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By Alan Oakes

What now?

tTttt BESr-LAID eLANS are often those that fail first. I, like many I suspect, was I. so incensed by the debacle of the debt limit negotiations that I made it the focus of this month's column, before leaving for a vacation. The last-minute, cobbled-together debt deal not only failed to attack the issues this country faces, but was, in my humble opinion, government at its worst-frankly, an embarrassment.

About 48 hours later as I landed in Europe, I learned of the downgrading of debt and realized that the stock market would crash come Monday and we would return to the wild swings we witnessed the prior week. Sadly, I was proved right-and then realized I had to rewrite my column.

First, all of us will have our own political opinion and bias and will pass blame on opposing camps. But as if the downgrade was not enough, stock traders and press piled on to create a crisis-a-day panic, centering first on the downgrade, then on Italy defaulting, the French banks going under, the rest of the E.E.C. about to fall into the sea, and finally that it was a Friday and it was raining.

The violent swings managed to wipe out $3 trillion of assets that hurt both business and us as individuals. This, in turn, has created uncertainty that leads to a fear of spending, investing and the possibility of a double-dip recession.

I take great interest in what is going on in Europe. Many countries in the E.E.C. face the same issues as the U.S. In all cases, the government is spending more than it is taking in, and unemployment is too high. There is the chicken and egg. Fewer jobs means less tax revenues and more social costs to help the unemployed, meaning higher spending.

The question I keep asking is, where are the jobs-realjobs-going to come from? Today, we have an official 9.lVo unemployment. We all know that's only half the story; the real number's likely around 207o. Amongthose,44To have been unemployed for over 27 weeks. Many have given up. Others have succumbed to the over-55, never-again-finding-a-job syndrome.

About seven yeius ago, following my first visit to China, I wrote a column that the West better wake up fast and protect itself. We have been so willing to sell our technology to the East that our traditional manufacturing industries have been decimated. Even when the economy picks up, many of the long- and short-term unemployed will still not find a real job. If they do, it will be often at substantially less pay than what they earned in their last job. Technological advances and changes, along with low- and now medium-skilled manufacturing jobs moving to the east, as well as companies finding these past few years that they can produce more with less people, will mean fewer and fewer manufacturingjobs here, service industry pay levels for all but the highest skilled, and less and less tax revenue. When you have a situation in which 49Vo of potential tax-payers pay zero payroll taxes, the percentage will only increase over time. This means the tax burden will have to be spread over an ever-shrinking tax-payer pool.

We face a frishtenine future unless we can find a way to compete with the likes of China. The sad thing is that not only have we allowed this to go on for the last 20 years, but no one seems capable of stopping the rot or willing to halt the migration of jobs. We are losing the fight, and it is clear so is most of the rest of the West.

Alan Oakes, Publisher ajoakes@aol.com

Bpii

Building Products lligest

www. bu ld n g-prod ucts. com

A publication of Cutler Publishing 4500 Campus Dr., Ste. 480, Newport Beach, CA 92660

Publisher Alan Oakes ajoakes@aol.com

Publisher Emeritus David Cutler

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BUILDING PRODUCTS DIGEST is oublished monthly at 4500 Campus Dr., Ste.480, Newport Beach, Ca. 92660-1872, (949) 852-1990, Fax 949-852-0231, www.buildingproducts.com, by Cutler Publishing, Inc. (a California Corporation). lt is an independently owned publication for building products retailers and wholesale dishibutors in 37 states East of the Rockies. Copyright@201 1 by Cutler Publishing, Inc. Cover and entire contents are fully protected and must not be reproduced in any manner without written permission. All Rights Reserved. BPD reserves the right to accept or reject any editorial or advertising matter, and assumes no liability for materials furnished to it,