Death of Manufacturing Excerpt:Manufacturing is the key to national power. Not only does it pay more than service industries, the rates of productivity growth are higher and the potential of new industries arising is far greater. From radio came television, VCRs, and flat-panel screens. From adding machines came calculators and computers. From the electric typewriter came the word processors. Research and development follow manufacturing.
Alexander Hamilton, the architect of the U.S. economy, knew this. He had served in the Revolution as aide to Washington and lived through the British blockades. He had led the bayonet charge at Yorktown. And he had resolved that never again would his country’s survival depend upon French muskets or French ships.
As first Treasury Secretary, he delivered in 1791 the “Report on Manufactures,” one of America’s great state papers. Reflecting on how close his country had come to losing its liberty, Hamilton wrote,
Not only the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures. Every nation … ought to endeavor to possess within itself all the essentials of a national supply. These comprise the means of subsistence, habitation, clothing and defense.
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One who has studied how China deals with craven capitalists who come courting is columnist Terry Jeffrey. On inspecting the Web site of Motorola, Jeffrey found this description of how it sees its future:
Motorola is moving toward … taking China as its home and development base. Motorola Chinese Electronics … has increased its investment several times in China without taking away a single dollar. The company reinvested all the profits in China. … Since the very beginning Motorola has brought forward the idea of trying to be a good citizen of China, taking China as its home and thriving with the Chinese people. … The development goal is to become a true Chinese company.
The hilarity of Motorola’s kowtow to the mandarins of the Middle Kingdom aside, this passage reveals a hidden cost of globalization. When U.S. companies go global, they shed their loyalty to America.
Consider Boeing, last surviving U.S. manufacturer of commercial aircraft. Apparently, Boeing has gone beyond building plants in China to make horizontal stabilizers and vertical fins for its fleet. On Jan. 1, this story ran in the New York Times:
The State Department has accused two leading American companies of 123 violations of export laws in connection with the transfer of rocket and satellite data to China during the 1990s. The Boeing company and Hughes Electronics Corporation, a unit of General Motors, were notified of the accusations last week.
Hamilton, Clay, Lincoln, and T.R. would recognize China’s policy for what it is and counter it. But this generation of free traders does not have a clue as to what is going on, or does not care. Either way, the consequences will be the same: de-industrialization of America, decline of the dollar, a deepening dependency on foreign countries for the necessities of our national life, diminished sovereignty, and eventual loss of our independence. If you disbelieve this, look at the once sovereign and independent nations of Europe.
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