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Mr. Obama, even god can’t create jobs in US unless………….

September 12, 2011

Mr. Obama has recently announced a package of nearly USD 300 + billions for job creation. He has promised tax breaks for companies which will hire locals instead of outsourcing to other countries (read India and China). I think Mr. Obama is day dreaming.

Forget the complex global financial systems. Forget the complex political international relations. Here is simple common sense which disproves this.

Minimum wage in US for the most common job is USD 8 to USD 10 per hour. Let us -for quick analysis- look at a job which requires 8 man hours. A US company getting it done in US has to pay USD 100.

The average salary in India for an equivalent worker is approximately Rs. 30,000 per month (25 days of 8 hrs each). This means this work can be done in India at USD 24. Now bring in our chinese friends. They will probably do it at USD 12.

Even if we assume that US companies will ignore all this and still get it done in US itself, who will buy it ?? Obviously US can’t manufacture anything which Chinese can’t do. Even god has given up competing with Chinese – don’t you see so many of our idols of various gods and goddesses coming from china ?. Add to this the fact that US can’t ban chinese products because chinese hold most of US debt and if US wants more debt only chinese can give them.

Now consider US consumer. If he has a choice between a US made product and a similar chinese product (at probably one third the price) which one does he buy ? When it comes to money there is nothing called patriotism.

So, Mr. Obama, how do you create jobs ??? Companies can be given tax breaks only if they sell their products  AND MAKE PROFITS. I know this is a very simplistic view. But it drives home an important point. Just tax breaks don’t help. American labour cost is too high in a world where people are willing to work their backsides off for a fraction of it.

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