Obama’s forlorn pipe dream – jobs will return back to the US

January 26, 2012

Last night, in the State of the Union address, President Obama mentioned his blueprint for a new vision for America begins with manufacturing.

He talked about many things – the revival of the American auto industry and said that what is happening in Detroit can happen anywhere and everywhere in America – he even went to cite since the end of 2009, business investment has grown by a rate of 18 percent, and exports have increased by 32 percent — for a total of $2 trillion. That’s great news for American manufacturing, which has added 334,000 jobs in the past two years. To achieve that vision, the President will focused on three key themes.

Tax reform. Obama told Congress that the U.S. needs to push for comprehensive corporate tax reform. “It is time to stop rewarding businesses that ship jobs overseas,” he said. “And start rewarding companies that create jobs right here in America.” Right now, a company that packs up its factories and relocates production to another country can write off that expense from its taxes. The President said that practice should end.

I don’t deny what Obama seems to be suggesting make perfect sense – if only you didn’t realize that fledging manufacturing output is the least of the problems plaguing a beleaguered American economy.

The main problem why America is fucked has ABSOLUTELY NOTHING TO DO WITH CHINA AND EVERYTHING TO DO WITH THE STATE OF AFFAIRS IN THE US. America is running the biggest deficit in the history of humanity – to inject a sense of scale into the whole debate, America currently runs a deficit with over 88 countries – to exacerbate matters savings in the US is virtually non –existent. That means interest rates and inflation will remain high and both factors will continue to militate against economic recovery. This in a nutshell is the problem that America faces today, tomorrow and probably ten or twenty years down the line!

Even if Obama proposes a 20 percent income tax credit for companies that bring jobs back to the United States – this is hardly going to make a dent on the already frenetic pace of manufacturing transplants to China – three reasons will ensure China’s primacy as the world’s preferred manufacturing sweat shop. Firstly, the allure of a cheap and non unionized workforce. Secondly, Lackadaisical enforcement of environmental laws and regulations that renders the cost of manufacturing dead cheap. And finally, many of the goods currently produced in China are not only consumed by the US and EU, but rather China itself – combine all these three factors together and what China offers to the world is really something that is hard, if not impossible to top.

As for Obama magic bullet, all I can say is – both he and his advisors clearly suffer from a lack of appreciation for manufacturing strategy and basic mathematics. While what he holds out clearly has all the set pieces of a prescriptive cure, it fails on two counts.

No American firm is going back to relocate back to the US no matter what is on offer. The hard facts about doing businesses in America can at best be described as dismal. There is no longer any advantage in starting manufacturing enterprises in the US. Land is prohibitively expensive, so is infrastructural capital investments and as for compliance requirements that really only works to increase overall cost – added to this problem is my personal belief, the average US worker doesn’t even know the difference between a monkey wrench from a dildo, so how are they going to get a whole generation of Americans who have never ever worked in a production line to even start producing stuff that all of us are supposed to buy is beyond me.

No. Obama dream of revivifying the US economy makes as much sense as throwing out cannon balls to propel a boat forward. I am afraid reality offers a much more sobering outlook – these days, the only thing preventing the US from spiraling into a third world banana republic is its weather. But give it enough time, opportunity and stupid politicians, this may come sooner than later.

Darkness 2012—————————————————————————————————

“The serious men amongst us always say: be careful what you decide to throw away and set aside. We live in a world full of implications and consequences. Today if you look around you, even in Parliament, none of those million dollar ministars can speak properly even with cue cards – that is because Lee Kuan Yew and his gang thought it was a good idea to chuck out the Westminster model. They wanted a kwai kwai Parliament, so now you know why Parliamentary debates are really not much better than sand box politics that you will find in a kindergarden. This is what happens when you throw away something that is valuable, you lose it. The same goes for agriculture. Singapore had a thriving research core competencies in agriculture. One day Philip Yeo declared like Stalin, “There is no agriculture in Singapore.” Today, Singapore does not even have the basic capabilities to ensure food security in a sustainable manner. We can’t even do simple things. Instead we have to rely on the Philipino’s and Malaysians to get advanced tissue strains of oil palm. Gentlemen, it would take us at least 20 years to redevelop the core competencies that we once had. Again this is what happens when stupid people decide to throw good things away. Now the Americans are telling the whole world, they will somehow be able to reclaim back their manufacturing prowess by bringing back jobs to the US. But what they have not asked themselves is a fundamental question: are they any Americans left in the US, who know how to build stuff? Again this is what happens when stupid people decide to throw away a good thing. Life I do not think is so simple Gentlemen.”

Darkness 2012 (this article is written with extensive inputs from the ASDF)

Meeting with the ASDF (the think tank of the Brotherhood) on board the deep space mineral cruiser KDD Tally Manakhan off the Saracenian neutral zone of Ismuzth Bilbao – The Brotherhood Press 2012

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