Reflections on America

Or

How to destroy an Economy

Summumm ius summa iniura!

The more law, the less justice!

Dr. A.H. Krieg

This is a very difficult subject for me to address, because it runs contrary to my patriotic nature. I have given it much consideration but believe it must be spoken of. I owned and operated an American manufacturing company in the specialty machine tool industry from the early ‘60’s until 1987, when I under duress liquidated the business. We operated facilities in CT, and CA, called Widder Corp., Widder UK Ltd in the United Kingdom, and Panox in Switzerland and Widder RSA Ltd in South Africa.

Before 1985 I would no more purchase a foreign made product than taking a long walk off a short pier. We not only manufactured machinery but we also exported it, while importing raw materials and some accessories products. Our volume especially in export was considerable for a firm of our size. Our operations in the U.K. and RSA were primarily distribution and sales outlets while our Swiss affricate Panox operated as a trading company.

Frankly our government through moronic tax policies, death duties, and incredibly dumb trade policies put us in the position of having to close our business, lay off scores of excellent employees, and deprive state and federal government from the taxes we might have paid them.

Tax policies included ERISA an act that was supposed to make pensions of American workers safe but as usual in legislative act, made them unsafe, as can be readily gleamed for current national pension scandal issues. In our particular case the companies pension funds were invested in the mortgages of our plants. This allowed us to pay 14% to our pension funds while deducting it as a business expense for the benefit of our employees. The investment was very secure because the mortgages accounted for less than 60% of the buildings valuations. ERISA forced us to seek a mortgage company to whom we had to pay 11% mortgage expense and place the pension fund with an insurance carrier who paid our employees 5.2%. In other words we were all jointly screwed at the expense of mortgage companies, insurance companies and the government.

Due to the stupidity and intransigence of our legislative bodies we have even to this day seen no tort reform. Lest you suffer the dilution that this is a minor expense let me relate our particular case. American manufacturers have what you call attachable assets; these would be plants and equipment. Importers have only limited liability because their only attachable asset is the inventory that they at any particular time have in their rented warehouse. Widder’s liability insurance rose from $480. per year to $47,000. per year from 1965 to 1987. We had never been nor where we ever sued on a product liability or any other issue. The only branch of society to gain from this act is insurance companies and trial lawyers, [shysters] of which our legislative bodies primarily consist of. If you disagree let me point out that in every American liability case all of which are litigated under contingency fee schedules the litigating law firm winds up with over 50% of the settlement. Let me further point out to you that on average 12% of the cost of every single item you purchses is for manufacturers [producers] liability insurance cost. In medicine it’s worse. All the babble about consumer protection from all sources including Ralph Nader is nothing but sales talk from trial lawyers.

Estate taxes are the bane of family business it is indirectly responsible for the largest percentage of family business and farms failures. In our case my father held almost all stock in the business. When he died the IRS came a calling. They demanded an immediate payment for estate taxes of $148,000. I explained that this was impossible without closing down the plants and liquidating assets. Sure we had A/R for $450,000 and $40,000 in the bank but payment to the IRS would have destroyed any cash flow we had and made payroll impossible to meet. The IRS agent agreed and we struck a deal, Widder would pay out 10% of the outstanding owed amount over ten years at 2% over prime, or $14,800 per year plus interest on the open balance. Then Americans in their wisdom elected a moron named Jimmy (the twit) Carter under whose able management interest rates rose to almost 25%, our payments rose to $ 49,000 in that year.  At the end of the ten years we had paid our over $ 380,000 estate taxes. This prevented R&D, expansion sales efforts all of which would have resulted in more employees and a larger tax payment to the government. In fact had the tax not been imposed the government would have come out far ahead.

As it happened the U.S. Navy was one of our better customers. We sold not only to the navy in general but also to the Underwater Sea Systems Command and to all individual navy yards, as well as many ships. This business accounted for about 8% of our overall turnover. At some point in the late ‘70’s our naval business came to an abrupt halt. Investigations by our congressional representative revealed that the Navy contrary to national defense policies was purchasing equipment from over seas. We were informed that policy had changed and the all NATO nations were now considered equal. In order for us to sell to the navy our products had to undergo rigorous tests called TPR’s, the cost of these tests was well over $30,000 per case. The imported products as long as they were proven to have been sold to any NATO navy, did not have to undergo any of these assessments. We were informed that we could on equal terms sell our equipment to all NATO navies. We tried, The Germans said no, politely. The French threw us out of their purchasing offices, The Belgium’s, Italians Dutch Norwegians, British, Spanish and Portuguese all said no dice. The navy even went so far as to allow sales of products we had patents on and had been approved by the navy to an altered state circumventing the patents be sold to them. Our Naval business evaporated. Our W. German competitor had products manufactured in E. Germany and shipped to him where products were cosmetically improved a labeled Made in West Germany; we were uncompetitive against such practice. When we contacted the customs office they informed us that it was only our word and we would have to provide invoices from the East German producer to the one in West Germany [an impossible task] for them to act. When we pointed out that by weight of steel the particular product had a greater raw material value that the cost at point of American entry they said so what.

Beginning in the early ‘80’s I had developed several patents for the nuclear industry. These were very expensive underwater remote controlled machine tools. The nuclear industry was booming and we developed a good business building custom made machines for almost all plants as well as all nuclear prime contractors. Among these were General Atomics, Proto Power Bisco, Westinghouse, GE, Fairey Engineering UK, BNFL UK, Waste Chem, Bechtel, Union Carbide And Torrey Pines. Under pressure of environmentalists the NRA [Nuclear Regulating Agency] began a system of changing even already approved designs of reactors eventually driving the cost so high as to make building them impossible. At the cost to our environment a bunch of bureaucrats and environmentalists were allowed to destroy the cleanest cheapest and most cost effective means to produce electricity in the world. We lost the industry as a customer it was about 15% of our business in the mid ‘80’s.

At some point in 1982 my comptroller came to my office and told me he could not balance the books that large amounts of money was missing. We contacted the bank that informed us that the IRS had come in and confiscated the cash. I asked what about due process? What about a court order? What about our rights? We found out that we had no rights. A though search turned up the canceled check made out to the IRS and deposited by them by cancellation marks on the rear. To no avail, attempts to get our money back starting with the agent, to the referee, and then to the regional manager in Hartford CT all were unsuccessful. Not even our congressional representative was able to see justice done. As it happened then Governor Ella Grasso was a friend and so I called her and asked her intervention. She after satisfying herself that our funds had been taken illegally called the director of the IRS and told him if funds were not returned within 48 hrs. she would get the entire CT delegation to vote against funding of the IRS. Our cash with interest arrived three days later.

In about 1974 we began manufacturing a nibbler for cutting corrugated sheet metal as we began to increase sales we developed several manufacturing methods such as the use of investment casting of dies and manufacturing the load bearing heads out of bronze rather than aluminum, that allowed us to capture a major share of the market. This continued and our sales grew to about 70% of the total market share. Robert Bosh of Germany was one of our competitors they reduced their prices far under production cost in an attempt to drive us out of the market. We went to the International Trade Commission and brought a dumping complaint against Bosh. We proved with absolute certainty that Bosh was selling product on the American market 40% below the selling price in Germany. This is called dumping and is in violation of international agreements. [GATT] The Commission found that we were right, Bosh was dumping, but that we were in fact only a small business and that the effect of our loss of sales in this product would only have minimal employment loss and that Bosh was a huge corporation and they would not enforce the law. What in effect we were told by our government, to whom we were paying thousands of dollars in taxes, was, that there were two separate sets of laws those for big corporations and those for small business. The presentation of our case without any lawyer’s cost of over 900 hrs of labor and three trips to Washington, Bosh had four lawyers on their payroll for this case. 

My first patent was in 1977. The total cost for it was $300. Which was primarily the filing cost to the U.S. Patent office. As time went on more and more shysters became involved with the processes of patent application the process became more complex and the ensuing bureaucracy became slow and incompetent. My last patents of which I had accumulated over 25 cost over $ $3,000 and involved a lawyer. By that time most patent reviewers at the patent office were so incompetent that they could not understand my applications. Patents in general became a liability because they became unenforceable. Large corporations with lawyers on staff would simply violate your patent, which would then take over ten years and hundreds of thousands of dollars to enforce something individual inventors and small corporations are unable to pay for. By this time I had become recognized as an inventor and worked in that capacity for numerous clients Combustion Engineering, General Atomics, Ontario Hydro PP&L and BNFL of the UK among them, in the development of new and innovative products for them. One of these was a German manufacturer who requested that I design a vessel to contain pressurized canisters that contained toxic materials that had developed a leak. I completed the job in a few weeks and they requested to see a drawing of the product. Being unaware that I was dealing with crooks but wanting some degree of protection I filed an American Patent Application. So did they. The German Patent office issued an application acceptance within two weeks our patent office had not even looked at mine by that time. To make a long story short the Germans are now producing my patented device under German patent numbers that were issued prior to mine and I have nothing to show for it.

In 1981 we decided to begin to manufacture our own saw blades. We had been importing them from Germany. For this venture we purchased a large mechanical stamping press, some very large horizontal milling machines, and about $25,000 worth of tooling. We sent our requirements for specialty HSS steels according to our own formula to every American and Canadian steel producer not one quoted us. By the way this is not cheap steel we speak here of about $12.00 per pound in 1981. Our requirements were for about 1500 pounds a month or in dollars 18,000. per month, that’s $216,000 per year. Finally we contacted steel mils in Europe and Asia, within days we had scores of quotes.   We settled on an Austrian mill. That was when our wonderful government intervened. The ITC informed us that there were quotas on steel imports and they were full so we could not import any steel. When we pointed out that American producers were uninterested in our business, and that we were importing finished product to meet our requirements they were uninterested. To make a long story short we sold our press at a loss had the Austrian steel mill farm out the punching operation and were thus allowed to import the product as stamped steel. I well remember the moron at the ITA who due to his intransigence and stupidity was repeatedly promoted and was one to the lead negotiators for the WTO agreement. Another fiasco.

Now I could easily continue for page after page about this debacle we call Washington but that I prefer to call Sodom and the Potomac. Since the governments policy of willful destruction of American small and family businesses much has changed on the marketplace. The present cornerstone of that policy is called “Free Trade”, which is a lie. There is no such thing as free trade because all international trade is controlled by rules made up by NGO’s [Non Governmental Agencies] that are then implemented by the legislative branches of all governments as well as the UN. Politicians know well what side the bread is buttered on so they do as the NGO’s instruct. These acts are WTO [World Trade Organization] that by the way has since its inception not ruled in favor of America once, GATT [General agreement on Trade and Tariffs] EU [European Union], NAFTA [North American Free Trade Agreement] which is an agreement because it was never ratified by the states and effected through an EO [Executive Order] by Clinton illegally, CAFTA which is the newly passed in 2005 expansion of NAFTA to the Caribbean Basin.

Now any sane person would before expanding NFTA to include the Caribbean Basin examine the results of NAFTA, which was past about ten years ago. Well if they did they either are illiterate, stupid, or so deeply in debt to the NGO’s that they have become their slaves. I’ll let you decide, which it is. The results of NAFTA over the ten years it has been in effect are as follows:

A trade surplus with Mexico of $5.6 billion annually turned into a $ 56 billion deficit.

Over 3000 American manufacturing plants out of business and moved to Mexico or China.

The direct loss of over 3.7 million American manufacturing jobs, and the loss of about 4 million indirect manufacturing jobs by European and Pacific Rim producers building plants in Mexico whose entire production is sold in America.

The investment of American manufacturers of over $ 2 billion annually for the construction of new manufacturing plants in Mexico.

What are these lost manufacturing jobs being replaced with?  “Service Sector Jobs” that pay on average 40% less than manufacturing employment. Just as the previously touted by Washington “information age” employment these both are stupid. Does anyone actually believe that you can build a house, make a car, and produce a machine tool out of information or services?

Large Multinational Corporations in concert with the government and the UN are systematically destroying all of the middle class of Western societies for personal gains and profit. Unless people of the Western world wake up and do so soon they will find themselves part of the what we now call third world. Most are already a number working for either government or some huge business bureaucracy, they have lost their independence, self reliance, and individuality and become part of the “Brave New World” and “1984” that Huxley and Orwell predicted.

Krieg’s latest book coming out Feb.2006 is Money a primer.