Is manufacturing the answer to fixing the US economy? Should we concentrate our efforts on building more and better goods and then supplying the world with those great products? Or should we drop manufacturing all together?
In past decades the USA was a great consumer and producer. The products manufactured in the USA were desired all over the world. Should we be concentrating our efforts in finding the next big product that we can produce and export? No, we should not! In fact, we should start shipping our manufacturing jobs to Mexico and Latin-America, China, India and other Asian Countries.
For many years the USA, like many first world countries, had an agricultural economy. After the industrial revolution it embraced and thrived as a manufacturing economy, while Third World countries were moving into agriculture. Third World countries were considered agriculturists or farmers, it was in the core definition of a Third World country.
Today we have a shift; these same Third World countries are manufacturing powerhouses. They have cheap labor, good engineers and great equipment. The new Third World country definition is a "Manufacturing Economy." Does the US want to stay, compete and hang on to a manufacturing economy and compete with them on their terms? No, it does not.
We can take a look at the suffering US car industry as a perfect example. Can the USA make the best and most inexpensive cars in the world? The US can't compete in quality and it certainly can't compete in price. The US government has to impose tariffs and special taxes on cheaper and better built imports to even give Ford, GM and Chevrolet a fighting chance.
The USA can't beat German, Japanese, Korean and the up and coming Chinese cars. Our labor pool gets paid $30 to $40 per hour for an industrial worker (even more with union costs and benefits) and competes with countries like Mexico that spend $2 to $3 per hour for a worker complete with tax, insurance and social security. US labor costs are 10 times higher and our cars are not better. Other fixed costs like rent, electricity, phone or water are also less expensive in other countries like Mexico and China.
Article comments
1 - Doug Hunter
I think it is possible to outsmart yourself. If you can't make actual, physical stuff in a crunch you're at the mercy of those who can.
2 - Jonathan Scanlan
I'm with Doug, an economy needs to be diversified - relying on intangibles to run an economy is to essentially play monopoly.
So long as certain products have limited use (i.e. food, goods, etc.), we will need someone to make them. And in terms of efficiency, local production has a lot of merits.
Besides, hasn't it been bankers hit hardest by the credit crunch?
3 - Ma rk
This is not either or. The US maintains rather huge agricultural and manufacturing economies at the same time as being the 'center' of the financial services capitalist world.
One other small point: just as China manufactures toxic toys, the US produces shitty financial products. Why should the world buy from us now that they've caught on?
4 - bob
Umm,
Where do we go if Manufacturing is gone?
Service Level jobs? Banking, Engineering? Artistry?
The US has no production, and our service industry is going bye bye as well to other countries.
The ideal economy would have the people best qualified for a job doing that job. If people in the US are loosing jobs based soley on cost, then the US economy is doomed.
5 - Dr Dreadful
The Third World doesn't follow our lead - it can't be relied on to manufacture for us, as others have pointed out. It did not 'move into' agriculture when Europe and North America industrialized. Prior to the Industrial Revolution, every society was agrarian, except for the few that were hunter-gatherers.
Perhaps we should get back to that. There are enough guns, after all, and hundreds of former hunter-gatherer tribes who I'm sure would be delighted to show the rest of us how it's done.
6 - Cindy
Dr.D,
Can we still have IMAX?
7 - Dr Dreadful
Only if it exclusively screens instructional films on how to hunt/gather.
8 - Cannonshop
Mr Olsen, this is the kind of idealistic bullshit that got us into this mess, and continues to destroy what tangible economy we have LEFT. The fact is, you can't live on the product of your ancestors' work indefinitely, and jobs that require only a classroom education to do, can be done elsewhere for even LESS than manufacturing.
Any economy that becomes a single-industry entity ends up obselete, or in collapse eventually. "Intangibles" aren't worth much without "Tangibles".
9 - Jonathan Scanlan
"Any economy that becomes a single-industry entity ends up obselete, or in collapse eventually."
... or with a civil uprising (i.e. Cuba)
10 - Cindy Briggs
We can't just shop and due to technology we are already shipping medical billing, dental work, accounting and a number of other jobs no one ever thought would go. Of course they work for less, they are slave labor. They don't make enough money to buy anything we make. Fair trade is fine, free trade is a losing proposition. The only reason it worked the last 8 years was because of easy credit and falsely inflated house prices. Now look where we are and so is the rest of the world. Free trade should promote decoupling. OH OH, so much for that theory.
11 - Cindy D
Your URL doesn't work Cindy. You would need to put it like a link, including the http bit.
12 - roger nowosielski
A very well reasoned argument, Jorge - mirroring Robert Reich's argument in The Work of Nations, 1992. The problem still remains though (and you should really look up that reference), it will not solve all our problems as you seem to suggest.
According to Reich, only ten percent of the population, fifteen percent at most, will be engaged in "service and information technologies." Reich called them "symbolic analysts." So what are we're going to do with the rest? Reich's prediction: the vast majority of Americans will be forced to be either "burger floppers" or "security guards" - menial jobs by any stretch.
So while your argument does ring true - in so far that we can't perhaps compete on a global scale when it comes to manufacturing - there's still something to be said for rejuvenating the manufacturing sector at least on the local, community level (if only not to foreclose the ever-dwindling employment opportunity at home).
13 - gazza boy
I feel sorry for all the people who are losing their jobs it is not right and is not fair at all, they all have worked hard to make America what it is and this is the thanks they get it is a disgrace to humanity. It sounds like a bit of a gamble to assume that everything will be alright to give other countries our jobs like it was no big deal. This kind of stupidity is what destroys countries and should not be allowed to happen.
14 - gazza boy
It would be more acceptable if there were jobs in place for Americans who are losing out to foriegn labour.
15 - Al
Technical jobs are being shipped overseas, India and Ireland are two that Fidelity shipped jobs to. I'm on the fence with manufacturing jobs being shipped overseas since I think it's dangerous for us to rely on everyone else for 100% of our daily or household products. But I'm 100% against our technical and office jobs being shipped overseas, I wish our gov would heavily tax or fine these companies so it wouldn't be worth it for them to not offer these jobs to Americans.