Jobs and Profits

Looked through automobile data the other day. Learned that many of the top quality rated vehicles are made in the USA. Content may be imported from all over, but assembled and final fit and finish is done right here in America. Most of the name plates are foreign corporations, however. Some are American through and through, but not many.

This leads to the pros and cons of this set up.

What’s more important: jobs at these manufacturing sites, or corporate profits earned from the product sales?

Jobs. That’s my pick. Why? Because jobs support families, local economies, and our national economy, too. Those jobs fuel financial transactions throughout the economy through food, shelter, transportation, education, support services and tax collections at all levels of our society. So, jobs are a huge engine of economic activity and future. That doesn’t even address quality of life, security and a host of other issues.

Profits. Corporate profits. These are important for the long term but short term benefits actually do support local economies. Before profits are booked by the home corporation in its home country, the money flows throughout the American system and fuels a lot of residual economic benefits. What profits do in the main, is fuel future investment and product improvement and replacement through research, development and scientific breakthroughs applied to product evolution. This is a big thing and it fuels technological advancement, education, research and other major investments in human terms.

Both jobs and profits are important. They each play a major role in our economic health as a nation. But the local economic benefit is most importantly the result of jobs. This is the what we gain by foreign investment in America.

Something else happened in this miracle of change: foreign competitors demonstrated to American manufacturers that they can make automobiles better than American firms. Even some of the most glamorous name plates and most expensive cars made in America are the worst in quality. Shameful. And a wakeup call to both American firms and labor groups that American products are not always the best.

We can do better than this. But really, do we have to?  Can’t we just spend our time, talent and genius in developing the newer generation of products, technology and life-quality assets?  Foreign trade, after all, is supposed to allow best-use-of-resources (land, materials, engineering, utilities and labor) wherever they are. So some locales provide excellent land availability, raw materials and labor supplies than America. Using our scarce inputs on higher value goods and services is a smart thing to do.

Both foreign and domestic investment in these matters needs – nay, requires – a global market for goods and services. Lower cost of goods and higher economic benefits accrue to all in this scenario.

Refreshing that being a good neighbor is also good economics. Imagine the peace benefits from this activity as well. Who wants the disruption of war when we all have so much more to protect with peace?

Think about that the next time you buy a car. Foreign or domestic. Things are not always what they seem.

December 6, 2018