U.S. Economy Cannot Evolve Without its Backbone
Despite reports of the manufacturing sector expanding for the sixth month in a row in January, the nation’s industrial decline is readily apparent in the fact that manufacturing makes up just 12 percent of the economy, down from a post-war high of 28 percent in 1953.
Without a strong and vibrant manufacturing base, the U.S. economy will continue to weaken over time. Throughout history, manufacturing has been the backbone of any strong nation.
"The reality is, in recent times, every great empire has been built on a manufacturing economy," Lynn Tilton, CEO of Patriarch Partners, told Yahoo News‘ Tech Ticker. "The fall of every empire has been the failure to remember that one fundamental fact."
The fall of the nation’s manufacturing base is resulting in the devolving of the American economy, she said. While America must look outside of manufacturing for other opportunities, it can’t completely abandon the industry because not everyone is built for a job in the service industry.
The nation’s industrial decline is evident in places like Detroit and Youngstown, Ohio, former industrial hubs reduced to dilapidated factories with sky-high unemployment rates. But, America’s manufacturing woes run much deeper and broader than the auto making and steel industries.
Through the purchase of important and strategic American corporations, and from insourced intrusion into the American domestic markets, foreign-based companies have built up a huge influence over entire industries. According to data collected from the Internal Revenue Service, certain industries have become completely monopolized by interests overseas.
Without a change in policies, it is a trend that will continue. But, American policymakers could commit to developing a strategic industrial policy, like every other industrialized nation in the world.
“We've never systematically used government incentives to help U.S. industry compete across the board,” John Hofmeister, former president of Shell Oil Company and founder and CEO of Citizens for Affordable Energy wrote in a Wall Street Journal Op-Ed piece. “It's time we did, like everyone else. Use the unspent hundreds of stimulus billions to create millions of competitively priced manufacturing jobs in America. We've never had more people available, ready and willing to work. Let's practice the "globalization" we taught everyone else.”
One U.S. lawmaker has presented a plan to do just that. Sen. Sherrod Brown (D-OH) is trying to gain support in congress for a new, comprehensive National Manufacturing Policy, which would incentivize domestic manufacturers to keep well-paying jobs in America.
The bill would enforce existing trade rules so that America no longer hemorrhages jobs overseas because of unfair trade practices and establish a $30 billion Manufacturing Revolving Loan Fund to help small- and mid-sized manufacturers transition to the clean energy economy through retooling and expand the Manufacturing Extension Partnership.
“We can revive American manufacturing through investments in clean energy,” Brown said in a statement when the legislation was introduced. “This bill will help our manufacturers retool, put our auto suppliers back to work, and produce clean energy technologies.”
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This Work, U.S. Economy Cannot Evolve Without its Backbone, by Dustin Ensinger is licensed under a Creative Commons Attribution-No Derivative Works license.
Copyright © 2010 EconomyInCrisis.org
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Thanks to Lynn Tilton for keeping the faith and for keeping up the fight to save American manufacturing jobs.
Manufacturing creates wealth by adding value (with labor) to raw materials. An automobile, for example, begins with a couple of hundred dollars worth of iron ore, sand, soybeans, petroleum or whatever. By the application of labor at various stages, it is converted into a car worth, say, $20,000. This hundred-fold increase in value represents created wealth. The laborers who added this value were well-paid because there was enough wealth to "spread around."
Services create little in the way of durable wealth. A cheeseburger only has value until it gets cold. Mostly, services move existing wealth around, but add little in the way of durable value.
Government generates no wealth at all. It can only suck up wealth and make it more difficult to create wealth.
Our Progressive government has little regard for manufacturing. In fact, they see manufacturing and its middle-class workers as an impediment to their goal of "spreading the wealth around." This is why our government has pretended not to notice while millions of value-added, wealth creating jobs have been allowed to be offshored to Communist China.
An important point that was made in the video is that about half of us Americans are not interested in attending college, but would make excellent plumbers, electricians, carpenters, auto mechanics, factory workers, machinists, toolmakers, firemen, cops, soldiers and front-line managers.
As a former college professor, I am a huge fan of higher education, but only when it is appropriate to the individual. Manufacturing made it possible for folks with only a high school education to achieve a middle-class lifestyle with a single income. Service and retail jobs pay only about one third of what manufacturing jobs paid. A college degree simply allowed folks to work with their brains instead of their hands (engineers, accountants, human resource specialists) for about the same pay as the more ambitious factory workers. The loss of manufacturing opportunities has made college less attractive. Why spend four years getting a degree if you are going to wind up flipping burgers anyway?
I hate to throw cold water on such hopeful efforts as this, but, everything that can be manufactured will be manufactured in China unless our government takes drastic action. Such drastic action is very unlikely since our present government sees no advantage in regenerating manufacturing or the middle-class.
Bruce Bishop
http://mises.org/daily/4099
The education worshippers are mostly still in denial times have changed.
"...... it can’t completely abandon the industry because not everyone is built for a job in the service industry".
Can my eyes be deceiving me? Is it true?? Hallelujah and Holy Mary Mother of God!! I have been saying this for, hell, I don't even know how many years now. I even remember posting this same thing on this forum in the past..."not everyone can be a doctor or lawyer, most people are AVERAGE and are not cut out for college, most people need manufacturing jobs", but I don't remember anyone responding to that here, or having anything thing to say about it when mention it to friends or aquanintences. I usually just get that deer-in-the-headlights, glazed-over eyes look, you know, that blank stare just before they utter the words, "but kids need to go to college in order to get a good job". Oh really? Tell it to all the unemployed American IT workers who were starry-eyed college kids 20 years ago, hoping to have the "good life" as an employee of Micro$oft.
Curtis
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