Real Wealth Society

Wednesday, April 05, 2006

I’ve been thinking about promises By Fred Cederholm

Column for on/after Apr 02nd

I’ve been thinking about promises. Actually I’ve been thinking about job security, France, the American experience, planes, cars, and boats. Changes are coming; the drama is unfolding before us scene by scene. We can foresee the outcome, we know what must happen, but we think there are alternatives available to avoid what we fear - because we are in denial.

You see when competition lowers the market price of goods and services to consumers, those decreases in price must be more than matched by reductions in costs. If that does not occur, the companies/businesses cannot continue to function; and they will ultimately cease to exist. Some substitutions can be made in raw materials – up to a point, but there are far more options available when it comes to the costs of labor. This is particularly true when the entire world has become the workplace. It is so easy to re-deploy production/jobs to those locales with the cheaper/cheapest workforces. Or… is it? To preserve a status quo for the existing “employed” and keep jobs where they are, concessions are sought. Nobody likes to give up what they have – particularly if what they “have” is seen as a hard fought entitlement by them.

Scenes from this global drama keep unfolding in different nations (or in different industry segments), but they are all related. France became the background for the most recent scene. French youth took to the streets to oppose the finalization of the February 9th proposal to eliminate them from the protections/promises enjoyed by the wider/older French work force.

Guarantees of a 35 hour work week, 5 weeks (plus) in paid vacations and holidays, a job for life with huge mandatory severance packages, and limited windows for terminations have rendered the French uncompetitive in the new global workplace. Adjustments are required by the entire work force, but PM de Villepin’s government’s proposal dumped all the changes on those under age 26. The young workers of France responded with a very loud – “NON!!!”

Throughout history it has been the young, the poor, and the “next” generation who seem to bear the brunt of the “solutions” to contemporary problems. It is “they” who fight the wars and/or are asked to pick up the economic slack. It is “they” who are delegated to face the costs which historically follow the aftermath of bad decisions. This is neither the high road nor low road, but it has proven to be the continued path of least resistance - for how much longer?

Elected politicos pay only mute lip service to Uncle $ugar’s snowballing debt/deficits and our job losses to the wage slavery of a so-called rising third world. All the while… they champion the longer range benefits of “free” trade, neo-con nation building, and personal debt financed consumption. Hello??? The American experience (and it successes) making US/us the goal/standard for the planet rests upon a level playing field, a Constitution with a functioning Bill of Rights, and a strong/growing Middle Class. This triumvirate of our strengths is not only under siege from without; but more tragically, it is under attack from within.

Some 30 years ago, our airline industry stalled under the turbulence of fare competition and escalating fuel costs; the “solution” was getting wage/benefit concessions from employees in return for the promise of future retirement benefits and pensions. Once again, they are in trouble for similar factors; but this time, they are weighed down because the promised future benefit obligations are also coming due. We are seeing this same scene being re-played in the auto industry. Similarly, our nuts-and-bolts/textile/electronics manufacturers have all but already surrendered to the regions of the Pacific Rim and other no-benefit, low wage locations.

Moving on from planes and cars to boats… we are told that that the rising tide of the new globalism raises all ships; that “free trade” and “free competition” will solve everything and will benefit US/us in the long run. That might be true were OUR “ships” not hard-anchored to the bottom and tethered by the finite chains of promised wages, benefits, and future retirement obligations. These constraints will cause our boats to swamp in the rising tide. Will a round of further concessions, or defaults on contractual obligations via corporate bankruptcies really be the fix this time? I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2006 Questions, Inc. All rights reserved

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