LESSONS LEARNED #52: “The political right is usually right.” -Old Pithy

Posted by PITHOCRATES - February 10th, 2011

The Right Knows Business.  The Left Doesn’t.

Creating jobs is important.  Without jobs no one has any money.  No one can buy anything.  And the government can’t tax what we don’t have.  So jobs are important.  To those on the right.  As well as on the left.

Now critics of the Right claim that those on the right only care about profits.  Not people.  Whereas those on the left claim they care about people.  Not profits.  In some sense this is true.  Those on the right tend to understand business.  They know a business can only survive by making a profit.  And only a business that stays in business can create jobs.  The Right understands this.

Those on the left, on the other hand, don’t really understand business.  They don’t understand incentive.  Only duty.  And sacrifice.  For others, that is.  Not them.  They don’t think a business should make a profit.  That they should give any excess revenue to their workers.  Or to the government.  In other words, business owners, they feel, should serve others.  They should work and sacrifice so others may live better.  Workers shouldn’t have to work hard or sacrifice.  But owners should.

Protecting an Industry only Delays the Inevitable

Some great entrepreneurs created some great businesses.  Made life better for all of us.  Provided good, inexpensive clothing.  Made high quality steel cheaper and more plentiful than any other nation.  Built cars than the average working man could afford.  These titans of industry built this nation.  Because of them we surpassed all other nations and became the most powerful economic engine of the world.  Life was good.  There were lots of jobs.  Lots of stuff.  And lots of homes filled with the most modern stuff available.  America was the place to be.  People waited in line to immigrate to our shores.

Unfortunately, big piles of money attract a lot of people.  And not just workers begging to get a job in these new industries.  No.  It was people looking out for the workers.  Labor unions organized workers.  To get a ‘decent’ wage.  And better working conditions.  Cost of labor went up.  Which made the price of what they sold go up.  Imports started to look more attractive.  So government stepped in and slapped tariffs on those.  To force Americans to pay the higher price for our domestic goods.  Then they legislated ways to further ‘protect’ these American industries.  And how did that all work?

Well, take a look at the American textile, steel and automobile industries.  The Left overreached.  And killed these industries.  They’re no longer the dominate industries they once were.  We have no textile industry to speak of anymore.  The once big steel towns look more like ghost towns.  And the government had to bail out 2 of the Big Three auto makers.  Those generous union contracts added thousands to the price of a car.  Allowing Toyota to take over the top auto manufacturer spot from GM.  By providing the same or better quality for less.

Bad Jobs Today may have been Good Jobs Yesterday

That’s what happens when you protect an industry.  That industry has no incentive to innovate.  To be better.  To be more efficient.  To be more productive.  To give the consumer what they want.  Because when the consumer doesn’t have a choice, where else is the consumer going to go?  So protected industries rest on their laurels.  While others innovate.  And became better.

Combine that with union wages and benefits that keep getting higher and higher and what do you get?  Inferior products that cost more than the higher quality imports.  The Big Three sold crap during the Seventies.  Opened the door to the Japanese.  And a few decades later they took over the top spot from GM.  No matter how much we tried to protect our domestic automotive industry.

Say what you want about life before labor unions but the fact remains that we had more jobs.  And as dangerous or as dirty as those jobs were, people still came to this country by the thousands to get those jobs.  People were falling off the Golden Gate Bridge during construction.  Did that dissuade people from wanting to work on that bridge?  No.  There was a shanty town with people waiting for others to fall and die so they could get their job.  Sure, by today’s standards, these were some pretty nasty jobs.  But not then.  In fact, they were pretty damn good jobs.  Compared to what else was out there.  How can we say this?  Because they chose those jobs over the other jobs out there.

The Greed of the Left Killed the Golden Goose. 

Henry Ford had a bold idea.  He was going to mass produce a car so he could sell it at a price that the working man could afford.  To get the best people in his plants he offered $5 per day.  Twice what other manufacturing jobs were offering.  No union made him do this.  The market did.  He got the best mechanics and the lowest turnover rates.  Other businesses had to follow suit to retain their best people.  And working conditions improved.  Because of the greed of these business owners.

Contrast that to today where union contracts force high wage and benefit packages onto a manufacturer.  And contractual obligations that make it near impossible to get rid of excess workers during times of weak demand.  Using the Ford model, Detroit became the Motor City.  An economic dynamo.  Under the union model, GM and Chrysler went bankrupt.  And Detroit is considering bulldozing sparsely populated neighborhoods into farmland.

When profit wasn’t a dirty word businesses prospered and provided jobs.  When the left came in to protect the little guy from those greedy business owners they made it difficult to make a profit.  Business struggled to compete with their competition.  And when they couldn’t, they shuttered operations.  Jobs disappeared.  The greed of the left to protect against the greed of the right killed the golden goose.  And all those good manufacturing jobs grew legs and left the country.  Where they’re now providing a better life for other workers.  Like they once did here.

Greed is a Hell of an Incentive

The Right understands business.  The Left doesn’t.  But it has never stopped them from trying to tell businesses how they should conduct business.  And the more they get involved, the more business suffers.  The more jobs we lose.  And the less competitive we get as a nation.

FDR tried for a decade to end the Great Depression.  Nothing he did worked.  When World War II came along, something had to change.  There was a crisis.  We needed to provide war material to our allies.  So the FDR administration told American industry to do what they do best.  They let them make profits.  Restored incentive.  And the government said they would interfere no more.  Well, that unleashed the floodgates.  Workers were hired and factories worked round the clock.  Businesses made profits that let them innovate.  Improve productivity.  Trucks, planes, boats, weapons, etc., poured out of American factories.  The Allies armies were mechanized.  Jeeps and trucks moved our armies.  While the Nazis used horses to pull their artillery and supplies.  The Arsenal of Democracy, the Detroit dynamo of industry, won World War II.  And men like Henry Ford made it all possible.  Because they were greedy.

The post-war era was one of the most prosperous times in our nation.  There were jobs for everyone.  And a better life was there for the taking.  Times would stay good until the Left ushered in their Big Government programs beginning in the Sixties.  To protect the little guy.  And it’s been downhill ever since (with a brief respite during the Reagan Eighties).

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