Epic economic fail: Don't try this at home kids
By Zachariah Lund
While it may make grammarians around the country cringe, the term "Epic Fail" has become very popular. It is most commonly used when someone does something embarrassing as a result of a lack of common sense, or to describe a scenario in which someone does something so obviously stupid that you are compelled to cover your face with your hand and describe that person with adjectives that are usually reserved for those with mental illnesses. Like when you're walking down the sidewalk and run into a light-post because you were texting, or when you put a bowl of Easy-Mac into the microwave only to realize several minutes later that you forgot to put water in it because you were talking to someone, or when you lock your keys in the car. Almost everyone has observed or been involved in an Epic Fail. Most Epic Fails are committed by average people, while they do average, every-day things. There are some people though, that take Epic Fails to the next level by managing to involve their Epic Fails with things that affect the entire country, like politics, war, diplomacy, and economics.
In this essay, I am going to target one person in particular whose Epic Fail involved economics: Kevin Danaher. Danaher wrote an article entitled "Globalization and the Downsizing of the American Dream", in which he attempted to point out problems he saw with globalization and the negative effects he claimed it had on America's economy.
Danaher doesn't seem to like corporations. Throughout his article he blames corporations for many of America's economic problems. Right in the beginning of his article he accuses corporations and globalization of lowering America's standard of living: "As U.S. corporations have expanded their global reach they are better able to put the U.S. workforce in direct competition with foreign workers, thus increasing their profits while driving down our wages and general standard of living." My first problem with his claim is the fact that he's blaming the corporations for firing American workers and replacing them with foreign workers. It's a competition, he said it himself. Let's say you want to hire someone to work for you. Two people with identical skills apply for the job, but the first person is willing to do the same amount of work as the second person, but for half of the pay. Which one would you choose? When you compare the costs and benefits of hiring each of them, it is obvious that the first person is the best choice. The corporations are comparing the costs and benefits of hiring foreign workers, or hiring American workers. If they opt for American workers, they will have to deal with the minimum wage, they will have to provide benefits, and they will most likely have to hire from unions that demand high wages for little work. It is much easier for the corporations to hire foreign workers that can do the same work as the American workers, but for much less. Danaher's article implied (at least in my opinion) that the way to provide unemployed American workers with well-paying jobs was to expand and encourage unions, and to keep corporations from hiring foreign workers. I don't know about you, but I sense that an Epic Fail is imminent. In my opinion, the best way to get corporations to hire American workers is to give them a good reason to favor American workers over foreign workers. That could be accomplished by improving the quality of American labor through better training and education, or by making that education more available (offering more college scholarships, or offering cheaper alternatives to college). Disbanding unions would help too. Also, his claim that corporations are lowering America's standard of living by hiring foreign workers instead of American workers is misleading. The standard of living for the workers that were fired from those corporations does fall, but not everyone in America works for a corporation. Those workers could possibly avoid the drop in their standard of living by searching for another job. Basically, the globalization of corporations is not the problem, the problem is America's control over labor through unions and the minimum wage is preventing American workers from being able to compete for the jobs effectively.
Danaher also proved his ignorance of economic principles when he tried to blame technological advances for depriving American's of jobs, and thus lowering America's standard of living. His argument was that as corporations get access to more advanced technology, they try to save money through lowering costs by replacing human workers with machines. He claims that the workers that were replaced by robots are then out of work because the service sector of the economy (telecommunications, banking, insurance, etc. Office jobs, pretty much) wouldn't be able to replace all of the lost jobs in the manufacturing sector. That's flat out wrong. Granted, he was right about workers being replaced by robots, but those same technological advances are creating more jobs than are being lost. Not only is there now a need for people to repair and maintain the machines that stole their jobs, but technological progress has created the need for computer programmers, computer graphics artists, software developers, computer engineers, web programmers, computer and internet security designers and programmers, and many other jobs. Even if some of those workers can't find a new job, the standard of living won't drop, the numerous other benefits technological progress brings with it will almost always improve the standard of living.
Danaher also tried to blame corporations for America's budget deficit and the national debt. According to his article, the budget deficits responsible for our national debt are caused from the lack of income tax revenue due to American corporations replacing American workers with robots and foreign workers. He claims that the lack of government revenue is a bigger problem than it's rampant spending. He even stated specifically that "a more crucial problem (than excessive spending on social programs) is that the wealthy corporations that dominate our government and our social values are able to avoid paying their fair share of taxes." While it is important that everyone pay their fair share of taxes, Danaher is putting way too much of the blame on corporations. I have already shown that it is America's labor control, not just corporations' greed that causes those corporations to look for workers in foreign countries, and I have also shown that technology generally creates more jobs than it destroys. In my opinion, the real cause of the budget deficit is the excessive spending on social programs that I mentioned above.
Zachariah Lund is an AP high school student. © 2010