WE WERE JUST WONDERING

It’s Just the Way We Roll

As we closed with yesterday, public companies report to their stockholders who have invested monies with the company in the hopes of a good financial return; and, those that are private need to generate retained earnings so that they can grow and expand and with that in mind, both need to be mindful of their expenses of which labor and benefits represents a huge chunk of money.

So, if you were a business person, would you hire more Americans, pay increased salaries and benefits and then pass along those costs in the form of increased prices to the consumer; or, would you decide not to hire Americans and keep your price low and competitive?  It is a tough decision to make but remaining competitive is the only way that provides you with the opportunity to one day hire more people.  Of course, if Americans are not buying, then companies can also sell in other parts of the world where the residents are buying. China is a good example of this and has had an increasing economy since 2008. 

So, if you want to sell in China would you manufacture here and ship there or would you manufacture there and ship there?  While this may be a difficult question to answer in light of our high unemployment, we can take a lesson here from the Mexican Drug Cartel, because they moved their drug manufacturing operations to the US to reduce their shipping costs and increase profits since America is their biggest customer.

Now, here is another interesting tidbit of information…  if we put Americans to work and do so every month and then attempt to increase the number of jobs we create each month, then those who are now employed will want to purchase more and more goods and services, resulting in more demand than can be supplied.  When this happens we have what is called inflation which typically results in everyone having less discretionary money to spend because their cost of living has increased.  When the cost of living increases, the consumer stops purchasing and business are left with inventory that will not sell so they must lay off workers... 

Now, we are in the free market enterprise cycle. And, typically the government must step in to balance out the equation.  In addition to laying off workers, businesses compensate by shipping jobs overseas where the wages paid to employees are substantially less.

But again, this just business and has nothing to do with politics, although some would tell you otherwise since they expect you not to care, and if you did and found out what they were doing, you wouldn't give a shit.

So, what more do you want to know?