Monday, November 8, 2010

The Future of American Manufacturing...

by Les Carpenter
Rational Nation USA

Not an economist, I cannot pontificate profusly about various economic models. Nor can I pretend to argue exactly what may be the correct model for any given business or household to follow. Sure I have my beliefs as to what might work best based on my experiences, and from a common sense point of view it is hard to argue with frugal concepts of spending and living within your means, building a nest egg for the future, and having a small "rainy day" fund to fall back on in times of uncertainty. It all makes sense in a simple and direct sort of way.

The nation's fiscal house is  a mess. We have ever growing debt, the government continues to spend like druken sailors, we can't seem to find our way away from costly wars or conflicts, we continue to see our manufacturing base shrink in America as we continue to export jobs overseas. Think about it people, It'ws absolutly nuts what we have done to our manufacturing base and producers in America.

 Among the the industrialized nations of the world I venture to say we are the only nationn that lacks a cohesive and consistent national polily favorable to our manufacturing infrastructure and the people that depend on it. Essentially we can thank our unyeilding faith in "free trade", and policies like NAFTA for our decline in manufacturing and the loss of American jobs to oversees competetors. It's all there in a remarkabaly well written and accurate book called "Three Billion New Capitalists." It should be required reading for every CEO, Congressman, Senetaor, and President before they assume office. Then they ought to form focus groups and formulate policy based on the truths presented in this book written by Clyde Prestowitz who was counselor to The Secretary of Commerce in the Reagan Adminstration.

Simply put the book make the case that as the east becomes economically dominate, powered by nations such as India, China, Brazil, and countries in Southeat Asia to name just a few, there will occur a significant shift of wealth to the east. The result will of course a declining America on the world stage of economic influece and a declining standard of living for our preople.

Mr.Prestowitz makes a powerful case that for the U.S to compete and retain a place at the table of economic powerhouses will require thinking differently and outside the box of 19th and 20th century economic models. He also supports a strong cental government role in the effort to develop a manufacturing and tecnological policy that favors and supportrs our manufacturing infastructure and provides protections agaist the trade policies that have got the U.S. were it is today.

I have not the time to address the wealth of knowledge and plain common sense between the covers of  "Three Billion New Capitalists." I encourage all those, Republican, Democrats, and Independent who truly care about our nations economic future to pick this book up and read it from cover to cover. Then start talking to and writing  your congressmen, senators, and business leaders.

Time is of the essence. Or perhaps the nation perfers to become a total service related country? The choice is ours.

Coming later this week. The current wage disparity in America and it's looming impact on our nations economy.

Cross poted to the Left Coast Rebel.

Memeorandum

20 comments:

  1. Here is another way to begin understanding our current economic mess:

    http://economistsview.typepad.com/economistsview/2006/04/james_galbraith.html

    Now, I agree with the idea that our economic system can be called predator capitalism but I am not willing to accept the solutions the author prescribes

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  2. Beware the term "strong central government" period, it is nothing less than a different term for Socialism and dare say THAT is exactly how we got to this point.

    From CAFE standards (unfunded mandates) to Fannie and Freddie you see a strong central government "role" in all of it.

    Last Tuesday we saw Americans reject this out-of-hand in the knowledge that only the free-market which has always sustained our economy is the only model which will save it barring a "strong cental government role".

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  3. Yes, your free market has done wonders to suck wealth out of this country and invest it abroad...

    What Americans want is a government that protects its borders, which includes its economy, rather than supporting the forces that have created the mess we find ourselves in...

    Americans said, JOBS, JOBS, JOBS...and stop the looting of our treasury to fund the financing of profits at the expense of our own economy.

    Our economy and our strength has been based upon tariffs not free markets....a government focussed on doing right on Main Street not Wall Street.

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  4. For anyone who does not know or understand me I am first and foremost a CAPITALIST.

    I firmly subscribe to free trade and open markets. However, that being said I also believe in A LEVEL PLAYING FIELD.

    The reality is we are not competing on a level playing field. Free markets, at leas in so far as this nation seems to understand the term, has in reality resulted in willingly, and foolishly handing our global competitors a definite advantage. Whether anyone wants to accept this or not our global competitors will use the advantage to destroy us economically.

    Just for the record, I am also a disciple of Rand and her philosophy of Objectivism. One of the foremost tenets of this philosophy is that rational and objective people will act in their own best self interest.

    Given this I ask... Are Americans, whether they be Conservative, Liberal, Independent, Socialist, Fascist, or otherwise acting in their own best economic self interest?

    I shall leave the answers with my fine and studied readership to decide.

    I will at this time comment further on TAO's measured response to my post...

    TAO, my political nemesis in many ways is ABSOLUTELY correct with his 2'nd paragraph comment. Americans do want its government to protect its economic borders. Why? Because it is in each and every individuals self interest to do so. Period.

    TAO and I could could find ground to disagree with the specifics with respect to free markets and tariffs. And initially I was going to blast his comment. However, after a bit more analysis I realized exactly what the man I once called a Leninist was saying and what his meaning was.

    Government has many purposes. One of its primary purposes is to insure that the people it represents are able to find work at a living wage and support their loved ones in a style equal to, if not better than that which that they were accustomed to.

    Wake up Corporate America! Wake Up Average America! Wake Up Republicans, Democrats, and Independents! If we continue on our current economic path we will in fact become the World's Largest Banana Republic.

    In this my political nemesis and I can agree.

    So America lets get behind a pro growth, pro American manufacturing and technological onslaught and takes back our economic interests and moves this productive nation forward.

    There is ABSOLUTELY no reason we should not be the worlds greatest economic power... Other than our own lack of understanding and concern for our real self interests.

    In closing... Call me a "Classical Liberal", or call me an "Independent Conservative." The bottom line is I don't really care what you call me. As long as my efforts are directed in the pursuit of doing that which is objectively right for not only myself and my family but for this great nation as well.

    TAO, on a personal note. We may disagree on many specifics. However, I thank you for your reasoned and thoughtful comments on this post.

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  5. Rational, Corporate America and Wall Street are our primary threat to individual liberty. They do not represent Ayn Rand's ideal but rather they are the Taggarts of Ayn Rand's novels.

    Once you clean up that mess and the influence they have on our political system the rest of it will be pretty easy to go after and clean up...

    To any true conservative and or libertarian this should be obvious. We are not a capitalistic country right now...

    If we do not tame this beast and restore financial sanity we will be staring at one world government but not from the left but rather from the corporations....

    Support the 3/50 project, support the new rules project, and buy American.....

    Which if you actually look up these programs you will realize that it translates into buying from local retailers, bringing governance to the local level and basing governance on individualism and buy Made in the USA...

    Now, you can claim that this is socialism if you want to because you perceive me as a liberal...but I see it as basic common sense and the most conservative and libertarian ideals one could have.

    I have supported all three for years....long before the Tea Party became popular....

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  6. Oh my. Les and TAO agree on something? Hmm. I reckon I will have to scour The Scriptures to see if this is one of the signs of the Apocalypse! Yikes!

    Okay, all kidding aside, I took the time to do a little reading myself. I'm NOT an economics major or any such expert, buuuuut, we are not a capitalist society right now, as TAO attests.

    Three things I would do to take over a nation:
    1. Take away all guns
    2. Take away all money, ie, kill the monetary unit used in said country by devaluing it
    3. Control the media

    Just an observation, not a sermon.

    Our economy is threatened each day by our Government. Something needs to give.

    Donald in Bethel, CT

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  7. Devaluing a currency allows one to compete...that is not taking away anything.

    The easiest way to take over a country is to replace money with credit cards then cut credit once everyone has maxed out at the same time move all production and those jobs off shore and leave lower paying jobs...

    Quitest way to slavery is via an indentured servant...which is exactly what debt does.

    Painless, and quite profitable way to take over a country...

    Where does government threaten the economy?

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  8. Devaluation of currency is government theft, plain and simple.

    We need to lower our corporate tax rate, and simplify the legal code as it relates to business.

    Jobs will take off.

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  9. Oh my.

    I believe not to long ago I posted a relatively simple straight forward tax plan that would sheild those on the lower end of the economic sale, tax at a flat rate of 10% for those making $40,000 and over, and tax business on their revenue after deductions for legitimate business cost as recognized by current accounting principles. It also would end subsidies and corporate welfare. As well as ending all exemptions and deductions. It received little comments. I wonder why. Check it out

    Simplifying the legal code and pursuing a sane regulatory policy would also help as Silvrfiddle notes.

    Once again, and this is almost frightening, TAO is correct with Respect to Ayn Rand. The majority of Corporate America does more closely represent the Taggerts and nother ideal of a capitalist America. And the CEO's of these corporations sure as hell do not represent Roark.

    If this nation is to have a prayer of surviving economical we better return to the knowledge that only production can create wealth and that only a nation whose people can afford to purchase the product and goods they produce are truly free.

    Perhaps people ought to study Henry Ford a bit. He understood that to become wealthy himself he needed to produce a quality product that people wanted and doit at a price his OWN EMPLOYEES COULD AFFORD.

    Think middle America people,as in middle class. Because as middle America goes so will go the nation.

    I ask you, is it looking real good right now?

    And for the record the two party system in America today hasn't any real significant differences between them in all reality.

    The Republicans have a historic oppurtunity to grasp the problem and effect real change...

    Waiting and watching.But not holding my breath.

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  10. This is the issue that 90% of Americans can agree on. As far as tariffs and free trade, free trade is great when the nations are playing by similar rules. Free trade with other western nations has benefited us all. However, nations like China that do not have environmental or labor laws. It is hard for the American worker to compete with a Chines or Indian worker that is willing to work for less than a tenth of the money. Free trade with these nations is like a basketball game our side has to play buy the rules, but the Chinese have ten guys on the court, and do not have to dribble. They are going to win. Unless both nations work under similar economic models, free trade is a bad idea.

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  11. @TAO,

    You responded to me with this question:
    "Where does government threaten the economy?"

    Not for nothing, but...are you seriously asking this question, or are you pulling my chain?

    TARP, the 787 billion bailout, ObamaCare...these things have adversely affected my economy. And my kid's economies. And my grandkid's economies.

    The moment the government decided they could get out of debt, or "help" others get out of debt, by spending money and/or printing new money (Go, Fed, go!!), our economy as a Nation was hit.

    The dollar I have in my wallet is worth how much today? The American people didn't devalue it. Government's machinations have devalued it. Brilliant strategy, actually. Good thing I am a "redneck" who hunts, fishes, can plant veggies, and has storage in my basement. That dollar in my pocket isn't worth a dollar. Ruh-roh!

    Donald in Bethel, CT

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  12. @TAO, part 2:

    I do agree that credit cards are pretty vile things. (My words, not yours)

    Indentured servitude is a great way to describe debt. I owe on my house and my school loans are almost(!) paid-off. No credit cards with a balance. (My mortgage company, Citi, gave me one when I got the loan for my mortgage. It is sterile.)

    A very wise man once said something along the lines of 'you are a slave to whatever has mastered you'. America is full of financial slaves, unfortunately. I used to be one, but that was a lifetime ago.

    Liked your thinking, TAO. I'm waiting for the other shoe to drop and for you to belittle me or slander my intelligence in some way. Here's hoping I shall be disappointed.

    Donald in Bethel, CT

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  13. Donald...

    Without TARP OUR financial system would have failed...it would have crashed. You would not have been able to deposit your paycheck. For two weeks in 2008 banks ceased to accept ACH transactions from each other. So, unless you were moving money from one account within one bank to another account in the same bank nothing was really happening...they were paper transactions that could have easily have been reversed.

    Had the financial system not unfrozen its self over 30 days then we would have had to go to a totally CASH system. No more credit cards, no checks just cash.

    You did get benefit from the stimulus because you got a tax deduction. Obamacare has cost you nothing because it has not kicked in yet.

    The dollar in your wallet is still worth the same thing its always been worth minus inflation. The "devaluation" of the dollar has nothing to do with you unless you get paid in a foreign currency and then have to convert it to US Dollars.

    The devaluation of the dollar means that what little we manufacture and or produce and sell to foreign countries is now cheaper. It also means that oil is cheaper in other countries.

    Now, debt is a BIG problem because it limits our options in the future. Then again some debt is good because of the effect it has on the economy but the government uses debt not to build the economy but rather to reward supporters...that is the wrong debt.

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  14. @TAO,

    I'm not convinced that TARP was such a savior. Perhaps it is that bile that rises up in my throat when I consider how we, as a Capitalist Nation, could allow our government, (Bush and Congress), to bailout failing private corporations.

    Fannie Mae and Freddie Mac, of course, are the exceptions.

    However, I appreciate your insight into this whole financial debacle, albeit I confess much of it is over my head. (I'm simply not good with numbers/math!) I reckon I wish our government could run its finances like I run mine: Never spend more money than what you make.

    Thanks, again, for the food for thought.

    Donald in Bethel, CT

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  15. Don... You said;

    "I reckon I wish our government could run its finances like I run mine: Never spend more money than what you make."

    Most would agree with these sentiments wholeheartedly... To a point.

    Some, and I mean a limited amount of debt, is not necessarily bad. As long as the debtor can retain control of the debt and if absolutely necessary could pay the debt off without becoming insolvent.

    One example that points to the value of assuming some debt is this;

    You have the capital to purchase a car outright by dipping into your investments, thereby bringing your total level of liquidity down. You have created no interest burden and you have created no debt obligation.

    However before making the decision you look at; 1) the interests you are making on your investments and 2) the interest level on a note to purchase the new. If the level of interest from your investments exceed the level of interest you are paying on a note to purchase the car it may be sensible to assume the debt. Because the net effect may very well have you further when the note is paid up than if you took the cash to pay for the new car.

    The same would apply to our government if our government had the ability to control it's spendthrift ways. It doesn't and over time this is dangerous.

    TAO is correct in principle with respect to devaluation of the dollar. What he didn't mention, and this is a possibility is what I call the Wiemar Republic effect.

    Perhaps unlikely i this day and age... But not impossible.

    TAO, your thoughts?

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  16. The Wiemar Republic effect was inflation...

    We have not had a serious issue with inflation since the 1980's and we will not have anytime in the future...

    While everyone is going around ranting about inflation they do not realize that our real issue is DEFLATION. For the last 15 years we have all been sitting and waiting for the evil inflation to pop up again and it hasn't but the whole time deflation is killing this country.

    Home loans are now what? Below 4% for a fixed rate 20 year mortgage? No inflation in our future. The feds are going to buy 600 billion in treasury bonds...why? No one else wants them.

    Since the internet bubble we have spent the last 10 years chasing around all the old crap from the 20th century and no one seems to grasp that it is the 21st century.

    Give up on looking for historical precedents...

    Your next bubble is building right now in emerging markets...you have gone through an internet bubble, commodity bubble, mortgage bubble and shortly you will see an emerging market bubble.

    Why in the world would anyone want to invest money in things that involve work like new companies or creating jobs when they can make 20 to 30% a month playing bubbles?

    This is not economics its speculation...and its caused by too much money in the hands of two few people....and they all are chasing the same few investments.

    Back in the 80's people owned stocks for years now the average ownership of a stock is less than 30 days.

    During a recession you always have periods of mergers and acquistions and that is the first sign that you are pulling out of a recession...anyone hear of any mergers and acquistions lately? Nope, there are none.

    Forget the Wiemar Republic effect....does a computer cost less now than it did 6 months ago? Gallon of gas cost 1.65 a gallon in 1977 and now? 2.87 a gallon...

    Interest rates are falling because no one is borrowing....no borrowing means no economic activity and no growth.

    Its time you give up on all the old ideas of economics and capitalism....they don't fly anymore because we do not have an economic system but rather a finance system...we are no longer a capitalistic nation but rather a nation of moneylenders.

    We do not create wealth but extort it...and its not your government its Wall Street....

    If you want to find a historic example then study the Raj period of India...the moneylenders impovished not only farmers, not only manufacturers, but also rulers....

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  17. TAO - Thank you for your insightful comments.

    What I find most interesting is the following...

    "This is not economics its speculation...and its caused by too much money in the hands of two few people....and they all are chasing the same few investments."

    And...

    "Its time you give up on all the old ideas of economics and capitalism....they don't fly anymore because we do not have an economic system but rather a finance system...we are no longer a capitalistic nation but rather a nation of moneylenders."

    You are correct in that our economy has become speculative and that to much wealth is now concentrated in hands of two few of our countrymen (women).

    We are no longer a producing nation but rather a nation that is trying to experience growth on the strength of interest accumulation, the result of lending capital at credit rates that are absurdly high.

    At the same time we have become a debtor nation and the lions share of our debt is owned by foreign nations. This is frightening. Even if these nations never call in their debt as it may very well bring down their economies it nonetheless makes us beholden to their whims and or demands.

    At he same time we have allowed "Corporatism" to take a firm hold in our affairs which has increased the wage disparity in the nation. The result is a shrinking middle class. if this trend continues unabated the middle class will eventually become non existent. As I have said many times recently as the middle class goes so goes America.

    My primary disagreement with you TAO is that we indeed need to return to a true capitalistic foundation. At the same time we need to rebuild our manufacturing base and strengthen our technological advantage which is slipping away.

    While I remain a strong proponent of limited government and true capitalism at the same time I realize ALL THINGS are relative and the passage of time and advancing technologies require adjustment to modern realities.

    PRINCIPLES, if they are sound need not be scrapped. They merely need the flexibility of adapting to ever changing realities.

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  18. You have a "disagreement" with me? Did I ever state that we should do anything other than return to capitalism? Was this "disagreement" in something you read or something you assumed as you were reading?

    "corporatism" is just another word for "globalism"

    "corporatism" is also another word for one world government...

    Who says that our wealth is in the hands of our fellow citizens? China buys as much if not more stocks as they do our bonds....

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  19. TAO - Thank you for your clarification. It is likely I who missed something, the result of being ill and likely over tired.

    "corporatism" is just another word for "globalism"

    "corporatism" is also another word for one world government...

    I posted some time on one world government (which I vehemently oppose) but acknowledge I "missed the corporatism connection" at the time. As I said enhanced understanding and growth is good.

    To be clear... I never said that wealth is in the hands of our fellow citizens. I did say that to much wealth is "in the hands of to few of our fellow countrymen (women)." I stand by that statement.

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  20. Les,

    You said:
    "At the same time we have become a debtor nation and the lions share of our debt is owned by foreign nations. This is frightening. Even if these nations never call in their debt as it may very well bring down their economies it nonetheless makes us beholden to their whims and or demands.

    At he same time we have allowed "Corporatism" to take a firm hold in our affairs which has increased the wage disparity in the nation. The result is a shrinking middle class. if this trend continues unabated the middle class will eventually become non existent. As I have said many times recently as the middle class goes so goes America."

    It is thoughts like this that have caused my hair to turn gray. Not for nothing, but how much money has China "lent" us through their buying of our debt?

    Exactly.

    I would say this, and I will sound like a total hypocrite, but bear with me here-
    If there was ever to be another "bailout", it should be us printing off enough money to pay China and free us from owing them jack sh*t. Then we could focus on repairing our economy without them breathing down our necks.

    I'm sure this theory is fraught with holes and pitfalls, but I severely detest those Socialist pricks having anything over our heads. Anything.

    My two cents.

    (Or maybe we could just give them California, and call it even. Don't most Californians want to be Socialist anyways? Or is that just the personalities on MSNBC?)

    Donald in Bethel, CT

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