June 10, 2005
PRODUCTION TIMES PRICE
By John Q. Pridger
"Production times price" equals income in a real economy.
If a farmer isn't able to sell his produce at a price that enables him
to return to the field the following year, somebody is going to end up
going hungry. If a fisherman cannot sell his fish for at least a living
wage, his boat will end up rotting on the shore. If General Motors
can't sell cars at a tidy markup, neither the autoworkers nor
stockholders will be happy campers.
Production times Price is the key to all productive business
activities. It has alway been that way, and always will be. But,
nonetheless, things have changed radically in America. The equation has
been thrown out of balance and the people into confusion. The
production-consumption game only works to everybody's benefit within a
closed economy -- i.e., one in which the producer and the consumer are
on the same team (are, in fact, one in the same), and where it is
desirable for industrial corporations to pay their workers well enough
to consume their own production so both the workers and stockholders
remain happy.
The farmers were sold out over half a century ago. During the last
quarter century the industrial labor force has gradually been sold out.
Today white collar and technical workers are being sold out too. All
the while, everybody is being told they are going up the river to a
brighter, more prosperous future. Cheap food and cheap consumer goods
have been the bait. We took it, hook, line, and sinker, and hardly
anybody yet realizes that, we've been sold down the river. But we have
been.
Today, the "production times price" formula pays Chinese workers what
they might
consider a decent living wage. It pays the corporate hierarchies and
stockholders, but not the American worker. He gets his benefits at the
Wal-Mart check-out counter -- if he's lucky enough to have any money to
spend.
When the production facilities providing all the essential goodies are
on the other side of the world "production times price" is no longer a
relevant economic equation for anybody other than the corporations that
profit from low wage labor.
Today we hear that we have transcended real economics and are in what
is called a "service" and even an "information" economy. Services and
information are valuable enough, of course, but there's not one person
in three billion who can subsist on a strict diet of service or
information alone. Nobody can eat them, live in either, or drive them
down the road, or put them in their fuel tank.
As always, those lucky enough to have good paying jobs in service and
information fields have to depend on others to provide the basics of
life. They need food and all of the things required to make life
bearable or enjoyable. Somebody else has to produce those things for
them. Without food or shelter, or the wherewithal to get to work,
service and information jobs are about as promising as snowballs lined
up on the crest of a Saharan sand dune.
To listen to the Washington brain trust, and the economists and others
who pull their strings and create our current excuse for national
industrial and economic policy, one would think that before long
everybody in America will be rolling in money peddling services and
information. It's the wave of the future, they say -- if, for example,
we can get CAFTA passed, or China to revalue the Yuan.
They would have us trust and believe that Mexicans, Chinese, Koreans,
Japanese, Indians, Bangladeshis, and Indonesians are going to fulfill
our material needs from now on. We Americans are all going to be
service and information people.
Well, so far, so good. America is still an amazingly prosperous place
(at least if you ignore the mushrooming public and private debt, not to
mention the trade deficit). Two or three generations of Americans have
grown to adulthood without ever knowing what hunger is. Most
are over weight. America believes it's so rich that it can continue to
be the most incredibly wasteful nation in the history of
civilization -- and be that way in perpetuity. Even the poorest classes
among us engage in conspicuous over-consumption and waste. Our solid
waste landfills are the envy of the world.
What's more, our leaders continue to think that we can make the rest of
the world just as spectacularly materialistic, prosperous, and wasteful
as we are. How? By turning the our collective national and global
future over to the stewardship of giant multi-national corporations.
They, with the license to exploit the earth through the global free
market system, are the key to universal prosperity and happiness.
The terror menace now preoccupying our leadership is nothing compared
to what actually faces us as a nation and global civilization.