Posted on 02/21/2007 7:13:32 AM PST by A. Pole
"Manufacturing is the key to national power," wrote former presidential candidate and conservative columnist Pat Buchanan. "Not only does it pay more than service industries, the rates of productivity growth are higher and the potential of new industry arising is far greater. From radio came television, VCRs and flat-panel screens. From adding machines came calculator and computers... research and development follow manufacturing."
The increasing frailty of America's manufacturing might was exposed last week as Chrysler announced a restructuring plan that inflicts yet another blow to America's anemic manufacturing base. Under the Chrysler plan, 9,000 U.S. autoworkers are set to become pink slip recipients over the next three years.
The announcement of such a plan, according to Sean McAlinden, chief economist and vice president of research at the nonprofit Center for Automotive Research in Ann Arbor, brings the total number of auto industry jobs lost since May 2005 to 132,000. McAlinden also notes that 64 Americans plants have also been shut down. The sting of Chrysler's plan, though, is just not isolated to the Motor City. Included in the job cuts and plant closings is a plant in Newark, Delaware that employs 2,100 Americans. These employees are now slated for the free-cheese line by early to mid 2009.
What does Chrysler's plan mean for America? It means 9,000 Americans will be thrown into a job market where manufacturing represents only 11% of the U.S. workforce. Because manufacturing jobs are going the way of the dodo bird and service jobs are reproducing like jack-rabbits, odds are many of these blue-collar workers will be forced to become a part of the growing Wal-mart workforce. These skilled laborers will be replacing their high paying jobs and strong benefits, with low paying jobs and miniscule benefits. Such is the gutting of a nation that was, at one time, the world's industrial giant.
It further means that Americans will be seeing their real rages continue to decline and their standard of living fall. It means more American's will turn to credit cards to ease the pains caused by their loss of income and it potentially means both parents will have to enter the workforce, leaving children to be raised by day care associates. How did this happen? When did America take a turn for the worse and turn a blind eye to her manufacturing base? Why has America decided to make high paying manufacturing jobs her number one export? And, most importantly, can we find the way back home?
For the most part, Buchanan's observation that manufacturing is the source of national power is not classified information. All nations, from early America to modern day China, have readily understood that domestic manufacturing equates to global muscle on the international stage. In other words, factories protect freedom and industry fosters independence.
Alexander Hamilton, the man who penned The Report on Manufactures and subsequently provided America with an economic blueprint, eloquently described this principle when he wrote, "Not only the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures." Was Hamilton opposed to the laissez faire economics of Adam Smith? Absolutely not!
Hamilton recognized the economic potential of the states constituting the newly formed American Union. Hence, Hamilton embraced a national free trade zone and denounced any attempts by the states to impede domestic trade and industry. To Hamilton, a strong nationalist, trade would be free for Americans and Americans only. As for the Europeans, Asians, and all others trying to get into the hottest market in town, Hamilton argued that a cover charge must be imposed. This cover charge, which would be applied in the form of a tariff, would be used to protect America's industry, build her roads, maintain her channels of commerce, and finance her government spending.
More importantly, the tariff, by means of raising the price of foreign goods, would foster American industrial development, raise productivity, increase exports and preserve the nation's economic independence. Economic independence, in turn, would prevent America from being ensnared by foreign wars not her own.
Hamilton's wisdom remained America's economic compass for close to two centuries, and during that time period America was the economic model to the world. As explained by Buchanan in his book Where the Right Went Wrong, "From 1869 to 1900, real wages rose 53 percent, commodity prices fell 58 percent, America's GNP quadrupled, and our national debt fell by two-thirds. Custom duties provided 58 percent of all federal revenues."
Even further, between 1870 and 1913 the U.S. saw economic growth that reached 4 percent, while industrial might grew at a rate of 5 percent. But beginning with the conclusion of the Second World War, the America First economic policy provided by Hamilton would be sacrificed to a golden calf of free trade and 200 years of economic advancement garnished by Hamilton's America would be erased in less than half a century.
In The Report on Manufactures, Hamilton also wrote, "Every nation... ought to endeavor to possess within itself all the essentials of national supply. These compromise the means of substance, habituation, clothing and defense." In the years since America abandoned Hamilton's economics, one must see how self sufficient she is.
According to Pat Choate, the level of U.S. dependency on foreign goods is down right staggering. The level of American dependency on foreign medicines and pharmaceuticals is 72 percent, computer equipment is 70 percent, communications equipment is 67 percent, semiconductors and electronics is 64 percent, engines and power equipment is 56 percent, and metal working and machinery is 51 percent. Hamilton would not recognize the country he helped create.
With trade deficits well over $800 billion, America has become an economy, not unlike the British of the early 20th Century, which is squandering its inheritance to live for the day. We are living for the moment, while forsaking the future.
And with the Chinese the largest beneficiary of the American trade deficit, China, not unlike the young American republic of yesterday, is using American money to increase her infrastructure, solidify her manufacturing prowess, advance her technology, and, most disturbing, fortify her Red Army. In essence, we are handing Beijing the keys to the store.
America is at a turning point, for she is about to follow in the footsteps of the nation she kicked off the continent some two centuries ago. During the late 19th-early 20th centuries, the same time period Hamilton's America was witnessing unprecedented growth, Great Britain had become intoxicated by free trade libations.
British free traders, who had grown accustomed to cheap goods and food, had forgotten a nation is more than a collection of consumers. And because it forgot her national interest, Britain also left vulnerable her most basic industries.
With cheap food flooding the British market, Britain abandoned her farmers and, as stated by historian Corelli Barnett, "It was the German submarine which reminded the British government after 1914 that the price of cheap food from overseas under the policy of Free Trade had been the ruin of British farmers and the terrifying vulnerability of the British population to a starvation blockade."
What was the result of Britain's flirtation with free trade? A decline in her manufacturing base, which, in turn, caused a decline in Britain's presence on the global stage. That decline is directly linked to the sun setting on the British Empire.
America can avoid this fate if her government, and more importantly, her people decide that it is time to place country before consumerism. While America's view towards Hamilton has changed over the course of many years, the wisdom of Hamilton's economics has stayed constant.
If we are going to stem the tide of America's economic decline and return self-sufficiency to our republic, we need only start by having our elected officials re-read The Report on Manufactures.
Only American sacrifice will prevent the sun from setting on the American Century. Are we, as a people, up for such a challenge?
Free trade bump
Free trade is costing us alot. It was one of the reason we lost the house in2006.
yeah, the demise of american manufacturing could not possibly be caused by obscene wages and benefits paid to bolt turners, compliments of the union.......nah, must be the nasty outsourcers....
Free trade is great but conscience free trade is screwing us.
Even if the American people were up to "the challenge", the people behind the "New World Order" wouldn't let it happen. It seems that our government, or some very powerful people in the government, are more worried about the rest of the world than they are about America. America needs to take this country back.
Love it oh lump it they vote. Increasingly they are voting against free trade.
Relax. I'm sure China will build our War Machine for us.
Bump to Alexander Hamilton!
200 years of history wasn't wrong.
The current crop of do-nothing-imposters masquerading as free traders in the Administration and amongst their governing coalition with the Rats are devoid of either all historical understanding ...or integrity.
They refuse to enforce the level playing field.
Even if the American people were up to "the challenge", the people behind the "New World Order" wouldn't let it happen. It seems that our government, or some very powerful people in the government, are more worried about the rest of the world than they are about America. America needs to take this country back.
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Beyond any doubt, for a multitude of reasons. And throw into the mix, excessive taxation and regulations (what the socialists love) and you have the recipe for the largest trade deficit in history. Anti-capitalism will be the bane of America, when combined with the increasing socialism and bigger government control.
Alexander Hamilton. Heh.
Yes, let's conduct our economic policy based on the ideas of a person that lived and wrote over 200 years ago--brilliant!
Folks, economics is a science. We've learned a few things in 200 years.
If someone said that we should base modern medicine exclusively on the writings of a man that lived 200 years go, they'd get laughed out of the room. But when they say we should do the same with economics, for some reason, people buy it. Strange.
Thats a great quote. Free trade is fantastic when you are actaully trading. Just sending American jobs hand over fist overseas for nothing in return is not free trade.
like it or lump it, it is now a global economy...isolationismn will only spell the downfall of our own econamy. the cure is to put wages in line with skill level. when a bolt turner makes more than a college educated engineer or designer, somthing is terribly wrong.
Only a systemmatic restructuring of American tax policies to fix the competitiveness issues will staunch the hemmhorraging. I have long advocated the ending of the income taxes, and switching to a national sales tax, together with a "free market" access tax that foreigners would have to pay. I.e., a uniform revenue tariff that rewards moving production into the U.S. or keeping it there.
Then with select allied countries negotiating mutual reductions of those tariffs..."reciprocity" is the traditional Republican policy.
This would restore fair trade, which is truly the only real free trade.
The Big Picture? What, exactly, is the big picture? Seems to me like our economy has never been stronger and the standard of living of Americans is far and away higher than it's been in our history. Since 1948--the beginning of the free trade "era", the amount of scientific progress and the advances made by society have been nothing short of remarkable--far surpassing any other similar period in the world's history.
But right. Free trade is bad.
You are making a mistake here. You are trying to look at it as economics, I am talking politics. The politics of it is free trade is a loser. And I think it is an economic loser as well.
More brilliant than you know. It's working for China as they kick your U.S.-based-butt.
Folks, economics is a science. We've learned a few things in 200 years.
Mostly not. You evidently haven't learned a thing, and manifestly have forgotten...if you ever knew... what got us up to the plateau we are now frittering away.
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