Tuesday, December 28, 2010

Good Read ::: ‘Compliance’: The Word That Sunk a Million U.S. Jobs

A great article to reference. Here's an excerpt:

Generally speaking, when discussing the state of international competition the conversation focuses on issues of taxation, fair/unfair trading partners, labor costs, and corporate CEO greed. However, as competitive as Americans are it is surprising that so little attention is given to the ways in which we make ourselves uncompetitive by putting one-sided burdens on our own companies. Whether as a source of revenue or a means of promoting social policies, we have watched federal and state governments do just that.

How might this happen? In reality, when we think of competition in business we usually focus on product pricing, unless there is a unique product that commands its own price. (Think anything named Apple.) In reality, competition among businesses is not based as much on price as it is on cost to produce. The market sets the price among like or similar products, and only those companies that can produce that product at a cost low enough to make a sustainable profit will survive. Those whose costs are higher must either lower costs or exit the market. It really is that simple. The companies that produce an acceptable product or service at the lowest cost usually determine the market price, and competitors must be able to match that price and be viable or lose out.

This is tough enough in a market gone fully global, but it gets immeasurably worse when the U.S. burdens its companies with layers of additional costs the competition does not have. While we focus on the relative labor rates between countries and demagogue about “slave labor,” we would do well to consider the added costs accumulated by federal and state government actions; extraneous costs that add nothing to enhance the end product.

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