I walked into a local business today. It was a place I hadn’t been in before, but the owner knew me from TV.
I didn’t prompt him. He just looked at me and said, “I’ve never seen the economy this bad before.” Then he began to talk about business.
Like him, I really am worried about the economy – and not just the stuff that’s been mishandled, like subprime mortgages, and other monetary slights of hand. We have seen a fundamental shift in the way of the world. We are no longer only competing against other ‘first world’ nations.
If you live in Kansas and answer phones for a living, it’s impossible to compete with someone in Bangalore who will work for 20% of your pay. The same goes for manufacturing and agriculture and nearly everything else.
JetBlue has airplane maintenance performed in Central America. Reuters has financial reporters look at US companies from India. The list is endless. There’s little you can think of that can’t be done cheaper elsewhere.
Then there are the box stores. When they replace 10, 15, 20 local business, they also displace the workers from those businesses. This ‘little guy’ I spoke with, a baker, was very worried about Wal*Mart, Costco and especially supermarkets.
What is the economic impact if his handful of employees is replaced by one or two in a big store?
In the past, labor saving devices made lives better for employees. After all, the forty hour week is a relatively recent arrival. Today, labor saving devices produce higher productivity for employers and if jobs can be cut, so be it.
My bosses, bosses, boss has a legal duty to protect the financial interest of his shareholders. If he puts me first, he’s violating the law!
Globally, we are on shaky ground trying to defend our standard of living to the Indians and Chinese who are taking our jobs. Look where we are. Look where they are.
I have been through recessions before, and we’ve always recovered. I have always been pessimistic going in, but once the economy was properly repriced, growth returned. My pessimism was misplaced.
This time, I am petrified our economic engine will have to be revalued against a world that can do what we do, only cheaper (and in many countries like China, with less kvetching from the workers). It’s a very scary scenario.
Right now, I have no answers, only questions.