About Michael Czinkota

Professor of International Business and Trade at Georgetown Univeristy, Washington, DC, U.S. and University of Kent, Canterbury, UK - http://www.faculty.msb.edu/index.htm http://www.twitter.com/#!/michaelczinkota http://www.facebook.com/169628456631

The Hard Truths About Today’s Labor Market

Jerry Haar

Unemployed coal miners want their jobs back. So do manufacturing plant workers whose employment has been outsourced to lower-wage countries. Add to those young people, including scores of college graduates, whose job prospects are grim, forcing them into underemployment and requiring them to live at home rather than on their own.

This litany of complaints (and outrage) has fueled, in part, the resurgence of populism not only in the United States but in Europe, as well. And while these grievances are understandable, it is time for real truths–not alternative truths–about labor markets. These are:

Dying industries cannot be resuscitated. Typewriters, pay phones, folding maps, beepers, Kodak film, and cassette players are obsolete, their product life cycles have run their course and their replacements/substitutes superior in every way. Coalmining employed nearly 130,000 workers when Obama was elected president. By 2015 that figure had dropped to 98,000. Competition from cheap, shale gas; fracking; renewables; and technology was and will continue to be the reasons for the continual fall. Other declining industries include knitting and apparel, hardware manufacturing, communications, equipment, and glass manufacturing. Here, too, technology will boost productivity while decreasing labor input.

Most offshored jobs will not be re-shored. Although some will be coming back, the vast majority will not. Outsourcing, whether transferred in-company to an outside supplier, from a union state to a right- to-work state, or to a foreign country like China or Mexico is intended to reduce costs to allow a company to sell to consumers at a lower price. The negative impact on a firm’s employees will be the same. Reducing costs allow the company to offer consumers a lower price. When Delta moved 1,000 jobs to India it reduced costs by $25 million and used the money saved to fund 1,200 new reservations and sales positions in the U.S. The intent of market capitalism is to serve the consumer, not the producer’s employees.

Continue reading

New World, New Policy: How Tax Cuts help U.S companies to go abroad

Professor Michael Czinkota

World trade has forged a network of global linkages, in which everyone and every country is involved. Nowadays, a drought in Brazil and its effect on coffee production and prices is felt around the world. U.S subsidies for ethanol production from corn affects prices for other agricultural crops and livestock in the far reaches of the world. As the key player in globalization, any U.S reform tends to change the international market. The old saying goes, if the U.S. sneezes, other nations catch a cold.

After only 100-days in office, President Trump has already released a tax reform memo to the public. Although not complete and detailed, there is clear a signal coming from the release how the government would like to encourage U.S companies to export and invest abroad.

First, comes a cut in the top tax rate for all businesses to 15%, far below the current 35% top rate. This reduction is not imbalanced since it would also benefit the owners and shareholders of international corporations in the United States. With this tax cut, companies, especially manufacturers, can lower the price of exports and have more money for R&D and marketing. This measure will greatly enhance the competitiveness of U.S goods in the global market. Also, a tax reduction will significantly reduce the financial constraint on companies and allow American companies to seek investment opportunities on a global scale.

Continue reading

A SUMMER IN CANTERBURY

Canterbury-Cathedral-460x306Scholars typically spend their summers at interesting and learn-worthy organizations. For my summer this year such destination will be the University of Kent in Canterbury, UK. There I will participate in several events. I will be help coordinate a university-wide international business seminar: Global Business in a Dynamic Environment. In addition, I will be chairing the scientific council of the 1st International Doctoral Conference “Socializing Business Research: Connecting and Advancing Knowledge” at Kent Business School.

Continue reading

CGTN Interview – Refugees and the Economy

What impact do refugees have on the economy, and how best can they integrate into their new home? I explore these issues in my interview on CGTN.