Social Question

JLeslie's avatar

What is more important? Americans having more jobs available, or profits being kept in America?

Asked by JLeslie (60133points) March 4th, 2010

I thought of this question because this morning my husband said there is some Republicans congressman supposedly sayign we should not allow Japanese car imports anymore in America, because we can’t trust the safety. What total bulls**t, but I digress :). Anyway, it was pointed out that the Japanese auto manufacturers build more cars in America sold to Americans than the US auto dealers do.

I am not sure of these facts, but lets just go with the premise for the sake of the question.

So, the Japanese are employing many Americans, but the profits are leaving the country. Does it really matter who is employing us, as long as we are employed?

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49 Answers

marinelife's avatar

I think the importance of job creation to the engine of the economy cannot be overstated. I think it is more important than profits staying in this country.

lilikoi's avatar

If we don’t want Japanese automakers running the industry, we need to step it up and produce competitive engineers. In my state they have furloughed teachers and shut schools down one day a week. Every hit to education is a hit to our future ability to remain globally competitive. When the defense industry is taking over half the national budget, education obviously takes a major hit. Looking at the state of our education system, I’d say this is just the beginning. If we don’t like foreign employers operating on U.S. soil, we need to change our priorities.

One important aspect of profits exiting the country is that you give up a little bit of control when that happens.

And what percentage of the national job market does the auto industry even take up? It seems like it would be relatively small (negligible).

cockswain's avatar

Great question. Both grow the economy. They are so intertwined it’s tough to separate one from the other. Greater profits reinvested in the business in America probably stimulates job growth (unless the owners become ultra-greedy), and more jobs means a greater quality of life for more people and more output (which means probably more profits). Philosophically, I’d prefer to see more people working lower paying jobs than having less jobs with those employed making more money. But great question, I could nearly go 50/50.

Mamradpivo's avatar

More jobs means more people spending money locally. So, more jobs.

Val123's avatar

I hesitate to jump in for fear of sounding iganerant…..but here I go. Deep breath.
But do the corporations pay American business taxes? How is it any different than an American company having profits and keeping them? How would the profits profit America?

Literal answer, I agree with @Mamradpivo. The “profit” of the employee’s wages go directly toward supporting American economy.

Factotum's avatar

I’m with cockswain on this. In the near term our economy needs people to get back to making money but in the only-slightly-less near term our businesses need to expand and create home-grown jobs which are less likely to be later exported than jobs provided by a multi-national company that can hire workers anywhere.

lucillelucillelucille's avatar

Jobs.The manufacturer must stay here.Who cares where these multinational corporations keep their money?

Arisztid's avatar

I think that creating jobs is of utmost importance today.

Yes, money staying in America is very important but, in this economy, enough people are out of work or underemployed as to almost make this moot. If you do not have a job, you cannot spend money.

If foreign based manufactures give Americans jobs, good on them. If Toyota, or whatever, opens a factory on American soil, thus employing Americans, I say “thankyou.”

My wife has been out of work for over three years despite sending out thousands of applications. We live in Michigan, the hardest hit State in the Union in this economy. The only jobs available here are medical, trucking, and scams. Factories are continuing to close. I have a job because I am a phlebotomist (hospital vampire) and they short hour me to keep me from getting benefits (like health insurance) because they can.

If a foreign manufacturer offered my wife a job, she would jump at the chance. I just asked her.

Val123's avatar

@lucillelucillelucille You said that so much more bravely than I! I’m afraid I’m missing some “obvious” economic benefit to keeping their profits here..

Keysha's avatar

As someone that worked in the automotive industry, I have to ask one simple question. How many ‘American’ automakers have businesses exclusively in the US? I can tell you, none do. The money goes all over the world, for all international corporations. That is how it works. Those that are US companies outsource parts. Those that are overseas companies build factories here. The money spreads around.

And those that make the ‘profits’ of the business don’t keep all their money in their country of origin, either. So the profit issue is, actually, nonexistent. Give us the jobs. Who cares where the heads of the company park their arses? It all spreads around, anyway.

laureth's avatar

@Keysha is right. The economy is global anymore.

Cruiser's avatar

As long as the jobs are here who cares where the profits goes or what they do with them as long as they pay their fair share of taxes.

lucillelucillelucille's avatar

@Val-Who controls the profits??We sure don’t.All we should care about is that the manufacturing stays here.

Val123's avatar

@lucillelucillelucille My thoughts exactly. And I like it that even if it were an issue, as @Keysha pointed out, it would be offset by American manufacturing over seas and bringing the profits back here.

simpleD's avatar

A local, private company is more likely to invest its profits back into the local community. A foreign owner will be much less likely to support other local businesses and community outreach.

If we can patronize local companies when we have the option to do so, it will benefit us more than if we support foreign companies.

Of course, a foreign company employing American workers is, in a way, investing in the local communities. I think you have to look at it on a case-by-case basis.

tarmar's avatar

More jobs! Even foreign companies want to support their US communities. Here in SW Georgia, we’re heralding the new opening of a Kia auto plant. Just opened. They planned for 1200 jobs (31,000 apps). Now they’re planning on 3500 total jobs. A great addition to this area. Bring on ALL the foreign investment we can, I say.

Val123's avatar

@tarmar Whoo hoo!! Well, nuff said I guess!

JLeslie's avatar

@lucillelucillelucille I guess that leads into a separate topic. Not a bad point though. If the manufacturing is controlled by foreign governments, then if we have to step up manufacturing for some reason, like American auto dealers made autos and other engines, probably more that I don’t know during war time, then we have lost the ability as a country to control that. It may apply to other industries also? I have not thought that through.

Val123's avatar

@simpleD Thinking about your answer about “local” companies putting profit back into “local” econmy….well, I’m thinking the only reason they would do that is to make themselves look good so that the “locals” would become loyal to their product. So it would behoove a foreign manufacturer to do so in the local economy too.

simpleD's avatar

@Val123: There are many locally owned small stores and service providers in my area who genuinely care about improving the quality of life in our community. Our food co-op, for example, boasts that .50 of every dollar stays here. Sure it makes the business look good, but it also makes us feel good about shopping there, knowing that we’re having a positive economic impact on ourselves and our neighbors.

JLeslie's avatar

@Val123 I think you might be talking about charity type work, I think others might be talking about the owners spending their money locally, consuming locally. Not sure.

I am pretty sure Toyota in MS I think it was, maybe Alabama, when the autp business started to hit a big slump a couple of years ago, kept paying their workers, even they were not producing cars, and they helped fix up the local community, but improving playgrounds, and other various things in the community. Kind of paid to volunteer. But, I can’t say all foreign owners would do anything close to this, and even the Japanese I am sure have their limits on how long they would and did do it. I worked for a Japanese company once, they paid 100% of the health care insurance for employees. We made a very good product also.

Val123's avatar

@simpleD I know that….I owned a small business, but we’re talking about large corporations.

@JLeslie Yes, I was thinking charity type stuff, but not about the owners spending locally, because if the owners live in Japan they wouldn’t be spending the money locally. They’d be spending their wages in Japan/ Now, the managers etc. who worked for the company and lived locally would.

LuckyGuy's avatar

It’s “jobs”. The workers spend money and pay taxes here. In general they spend all of it here. And buy products here. Much more thatn the profit.
The profit is a small portion that goes to the top level of the corporation. Sure, they say the corpration is owned by shareholders but if you look at the shareholder listing you will find that a few groups own most of it and the top level execs a get a huge salary that can be 100x the salary of the workers. One top level exec does not buy 100 cars /year. Nor does he spend virtually all his salary every year .

Just_some_guy's avatar

why do people think that this money is staying in America? Its cheaper to buy raw material from another country and to send it here. Not only that what large company isn’t invested all over the world. I think jobs is a logical answer. I am laid off since august. I just had my last unemployment pay and am still trying to find a job in my field. I have worked a few part time or one time jobs during this time, but nothing is permanent atm. I have to tell my kids they can’t have have x-mas or new clothes. Maybe soon no food if I don’t get a job, or if I can’t get some assistance. Always said I’d never try for welfare. No choice now.

davidbetterman's avatar

The one would bring about the other. Americans having more jobs available would keep profits in America.

Captain_Fantasy's avatar

If profits are kept in America, American business can then afford to hire more American workers.

Trillian's avatar

I’d rather have a Japanese corporation here in America employing Americans than an American corporation outsourcing jobs to India. Or wherever.

phillis's avatar

How can a business show profit without people having readily spendable money? When everyone imaginable has thier palms out for “thier share” of even the tiniest profit a company (or individual) can show, the greed bleeds the system dry. Do the CEO’s of all large corporations have posters of Gordon Gecko adorning the walls in the executive washrooms? In this scenario, only those companies who offer necessities central to survival, and who outsource, can comfortably survive…..and therein lies the problem. In the end, the bodies of broken companies create the scrap heap upon which only a few climb atop to plant their flag.

I have to admit, I feel guilty. I love shopping at Walmart and Sam’s Club (same difference) because frankly, I can’t afford to shop at Publix. I can’t afford to support the Mom and Pop businesses.

I am completely against government getting involved with businesses except for the purpose of regulation. I don’t begrudge a company amassing millions. Free enterprise, baby! But it doesn’t start there, it starts with each individual. Taxes, healthcare and childcare takes well over half of each paycheck.

Going further, why NOT fund small business start-ups in the form of a LEGIT tax breaks for corporate contributions? Why NOT micro-loans? Why NOT teach a skill to a welfare reciepent that they can actually build upon, instead of barely scraping by? We educate people, they go off welfare. Viola! That takes care of draining a state’s budget. In turn, that money can be put toward public education, or other worthy goal.

Cruiser's avatar

@Captain_Fantasy More profits would be kept in America if the corporate tax laws were not so brutal.

SeventhSense's avatar

I like the hard line with the imports. There’s not a fair trade balance with Japan and hasn’t been for a long time so we need to play hard ball. Keep the foreign corporations on American soil but limit the bleeding. Meanwhile hire competent foreign engineers from wherever to strengthen and make more competitive American industry. We need to look to focus on becoming better than Japan or Germany and make made in the USA mean what it once did-quality.

cockswain's avatar

The concept of corporate taxes has come up a few times here, in terms of how the taxes are good for the government and also a deterrent to corporations. What are corporate taxes and who pays them? Some people argue corporations just pass the tax onto consumers by raising prices. Others say the stockholders bear most of it. Some say employees pay it by receiving lower wages than they’d otherwise get. In all arguments, it is people-owners, consumers, or workers-that truly pay the taxes.

I’m paraphrasing this from an econ book.

Hypocrisy_Central's avatar

Fact from fiction truth from diction. I would normally say keeping profits in the country is more important. Those profits will pay taxes that should support projects that will benefit here. To have more profits you have to have profits, and most Americans don’t want to pay a price which allows goods to be produced in country so it gets out sourced where the labor is cheaper and prices can be kept with in tolerances American can stomach.

mattbrowne's avatar

If some Americans want to keep Japanese cars out, the Japanese will then want to keep out

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Talk about American job losses. You sure anyone would want to get into this?

Protectionism is not the answer. I’m surprised that any Republican would consider this. I thought they would be advocates of free markets.

Of course jobs are more important than profits. To save American jobs and to create new ones the best strategy is high quality products & services and innovation. The consumers will decide. If Toyota’s cars are no good (which I don’t think) then consumers won’t be buying them and choose better products. No need for hard-core Republicans to get involved.

SeventhSense's avatar

@mattbrowne
I disagree that this would translate as negative. Unfair trade balances need to be addressed. It has noting to do with quality but exorbitant tariffs and import taxes on American goods imported into Japan and elsewhere. The Japanese benefit unfairly from our less restrictive import taxes. I sell items all over the world and it’s ridiculous the import charges that are assessed. I’ve never had to pay for one item that I’ve received through mail order from a foreign country yet many of my customers are charged up to 70% of the cost of the item! And I for one am not a Republican.

laureth's avatar

For what it’s worth, we benefit unfairly from Japan’s universal health care system, too. Because the automakers don’t have to figure in health benefits for their workers and retirees (like we do here), their cars are that much cheaper. American cars would be that much cheaper (ergo, more competitive) if we also had universal health care. Most people don’t seem to think of the connection, but it would make just about every American product more competitively priced, here and overseas.

mattbrowne's avatar

@SeventhSense – Talk about trade justice. What about the poor guy picking coffee beans while American and European coffee companies keep more than 80% of the profits consumers spent on buying coffee? Now I’m no expert able to judge how the US-Japanese import-export balance sheets looks like, but I’m sure there are many examples about unfairness on both sides. Yes, unfair trade balances need to be addressed, but the issues are very complex and people who usually make a lot of noise about it often pick examples that fit their story best while leaving counterexamples completely out of the picture.

mattbrowne's avatar

@Val123 – My point is, America has many great companies (the list is very long) with high-quality products and services able to compete on a global level.

mattbrowne's avatar

@laureth – Agreed. European products are more expensive, because everyone has got health insurance while over 30 million Americans often don’t see a doctor when they actually need one.

Factotum's avatar

Who is this poor guy picking coffee beans? If the pay sucks why doesn’t he do something else?

laureth's avatar

Perhaps out of all the options he can actually access, that one sucks the least? Not everyone can just go to college and become a software engineer.

(“Why doesn’t the market fix it?” you ask. It’s because Mr. Market likes serfdom.)

Factotum's avatar

Doesn’t everyone in any market or any system go for what sucks least?

Markets don’t ‘like’ anything. If this guy could come up with something marketable it would be welcomed, not by the market, but by human beings.

His lack of opportunities have far less to do with the availability of coffee bean picking jobs than the unavailability of better jobs.

For that he can likely thank his government.

laureth's avatar

He can thank his government, @Factotum, because his government is playing the Free Market game instead of the Nationalization game. Also, it takes more than just a spiffy idea to make human beings (or the market, which consists of human beings) beat a path to his door – he would also have to innovate it, implement it, and market it so they can hear about it and want it – which is probably hard when you need to spend all day picking coffee beans. I suppose his government’s failing here is also by not having the military might to stand up to American colonialism in his grandparents’ day.

The market “likes” cheap labor because it makes items cheaply, which makes people choose to buy his coffee rather than the more expensive “fair trade” stuff. (Yes, some people will pay a premium for fair trade items, but not nearly all.) If he decides his time and effort are worth more and decides he wants a raise, he will likely be told to pick coffee elsewhere, or less of it will be sold at the higher rate.

mattbrowne's avatar

@Factotum – You mean like growing coca plants? How much do you know about developing countries?

SeventhSense's avatar

@mattbrowne
I agree that the little guys always get caught in the crossfire but on a more fundamental level we need to address the entire system itself.

Val123's avatar

Somebody’s gotta pick the coffee beans.

mattbrowne's avatar

@Val123 – Exactly. Therefore we buy coffee which got a

http://en.wikipedia.org/wiki/Fairtrade_certification

Our money will reach the coffee farmers instead of the CEOs of large distributors and retailers who might now be worried not to be able to afford their third yacht. The fair trade movement is huge and very slowly large corporations realize something needs to be change to retain customers. Check this out:

“Small-scale coffee farmers around the world have scored a victory with Procter & Gamble, the largest seller of coffee in the U.S., announcing that it would introduce Fair Trade Certified coffee products through its specialty coffee division, Millstone.

The announcement comes in response to dialogue with shareholders about the company’s practices, as well as pressure from consumers, people of faith, human rights activists, and humanitarian organizations. With P&G’s announcement that it will offer Fair Trade Certified coffee through Millstone, the advocacy groups have agreed to suspend their campaigns against the corporation and the shareholders have withdrawn the resolution they had filed on the issue.”

http://www.maketradefair.com/en/index.php?file=12092003132827.htm

Consumer power does work !!

Ron_C's avatar

This is a very interesting conversation for me because I am constantly working with companies with foreign ownership in the U.S. and Mexico and American companies operating in Europe and Asia. In my experience there are several issues here:

1. Free trade in its current iteration only applies to large multi-national companies and works to the detriment of small, American companies.

2. Creating local jobs is always a good thing, Problems arise when communities bribe companies to locate in their area. I have seen where hundreds of millions of tax breaks and property purchases were offered. Foreign and out of state companies accept those offers, then insist that the temporary incentives become permanent and move if they do not.

3. Organizations like the U.S. Chamber of commerce actually support company’s that decide to relocate out of the U.S. and there are significant tax and salary savings available to encourage them. This is a totally anti-American labor policy.

4. The electoral process, in the U.S. has become co-opted by multinational organizations and proposed candidates and the election process has been taken away from the voters and is now operated by outside investors with voting machines that can easily “adjust” for unexpected opposition.

If you look at the big picture you can see that the decision process and control has been taken away from the individual and given to corporate leaders. Soon we will arrive at a neo-feudal system with corporate barons and a serf labor force. The ironic part that they call people that want a return to democracy “socialists” and the ones that protect their corporate barons patriots.

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