Thank goodness we still manufacture a little in America, right?
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?
Economics IS largely mathematics. While it does predict human behavior to some point, it is about making decisions based on mathematical outcomes.
The field of economics of 2007 is light-years beyond economics in the late 18th Century. Wealth of Nations was only published in 1776 and Ricardo's theory of comparative advantage--clearly one of the most fundamental principals underlying ALL economic trade in the 21st century--wasn't even published until 1817, long after Hamilton was being eaten by worms.
As long as we're looking to the Founders for scientific advice, how about a return to blood-letting? After all, George Washington thought it was a great idea and practiced it fairly regularly.
Really? How much does Pat make? Or does he consider his job to be manufacturing newspaper columns?
I could....started out on the plant floor, talked my employer into paying for my schooling..worked 10 hours a day, 6 days a week, went to school for 4 hours a day after work, while being married and having 2 little kids to feed. I get so damn sick and tired of listening to those who REFUSE to better themselves bitching about those that have. If you are not happy in your situation, get the hell off your butt and do something about it...and in closing, running a nutrunner, feeding parts into a machine, yes, anyone could do it. Now, the skilled trades are another story, and not part of my rant. An apprenticeship is equal to a degree, in my book anyway.
Thank goodness we still manufacture a little in America, right?
Would you think the proper measure of a manufacturing base would be the output or the number of employees? If output remains strong, but the number of employees declines through attrition, then productivity and wages should go up. Only a professional whiner would object to that.
You haven't dealt with A. Pole before. He thinks socialism is great. He thinks we need more.
ROTFLMAO Perhaps the advocates of free trade need a protectionist to explain it to them?
So you like fewer barriers to trade and lower tariffs, you just don't like it when they waste paper?
Here's the lobbyist: "If you cut your tariff to 0%, I'll cut my tariff to 0%." So easy, even a caveman can do it.
Certainly a person who works with his hands can't do as much damage to a business that a Carly Fiorina can.
No, I didn't say that. Odd that you would translate decent wages for a manual laborer into earning as much as a guy with a coupla of masters degrees.
A winner take all while the bulk of the population must share a few crumbs from the table economy, will not survive long.
If you don't like unions, then take a careful look at the conditions that created them.
If you want to earn more cash, GET A DEGREE........
And Marie said, "Let them eat cake." Thanks for proving my point.
Opps, looks like you got a very expensive benefit. Didn't you feel overpaid? Why didn't you give up your job for the benefit the one world economy you love? You know, give back what you've taken out. Or is that just for people like me who are so lazy we paid our own way through college only to see our jobs eliminated in the name of quarterly earnings bonuses?
And that little is vanishing apace. It is what we manufacture, my friend. How important are clothes? How important are components that are engines of war and national defense depend on?
Read the tags on the next batch of necessities you buy. Note where they are made. If we manufacture the statute from steel, but others manufacture his ankles from clay, what use are our efforts?
There seem to be two kinds of thought supporting what we are calling free trade. That which is enlarging itself off the inequity and that which is too stupid to twig on what's going on.
PJB is against it.
Little? $1.79 trillion? Vanishing? LOL!
I mean, that executive who pulled the trigger on your job? Is he going to turn around and say, "what the heck, mike, you can stay--the Schumer-Graham bill passed."
Yes, I did get a very expensive benefit. My education also benefited the company. As I gained education, my employer promoted me to fill openings. But, because he was paying my schooling, I was making considerably less money than the other guys who already had the degree. It was the price I paid for my education benefit. And no, I did not bitch or complain about my lower wages. So, my employer got back what he put into me, and more. If your job got eliminated for quarterly profits, perhaps you should evaluate your performance. An employer who is interested in making money usually lets the poorer employees go first, ya know, the ones that cost more than they produce.....also, they will eliminate the ones with bad attitudes...
Add a bunch of statists barking like Pavlov's dogs, and you have a FR econ thread.
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