Simple Math and Basic Economics

I am not a politician or do I hold an MBA or other fancy degree. I am a man that works for a living and does whatever he has to do to get ahead. From my perspective fixing our counties economic mess is relatively straight forward. It comes down to simple math and basic economics.

Our country used to lead the world in manufacturing, there were plenty of jobs and the economy flourished. Yes a lot of those jobs are what some people consider menial assembly line work, but they were jobs. There are many people that would be happy with that type of work and would rather do that than collect unemployment or welfare. These jobs provide a steady paycheck and benefits to the workers. Unfortunately we manufacture very little in America anymore. Most of the manufacturing has moved to other countries where it is cheaper to operate. Many people blame the greedy large businesses and corporations for this. I do not and I will explain why.

Businesses and Corporations (both large and small) exist for one reason and one reason only, to make money. The leaders of these companies have a job. Their job is to manage that business to make as much profit as they can and pass the dividends onto the shareholders. That’s why people invest in stocks. If you have a 401k type retirement plan your money is invested in the stock market and your retirement hinges on these companies making as large a profit as possible. If a company has a chance to increase their profit margin by scaling back or moving, they are going to do just that. I myself have owned small businesses. The principle is the same. When a business was not making money I was forced to scale back or shut down. Now let’s get back to the original point of this article.

We need to do whatever it takes to bring manufacturing back to this country. If that includes corporate tax breaks to companies that provide jobs, so be it. Yes this is trickle-down economics, but it makes sense. If we give a tax break to a business to open a factory in a high unemployment area, I say we do it. Yes the businesses profit margin goes up (that is what they are in business to do), but they also create jobs and the higher profit margin creates long term stability for the company. Yes our government gets less money from that business, but we still create our tax revenue. Say this factory hires 600 employees. That is now 600 people that no longer have to collect benefits from the government and are now paying taxes. Less going out and more coming in. Then there is the knock on effect to other business in the local area of this factory. The more employed people in an area the more money available to spend in local small businesses. It’s a win win situation.

The point of this article and my message to our elected officials is simple. Do whatever it takes to bring manufacturing back to this country. It’s simple math and basic economics.