A Weakness of the US Economy

June 2, 2005

A Weakness of the US Economy

By T.S.Khanna

With increasing globalization, the US economy is showing weakness in two areas; unions and government run businesses.

One of the fundamental tenets of democratic economy is competition in quality, efficiency, and cost. While American business corporations have to face competition in world market, they do not have this advantage in production lines at home. The culture of unionism eliminates the spirit of competition. Consequently, the jobs are being exported..

The solution to this growing problem seems to consist in a) creating several unions in each field to compete against each other, and, b) making hiring/firing practices more protective of competition and less protective of unproductive union members. No where else in the world, the labor is paid so highly and so well insulated from competition. To save the jobs from being exported, either the wages or the dollar value may have to be adjusted to compete with the developing countries.

Again, government run businesses have no competition, accountability, or standards to evaluate their performance. Consequently, they become bloodsuckers of taxpayers as well as of the captive clientèle. A case in point is BART. No where in the world, the cost of public transportation is so high as of BART. Yet, every year the fares are raised. Staff salaries of the upper management are certainly not justifiable. In fact, most other Public Transportation Systems in the US are in a similar predicament.

The solution seems to consist in adjusting basic salaries of the upper management staff to what the business can bear with lowest competitive fares and then paying profit bonuses if they accrue.

In our democracy there is no dearth of ideas to solve our problems, only a lack of mechanism to implement them.

Your Comments are invited.