Friday, October 26, 2012

The Price of Peace....And Short-Sighted Economic Decisions

One of the perks of social media is being able to track the random thoughts and musings of those on the left here in Northeast Wisconsin.  Predictably, yesterday's timelines were filled with comments that the Oshkosh Corporation was trying to "scare" its employees into voting against President Obama--because they claim he is "going to cost them their jobs".  The 450-layoffs announced by the company yesterday are due in large part to projected defense spending cuts in 2013 and beyond.

Peace (even if it comes only from withdrawal before Afghanistan is secure and stable) is always an honorable goal.  But it creates a conundrum for communities and companies that rely on the business of war.  Nobody wants American soldiers in harm's way.  But when you make the vehicles or the aircraft that take them there, your livelihood kind of depends on it.  Call the layoffs at the Oshkosh Corporation the "Price of Peace".

As you may recall from your high school macro-economics courses, governments face the choice of "guns or butter" when it comes to allocation of resources (unless you can rack up $16-dollars in debt--then you can have all the guns and butter you want, apparently). Unfortunately for Oshkosh Corp. the demand for its "butter" is down as well.

The EuroZone market--a target of Oshkosh growth in the "Old Economy"--is dead.  Thanks to decades of overspending and overtaxation, European governments have no ability to pay for the the new construction equipment or garbage trucks that Oshkosh civilian units could build instead of military trucks.  And thanks to President Obama's insistence that the "Stimulus" target only "shovel-ready", union contractor projects--instead of a long-term infrastructure focus--the civilian market for concrete placement and access equipment also remains stagnant.  Throw in continued tight credit markets and limited investment interest--and the private construction market is soft as well.

So what advice should we give those about to lose their jobs at Oshkosh?  Well, to paraphrase the friend of Benjamin Braddock's father in The Graduate, I've got two words for you: "Health Care".  Since that seems to be the obsession of those on the left, health care is the only growth industry on the horizon.  So perhaps welders could be "retrained" to do build hospital beds--there are going to be plenty of Baby Boomers to fill them in a few years.  Electrical systems guys could move over to the Hover Round plant--since Medicare pays for those--and anyone who has the slightest difficulty walking is already using them at the grocery store.  And everybody else can get jobs pushing papers at hospitals and clinics as all of those people who are now "guaranteed access" to health care make full use of their fellow insurance customers' premiums--and then some.

I'd suggest Oshkosh look to China for growth--but it's an election year and China is a dirty word.

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