The Competitive Global Economy

Objection to IBM's decision to move American jobs to India should not be dismissed as a lack of economic intelligence.

The economic cost detected by Americans is correctly determined to be a benefit to IBM's profit margin. The cost and benefit is clearly a zero-sum valuation.

The theory that the added margin to IBM's profit represents a marginal utility of a competitive, employment-cost advantage ignores the cost to the American economy, and IBM.

The probability that the competitive marginal utility on the labor cost will be reinvested to benefit Americans by ensuring a competitive cost efficiency as cheap imports return to the American consumer is a weak optimality at best. The benefit is washed to the consumer whose income is competitively reduced while the pricing power (the marginal profit) of IBM is not. IBM invested the employment cost in India to "gain" an advantage that will be invested to ensure an organizational size that minimizes the competitive advantage that benefits labor and the consumer.

The business model--being too big to fail--is fully in operation here and it is the model for economic crisis if the status of the global economy is any indication. The model is the classic model of capitalism that always results in crisis: assuring investment that uncompetitively consolidates capital by rendering labor costs competitive, and when the crisis of deflation results (a lack of purchasing power against high, uncompetitive marginal pricing), consolidated capital claims the market has decided and the "technical adjustment" of labor costs assures the efficiency of markets. What it assures is a sub-optimal distribution of income that always results in crisis that requires the elite bureaucratic management of political economy, like we have now.

The market efficiency claimed by organizing to be "too big to fail" is a false free-market efficiency that is not peculiar to the financial sector. Where small, competitive firms are encouraged, costs are minimized, purchasing power (employment) is maximized, and businesses are held to a close accountability that minimizes the need, and the cost, of government. It does not mean government is bad for business. Quite the contrary if government's function is to ensure the competitive multiplicity of the marketplace in priority. Being too big to fail is obviously what is bad for business!

Of course, government that functions to ensure a free-market pluralism in priority is inimical to the business model of "too big to fail" which, by definition, acts to eliminate market efficiency by accumulating and consolidating value to a crisis proportion that cannot be allowed to fail. Extortion is not characteristic of a free market where there is a plurality of choice and the extortionists, the criminal element, will most assuredly fail.

Does not eliminating the means of being "too big to fail" identify exactly what "change we need" really means? It is not change to be just believed in, but to be relied on to work with an easily verifiable legitimacy of what The People want by means of doing business--of being actively, directly, democratically involved in a free and uconsolidated marketplace, or what does not allow for "too big to fail." The businessperson's freedom, sovereignty, to pursue self-interest in the private sector is not compromised by ensuring the means for it by the public sector.

Where reconciling individual interest with the collective is otherwise confirmed improbable without conflict, a peaceful prosperity that we all agree to, the general welfare, is possible; and as long as government functions primarily to ensure it, being too big to fail--tyranny--is highly improbable.