Outsourcing and America’s Nanny-Statism Bubble

by Eric Englund
by Eric Englund

The consequences of publicly providing people gratis with services which would be of fundamental personal and moral importance if they had to provide them for themselves, are likely to be far-reaching indeed. When the government imposes its priorities it alters the balance of the choices which the individual can make for himself…His sense of responsibility for what he is not allowed to decide for himself is likely to diminish, and it is possible that he will be less concerned for his health and his children’s education than for his amusements.

~ H.B. Acton

When it comes to the emotionally-charged topic of outsourcing, academicians, politicians, public school teachers, media-types and other government worshipers are one-trick ponies (or more accurately, one-phrase parrots). They continuously chant the Marxist-tinted mantra that outsourcing is all about reducing labor costs by exploiting laborers in third-world countries. Reducing labor costs, undoubtedly, is a key factor behind outsourcing; yet, there is more to this story and you will not hear it from these government-worshipping folks as it would be tantamount to admitting a miserable failure on the part of the nanny state. Instead, obfuscation, name-calling, and finger-pointing – at those "fat-cat capitalists" – are the orders of the day.

The terrible truth is public high schools are "producing" graduates which manufacturers, hi-tech companies, and other technical businesses do not want to hire – certainly, there are exceptions. In fact, it is common for business owners to hold a generally negative view of workers, including white males, under 35 years old – after all public schools are churning out hedonistic individuals with high self-esteem, low skill levels, and no work ethic. Hence the poor product "manufactured" by our public schools is a key factor driving manufacturers, and technical businesses, overseas in search of quality labor. Of course, this aspect of the drive to outsource (i.e. a deteriorating labor pool) can be traced back to nanny statism as enabled by the Sixteenth Amendment and the Federal Reserve.

Poor parenting, undeniably, is part of the equation as well. The above-shown quote, from H.B. Acton, nicely summarizes how the welfare state negatively affects parenting.

As a surety bond underwriter, I have a wide variety of clients. My clientele includes general builders, mechanical contractors, electrical contractors, heavy engineering firms, steel erectors, stainless steel fabricators, other specialty trades, and various manufacturers. What I love about my job is that I deal directly with a firm’s owners. Surety credit, on balance, can be essential to a firm’s success and business owners take this credit relationship quite seriously.

When meeting with a client, I seek out a great deal of information in order to assess the risks associated with the particular client. In today’s marketplace, my customers are seeing significant price inflation (and, thus, risk) in steel, copper wiring, plumbing supplies, lumber, concrete, and oil-related products. If a contractor or a manufacturer fails to lock in prices of inputs, then profits can quickly evaporate. What I find most disturbing, however, is the common complaint that the quality of the labor pool is deteriorating.

My clients doing business in Idaho, Montana, Oregon, and Washington are acutely aware of the difficulty in finding skilled labor amongst those who are under 35 years of age. When touring building construction sites, the skilled laborers are typically late baby-boomers. For example, while taking a job-site tour with a client – who is the owner of a steel erection company – I detected that not a single one of his field employees was under 40. I passed along this observation to my client and he shook his head in disappointment. He stated something to the effect that "…America is becoming a country of baristas and real estate salesmen…all soft jobs. The ‘kids’ who come to work for me usually don’t last long because they don’t want to work hard, they can’t do any math in their heads and can’t even write a decent RFI." (An RFI is a request for information). The "lack-of-skills-and-work-ethic" complaint is a common theme I am hearing from the full spectrum of contractors, fabricators, and manufacturers. One of my customers, a tree-cutting contractor, summed it up perfectly and stated: "I don’t run a babysitting service and that’s why I typically hire guys my age or older." He’s 45.

Another disturbing aspect of the deteriorating labor pool pertains to drug use. A long-time client, based in Idaho, has a job-safety program which includes drug testing for job applicants. Fully one-third of applicants fail the drug test. Such failures are disproportionately skewed towards laborers under 30 years old. It is important to note this general building contractor (which self-performs structural-concrete work) is not turning away people who are merely applying for low-wage work. This contractor pays top-dollar for skilled structural-concrete workers.

Keeping the aforementioned Idaho contractor in mind, I had a most enjoyable job-site visit pertaining to a new 5-story parking garage this firm was building. Not surprisingly, the rebar and concrete crews were made up of seasoned men, earning a high wage, with few under 30 years of age. After the site visit, we walked to a nice restaurant for lunch where the wait-staff was comprised of personnel in their early-to-mid-twenties. What a contrast from those working at the construction site, yet par for the course.

Businessmen do understand America’s public schools are wretched failures. Most, nevertheless, have not connected all of the dots in that our American republic has devolved into a social democracy. It is social democracy that changes the character of a people and always for the worse.

A few weeks ago, I had a breakfast meeting with a retired general contractor. Needless to say, I brought up the issue of the deteriorating labor pool. He, interestingly enough, mentioned how he had "…grown tired of having to baby-sit my crews." What he stated next was something I had never heard from a customer throughout my 20+ years in the surety industry. He said the following: "Eric, we have too much democracy in this country." I almost fell out of my chair. Our conversation immediately grew deeper and it proved to be one of the most stimulating discussions I have ever had with a businessman. This entrepreneur had given much thought as to how the ever-expanding nanny state has lead directly to the diminishing quality of the American labor pool. Naturally, I recommended that he purchase Hans-Hermann Hoppe’s masterpiece Democracy: The God That Failed. He could hardly wait to get home to order the book.

Dr. Hoppe’s book, among many things, provides an in-depth study as to the decivilizing nature of social democracy. Surely, this retired businessman would agree with Dr. Hoppe’s statement deducing nanny statism

…has led to permanently rising taxes, debts, and public employment. It has led to the destruction of the gold standard, unparalleled paper-money inflation, and increased protectionism and migration controls. Even the most fundamental private law provisions have been perverted by an unabating flood of legislation and regulation. Simultaneously, as regards civil society, the institutions of marriage and family have been increasingly weakened, the number of children has declined, and the rates of divorce, illegitimacy, single parenthood, singledom, and abortion have increased…In comparison to the nineteenth century, the cognitive prowess of the political and intellectual elites and the quality of public education have declined. And the rates of crime, structural unemployment, welfare dependency, parasitism, negligence, recklessness, incivility, pyschopathy, and hedonism have increased.

One could easily add "a declining work ethic and, hence, a weakening labor pool" into the mix. Is there any wonder why outsourcing is seen as vital to the survival of many American businesses?

Without the power to control the monetary system, and without the power to redistribute wealth, government would find it quite difficult to impose its priorities upon its citizens. In the United States, however, two important events occurred in 1913. First, the Sixteenth Amendment was ratified allowing the federal government to levy income taxes. Secondly, the Federal Reserve was established thereby wresting control over America’s monetary system. When combining the printing press with the power to levy income taxes, federal fantasies such as the New Deal, the Great Society, and public education can be financed for surprising lengths of time; thus fooling people into believing the state is a miraculous entity by which everyone can live at the expense of everyone else.

Alas, the miracle of the nanny state is built upon a mirage whereby a society can borrow its way into prosperity. The federal government’s debts and liabilities now add up to about $50 trillion. Moreover, due to the monetary manipulations of the Federal Reserve, Americans are lured into the false beliefs that savings are bad for the economy and that borrowing and spending lead to economic salvation. It is with this public-and-private-debt orgy that an illusion is created in which we can live comfortably by simply selling (to one another) real estate, stocks, bonds, lattes, and massages; while the rest of the world toils to manufacture products for our pleasure – isn’t it wonderful having the world’s reserve currency. Of course, this chimera is also being funded by capital built up by previous generations – sadly, Americans are now consuming instead of producing capital.

To be sure, debt and monetary inflation are fueling the nanny-statism bubble. With a welfare tab now standing at $50 trillion, it is no wonder why soft jobs and leisure are preferred by younger Americans. We have literally bred and "educated" the work ethic out of our children. With social democracy polluting and diluting America’s labor pool, businessmen are seeking higher quality (and not just cheaper) labor pools. Outsourcing is a logical and justifiable response to this unfolding tragedy in the United States.

October 6, 2005

Eric Englund [send him mail], who has an MBA from Boise State University, lives in the state of Oregon. He is the publisher of The Hyperinflation Survival Guide by Dr. Gerald Swanson. You are invited to visit his website.

Copyright © 2005 Eric Englund

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