Town Square

Driving the Hippo

Original post made by Tom Cushing, Danville, on Sep 14, 2011

When I was a cub employee at a Fortune 50 company on the Other Coast, a mentor once told me: “Sprout, this company is like a huge hippopotamus, floating slowly down a lazy tropical river – there are a thousand ants on his back, and every one of them thinks he’s driving.”

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Posted by Dirk
a resident of Alamo
on Sep 15, 2011 at 8:05 am

You don't seem to have a flood of suggestions coming in on this one, Tom. I suspect that is because the problem you have described is just too tough. We are in bad trouble. If I knew how to steer a hippo, I would happily tell you!

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Posted by spcwt
a resident of Danville
on Sep 15, 2011 at 12:17 pm


Thanks for the civics lesson. But once again, you’ve misrepresented the facts.

You say President Obama has been, “maintaining tax and interest rates low.” That’s laughable, considering that the U.S. corporate tax rate (at 35%) is the highest in the world (save Japan). Most European corporate tax rates are around 25% to 30%. China, Korea, Singapore, etc., all have corporate tax rates around 20%. If you move jobs to those countries, you can often get special tax holidays, paying less than 5% in some cases.

In addition, the U.S. taxes U.S. companies on their worldwide income, while our European and Asian competitors generally tax only profits that are earned within their borders. This puts U.S. companies at a huge tax cost disadvantage relative to non-U.S. companies.

Your point about Obama keeping “interest rates low” is likewise incorrect. President Obama doesn’t control interest rates, the Federal Reserve does. It is illegal for the President to apply political pressure on the Federal Reserve with respect to interest rates.

As for fiscal policy, Obama’s centerpiece (besides his obsession with wealth redistribution) is initiatives designed to displace fossil fuels in favor of "green energy," at much higher cost. One can only hope this leads to better results than the $530 billion the U.S. government recently lost on its investment in (now bankrupt) Solyndra.

Perhaps you might be able to explain how forcing American businesses to use high-cost solar power will lead to U.S. jobs? Doesn’t manufacturing largely gravitate to where costs, such as energy, are the cheapest? Wouldn’t high-cost solar power put U.S. manufacturing businesses at a cost disadvantage relative to their foreign competitors?

If we wanted to increase U.S. manufacturing jobs, wouldn’t it make sense to lower the cost of energy? The U.S. has by far the largest coal reserves in the world (237 billion tons) and enough natural gas to last centuries, which can produce electricity at a fraction of the cost of solar. Why are we betting the farm on unproven and costly renewable energy?

One economic “lever” you failed to mention is the impact that government regulation has on U.S. businesses. We enacted a health-care plan whose unimaginable complexity and cost can only weigh negatively on every private-sector employer. There is uncertainty about the costs of pending EPA regulations concerning green house gas emissions. We have a Federal government willing to sacrifice jobs in order to punish Boeing for building a plant in South Carolina that would employ non-union workers. etc.

As for your “hippo in a river” analogy, it seems a little outdated. Most economists agree that America’s economy is interdependent on the world economy.

Perhaps the better analogy is the hippo is the WORLD economy and the ants are all of us workers, businesses, and governments just trying to hold on. No one’s driving the hippo, least of all the U.S. government. All any of us can do is try to get on top of the hippo, away from the river, so we don’t get washed away.

In the past few decades, however, instead of trying to “stay on top,” Americans have been less concerned about U.S. jobs than other priorities. These priorities include protecting the environment, public health, fair labor practices, anti-discrimination laws, consumer protections, anti-trust laws, anti-bribery and corruption laws, SEC disclosure laws, a social safety net, etc.

All of these priorities have costs. These costs put U.S. companies at a competitive disadvantage to foreign businesses that are not burdened by such costs. As consumers generally buy goods & services primarily based on the lowest price rather than ethical considerations, high cost U.S. companies began losing customers to their low-cost foreign competitors.

In order to stay in business, U.S. businesses have been forced to move much of their manufacturing and other business operations (i.e. middle class jobs) to those low cost countries. Politicians love to demonize “big business” in order to obtain the votes of the uninformed and the gullible. But if U.S. businesses didn’t outsource to low cost countries, then most would soon go bust.

We can’t wish this away. Globalization is here and it’s not going away. We can no longer pretend that American values are cost free. All we can do is adapt.

A good example is President Obama’s decision last week to overrule the EPA on ozone emissions. The American Lung Association says that lowering ozone levels to .060 ppm would save 12,000 lives per year. But this would put 85% of US counties out of compliance with EPA standards. As such, businesses would basically have to shelve any expansion plans, thus hampering job growth.

Environmentalists are furious that President Obama “sided with polluters” in opposing strict EPA standards for ozone pollution. They called it “a slap in the face” a “stab in the back,” and accuse Obama of “reaching into the George W. Bush playbook.” They urge you to call the White House and “give him a piece of your mind.”

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On this issue, Obama chose jobs over health, essentially giving a death sentence to 12,000 Americans per year. These are tough choices, but if we are serious about creating U.S. jobs we can no longer ignore that competing priorities have costs.

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Posted by spcwt
a resident of Danville
on Sep 15, 2011 at 12:47 pm

Correction: It was $530 million (not billion) that the U.S. govt. invested in Solyndra.