World Economy” – Somewhat true, depending on the definition, but that does not mean that we give our industries away…we need to be responsible to our communities and avoid making decisions based solely on short term profits.
- “Manufacturing jobs get replaced with better service jobs”- Facts are we have over 13 million direct manufacturing jobs in the U.S. each of which supports up to 9 service/support workers… Losing manufacturing jobs = losing jobs!
- “The loss of these underperforming companies is a form of natural selection and good for the economy” – We are losing good companies that are being replaced by non domestic competitors as the result of unfair business conditions and regulations.
- “There is really nothing that I can do about it” – The U.S. was literally created by two men who created an alliance of citizens and business owners that eventually became congress, and the rest is history!*