LETTER FROM THE EDITOR 3/31/08
It may not seem like big news that Ford has sold Jaguar to a company in India. But it's a huge story, one that's closely related to America's current housing and financial crisis.
India has been given a massive economic stimulus package by American business. For the past decade, many of the manufacturing and white collar jobs that U. S. workers always did were given to workers in India, among other countries. Corporations could squeeze more profit for their bottom line by hiring people who would work for cheaper rates than American workers---paying salaries that seemed like fortunes to poor third world countries like Pakistan, the Philippines and yes, China.
The economy of nations already on the brink of leaving the third world was buoyed into power by United States corporate money. But the problem---in fact, the biggest problem in corporate America today---is that an obvious truth has been ignored: saving money on the bottom line is not the same thing as making a profit.
As American money and employment flowed into countries like India, little reflection was given to the dwindling number of jobs left for the average American worker. A lot of people who wanted a job could no longer find one. Unemployed workers took out loans, maxed out their credit cards and went deeply into debt. Our nation is one of the most indebted on the planet. The money to repay that debt no longer exists at home. It has gone to India, and Pakistan, the Philippines and yes, China. Even more of it, an incredible amount of our money, flows to the Middle East to pay for the oil we use and the cost of the wars in Iraq and Afghanistan. We can print dollars, but we don't have value to back them up.
The businesses that shipped their jobs to other countries didn't take the necessary long look down the road to see the twin-like connection between themselves and the American worker. It's common sense simple. If Americans didn't have jobs, they couldn't buy Jaguars or other Ford cars. Eventually, Ford and other car companies would not be making the money needed to stay profitable, because the people in India and those other countries are not their customers and don't purchase American cars. Question: if U. S. corporations don't take care of the U. S. workers who are their customers, where will their profit come from?
And so Ford, which proudly purchased Jaguar and Land Rover from the legendary British car makers, was forced to sell those acquisitions. India, swollen with American money, bought them.
Ford's situation is a match for the now-panicking banks and mortgage companies, who saw a way to make quick money from loans and mortgages by---well, let's call it what it is---gouging people who didn't have great credit. The obvious question was, what will happen if these people can't pay for their houses? Again, a simple observation would have sufficed: if the lending industry didn't insure the viability of their customer's loans by keeping them reasonable, what would happen to the industry's profits?
So here is what will happen next: the cars that people can't afford to buy will stay at the dealers until the dealers are forced to go out of business. The auto manufacturers who depend on the dealers will be forced into bankruptcy because no one is buying or selling their automobiles. The bad news isn't over for the auto industry.
Meanwhile, the banks which are taking back the houses they foreclose upon still have to pay property tax and pay to keep up the lawn and the landscaping so the house looks nice for potential buyers, all of which will be about a thousand dollars or more every month, so the banks are spending money instead of making it. The bad news isn't over for the lending industry.
Meanwhile, the newly trained workers and newly powerful corporations in India and China and Pakistan have become our global competitors. And of course, they will work for much lower salaries than Americans.
Sadly, the bad news isn't over for America.
Wina Sturgeon, Editor