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A Real Economic Stimulus; Congress Pay Attention

Published 01/30/08 Jim Baird - Print Article
E-mail - editor@economyincisis.org

The economic crisis is deepening and may soon get worse.

Housing is in a free-fall and the American middle class, which have seen 3 million manufacturing jobs lost since 2000 and 2 million of their homes threatened with foreclosure, is taking it on the chin.

And the proposed economic stimulus plan won’t fix the problem- it will only fan the flames of the decline.

The stimulus package shuffling through congress is estimated to increase the national deficit by $100 billion. Currently the national deficit is at an all time high of over $9 trillion and the balance of trade deficit of $765 billion in 2006 continues to expand as Americans buy more and produce less.

The solution we need is not more debt. The solution must create jobs and help reduce towering personal and national deficits; manufacturing is the solution.

Since 2000, an estimated 3 million good paying, good benefit manufacturing jobs have been lost to low-wage foreign nations. The jobs have been replaced domestically by lower-paying service jobs.

As Americans earned less from these replacement jobs, real estate became inflated to a record 38% of household net worth. This inflated real estate bubble has popped- and with it, the false wealth many Americans depended on has vanished.

The often overlooked truth is that manufacturing matters- and the good paying jobs, and the domestic goods produced because of them- help keep our nation, and our citizens out of debt.

Economist Eamonn Fingleton discusses the importance of manufacturing here...

We have long been told that more and more manufacturing jobs are destined to migrate to the Third World. This view was popularized in the 1980s by such authors as John Naisbitt and Kenichi Ohmae, and it continues today to be the subtext of much economic commentary.

But not everyone has bought into the program. Take Canon (Research), the Japanese camera and copier company, which has more than doubled its workforce in high-wage Japan in the past two decades. Since 2002 it has added 6,000 Japanese jobs--at the same time it has boosted profits by 156%, to a record $3.1 billion.

…

A strong manufacturing sector is crucial for any advanced nation that aspires to pay its way in the world. With few exceptions, America's postindustrial businesses are weak exporters. This helps explain why, measured against gross domestic product, America's current-account balance has gone from a surplus of 0.8% in 1965 to a deficit of an estimated 6.3% in 2005. In the same period, manufacturing's share of nonfarm employment went from 23% to less than 12%. America's trade last year, measured as a percentage of GDP, was the worst of any major nation since Italy's in 1924.

Jim Baird is the managing editor at EconomyInCrisis.org. He is a journalist and commentator. Mr. Baird studied in the Honors Politics program at the University of Edinburgh and is a graduate of The Ohio State University where he studied political science and journalism.

Click here to contact your Representative in Congress.

Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.

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Article Comments From Readers

guest says "Unions make America more competitve" on 01/31/08
Unions actually make America MORE competitive and better able to beat out foreign competition.

As unions become weaker, America citizens and workers become poorer, less secure, and unemployed.Less able to invest, raise families and purchase products and services. America will be strongest when labor comprises 100% of the workforce. Those who have doubt should look back to previous generations of Americans when union membership was higher and American citizens and families were much better off.

Only the wealthy and ignorant beat up on unions. Why? Because the wealthy would happily see others starve and suffer injustice as long as they had money for themselves. The ignorant beat up on unions because they have never even bothered to think about the issues surrounding unions and act as a mouthpiece for the wealthy.
No thoughtful person who is concerned with the welfare of human beings-their jobs, families, future, and happiness would ever be anti-union.

guest says "common sense" on 01/31/08
Well, common sense tells me that we can't consume more than what we have produced. In the end, we consume what we produce. We don't have to export, we don't have to import. If we do export/import, the deal must be equivalent in value or we create another imperialistic "free-trade."

guest says "Simply solution..." on 01/30/08
We are rewarded to consume and penalized to produce.

http://thelyonsden.wordpress.com/2008/01/24/fnma-and-fha-up-mortgage-loan-limits-as-part-of-stimulus-package/

guest says "use your head..." on 01/30/08
Why is Toyota kickin our ass? Because they are concerned LONG TERM. They are not concerned about putting plastic parts that are designed to break so you'll have to spend 300.00 at the dealer to get a 10.00 part replaced... again--> We have unionized, taxed, environmentalized, sued, insured and out waged ourselves out of making just about everything.

guest says "Shoes.... 3 years" on 01/30/08
Let's see.. Toyota, which by the way makes every part of their cars/trucks, is kicking the crap out of GM and FORD because they make superior vehicals is opening plants in the USA! You are saying we will build shoes that last longer... THINK AGAIN> OUR GREED will make shoes that have designed obsolescence so you will be forced to go by those 120.00 shoes again and again and again.. just like GM you have to take to the shop every 6 months. THINK AGAIN!!

guest says "debt vs. deficit" on 01/30/08
And *I* just mistook "DEFECIT" for "DEFICIT" -- Sorry about that.

guest says "debt vs. deficit" on 01/30/08
Baird mistakes the national DEBT for the national DEFECIT in this article.

guest says "Time to bail" on 01/30/08
It may be time for Americans to emigrate to another country as this one looks like its done.

guest says "Yes you can" on 01/30/08
It's hard, but you have to be competitive. I buy a $20 pair of shoes every 3 months. Why? Because I wear them out. Why? Because they are made like a piece of shoe. If your $120 pair of shoes lasted me 3 years, well, then it's half the price of what I am paying currently and I would buy your shoes. Another way to compete is to offer features that no one else does. Who offers you the latest and greatest features in automobiles these days? Bet you its not GM or Ford. Still another strategy is automation. People are high cost? So have as few as possible and let the automated machines and computers do your work for you. The problem is that for publicly traded companies, if your investment does not pay back in the quarter or fiscal year its a non-starter.

Production is the only thing that adds value. Adding value is what gives a nation its standard of living. Everything else is parasitic activity. (Lawyers, banks, schools, government, public road building, air travel, pet grooming, welfare, healthcare, defense, elected or appointed representatives, TV programs for examples.) If we don't produce anything, we have little choice but to beg, borrow or steal to obtain the food to fill our tummies.

guest says "No, guest" on 01/30/08
We have less unionization now than ever. We used to have industry. We allow countries that use child labor, slave labor and dump raw waste into rivers and air compete on a level playing field with the USA. If China is your ideal, perhaps you should consider moving there?

guest says "manufacturing here...." on 01/30/08
We CAN'T manufacture anything HERE. We have unionized, taxed, environmentalized, sued, insured and out waged ourselves out of making just about everything. If I was to open a shoe plant, after all the red tape described above, each pair of shoes would cost 120.00.. NO ONE WOULD BUY THEM! The US has gone the way of the Roman Empire, its decline is embeded in its bureaucracy.