By David Glenn Cox
In the last century Henry Ford became the richest man in the world by building automobiles. He took a couple of hundred dollars in parts and built a six-hundred-dollar automobile. Duesenberg took a thousand dollars in parts and built a ten-thousand-dollar automobile. It doesn’t cost that much more to build a Lincoln than it does to build a Ford and the difference is pure profit. You take eighty dollars in parts and build an X-box and when the market becomes saturated you build a new X-box. All you need is a building with some semi-skilled workers in the Asian mainland and the money rolls in.
In the old manufacturing economy, you had worries about labor strife, environmental laws and government intervention but on the Asian mainland that’s as obsolete as a Model T. It’s almost a quaint the to think about. A cellphone factory was using a toxic chemical to clean the glass before installation. They could have used alcohol, but it took too long to dry but the toxic chemical made people sick and only a few workers actually died. The difference in drying time between the alcohol and the solvent was seconds.
I’m not going to discuss the merits or demerits of Capitalism. Only to say Capitalism works best when the boss decides how long the shifts are. When the boss decides what kind of solvent to use. When the boss decides a fair wage. The profits from manufacturing are tremendous, you are literally taking ten dollars and making it into a hundred dollars. That’s real money that is really in your economy. And making more every day. The huge automated car washes in your town wash your car for ten or fifteen bucks. Their cost to wash your car is seven or ten bucks. They’re lucky to make thirty percent on a sale and on days when it rains or snows, they make nothing.
But this is in the other economy the one you read about in school. We’ve all played Monopoly and know that Pacific Ave might cost $300 but its scarcity being the only one giving you a monopoly is ten times that amount. Like a pizza party, one large pizza, three or four people and there is plenty for everybody add in a couple more folks and every eye will be on that last piece of pizza.
How many of you remember the Great Depression of 2008? It was in all the papers. The economy tanked due to a massive over speculation. Twelve million homes were foreclosed, and millions of Americans were forced into the streets. General Motors went bankrupt and was freed from its pension liabilities and their toxic waste sites became the taxpayer’s problem. It was like going to court and getting laid.
Through the Federal Reserve (Don’t get me started.) and the Republican administration of Barack Obama, they initiated Quantitative Easing. Interest rates would be kept artificially low. Member banks could borrow one million dollars for as little as $1,500. NOT YOU but member banks. So, you take half of your million dollars, and you buy treasury notes paying 3%. You take the other half and speculate on Wall Street, and a brain-dead moron couldn’t lose. Because interest rates are artificially low it’s pointless to park money in a bank. And because there are only so many slices of pizza on Wall Street, their value increases because even fewer slices have pepperoni and onions.
When I was a kid if you went to Detroit, you’d see the General Motors building or in my native Chicago the Sears Tower. Today the biggest building in town is usually the bank. Speculation on a Chinese cellphone companies doesn’t bring one dollar to main street. It’s a private economy and you’re not invited. But you don’t mind if they use your credit, do you? We all know from Monopoly that as the game progresses the few remaining properties increase in value until they’re gone. After that you’re locked out of opportunities…a private economy. And, as we all know the game can stagnate at this point, players going around the board paying rent back and forth to each other. You know what the game needs at this point? Deregulation! The ability to forego those street repairs and luxury taxes. It doesn’t generate one dime for main street, but it sure helps the bottom line in the private economy.
Remember the Great Depression thing I was telling you about? The banks were stuck with all those houses all those homeless people used to live in. To backstop the banks, the homes were auctioned off for pennies on the dollar to banks and private investors for nothing down. Homeowners begging banks, filling out government forms and jumping through hoops for a simple mortgage reduction! But in the private economy…here’s the paperwork, pay me next time you see me! The banks were bankrolled and proudly boasted of repaying all their debts to Uncle Sam with the FREE MONEY they earned. After spending billions, the net benefit to the average American on the street was zero. The private economy will argue, “We kept the sky from falling!”
But you caused it to fall and then profited by it looting tens of millions of American families.
Remember that brain dead moron? Now Imagine he’s orange and says things like, “Trade Wars are easy to win!” and “we’re very close to a trade deal.” If you knew one hour before he opened his big mouth you could become very, very rich. “I think we might need to raise tariffs on the European Union.” Did you hear that? Every time a cash register rings, an angel gets their wings. In the private economy the investor gets a condo in Hilton Head or a new Mercedes.
The big orange moron complains about the Federal Reserve raising interest rates, a whole quarter of a percent. “Waah! We want more free money!” We have hundreds of millions of dollars invested in Asian factories, and we pay no taxes! But Mediterranean and Baltic are gone and so are Boardwalk and Park Place and the private economy has no one left to sell to but each other.
“The liberty of a democracy is not safe if the people tolerated the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.”
― Franklin D. Roosevelt