Caricature by Jerry Dowling

The news has been abuzz this week with snippets of our Community-Organizer-In-Chief (COIC) bloviating about those “wascalwy Wepubwicans” endangering the country’s safety by insisting on no tax increases as an agreement (whatever that means in Washington any more) is reached on our debt ceiling before the August 2 bewitching hour. He went on for almost 45 minutes about fat cats with corporate jets and oil company tax subsidies and that the wascalwy Wepubwicans will have to give some ground on these “vital” loopholes to bring resolution to our national crisis. And if they don’t, they’ll ruin the lives of countless children and threaten the lives of good seniors everywhere.

Let me see… General Electric posted BILLIONS in profit last year and paid $0.00 in Federal income taxes. And guess who has a corporate jet?

This class-warfare-mongering COIC thinks wise Americans will side with him and demand an end to all “corporate welfare”. Even Ben Stein, a fiscally conservative Republican, agrees with him.  Ben said that he was all in favor of soaking the rich, because that would generate some $900 billion in additional revenues. This in the face of a $3 Trillion PLUS Obama budget? And national debt of over $14 trillion (click here). Is Ben serious?

We don’t have a tax problem. We have a spending problem. And I for one am for relieving ALL of the current residents of the Capitol Building of their duties in 2012 (including the occupant of the White House).

What most Americans don’t understand is that NO CORPORATION PAYS INCOME TAXES! Suppose the Congress caves and takes away the deduction for corporate jets (not including, of course, Air Force One). Gee, do you think GE (or an insurance company or Shell Oil) will eat that hit on the bottom line?

OF COURSE NOT. They’ll factor that into the price of the product and pass it on to their customers. Likewise if Congress takes away tax loopholes for oil exploration, or oil leases, or securities transactions, and so on.

So by blaming those wascalway Wepubwicans and those mean big businesses, the COIC convinces the American people that we can heal our economy with minimal tax increases (with everyone going “Hoo ray!”).

Then they’ll wake up next week and wonder why gasoline went up 50 cents a gallon, or why their insurance deductible just rose by $1,000 or why their bread costs a quarter more per loaf.

Remember, people. Corporations don’t pay taxes. The consumer ALWAYS pays ALL taxes.

Period. Do you understand?

I was watching a report last week on The Fox News Channel (yeah, I’m one of THEM) about the bowling industry in America– or rather, what USED to be the bowling industry in America. At one time, almost all of the bowling equipment sold in the US (balls, pins, machines, shoes, uniforms, bowling alley furniture, etc.) was made by either AMF or Brunswick.  But when NAFTA was passed in the 1990′s, the factories went to Mexico to take advantage of the cheap labor market.  Why?

Because American bowlers were demanding cheaper and cheaper gear, and it could not be produced in the States with our higher standard of living (and attending wage base).  So the Mexicans celebrated as they inherited hundreds of millions of dollars’ worth of factories, development, and expertise.  There were fiestas down south as plants closed up north, and several small US towns hat depended on AMF and Brunswick were decimated.

But now the Mexicans are singing the “Bye Bye Birdie” song because the manufacturers (still mostly owned by Americans) are moving their plants to someplace where the labor is even cheaper– yes, China.

I find it ironic as it can be that our friends to the south, who celebrated their big wins with NAFTA-inspired migrators like AMF and Brunswick are now in the same state of shock our workers were 16 years ago.

Why?  For the same damned reason as it was in the early 90′s– American bowlers want their goodies STILL cheaper.

I’m going to reap a lot of flak for what I am about to say, so before you hit me with your flame thrower, read the entire

Off-shore call center?

blog carefully.  I am a patron of Walmart.  I like Walmart.  They have been generally good for America, especially in the smaller towns were they set up shop.  But there is a downside to Walmart– and it is what I call the “Walmart mentality.”  It’s the mindset that cheaper is ALWAYS better, that somehow it has become an American right to have the best of all goods at the cheapest possible price.

The result?  Someone off shore makes a knock-off of  a high-quality US product (or, sometimes, a poor-quality one, as Detroit knows only too well) and sells it for 25% less than the US product, usually at Walmart (and similar discount chains– it’s not just a Walmart issue).  So what does the American manufacturer do?  Try to match prices and keep the quality up (sometimes an impossible task), so they either have to beat the bat snot out of their employees for concessions to stay “competitive” or they must move out of the country to where labor is cheap.

It began 50 years ago.  First shoes went offsore.  I grew up in a small town in the Midwest that had, among other things, a shoe factory, owned by the Brown Shoe Company.  I worked there one summer while in high school. At one time, it employed about 400 people, making shoes that Americans built, Americans wanted, and Americans wore.  Then someone– I don’t know who– maybe the Italians, maybe the Fillipinos, or Indonesians– began making equally good shoes (or better ones) at a lower price.  Brown tried to keep up by cost cutting, but it was not enough, and eventually Brown outsourced all its shoes to off-shore factories.  Today, Brown is still in business as an American company, but the shoes are not built here any more.  Because Americans wanted it cheaper, faster, cheaper.

Then television sets left the American landscape.  Do you remember when RCA, Magnavox, Philco, Emerson, Motorola and others were built here?  I do.  They are all built in Asia now.  And they are darned good sets too!  But again, we clamored for cheaper, faster, cheaper.  And we got it.

Steel mills followed soon thereafter.  Then cameras.  Then computers.

We demanded it cheaper, and we got it.   But at what price?

What does the future hold for us?  I have heard it said that information technology is the new steel mill for America, that we have a huge lead in that area and that we can leverage that for wealth.

But not for long.  We’ll lose that lead to cheaper, faster, cheaper soon too.

Gee whiz, I sound pessimistic on this, don’t I?  But have I missed it?  Am I wrong?

The English art critic and essayist John Ruskin said it so well over 100 years ago:

“It’s unwise to pay too much. But it’s worse to pay too little. When you pay too much, you lose a little money, that is all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do.

The common law of business balance prohibits paying a little and getting a lot. It can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.

There is hardly anything in the world that someone can’t make a little worse and sell a little cheaper and people who consider price alone are this man’s lawful prey.”

Can product quality and superior salesmanship save the United States from its plunge down the world’s economic toilet? I hope so!  I’m betting on it!  But we have our work cut out for us!

The premise of the article was that the publishers solicited advice from various contractors (painters, plumbers, electricians, flooring specialists, cabinet makers, etc.) to help homeowners haggle with contractors so they can “cut costs, not corners.”

The first two “experts” advised customers to get multiple bids (at least three) so you’ll know the market price range for the job. And let them all know you’re getting three (or 10) bids, to keep them all honest.

First, what guarantee do you have if you get three bids that you’ll have anything even close to the “market price range for the job?” You’ll just have the range of the three people you talked to, and they may (or may not) be good contractors and therefore their bids may (or may not) reflect the “market price range for the job.”

One expert had some good advice-draw up your specs before getting bids and have the bidders bid on the same specs rather than let each contractor offer their own solution. (I must point out they were not saying the homeowner should design the job themselves, but merely specify things like color, tiles, hardware. To that I would add energy efficiency and sound ratings.) But then he advised homeowners to get itemized bids and compare the costs apples to apples. In other words, cherry pick the contractor!

Unless you are conversant with job bidding, how would you know that the red tiles quoted by flooring contractor A were an apples to apples equal of the red ones bid by contractor D? You wouldn’t know, so this is dumb advice too.

Two more experts suggested homeowners dangle incentives before their bidders. One suggested the homeowner should offer to pay the subs and suppliers directly (which lets the homeowner know your exact costs, doesn’t it?). Of course, implied in this is that you’re screwing the contractor out of his markup on materials and subs. Do that enough, Mr. Dealer, and you will become a bankruptcy statistic!

Another expert suggested you have the contractor lean on his subs for price concessions. That might work in a bazaar in Timbuktu. I don’t think it has much merit for America right now.

Another bit of advice said to play your hand and then shut up. For example, if the contractor says the job will take $9,000, come back with “My budget is $7,000,” and then clam up. The advice from this sage is “he who speaks first loses.”

Bull! The best way to sink that ship is wait a few seconds and then say, “Mr. Jones, my mother taught me when I was a lad that silence was consent. Was she telling me the truth?”

I think any contractor who puts a price on the table without first establishing the homeowner’s budget is a fool anyway and deserves to be handed the “silent treatment.”

And don’t tell me a contractor cannot get the customer to divulge his budget. I did it all the time. If he does a great job of establishing trust and rapport, it is just as easy to ask, “Have you set a budget for this project?” as to not ask and then guess and end up priced out of the ballpark. Most customers won’t have a budget, so you can work with them to set one.

It goes like this: “Well, can we work together for a minute to establish one? You see, I have literally thousands of combinations of units I can bring to this problem and the prices will vary a lot based on the combination. If I know what you are comfortable with, I have a better chance of finding a solution that will please you.” Most folks would be ok with that. Then, to set the budget, start off, “Let’s suppose we went top-grade all the way and the job came to $12,000. Would that be out of line?” The customer gasps, “Twelve thousand! Are you nuts?” You reply, “I am just looking for the ceiling. Obviously $12,000 is too much. Suppose the job came to $9,000. Would that be more acceptable?” And so on until the customer indicates the range you have found is workable. (A variant is to cite monthly payments instead of the lump sum.)

Now here’s the catch. What if their range is well below what you need to charge for the job? You then say, “There may be a problem. In my experience, solving the issues you want to address cannot be done for that low a number. Are you willing to give up some of your requirements for me to meet your budget, or do you want to reconsider your budget and meet all of your requirements?”

Perhaps the best advice of the column was the last one: “Choose the guy who’s best for the job and then talk budget.” I can work with that and create a great solution (most of the time) for the money the customer wants to spend.

In the months ahead, I will be placing some sales training materials in my web-site’s “Shop” that you may want to consider and purchase. Check back from time to time to see what new is on the shelf!