Fix or Farce: Obama Imposed Federal Employee Minimum Wage Increases Will Wage War on Citizens Working in the Free Market

There are rumors Pres. Obama plans to increase Federal employee minimum wage via executive order.  One could argue whether Obama actually has the authority to do such a thing.  Additionally, Congress, if it had the will, could legislate federal pay according to the market so it does not come into conflict with it. That aside, since doing something about it would require men (and women) of resounding character, let us get to the issue of minimum wage and how it effects the economy.

Raising the Federal employee minimum wage will cause:

MORE Federal debt to pay the wages;

A reason to justify Federal spending;

A reason to increase the debt ceiling;

A reason to increase taxes;

A sense of entitlement from employees (whose wages already average higher than the free market for the same work.) who have not earned a raise:  This is counter intuitive to motivation based upon excellence.  Conversely, left to its own devices, the Free Market System actually grows income better and based upon value of productivity which in turn spurs economic growth naturally. The graph below shows historical numbers in times of growth calculated without minimum wage interference and those with interference by government. Notice, particularly, the steady incline with greater momentum when productivity (Free Market) governs minimum wage levels versus mandated minimum wages. Also notice the erratic spikes and adjustments caused by government intervention in the federally mandated minimum wage. Thirdly, notice the counter productive drop in real wages, meaning that over time the costs of living outpace the wages in the government mandated minimum wage history.

Proponents of raising the minimum wage believe raising the Federal employee minimums will signal states to follow suit.
 
In reality: The Federal government (which is not actually part of the Free Market System) will become an even greater competitor against the Free Market. That means you and I and everyone else you know working for anyone other than the government will struggle as businesses struggle with unfair and illegitimate competition.



{Cr for caption: Rgcombs]

History shows a number of  negative market conditions prevailing every time minimum wage is increased: 1.) Either companies must cut expenses somehow; or they must raise the costs of goods and services to cover the costs of doing business. This ultimately hurts those at the bottom most.
Defenders of minimum wage will argue that  actual low income (real income) doesn't really soar with minimum wage increases so the effects are negligible. I cant argue this point: In fact, I agree: Minimum wage increases do not solve low income problems. They maintain them.

This is because minimum wage also increases inflation throughout all other wages. All incomes will will  rise to distinguish value between skilled and unskilled labor. Proponents of minimum wage increases claim that very few people in the US actually earn minimum wage.  They fail to acknowledge the effect on higher wages when the minimum wage is forced to increase. Put again, forced minimums only increase the entire spectrum of wages, leading to nothing more than inflation and causing frustration among the poorest sector of wage earners. Were this not so, low or unskilled job wages would have already caught up to the wages of higher skilled jobs.

History also shows a pattern of slump in the economy whenever the wages are mandated to increase. Defenders of minimum wage claim because increases are small, the effects are negligible. They do not account for the effect on businesses that survive on low pay and unskilled workers. These businesses also have a rapid turnover and higher training expenses because their workers are unskilled (retail businesses for example). Their argument is completely moot with the current intention to raise minimum wage at least $3 in one hike.

Moreover, history shows employment growth slows with mandatory wage increases.  Businesses recoil. Growth and hiring slow or stop as they adjust to the forced added expense. (Notice the spikes, then sudden drops, in the graph with every forced wage increase.)

Ultimately, the only one that benefits from minimum wage increases is the Federal government via income taxes. This effect is not lasting as politicians do not slow spending.

This is not a fix, it's a farce. Numbers don't lie: People lie about numbers. It pays, literally, to note the difference.

American Political Perspectives under Scrutiny: Are You Sure You Want Term Limits?

Every few years there is a resurgence of interest in a Constitutional Convention with an array of amendment proposals.  A favorite is the idea of term limits for Congress.  The argument is drawn out of the frustration by Americans dissatisfied with the lack of responsiveness by their representatives; and perceived poor performance of the bicameral legislature.

Term limits may force legislators back into the private sector to earn a real living. But they will also guarantee revolving representatives. The understanding of which should be reviewed for its consequences before promoting the measure.

Are Term Limits All They are Quacked Up to Be?

For an example of how nefarious term limits are we need not look any further than our current Administration.  The term “lame duck” is often associated with an incumbent president in the second—and final—term, where the president is at odds with the legislature or has no motivation to work with it. Thus, he is ineffective and unaccountable to anyone. Without accountability there is no motive to do either what is morally right; or, what the constituents who vote expect. It is the sole reason President Obama can and has successfully circumvented the constitution by rerouting legislation via Executive Orders, etc. Those without any moral compass have license when they know their term will end. The incumbent on his last term is more than a lame duck.  He can be a constitutional menace—an engineer who has no need to stop politicizing the public against their will, knowing he will be free from the freight train by the time it rams into a brick wall.  Superficially, term limits appear to reduce the apparent misgivings of long term incumbents. But what is not observed is that in limiting terms, we actually limit our voice. As for reducing collusion, corruption and so forth:  Term limits do not stop an outgoing elected official from orchestrating the perpetuation of his agenda with the next candidate.

Speeding Up the Political Revolving Door

The problem just mentioned is a greater unseen menace than the original problem that leads many to believe term limits will resolve irrational legislation (such as “Obamacare”) and lack of constitutional representation. The unseen—and dangerous—appeal of term limits is that it gives license to individual Americans to operate on auto-pilot.  An incumbent is automatically thrown out after a set number of years. Political alliances that are now formed in the open will be formed behind the scenes by a systematic and automatic succession of politicians groomed and ready to replace the outgoing incumbent.  This may seem efficient, but efficiency was exactly what the Framers were trying to avoid when they designed a constitution with more than 30 checks and balances incorporated within its body.  It is not incumbency that is nefarious. It is the machine that can (but does not necessarily drive it. 

While we may pay particular attention to the single politician-or a single party, we forget that this politician (and/or party) was promoted by someone—and many “someones”. Term limits render the public impotent to stop the machinery running behind the scenes.  Rather, they promote a stronger system that reduces the unique power of our republic that is by and for the people. When one candidate is elected, a body will immediately organize for a successor to maintain the body’s power.  This goes far beyond the current overgrown power of party politics, but balloons collusion by many factions vying for power through government by validating the system. If Americans are disillusioned by party politics and collusion now, wait until we have term limits.   All the problems disdained by the public now will become an automatic revolving door under term limits as the element of surprise is gone.  Term limits provides regularity, not honesty and representation. Free from term limits, the people decide how long an incumbent remains, not a system, and particularly, not this system. Irregularity of incumbency—vis a vis: unpredictability in elections—actually thwarts the automatic calculation and systematic orchestration of groups seeking power rather than service to the Constitution they swear to uphold.

Who’s Steering The Ship?

Term limits puts voting on auto-pilot, hardly what the American public needs given their growing laziness.  Ours is a republic specifically designed to be run by the people, who appoint representatives that identify their unique and specific concerns from state to state and district to district, respectively. Our involvement is what makes us free. But as far back as this Republic began there were concerns about how effective this form of government would be. Among others, Benjamin Franklin worried that the American constituency would not be up to the task, instead resolving to political laziness and indifference in civic affairs.  Therefore, anything that can exacerbate this malaise, such as putting us on auto-pilot, must be avoided like the plague it drives.  Secondly, we must end pointing fingers of blame.

One point of blame is laid on heavily financed elected officials signaling collusion and corruption—because they listen to deep pocket campaign contributors. That may be superficially relevant.  But elected officials are not elected by deep pockets contributors:  They are elected by their constituency.  Without the substantial voice of their constituency many elected officials vote based upon contributions who do voice their opinions.  This is not the fault of the elected official or deep pocket supporters. The absent constituent must put their finger down: This is his fault.  Elected officials who are being told what to do by constituency will not routinely vote contrary to their dictates, knowing if voters put them in office they can just as easily take them out.  Elected officials vote according to the wallet when the constituency is conspicuously absent from duty. With no other voices to guide them, they have nothing to fear, knowing also that most will be absent in the voting booth also. When the people speak their minds and are actively engaged in the American process corruption is prevented. Unless of course, the constituency is corrupt.

A Compass and a Rudder

To prevent a wandering, mindless, and greedy constituency takes propagation of our American tradition. The argument that America is based upon a lack of tradition is a mistake.  George Washington was so concerned about the progeny of American perspective and its ramifications for future elected officials that he believed—and espoused—a national school teaching the principles of the Constitution as imperative to America’s future. This oft-quoted section speaks to his concern:

[T]he assimilation of the principles, opinions, and manners of our country-men by the common education of a portion of our youth from every quarter well deserves attention. The more homogenous our citizens can be made in these particulars the greater will be our prospect of permanent union; and a primary object of such a national institution should be the education of our youth in the science of government. In a republic what species of knowledge can be equally important and what duty more pressing on its legislature than to patronize a plan for communicating it to those who are to be the future guardians of the liberties of the country?[i]

Designed to be our compass and rudder, Washington was encouraging a national school for the cause. He also suggested a national academy for military training and education.[ii]  Arguably, a national school devoted to the teaching of our republic, while not unconstitutional given several clauses that could support it, does not mean it is wise as it holds many troubling problems of its own. The greatest concern, in light of an indifferent public, would be whether such a school could withstand the temptation of corrupted bureaucrats forging an education of their own making. That is, after all, exactly what has happened to public education beginning with John Dewey in the ‘30s and growing exponentially since nationalization in 1965.[iii] On the other hand, there are those with a smidgen of knowledge, who, once gaining it, believe themselves to be experts. They may have a rudder, but have no compass, nor the capacity to know which way to steer.

A nationalized school teaching founding doctrines and our heritage is not the answer.  But it can be argued that states should be teaching those; and mandating them to be promoted for perpetuation of their respective states and the union, as President Washington suggested. A curriculum for every year of education should be standard. Texas has such a requirement. Graduates of public institutions of higher education must fulfill four core courses in Texas and US constitutions. This however, is merely cursory. Yearly teaching of constitutional ideas in conjunction with world history for perspective requires consistent study throughout the education years and beyond.[iv]

This brings us back to the real problem: Poor representation is merely a symptom of political laziness.  The remedy for poor representation is not term limits, but an active and knowledgeable public. In depth knowledge of American constitutional concepts and accurate historical perspectives, derived from thorough individual and institutional study of the founder’s own words and works, is half the remedy. The other half is constantly speaking up, not just in the voting booth, but between elections directly to respective representatives.  Americans should run from the concept of term limits unless they would like to add one more chink in the shackles of political laziness that got us in this predicament in the first place.

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[i] Eighth Annual Message of Geo. Washington, Dec. 7, 1796.

[ii] Ibid.

[iii] http://www.scribd.com/doc/49149656/Elementary-and-Secondary-Education-Act-of-1965#sthash.MVANep0d.dpuf. The Elementary and Secondary Act of 1965 copied the nationalization efforts of England and other European countries utilizing a nationalistic approach to education.  While England, in particular had huge success in bringing 80% of their population out of poverty with a nationalized school system in the late 1800’s, it is equally important to note Britain’s public school system originated from a feudal-monarchical which eventually became a representational democracy in the 1960s. Nationalism is often a portal for governmental system transitions.  For them it was a step away from that dual system.  Given we have been a representational democracy since inception, nationalization of public schools was a step backward in 1965 toward a socialistic society.

[iv] Having formally and independently researched primary source documents of Colonial, revolutionary, post-revolutionary and US constitutional history for many years, I can attest that study of the American perspective cannot achieve a measure of proficiency without consistent study as an American lifestyle.

A Satirical Allegory: Politicians are like bugs..

I've learned a lot since being in Texas: Big really is BIG here. If you never thought you were prone to sweat, come here and you will be. Southern hospitality abounds. And the difference between politicians here and elsewhere is the drawl. And because this is a big state, politicians are prolific--as much as its sub-tropical topography is prolific with an array of bugs.

I recently discovered I have a propensity to being totally creeped out by bugs. Politicians are a lot like bugs. They are weird, (and creepy), hide in dark places, and you can't often tell the good ones from the bad.  Let me illustrate my point with a brief (true story) analogy:

The spider , its belly bigger than a half dollar, lost more than half its web thanks to me.

I was in my back yard (yes, in Texas) a couple nights ago when I suddenly walked right through a enormous spider web. Swishing it away and out of my hair and face, I turned around to see an appropriately enormous yellow spider with a huge round belly and white spots on it, furiously trying to repair the damage I just made to its bug collecting domicile.  It and its domain were gone the next morning. So, I assume either the neighborhood Hoot Owl had a midnight snack or it relocated to a more hospitable neighborhood.  I looked up the spider online only to learn that spiders--like politicians can be difficult to find. But I learned that spiders that make circular webs like the one I ran squarely into cause the most heart attacks due to the shock going headlong into encapsulating, gooey web fibers. You think? 



The bug fell to the prickly pear cactus below.
A fate most of us would wish for many politicians.

Fully recovered from the previous night's run-in with a mammoth-sized Texas bug, I was grooming a Star Jasmine today that was taking over a window. It was so aggressive I had to take the screen off to pull the plant from between it and the window. No sooner had I done that when I was looking squarely at another bug. The thing was hanging on the jasmine vine for dear life. We were in a stare-down. Thinking like a constituent, I looked around for something to get rid of it with. 
Next thing I know it is gone. So I carefully pulled the vine from its rooted position around the frame of the window, copiously searching for the big bug in the process. I didn't see it.  A second later, I discovered that it was sneakily hiding itself in plain view, covering nearly all of the back of my hand!

I could hear my neighbor's windows rattle with my scream. The bug fell to the prickly pear cactus below.

Like some politicians, I know these bugs exist; haven't a clue where they are this instant, or whether they are good or bad; and don't know anything more about them than I did before I encountered them...except that I am totally creeped out by some of them.

Armed Forces Day: In honor of a legacy of defending liberty

Armed Forces Day, always the third Saturday in May notes the combined duty and mission of the branches of American military in defending our liberties.  Prior to 1949, each branch of the military was honored on separate days.  But in August of that year, all but one branch agreed to combine their honorary days into one.  The first year of Armed Forces Day, three branches of the military united leagues, the Army, Navy, and Air Force. Today, Armed Forces Day includes those three, plus, the Marine Corp and Coast Guard leagues.

When Harry S. Truman spoke of the first Armed Forces Day, conflagrations smothered the earth.  Most noted, and one of the major impetus for the show of unity and strength of our military were attacks by communist entities. One in particular stuck in America's craw—the Chinese Communist Government seized two buildings American purchased prior to that communist regime and owned outright at the time of confiscation.  Along with Red China, Austria, East Germany, Burmese, Nicaragua, Bolivia, Cuba and the Soviet Union were entangled in expanding communist efforts.  The Armed Forces Day intended to demonstrate the patriotism and unified strength of American military might despite the world's circumstances.

That first year, May 20, 1950, the theme way “Teamed for Defense”.  Each year the combined leagues chose a new theme.  This year, the themes are “Strong and Resilient” and “Prepared to meet any challenge”.  The combined themes suggest a focus and mission different from more than a half century ago.  Enemies were clearly visible then. 

Today, the enemy is transparent, elusive, and evolving.  The combined leagues’ challenge to be “strong and resilient" and, "prepared to meet any challenge” is indeed a daunting task.  Americans of all backgrounds surely must rise to salute a contingency that often does not know what enemy will surface at any given time. They are our country’s first line of defense.  Their vigilance and support of the country at their own peril cannot be ignored lest we lose the right to call ourselves Americans. In fact, they pass on a legacy they did not create. 

The pride and passion to defend the land of liberty came by the sacrifice of those very first defenders, the troops of the Revolutionary Army.   Scraps of clothing—if you can call it that—barely covered their war beaten bodies.  The soles of their feet were their shoes. They had none other.  Most came from impoverished families promised a salary, food, and clothing in exchange for defense of the rebellion.[1]  Most learned loyalty, American compassion, and undying faith in a fledgling country on the trail.  Many died of wounds. Many more died of exposure, starvation, and the darkest of plagues at the time, small pox.  In the end, the army persevered.  

What many including King George, and perhaps even the Colonists themselves, failed to realize is that a hundred fifty years of Salutary Neglect created, promoted, encouraged, and propagated a nation of fierce defenders of liberties. The military exemplifies the tradition, its nurture, and naturally American tendency in us all. It deserves our utmost allegiance and support. 

God bless America and her troops.

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[1] There are numerous accounts of men and women who joined the Revolutionary Army against horrendous odds. The most complete journal of that experience is of Joseph Plumb Martin who recorded every campaign of his engagement from 1775-1783.  Martin, Ordinary Courage. Ed. Martin. Wiley-Blackwell. 2013

Do US Trade Deficits indicate the downfall of US manufacturing, production and economic decline?

Trade Deficits and Trade Mechanisms: The power of Currency

If ever there was a demonstration of the Fallacy of Composition it would be with the way we look at trade. This term, "Fallacy of Composition" is a condition where part of something that is true is mistakenly assumed to be true for the whole of something.  In this case, it is to assume that a trade deficit is indicative of our competitiveness abroad and our economy in general. The way we are assessing the trade deficit leaves the public (and politicians) in fear of being overtaken by other countries.  Outsourcing and manufacturing by American companies to countries where labor is extremely cheap by our standards leaves many feeling threatened by the perception of an inevitable shriveling of our job market while developing nations grow in our stead.  With these concerns in mind, the purpose of this article is to explain the mechanisms of trade at work, including what the public sees but does not understand; and a myriad of things they do not see—indeed, are never shown—that, were they seen and understood, would alleviate unjustified fears of an America with diminishing returns on export investment versus import spending.  Additionally, this article will discuss the health of America’s trade dynamics by looking at the operations of an American global company.

Double vision

Let’s start with what is seen. When we talk publicly of the trade deficit, we are typically shown two totals with which to assess our position in the global market. One is the total of what we spend overseas and the other is the total of what others spend for our goods. The difference  between the two is either a trade surplus--we sell more abroad, or a deficit--we buy more, simplistically speaking. The latest figures for income and outgo of trade were published May 1, 2013.  USA Today reports, “Exports fell 0.9% to $184.3 billion as sales of machinery, autos and farm products declined. Imports fell 2.8% to $223.1 billion, led by a 4.4% drop in foreign petroleum.”  The conclusion made in the article, based upon this small shrinkage in the deficit gap, is that Americans will have more money in their pockets to spend on stuff. [1]  It appears that there is also a general assumption that we are losing money when our imports exceed our exports (deficit).  The article continues,

U.S. exports to Europe are down 8% compared with the same period in 2012, reflecting the impact of a recession in the 17 European Union countries that use the euro.

The European Central Bank announced Thursday that it was cutting its benchmark interest rate to a new record low in an effort to stimulate growth in the 17 countries that use the euro currency. The 27-nation European Union is the USA's largest trading partner.[3]

The conclusions are wrong-headed for several reasons.[2] It would be hasty to jump to conclusions how the European economy has shrunk or why.  But, based upon the last sentence, it is implied, whether by the writer or by the ECB, that the drop in our exports is caused by the European recession. He draws a correlation that while our drop in exports could have an affect, it is not necessarily so. He does not consider that both markets could be changing independently of each other due to internal fluctuations in their respective economies.

To understand: The Balance of Trade is simply a circular flow of currencies. It is separate and different from each country's economics.  Balance of trade is not the comparison between exports and imports (income and outgo of cash--receipts and payments).  Those are not on opposite sides of the balance sheet. They are on the same side of the balance sheet. Together they represent the current of payments for imports and exports.   The other side of the balance sheet is Capital assets, what we and our trade partners get from each other. Capital assets account for our investment in foreign goods, bonds, securities and so forth; and likewise foreign investments in ours.  Herein lays the balance of trade. It follows the algebraic equation, which is the cardinal theory of accounting: What is done to one side must be done to the other because they both exist and their ratio to each other must be maintained.

 If not manufacturing, then what?

In truth, though it is not readily seen, our manufacturing industry has stayed remarkably consistent for over 80 years.[5] What have not stayed consistent are our population and our efficiency in production. Population and production have outpaced creation of—and need for—more manufacturing jobs. Thus, we think we see manufacturing jobs disappearing. It is true that this causes a net decrease in the percentage of manufacturing jobs. But our output has soared since 1959—nearly quadrupling.[6]  Purchasing power derived from productivity, not trade or a deficit, is the measure of economic prowess. In fact, the deficit shows our ability to buy more stuff than anyone else. It also shows our ability to borrow for it. But it does not represent jobs. They are unrelated.  In fact, a trade surplus might indicate others want to borrow our money but it may well signal that our dollar in ratio to foreign currency is undervalued, or that we have lost purchasing power due to domestic unproductivity, or by poor policy.[7]  And while the total number of manufacturing jobs has declined (percentage wise), it does not follow that the total number of jobs has declined respectively. By creative destruction jobs have developed in other sectors beyond manufacturing.

It’s important to understand unseen advantages we have over other countries. We earn more and our cost of living is moderately less than other industrialized nations.[8] We do not see that real income (not nominal income) has dramatically increased since the better part of the last century.  To the question of where our jobs are if not in manufacturing: We actually do create manufacturing jobs. For every one of our jobs, we create four other less skilled but important jobs in manufacturing, which combined equal the income of our one. We mostly outsource those to other nations.[9]

The lack of lesser skilled manufacturing jobs here pushes our working sector to develop higher skills. This creative destruction is sorely overlooked.  Our focus in the production cycle is on invention, creation and service.  Those skill-sets provide us far more income and are actually more productive than the jobs we outsource.  Without even seeing it, we are expanding creative destruction here and abroad. In other words, we are no longer domestic inventors of gadgets but global inventors of products and jobs for others around the world to grow into.

From shoes to autos: 69 is a powerful number.         

In 1996, Viet Nam opened its economy to free market enterprise.  Within a year of five Nike plant openings, tension and consequent scrutiny arose from factories in Ho Chi Minh City, especially. To understand, NIKE,Inc. has mastered the system of outsourcing via subcontractors, meaning that plants are independently owned; and produce Nike products by contract.  When NIKE,Inc. moved into the labor force of Ho Chi Minh City, the minimum wage was $42 monthly. Today it is $112.60. That is unbelievable poverty by our standards. But it is a 300% increase in income in 16 years,[10] more than a 17% increase per annum, and nearly double the hefty national inflation rate.[11]

But Ho Chi Minh became a hotbed of controversy. Expose΄ after expose΄ detailed the atrocities of the factories. Everything from paying below the minimum wage, 12 hour days up to 7 days per week, physical, emotional and sexual abuse, to child labor were incessantly arising from investigations. Still, Phil Knight, President, CEO and Founder of Nike took a hands-off approach to the problems. The root of the problems lay with Vietnamese culture which had been practicing these behaviors as an agrarian (rice) farming society.[12] Western European societies saw the behavior as wholly unacceptable and they demanded Nike do something about it. Nike, by then a hugely successful global entity, ignored the outcry and boycotts.  That is, until its revenues plummeted by 69%.  Sixty-nine is a powerful number: Seeing his corporation in a tailspin got Knight’s attention. He not only changed his philosophy on enforcement of the (until then, mostly ceremonial) Code of Conduct, he created a global mentorship for countries around the world.

The critical point here is that neither foreign manufacturing jobs nor a trade deficit caused the near collapse of Nike. Politics did. Today, NIKE, Inc. owns nearly half the world’s shoe market, plus over 900,000 products—most produced outside the US.  Nike contracts with over 600 plants around the globe, of which more than a third are in Third World counties.[13]  Not seen, however, are the results of their global footprint.

As manufacturing goes, shoe making is on the lower end of production skills, utilizing mostly assembly line tooling. High skill sets for production include invention and manufacturing technology and automation such as electronics and cars.[14]  A few years ago, South Korea thanked Nike for its pivotal role in advancing its labor force skills and asked them leave. As their president put it, the nation had reached its goal of skilled laborers (of shoes) and wanted to advance their workforce skills further.[15]  Because of improved knowledge about how to operate manufacturing the country expanded it placement in the high tech world.

Their skill level has advanced to the point that the 2013 Hyundai Elantra [16] is out-pacing demand by competitors including the perennial favorite, Toyota Corolla. There is no evidence that their advancement has created a burden upon our country. In fact, what can be seen is the positive relationship between rising countries and already developed ones. When emerging markets elevate their standard of living, boosting their purchasing power, it elevates ours as well.[17]  It goes largely unseen that international trade is an asset to our economic success. Nike philanthropy in Third World communities in health, education, sports, and leadership programs for the rising generation, especially, is not indicative of trade and trade deficits as destructive.

Moreover, Nike’s business model includes hands-on training for over 50 countries producing Nike products.  Four expatriates per factory assist in oversight and training to insure proper working conditions. Leadership training held at the global headquarters in Oregon provides classroom instruction. Subcontractors from 47 countries attended the conference in 2012.[18]   NIKE,Inc. has more than 1 million employees in the US and around the globe.

If trade has any impact upon the American economy, it must be seen as a highly profitable one that improves the entire global economy and their societies, despite the inability to understand the bottom line of the double ledger. 

[This article was originally a memo I wrote for a class on ethical economics culminating from research and long standing principles of economics. The class was part of a project under the direction of Dr. Jim Granato, Dir. of the Hobby Center for Public Policy, University of Houston.]

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[1] Crutsinger, Martin, (Associated Press), “U.S. trade deficit falls to $38.8 billion”, USAToday. 2 May 2013. http://www.usatoday.com/story/money/business/2013/05/02/trade-deficit-march/2128791/ There was no date source citation from an economist for the conclusion which the journalist drew. It is apparent from the article that the writer knows to combine a number of economic facts, but it is also clear he doesn’t know what to do with them or what they mean. The scope of this paper is too brief to critically discuss all that he says. However, certain parts of his article will be used illustratively as this report advances.

[2] It is enough to say all the indicators Crutsinger includes have merit in a discussion on economics but he makes no association between them pertinent to the subject of trade deficit. A full discussion of them is beyond the scope of this memorandum.

[3] Crutsinger, Martin. “US Trade Deficit…”, USAToday, 2 May, 2013.

[4] Krugman, Paul, Pop Internationalism. MIT Press, 1998.

[5] Roberts, Russell, “Does the Trade Deficit Destroy American Job?” George Mason University, Nov 2006.

[6] ibid

[7] Krugman, pp42-46

[8] The U.S. ranks 3^rd in the world in purchasing power but less than average on the consumer price plus rent index. ( ̴137:60) http://www.numbeo.com/cost-of-living/rankings_by_country.jsp

[9] Krugman, pp46-52

[10] Wage Indicator, Western Governors University. www.wageindicator.org/main/minimum-wages/vietnam

[11] Runckel & Assoc. ,“Vietnam’s Labor Problems Amidst it High Inflation”. http://www.business-in-asia.co/vietnam_workers.html.

[12] Norberg, Johan. “The Noble Feat of Nike”, The Spectator. June 13, 2003.                

[13] www.Nikeinc.com

[14] Guntrie, Doug, “Building Sustainable and Ethical Supply Chains”, Forbes. Mar. 9, 2012

[15] There are two remaining Nike plants with a total work force of less than 20 in South Korea.

[16] I own one and can attest to the reliability of the car and the demand, having had offers by multiple car dealerships who have asked to purchase my car outright with no strings attached to purchasing or trading it for another. They just need the car. http://cars.findthebest.com/compare/191-399/2011-Toyota-Corolla-5-Speed-Manual-vs-2012-Hyundai-Elantra-GLS; http://www.thecarconnection.com/compare/toyota_corolla_2013_choices; http://www.thecarconnection.com/news/1075169_toyota-corolla-vs-hyundai-elantra-compare-cars; http://www.newcars.com/reviews/toyota-corolla-vs-hyundai-elantra-sedan.html,

[17] Krugman, 52.

[18] www.Nikeinc.com