The Race to the Bottom

We are racing to the bottom. That is what we are doing as a society, be it on the local, state, national, or world scene. As a society, we no longer strive for excellence. We are heading at breakneck speed towards Third World status.

Particularly in the Hickory area, we have bought into every aspect of this economic concept and it has taken a decade, but we have ruined our economy in this area and until we shift our focus, we are not going to improve.

In studying the dominoes that brought us here, I see a chain of events deeply associated with the long time business model of the area. We had built a vast manufacturing based economy that lasted decades until the 1990s. At that point, we had achieved full employment, which led to hyper-competition for labor during those years. Labor is the number one cost of a company's business expenses and the business owners and management looked at how they might be able to squeeze the labor model and increase their profit margins.

Along came the year 2000 and the stock market bubble involving high tech stocks. Much of the bust involved data communications companies, such as Global Crossing and Level 3 Communications, who were wiring the world. When the bust occurred, these companies drastically slowed down that wiring of Fiber-Optic cable and guess what? We had local companies such as Alcatel, Corning, and Commscope that were riding the crest of that wave. That is when our local economy hit the fan.

Up until June of 2000, it was thought that this Cable Industry business model would not end, but it quickly came to an abrupt and screeching halt. We all remember those days, when the first layoffs started in early 2001. No one thought it would last forever and it might not have, if it weren't for that infamous day in September, 2001.

What also coincided with this period of time was the influx of Hispanic workers into the area. When many laborers left their jobs working in textiles and furniture, working for $10 per hour, to go work for the cable companies making $15 to $20 per hour, the owners of those businesses looked for cheaper and more effective ways to control labor costs. That is the period of time when the State of North Carolina started turning a blind eye towards the massive in-migration of Hispanics into this community.

Now I know that the slacked-jawed amongst us are going to complain about me pointing out the obvious, but what I would like for you to realize is that I don't blame Hispanic Immigrants for wanting to come here. I have worked with many industrious Hispanics over the last 13+ years, since my days working at Bald Head Island. All they want is to improve their circumstances and be able to help their families.

What bothers me is the way that government and industry went about implementing this process. And what I at one time thought was a process, I have come to realize was all along a full blown scheme. It seems that there was no plan other than to bring foreign labor into our area to change the labor equilibrium by increasing the supply of labor. The purpose of which was not to fill labor capacity, but to suppress wages.

In this early 2000 period, we saw the perfect storm occur, because when the tech bubble burst, then additional labor supply increased at a time when the economy began slowing, causing demand for products to slow and thus demand for labor to slow also. The chase to the bottom had begun.

Instead of the old system, where migrant labor was sent home when their service was no longer needed, our government turned a blind eye, because in my opinion, many business owners wanted to continue to maintain their profit margins during the economic crunch.

That is where I am coming from. Business owners have failed to realize that their mindset that revolves around short term economic gain has created a cultural climate of long term economic pain for the middle class laborer. That is what I spoke of when I wrote in the article Getting Back on Track -- Creating a Legitimate Financial System, "A transformed investment model should take into account what impact an investment has on the community. Any investment needs to have a positive impact on what Catherine Austin Fitts terms the "Financial Eco-System" as well as yourself. If you make money, but everyone around you goes broke as a result of your investment, have you truly increased your own wealth (standard of living)?"

First, we saw NAFTA implemented and its effects on our economy. The blind eyed acceptance of illegal immigration into our economy saw a drastic reduction in the standard of living of the middle class, but people were able to keep their jobs for the most part, at that time. The next leg down came when the agreements in accordance with the World Trade Organization started being implemented fully. That next leg down was shipping labor demand capacity overseas.

What this has led to is built in excuses for business owners. "I had to hire illegals, because Americans won't do the work." "I had to hire illegals, because my competitors are hiring them and I can't compete." "I had to hire illegals, because they will do the work and they don't expect the money the lazy Americans expect." "I had to ship my labor overseas, because I can't compete against my competition."

The deal is that this is what industry wants and the Rich get Richer and the Middle Class and Poor get Poorer in this race to the bottom. Americans ARE willing to do the work, but they expect to be compensated fairly. Businesses are always going to have to compete. They certainly seem to expect labor to compete. Instead of asking government to not move us toward World "Free for All" Trade, they decided to utilize and abuse, not only people that were loyal to them in their country, but also take advantage of the illegals by low-balling their labor costs. They also decided to further allow the oppression and abuses that take place in many of these Third World countries and systems that they have sent those jobs to.

What good has any of this done? Our community has been decimated and the low skilled labor is cornered and has nowhere to turn. The cost of living continues to rise and yet income levels are stagnant or depressed. How are people going to make ends meet? Many older businessmen and governmental leaders, who pushed this race to the bottom, are at a loss as to how to even stem the tide of the drain that has been placed upon our community, while at the same time they are unwilling to accept any type of efforts that may be deemed 'Too Risky."

What does this mean to the quality of life in our community? Where will government income come from? Where will businesses find customers for their products, when much of the population can't make ends meet? How will we begin to grow the economy again?

The Prophet (HaHa!) Ross Perot from the 1992 Presidential Debate (He says 15 years):



The effects of NAFTA on the indigenous Mexican Population and the USA:



This is what I mean when I make the statement, Cheap begets Cheap. Everything in our community, when it comes to investment is about frugality. We don't need to be frugal. We need to create value. We need to make a profit. People have mistaken cost cutting measures with making a profit. You can cut your costs to ZERO and that doesn't mean you are going to make a penny. Many times you destroy your customer base by cutting costs at the expense of quality. Let me ask. Who is going to be more willing to ensure that they create an excellent product, an employee you are willing to invest in or an employee that you keep dangling on a string?

As a community, a state, and a country, we have to get back to the idea of excellence. Excellent products, excellent performance, excellent people, and excellent communities. We do that through respect and equality in the administration of justice. You can't look to take advantage of people by scheming them. It can't be about Dog eat Dog. It has to be about loving thy neighbor and helping thy neighbor and I don't mean that under the context of Unilateral Disarmament by being the so-called "bigger man." I mean that as in building relationships of trust, because once trust has been breached, it is hard to ever regain. But, is that not the valuable lesson that we have all learned. Whether we like it or not, we need one another to further our own personal growth.

If we get enough people to buy into the concepts that I describe above, and marginalize those unwilling to participate and play fair, then I truly believe that we will turn our economic lot around.