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By Roz Rogoff

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About this blog: In January 2002 I started writing my own online "newspaper" titled "The San Ramon Observer." I reported on City Council meetings and other happenings in San Ramon. I tried to be objective in my coverage of meetings and events, and...  (More)

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Play it again, Barack

Uploaded: Sep 22, 2011
With much fanfare, President Obama announced his new Jobs Stimulus plan, only it sounds a lot like his old Jobs Stimulus plan. You know the one where he reduced taxes on working folks and provided Federal funding for infrastructure projects and to retain municipal employees like teachers and police. Well that was so-so to begin with, but it held off the brunt of the recession for about a year. This new one is the same old song and hardly anyone finds it tuneful anymore.

Obama is a decent guy and a smart guy, but he is looking at things from the wrong direction. He keeps moving to the right to appease Republicans, but he's still trying to persuade them to behave like Democrats. Obama should have thrown the gauntlet back at the Republicans who say that the rich deserve tax breaks because they provide jobs. OK if they are not paying more in taxes, then where are those jobs they are supposed to be providing?

The wealthy and big corporations are sitting on mounds of cash right now. Yes they have it and they could be spreading it around and pulling up this economy, but they are not. So Obama should tell the Republicans in Congress, get your rich friends and supporters to start hiring and paying better than minimum wage, and stop exporting jobs to China and India for cheap, unregulated labor, and behave like loyal American Citizens, and invest the money we are not taxing them in the American economy, or else we'll slap big tax hikes on these Scrooges.

That would get their attention and throw the ball back in their court. Why aren't the rich investing their large hoards of cash in startups, small businesses, hiring more American workers at better-than-subsistence wages? Because the economy is stuck in low and nobody is buying or spending money, except the rich who can afford to buy designer brand clothes and megawatt cars. The rest are shopping at Wal-Mart where they get their goods from China and Mexico.

We need to bring back the American middle-class. Almost 100 years ago Henry Ford did an amazing thing that launched the American worker into the middle-class. There was a small middle class then of merchants, business men, and educated professionals like doctors and lawyers, but the mainstream worker was at the bottom of the economic ladder. In 1913 Ford reduced his work day from nine hours to eight and increased his workers pay to $5 a day. Everyone thought he was crazy.

Ford introduced a new automobile and manufacturing concept in 1913, the Model T and the assembly line. In order for this to be successful he needed a reliable, sober workforce. He concluded he would get the best workers by paying them a decent, livable wage.

His competitors all laughed at this crazy idea. Other bosses were angry, believing Ford was spoiling his employees and theirs would start making the same demands. In fact Ford had so many job seekers wanting to work for the Ford Motor Company the police had to be called to chase them away.

Well we know from history that Ford's Model T became the hottest selling automobile of the early 20th Century. In two years Ford had doubled his sales, and even more amazing, his employees were buying Model T's too. Yes by paying his people more, they could afford to spend more. You see money doesn't trickle down, it floats up. Being trickled on doesn't sound very pleasant either, does it?

The concept of a middle-class workforce was started by Henry Ford in 1913, and when his competitors saw how effective it was, they followed suit. Now is the time for our corporations and Harvard MBA's to realize that if they want a consumer society in the USA to buy their products they have to make them here and pay their employees a decent wage.

The gap between rich and poor is growing. The American middle-class is declining while the Chinese and Indian middle-classes are growing. Multi-national corporations are making big money selling in the countries that benefit from manufacturing there. We need more of those same benefits here.

One giant corporation that's doing this successfully is Koch Industries. The Koch brothers have been painted as bad guys because of their financial support of right-wing Republican candidates. I may not like some of the candidates they support, but Koch Industries is doing exactly what Henry Ford did. They are keeping jobs in America and hiring people right now.

I'll probably get my head handed to me by my liberal relatives for defending the Koch brothers, but they are doing what I'm recommending other capitalists and industrialists should do, hiring American workers, paying them well and treating them with respect.

So Barack are you ready to start singing a different song or are you stuck in a grove like an old 78 rpm record? I've been blaming the Republicans for holding up the government, but now you have a chance to call their bluff. Give it a try. Call the Koch brothers and see if they will join with Warren Buffett and Howard Schultz and other CEOs to break the log jam of corporate capital and bring American industry back here where it belongs.

Comments

Posted by Harry, a resident of San Ramon,
on Sep 23, 2011 at 8:47 am

Roz- Obama's presidency is playing out much like one would expect from a person whose previous work experiance was "community organizer". I agree with you however that the tax rates on the uber wealthy need to be raised, but that will only provide a fraction of the revenue needed to bring the deficit down. Try incentivizing corporate tax rates based on the number of jobs a company has in the US as a % of it's total workforce. The more off shore jobs the higher the corporate tax. Raise Social Security taxes above the $106,000 level on income; all income should be taxed for social security and means test the payouts as well. Eliminate the requirement that self-employed "pay twice" on social security, they pay their contribution and then the "employer" contribution. That would free up discretionary income to tens of thousands of individuals. In fact lower tax rates for the self-employed and watch macro demand rise and unemployemtn start to drop.

Just a few thoughts on how to solve the economic woes that ail us:)


Posted by Roz Rogoff, the San Ramon Observer,
on Sep 23, 2011 at 10:51 am

Roz Rogoff is a registered user.

Great comments, Harry, and I agree with all of them. I'm worried about Social Security, because I depend on it to supplement my income. I don't know how many seniors could live entirely on it.

Perry isn't completely wrong about it being a Ponzi scheme. Forty years ago I didn't believe I'd get anything either. A Ponzi scheme takes money from one group of investors and uses it to pay off another group, so they think their investment is working and this attracts more investors to buy into it.

This is also called a pyramid scheme, where the bottom level pays off the upper levels until the pyramid flips upside down and there are more investors getting money than there are paying in. That's what's happening to Social Security now. With older people living longer and fewer younger people with jobs, there's more money going out than coming in.

Ronald Reagan saved SS for 50 years by raising the age for full Social Security from 65 to 67 in two month increments over a 15 year period. My full SS didn't kick in until I turned 65 and 10 months.

People are healthier and living longer now (blame Medicare!), so the solution is to raise the age for early SS from 62 to 65 and full SS from 67 to 69 or 70, and remove the salary cap so older, higher paid employees would pay more into it. I would keep the employer cap on it though to keep from cutting into corporate capital. This would probably save Social Security for everyone alive today, but a new plan would have to be developed for the next Century.

I doubt President Obama could accomplish this, and Perry and the other right-wing Republican candidates would take any excuse to dump Social Security, so where's Ronald Reagan when we need him!

Roz




Posted by Westerner, a resident of San Ramon,
on Sep 23, 2011 at 12:00 pm

Obama is relying too much on his economic advisers who still believe in Kensian Economics. If it does not work, just try it again. What he needs to do is bring in some new economic advisers. Also, I believe that the Volkswagen Beetle was the best selling automobile of the 20th century, not the Model T.


Posted by Roz Rogoff, the San Ramon Observer,
on Sep 23, 2011 at 12:58 pm

Roz Rogoff is a registered user.

Westerner,

I didn't say the Model T was the best selling automobile of all time. It was the best selling automobile from 1915 to about 1920. By the 1920s there were many better cars available and the Model T dropped in popularity until it was replaced in 1927 by the Model A. I owned a 1931 Model A back in the early '70's. That was a great car.


Posted by Waiting Business Owner, a resident of San Ramon,
on Sep 23, 2011 at 1:11 pm

The US consumer is stuck in a prolonged hangover from the over spending driven by the housing bubble. Corporations won't spend without signs of demand, and there isn't any. This is the time in the economic cycle when Governments should step in with public works projects. Unfortunately our Gov't too is tapped-out and many of us suspect bloated non-essential spending has yet to be cleaned up. What has Obama been focused on? A healthcare bill that will likely raise costs for our #1 job creators - small businesses. Absolutely the wrong idea to help spur a recovery (Personally I've put my own small business plans on hold due to this unknown cost). The best idea I've heard is Obama needs a gov't sponsored program that allows people to swap out their higher rate mortgages for lower ones, even if they are under water on value. This would free-up tons of cash for the middle class who want to stay in their homes and can if they could just get a refinance. Fix that tumor on consumer growth and I say you are more than half way to recovery. But apparently he's too busy campaigning.


Posted by Roz Rogoff, the San Ramon Observer,
on Sep 23, 2011 at 2:10 pm

Roz Rogoff is a registered user.

For the past year and the next year, Republicans in Congress want only one thing and that's to get rid of Obama in 2012. Obama wants only one thing, and that's to be reelected in 2012. So that's why nothing is getting done in Washington.

I'd consider voting for a Republican next year but they have to come up with better candidates than Perry or Bachmann. The field is so bad that I'd even consider voting for that weasel Romney. He'll say whatever it takes to get nominated, but he wasn't a bad Governor in Massachusetts.


Posted by mloliver, a resident of San Ramon,
on Sep 23, 2011 at 6:57 pm

mloliver is a registered user.

Well, Roz, it looks like you hit a "hot" button with this blog. I have only one addition to the above comments. A President is only as successful as his ability to select advisors who are smarter and more competent in their own areas of expertise than he/she is and who can make him/her look astute and competent. President Obama appears to have surrounded himself with "yes men" and folks to whom he owed political favors. Though I didn't vote for him, I had hoped he would bring a new direction to the country. I didn't expect that direction to be down.

MLO


Posted by regular reader, a resident of San Ramon,
on Sep 25, 2011 at 10:54 pm

The real problem is american worker has gotten used to luxuries which workers world over do not have or will never get. That's why jobs are flying overseas. One after another. First manufacturing and now even service sector. You cannot stop them! We constantly have to figure out new ways of creating jobs and it is a matter of time some Asian or south american country grabs them. China, India, Brazil, Ireland.. the list goes on with the types of jobs they grabbed from us

What luxuries you might ask? Health insurance, social security, workers comp/protection laws, unionization, medicare. On top of these, we have programs to support poor. These poor once they turn poor, try to stay that way on paper even though they make money in cash and the society bears them for the rest of their life. None of these countries take care of their poor or protect their workers as well as our society does.

We are paying for what good we made for ourselves.


Posted by regular reader, a resident of San Ramon,
on Sep 25, 2011 at 11:00 pm

Regarding Obama or Bush or Clinton, it is not really presidents or their policies that destroyed or created the jobs. Economy flows like a river. Good rains, good flow. No rains no flow.

It is not Obama's fault that economy didn't turn around in 2years. It wasn't Clinton's greatness that he had budget surplus for so many years. Economy was flying during his time and he had little to do with any of those things.

Keynesian or trickle down economics theories are only made to work for the corporate lobbyists who support, fund and control the politicians to make them work for their own benefit. Solar companies and Solyndra founders reaped from the so call stimulus. Military contractors, energy companies and defense equipment manufacturers won during Bush time.

The loser is the common man. Falling every time for ideologies proposed by these policies. Keynesian or trickle down. They are the same. It benefits those who are lobbying. Not the common man.


Posted by regular reader, a resident of San Ramon,
on Sep 25, 2011 at 11:09 pm

Roz

We should have never elected Obama. He is incapable. His charisma was created and thrusted upon us by media. He is not a good negotiator or a speaker. He is so annoying to listen to with those prompters. For once, come out of that hole and speak your heart out i say to the president.

If he was as capable as Reagan, he could have negotiated his way through this mucky congress. He doesn't even know what he has to say as stump speech on road. He is using the wrong words and his ideology to pull of things that he knows will not happen. he is not motivated to solve the job crisis we have currently. he wants to win second term thats it. Blame the rich for everything. Will the rich be able to pay off 14 trillion debt. NO way!! They will lobby their wealth off before they pay off that debt.

Problem solver will work with congress, because that is what people of this country gave the president. A republican majority in 2010. He is walking away from the problem. That won't help. in the end he will be punished for being the leader. Those in congress cannot be singled out and for their re-election, they are fine since their constituents are probably republican as well!


Posted by Roz Rogoff, the San Ramon Observer,
on Sep 25, 2011 at 11:39 pm

Roz Rogoff is a registered user.

Interesting comments, Regular Reader. I agree with you on Obama. Ironically if he's reelected things will probably get better because he'll be a lame duck. The Republican Congress won't have to oppose everything he tries regardless of what it does to the economy.

Instead they will be scurrying around to generate some real improvements so they can take credit for them in the next election. It's too bad that our government has become so manipulated and manipulatable, but the pendulum just swings back and forth.

Roz


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