The Intersection of Education and the Economy

Our economy and good paying jobs is directly tied to our educational system and our labor and business policy.

In a recent CNN Money article, Why Apple will never bring manufacturing jobs back to the United States,the author noted Candy Crowley asking both presidential candidates, “IPad, the Macs, the iPhones, they are all manufactured in China, and one of the major reasons is labor is so much cheaper there. “How do you convince a great American company to bring that manufacturing back here?”

Mitt Romney said the solution is “very straightforward.” The United States must pressure China to stop manipulating its currency and the federal government needs to “make America the most attractive place for entrepreneurs” by lowering taxes. He supports reducing the top corporate tax rate to 25%, down from its current 35%.

President Obama offered a starker answer: “Candy, there are some jobs that are not going to come back, because they’re low-wage, low-skill jobs.”

This presents a couple of key points:

Why, how, and what benefit would pressuring China, a sovereign nation, to stop manipulating its currency provide? Who would benefit the most by that type of solution? Why not strengthen our import and export policies and disallow companies to rake in huge profits by outsourcing manufacturing? Giving companies more tax breaks while not requiring more accountability from those companies guarantees larger profits to corporate owners, but does nothing for the average American, nor does it support growth of an American labor force, or our founding principles.

As I am writing this, I am listening to Mitt Romney talk about our trade imbalance with China. He’s blaming the Chinese government for manipulating markets, while also saying that Governments don’t run businesses in response President Obama’s handling of the auto industry during the recession. As far as I know, governments do run businesses. Governments make all the laws, policies and rules of practice that run a society including how business are conducted, and our government steps in when corporations seem to wield too much power, otherwise we’d have no ant-trust laws.

Another point, aside from the cheap labor force that China offers, due largely to standards far below what Americans would consider acceptable or humane: China has many more skilled engineers than the United States does. Steve Jobs, Apple’s late CEO, brought the issue up during an October 2010 meeting with President Obama. He called America’s lackluster education system an obstacle for Apple, which needed 30,000 industrial engineers to support its on-site factory workers. “You can’t find that many in America to hire,” Jobs told the president, according to his biographer, Walter Isaacson. “If you could educate these engineers, we could move more manufacturing plants here.” In a May interview with AllThingsD, Apple CEO Tim Cook agreed with Jobs’ assessment, and said there has to be a fundamental change in the education system to bring back some of this [labor].”

So, not only does our tax code encourage outsourcing, but our educational system has been doing a poor job educating a competitive, skilled labor force.

Back to the cheap labor force and low-wage, unskilled jobs; the other point that needs to be acknowledged is the too easy acceptance that some jobs won’t return because Americans won’t live in dormitories and work 12 hour shifts without adequate rest in between for little pay.

The unquestioning acceptance that this is why jobs are lost gives me pause, because as I see it, the solution to American businesses inability to keep jobs here due the cheap labor that comes from outsourcing which relies heavily on practices akin to indentured servitude and outright slave labor is simple; adhere to our founding principles, that all men are created equal and entitled to liberty, justice and the pursuit of happiness, and when a ruling government usurps basic human rights and creates a nation of despotism, refuse to do business with them; adhere to the principles of basic human rights. Prohibit American corporations from substantially profiting through practices heavily invested in using slave labor and indentured servitude. Levy heavy penalties if such practices continue. Make the utilization of cheap labor at the expense of human rights a non-option.

Yes, we live in a global economy and we want to stay a competitive, cutting edge part of it, but we can do that by raising the bar instead of playing to the lowest common denominator.

And while we are at it, in the second presidential debate, why did no one take issue when Mitt Romney said he would get rid of capital gains and estate taxes which profit the wealthy at a much greater degree than the average person? “There no evidence that low capital gains tax rates boost the stock market, investment, or the economy, and most real wealth in this country is heavily concentrated at the top, and its old, inter-generational wealth. The capital gains and estate taxes, especially in terms of the preferential rates, haven’t hurt that wealth pool at all. The benefits of preferential tax rates for capital gains and dividends go overwhelmingly to the highest-income taxpayers. The capital gains tax preference is a major reason why the tax code violates the Buffett rule, which essentially states that high-income taxpayers should not pay less of their incomes in federal taxes than middle-income Americans.  A significant group of high-income taxpayers ” particularly those who derive the bulk of their income from capital investments ” pay taxes at a lower rate than many middle-class families households with incomes between $50,000 and $75,000 who receive most of their income from their paychecks (as middle-class people generally do) paid 14.9 percent of their income in federal income and payroll taxes in 2011, according to TPC. Millionaires who received more than a third of their income from capital gains and qualified dividends faced a 14.6 percent effective tax rate, and millionaires who derived more than two-thirds of their income from these sources faced a 12.0 percent rate.

Our systems have been breaking down, and we need systemic, interrelated solutions from within to grow and flourish. Pressuring China to stop manipulating its currencies is not a sound, systematic solution for advancing a strong and competitive America.