You Wont Like This

Why? Because I am going to shatter your conventional wisdom as I have many times in previous columns about the lies that Wall Street continues to tell you. This time we are going to go deeper into the economy to unearth the truth about lies the politicians are telling you.

Let's understand from the beginning that few politicians understand basic economics. Just because they work in Washington does not make them experts about the laws that have been passed or those they vote upon. Politicians do not create jobs or wealth. Don't feel you are the only one who can't make head or tail out of government statistics.

The most misunderstood debate today is about OUTSOURCING. ? sending our jobs overseas. From March of 2001 to January of 2004 manufacturing jobs declined by 2.6 million ? a loss of 17%. BUT during that same period there was an increase of 17% in worker productivity and only a loss of 3% in jobs. More goods produced with fewer workers. Those jobs did not go overseas ? only 300,000 did. The majority were lost to better machines and will never reappear. If employment efficiency had not increased we would have even higher unemployment today.

That is why unions hate new machines. Loss of jobs. If a company wants to remain competitive they must be able to produce at the least cost or you won't have a job. Do you think you would have your job today if your company continued to operate they way they did 5 years ago? Employment continues to increase every quarter even though we lose about 7% or 8% of U.S. jobs every quarter.

Has anyone told you that thousands of foreign companies have opened plants in the U.S? We don't hear about the small ones only the BMWs, Toyotas and Hondas. According to Peter Drucker, management consultant, we import more jobs than we export. Jobs increased by millions after NAFTA and because of NAFTA.

Will these layoffs continue? It depends upon your industry sector. According to the Bureau of Labor Statistics there were more mass layoffs (50 or more) during this January than any previous January in history - 239,454 ? 1/3rd of those are in manufacturing.

The U.S. is still not producing enough new jobs to keep us even; that requires more than 150,000 new hires each month.

Political demagoguery blames everyone and anyone who is in office. Whoever the president is is the one to blame ? rightly or wrongly. Every industrialized country today has a problem with excess production capacity and is doing weird things to keep their workers on the production line. We are not the only ones with job losses. That does not make the guy in the unemployment line feel any better.

It is our productivity edge that has kept as many jobs as we have now or it would be a lot worse. Free trade is the answer and not tariffs on other country's goods. As I have written before tariffs are hidden taxes on the consumer and benefit no one. They have NEVER worked in all of history and make more problems than they solve.

Don't listen to the political rhetoric. You may not like what I have said, but maybe it will start you thinking.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

1-888-345-7870; al@mutualfundstrategy.com