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Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles American Manufacturing Can No Longer CompeteE-mail - editor@economyincisis.org |
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Today there are fewer manufacturing employees than in 1955, and over the past 20 years 3.7 million manufacturing jobs has been lost. These figures are a grim reminder that America can no longer manufacture competitively. How did this happen? Two causes stand out: low international wage rates in countries like China and Mexico that America will not and can not compete with, and America’s abandonment of capital and knowledge intensive industries. American workers can not and should not have to compete with third world wage rates. Some Chinese manufacturers are paid 33 cents an hour according to a 2005 AFLCIO report. This cents-an-hour pay in many countries around the world has caused American companies and entire industries to move abroad (see the lost industry list here). It also lead Princeton economist Alan Blinder to estimate 42-56 million jobs could potentially be sent overseas. Japan has successfully navigated the problem of China’s low wage rates. China is one of Japan’s biggest trading partners and yet Japan maintains a trade surplus with them. The labor in Japan is leveraged; one person operates equipment that can do the work of 100 ordinary laborers. America used to manufacture this way but now produces little by comparison and increasingly depends on imports at a net cost of $1.5 million per minute ($765 billion per year) to maintain our standards of living. Auto and other manufacturing industries were once proud centers of American productivity, but have since seen their superiority usurped by technology based economies like that of Japan. The Japanese realized the gains of encouraging industrial growth and with hardly any natural resources turned their economy into an economic superpower that last year alone generated an $88 billion trade surplus with America and a $170 billion current account surplus with the rest of the world, the second largest next to China. Meanwhile, the U.S. has resigned itself to live on increasing debts. Since 1987 home mortgages have gone from $1.8 trillion to $8.2 trillion, consumer debt from $2.7 trillion to $11 trillion and household debt has quadrupled. Add to that a national debt approaching $9 trillion and you do not have to be an economist to realize the economy may not be as rosy as America’s GDP rating system would deceptively lead you to believe. Increasing debt, decreasing savings and selling off America’s principal assets, its wealth producing companies abroad. This is not a sustainable or responsible long-term economic policy. America can, and must, do better. How do we get out of this debt-ridden rut? The solution is to copy Japan’s model. Taiwan, Korea and many other Asian countries have adopted the Japanese East Asian economic model and are extremely successful. What if the economy had always operated as it does today with companies being sold abroad diverting wealth, jobs and production to other countries. Imagine the consequences in WWII if Chrysler had been under its recent 9 year-long German ownership. Chrysler produced the main combat vehicle for troops on the ground the Sherman M-4 tank. German ownership would likely have forced production of tanks for the Axis rather than America. That one acquisition would have deprived America of one of its best on the ground assets and could have greatly changed the course of the war. The World War II scenario is of course a hypothetical, but it illustrates the potential risk of continuing to sell our best companies from vital industries abroad. Investing in industry before WWII turned America into the most productive labor force and strongest country in the world. It’s time to make that investment again. If we don't our security and living conditions will not be as good for your children and grandchildren as you have experienced. Thomas Heffner is a commentator for EconomyInCrisis. Click here to contact your Representative in Congress. Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles
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Article Comments From Readers
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guest says "AXmerican Manufacturing Can No Longer Compete" on 09/19/07
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For the guest of 9/l9/07 who congratulates President Bush for destroying the U.S., I want to inform him that his arguments need to be stated. I don't understand what he is talking about. I'm not saying he's wrong or right - just that his arguments are not there. as for the guest of 9/l9/07 who has determined that the "real" unemployment rate is between 9-ll% I would like to know where that figure comes from. As for the poor workers at Walmart's, no-one forced them to work there. The other workersin the vicinity might like the low prices at Walmart's. Finally, inflation depends on too much money chasing too few goods. The flood of goods entering this country is key to keeping inflation low. It is certainly not the restraint on spending in Congress. Investments made in this country from abroad are keeping interest rates low. You just try to remove these benefits of world trade and you may not like what happens.
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guest says "ECONOMY" on 09/19/07
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I WOULD LIKE TO THANK PRESIDENT BUSH AND HIS FELLOW REPUBLICANS FOR THE EXCELLENT JOB THEY HAVE DONE DESTROYING THE U.S.WHAT A SHAME
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guest says "Enforce our trade laws" on 09/17/07
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The U.S. lost 46,000 manufacturing jobs in August 2007. More significantly, the ongoing losses are taking a cumulative toll on communities throughout the country. We need to adequately enforce our trade laws, and hold countries like China accountable for illegal trading practices such as currency manipulation. Otherwise, we’ll continue to shed manufacturing jobs. www.manufacturethis.org
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guest says "Don't forget the tactics" on 09/16/07
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McDonalds' Corporation went before Congress in 1974 and bitterly complained about "excessive minimum wages" that were threatening to destroy shred profits and undermine the financial well being of the company.
This same corporation which adds "Edible polymers" (plastic dust as a thickener)to its shakes lobbied for a SUBminimum wage to keep workers pay and esteem as low as possible. Keeping workers down meant keeping Ray Kroc's profits up. McDonald's and Walmart are very strong anti-union corporations. According to WalMArt Watch, Walmart (like McDonalds) has resorted to closing entire stores rather than retain workers who freely organized to create a union and petiton for fair wages, benefits and hours. The message is clear, these large corporations want to operate on their own exploitive terms and will do everything they can do discourage and destroy worker's self esteem and rights to organize because they undervalue labor and workers. Walmart has also been found guilty of sex and pay discrimination by grossly underpaying women workers compared to men and passing them by for promotions and higher management positions. These are the facts that anyone can look up that corporate America uses to create an environment of serfdom and poverty for the workers as CEO's earn ever more obscene salaries. |
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guest says "True U.S. unemployment is around 9-11%" on 09/16/07
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The guest who stated a 5.3% unemployment figure is understating actual American unemployment.
The underreporting tactic has been used for years to artificially prop up the appearance of a strong healthy and robust economy to help keep the markets strong for top investors. As we all know now, the face of reality is a very different and much sadder picture of desperation and decline that largely goes unnooticed and unreported by the corporate media. Workers who have been looking for a job for more than 6 months are dropped off the tally because there are so many. Shit jobs like McDonalds, Walmart, conveneince stores, and other abusive employers who conspire to keep wages ultra low, benefits to a minimum and retain millions of Americans poor, weak and enslaved to debt are counted as employment even though technically "Enslavement" is the more accurate term. U.S. based employers can also count overseas workers as "employed" to help prop up U.S. numbers. Actual unemployment is really in the 10% range. What can be done? If unemployment is bad and employment is good, the government should create jobs for people. Repairing bridges, picking up litter, planting trees, etc. etc. That's the right and smart parth to follow just like Roosevelt did with the CCC. A government that allows and condones any business to outsource workers, restricts unions, and pulls the rug out from under families is actively destroying its own country and people. Continuing on the probusinnes and anticitizen path is going to effectively ruin the world's greatest nation for the sake of short term gain. |
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guest says "American Manufacturing Can No Longer Compete" on 09/14/07
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Over the past year the Bureau of Labor Statistics reports that manufacturing has dropped by 0.2%. As a matter of fact, manufacturing has been dropping all over the world. A lot of this is due to technological improvements such as computerization. Unemployment in the U.S.A. runs about 5.3%, not high by historical standards. The connotation of the article is that we ought to go back to an industrial policy. Shades of the Clinton years and Andrea Tyson at the head of the Clinton Council of Economic Advisors. It's all coming back. Protectionism, making unreasonable demands on third world countries to step up their unionization and social legislation. Whatever prosperity exists in the U.S.A. depends entirely or world trade or what is murkily referred to as Globalization .Shades of Mickey Kantor, Paul Krugman and Japan telling us no. I hope we don't get a repeat but I doubt it. I just noted that Charlie Rangel has entered an agreement with Alan Garcia for free trade provided that the Peruvians institute social legislation a la U.S.A.
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guest says "Comparing the 36 year cycles" on 09/12/07
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Looking at the last 75 years of America's political history, we can easily see two distinctive periods.
The Democratic Era (1932-1968) 7 Presidential elections with Democrats winning 2 Presidential elections with Republicans winning The Republican Era (1969-2005) 7 Presidential elections with Republicans winning 3 Presidential elections with Democrats winning Ronald Reagan asked voters in 1980: "Are you better off now than you were 4 years ago?" Democrats should ask voters: "Is our nation stronger, safer, and more prosperous now than it was in 1968?" Both periods ended in ahugely unpopular protracted war, but the overall well being of our nation is hugely different. In 1968: America was mainly loved, revered and respected by the world community for promoting freedom and opportunity. America's businesses were strong and prosperous and our nation maintained its edge through exporting products. America's labor laws and worker safety was improving American's worked shorter work weeks for better pay Minimum wage (adjusted for inflation) was much higher America was safe from Terrorism American jobs were being created, protected and wages were rising American infrastructure was safe and properly maintained The dollar was strong and valuable Healthcare and homes were affordable for families In 2007: America is seen as an aggressive military empire and the single greatest threat to world peace America's manufacturing is in steep decline and being sold out to Communist China as we've become an import nation America's labor laws and safety standards are becoming weaker through tort reform and lax enforcement on employers America workers are working much longer hours American's minimum wage (adjusted for inflation) is much lower America is in far greater danger of Terrorism than ever before thanks to open borders, port control under Dubai, failure to inspect shipping containers, soldiers away from the homeland, and aggravation of Muslims worldwide through the Iraq war American's jobs are steadily being lost to illegals and deported to China and India The nation's infrastructure is crumbling and unsafe The dollar is weak losing 39% of its value against the Euro since 2001 Healthcare and Homes are grossly overpriced and increasingly unaffordable for Americans |
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guest says "Break the model" on 09/12/07
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A hidden source of tremendous power that Americans citizens possess yet have failed to appreciate and use in an organized way is the power of the purse.
This is the "piece de resistance" and ultimate tool every American can use to break the terrible cycle of debt and dependency that are leading to ever lasting wars and offshoring of jobs and businesses as well as eternal debt that is ruining our nation. Americans can and should ban together and commit to halting or severely reducing their spending to bare minimum levels. If done effectively this will send huge shock waves in the markets resulting in panic and recession. If organized on a grand scale, this will force the government to make the radical changes necessary to save our nation. However, as long as Americans are debt-addicted to overspending, the same awful cycle of dependency and weakness will continue, and America like a cocaine addict will finally succomb to death. We must go cold turkey from our spending spree addiction and withold/delay purchases to acquire control over our destiny and the destiny of our nation. As things currently stand neither our government nor international business will listen or be responsive to the people and make positive and meaningful change. This is the painful yet necessary surgery needed to prevent the death of America. |
