Learning from History

We are experiencing the same problem in 2018 that we had in the 1880s. The labor oversupply at the lower skill levels is keeping wages flat. We now have an oversupply of lower skilled immigrants.

In the US in the 1880s, the total debt amassed by the railroads to pay for the rapid expansion of railroad tracks was unsustainable. The banker for these railroads was JP Morgan. He told them to stop competing with each other and lower their costs.  He ultimately merged them to form a monopolies. That was legal at the time and was the right answer. The railroads could raise rates and not worry about competition. This raised the cost of transporting goods, but their customers just passed on the cost to their consumers.

Also in the US in the1880s, immigrants flooded in to take the factory and construction jobs. The constant flow of immigrants allowed factories and construction firms to keep wages low because employees were easy to replace. Discontent over wage stagnation allowed unions to form and populism to rise as a political issue.

This occurred at a time when management was extremely overleveraged and unwilling to give employees what they were demanding. Companies needed to lower their debt, but needed to continue to raise capital for improved equipment and needed to fine tune operations to increase productivity. Business owners were consumed with a backlog of technical problems. They were product and operations quality focused and employee morale was not addressed.

The end result of this was unfortunate. Worker discontent played into the hands of the socialists. Business replaced foreign investors with the Federal Reserve and government subsidies. Government loaded up on socialist legislation and over-regulation. 

The fortunes of the “working class” and “middle class” in the US peaked in the 1960s, but those whose productivity was flat to down began to experience wage stagnation in the 1970s and inflation lowered their household income. The 1980s lifted all boats in the US until the 1990s, when immigration doubled and tripled and US jobs went overseas seeking lower labor and regulation costs. Now we have an oversupply of immigrants who have recreated the conditions we had in the 1880s with our oversupply of labor. We also have everybody on welfare and the federal government pays the tab.

The corporate tax cut should allow companies to return manufacturing to the US and restore “middle class” jobs. But we cannot end the flat wage problem for the “working poor” until we reduce the numbers of lower skilled immigrants.

Exacerbating the problem, the lower skilled immigrants we do have creates two kinds of threats; one is terror attacks and the other is the formation of political pockets fostering permanent non-assimilation. We are seeing the formation of “no-go zones” full of Muslim immigrants and pockets of Mexican immigrants waving Mexican flags. This looks like invasion through migration.

This is a Democrat imposed piece of sabotage engineered to immigrate the poor in hopes that they vote Democrat and that costs $billions in tax dollars to subsidize their goal to expand socialism.

Having seen the debacles created with Obamacare and the unsustainable costs of healthcare and education, informed US taxpayers are rejecting more big government socialism.

US industries in 2018 do not have the same problems that faced US industries in the 1880s. They should actually be able to help, but they are not helping. The 2018 CEOs are not as smart as the 1880 CEOs.

Increasing productivity remains the main goal to fund increases in wages for everybody and this requires capital. We are spending too much on government programs and not enough on tools to improve productivity.

Norb Leahy, Dunwoody GA Tea Party Leader