Bringing back our manufacturing base would go a long way to reduce unemployment.

Manufacturing is probably the one industry that creates wealth and value from lower cost inputs. Material, labor and overhead go into the finished product that is sold, hopefully for more than the cost of the input. Manufacturing uses labor at all skill levels from unskilled to Ph D's. The supply chain for manufacturing creates demand for other businesses from raw material suppliers to distribution companies which increases demand for labor.

Manufacturing has decreased in this country because of cheaper labor costs elsewhere. To combat that we should support efforts to pay living wages in other countries along with subsidies to manufacturing companies to relocate back to this country. Rather than offer lower cost labor we should offer lower costs for other operating expenses. State and local governments should subsidize overhead costs such and utilities, building and maintenance and insurance costs. The return to the states and local governments is a decrease in the costs associated with high unemployment such as a lower tax base, unemployment insurance, need for social welfare services.

corporate profits from foreign competition and maintain their domestic monopolies. The banner flying behind the fat bankers proclaims their support for "War (some things never change), Tariff & Monopoly".



We are unfortunately unable to regulate and control corporation today. Tariffs would give them even more profits and power aside from whatever economic damage they did.

What I can't understand is why the PTB would let our critical supply chains, tool and die and manufacturing go off shore?

Well, I do understand.. it's corporate greed and corruption in the halls of CONgress.. but that doesn't make it right.

We don't even make the ammunition for our troops anymore.. we sub-contract it to China... this is insanity.

I don't care how cheap they sell me drywall, I don't want it to smell like rotten eggs. I don't want poison in my pet food and lead paint in my kid's toys. And I want my job back!

This whole insane Ronald Reagan off-shore out-source trickle-down wet dream has got to STOP.

I got pissed on, didn't you?

I think something like half our manufacturing is lost because our tax structure puts us at a disadvantage and the currency of China is undervalued.

Chinese wages grow at about 15% a year. US wages grow at 3% a year. It is only a matter of time before China is outpriced.

I think the savings from outsourcing are only about 5% anyway. Its not a huge savings.

It took me a wall of words below to get at what you said in three lines. :rofl:

Let's hope.

There are two aspects to an economy. There's the support economy, which basically is all the jobs that support a region (however you define that region), such as restaurants, local businesses. They sell to the people in the region. Then there's the base economy, which is the business that brings money into a region from outside of it. The base economy is what gives people money to support the support economy.

Since Reagan, the US has been a debtor nation, meaning we import more goods than we export. That means our base economy is not bringing in enough money. The inevitable result of that, long term, is that our money becomes worth less and less compared to the rest of the world's money, and our jobs slowly evaporate.

The biggest cause of this problem is Reagonomics. Reagan believed--for outdated economic reasons--that if you give the wealthiest industries more money and give them an incentive to invest that money, they will spend it on creating more jobs. The problem with the theory is obvious and simple--industry doesn't make a product because they have money to make it, they make a product because there is a market to buy it. GM wasn't going to make more cars and put more people back to work if no one was buying their cars in the first place. Instead, they invested the money by buying up markets that already were making money--parts, tires, smaller car makers, etc. This created no new jobs, since they were just buying existing jobs. It only shifted those jobs from smaller ownership to larger ownership, and in the process reduced the number of employers.

So take the tax cuts that gave more money to the wealthy, giving them an unfair advantage in business competition against smaller businesses who did not get as much money back, and take the shrinking employer base from larger businesses buying smaller businesses (those who remember the 80s know that the big words then on Wall Street were merger and takeover), and you have middle and lower economic classes making less money, therefore starting fewer businesses, therefore not contributing to the base economy.

Clinton--who should be worshipped by progressives, not condemned--reversed Reaganomics. His raised taxes marginally on the wealthiest, and lowered them on the middle and lower classes. Instantly, the market responded. Larger companies no longer found it profitable to hold monopolies just for the sake of investing their extra cash, because there was no extra cash. So they either closed their marginal businesses, or sold them, or let them spin off. Since there was still a market for whatever these companies produced, the middle classes with their new competitive buying power bought them up, or ran them as employee investors. Key words on Wall Street during Clinton were spinoff, and startup. Wages started going up, poverty shrank to as low as one can expect it, and the deficit came down because finally there was enough of a base economy for tax revenues to finally outstrip the requirement to spend and borrow.

Bush reversed that, and we started down the Reagan path again. Obama's stimulus package, while having a lot of Clintonomics in it, still carried a little too much trickle-down to really reverse things, but he did stop the bleeding. Right now we are tottering on an edge, seeing if the weight of the economy will pull us back to safety or pull us over the edge. Obama halted the problem, but whether he did enough for the solution remains to be seen. He knows this, I think, which is why he's talked about additional stimulus bills. On the other hand, he's still too much a believer in the Republican tax-cuts-will-stimulate-the-economy mentality. Long term tax cuts that target the middle and lower classes while making up for the shortfall through taxation of the wealthiest, and more importantly of corporate wealth, would do what he wants, but that's the part he's not as clear on.

Anyway, I agree with you that bringing back the manufacturing base would create jobs. That is a big part of the base economy, as is agriculture, technological research and innovation, and anything we can do better than someone else. That's what they pay us for. The best way to bring that part of our economy back, though, is to tax the wealthy. Make it less profitable for them to make products overseas, and people will start making them here. I have no problem with NAFTA, because if we taxed income (personal and business) progressively, smaller businesses would be stimulated, and larger businesses would be curtailed, and manufacturing would return. Let China keep making cheap stuff we don't want to make anyway, and let us keep buying it cheap. That helps China and us. But we have to make what we make best over here, and that's where our economy is shot.

Under Clinton, we saw an incredible tech boom, not because people were suddenly inventing stuff, but because there was suddenly enough middle-class money to invest in smaller markets, so people with ideas could make money off the ideas. Reagan and W killed that aspect of the economy. That's what we need to bring back. And the good part is that it's simple to bring back--just realign our tax structure, and the money is there, and suddenly our brilliant thinkers will create a fortune on green technology, the next generation of computers, or whatever. Tax cuts are relative--you have to tax the wealthiest most heavily to make the market more competitive for those just starting up. That's the biggest mistake Obama has made so far.

Anyway, that's how I'd fix the economy. :)

Excellent post, btw. My long ramble wasn't a contradiction, just thoughts inspired by your point. Well done, and thanks. :thumbsup:

GDP output in current dollars for US manufacturing 1970-2008


United States Manufacturing (ISIC D)
2.4924E+11
2.62525E+11
2.89789E+11
3.23001E+11
3.37277E+11
3.54627E+11
4.04991E+11
4.61798E+11
5.16524E+11
5.70754E+11
5.84039E+11
6.51852E+11
6.49373E+11
6.89128E+11
7.79248E+11
8.02347E+11
8.32685E+11
8.886E+11
9.799E+11
1.0177E+12
1.0406E+12
1.0435E+12
1.082E+12
1.1314E+12
1.2232E+12
1.2891E+12
1.316E+12
1.3796E+12
1.4405E+12
1.4918E+12
1.543E+12
1.46E+12
1.4716E+12
1.4829E+12
1.5587E+12
1.6239E+12
1.7117E+12
1.7556E+12
1.83068E+12

Far ahead of nearest rival.

If you use the different code that incluses mining and utilities as well as goods manufacturing (which is typical in discussions of manufacturing) our lead is even greater.

It's higher than it has ever been.

Do not confuse payroll numbers with manufacturing base.

I wish I had a chart of the same period that showed the number of manufacturing jobs each year.

That fewer people can create more value is not unique to the US, and is not a bad thing anywhere. Should we have hundreds of people hand-weaving cotton now?

As far as jobs go try this....

there is inventory control, purchasing, lower, middle and upper management, there is shipping, information systems and more.

I was a controller for several small manufacturing plants one owned by a large Japanese Corporation. What I am talking about is to open small manufacturing plants that will need the positions I've described.

I guess I am talking on a micro level and you are on a macro level.

I agree that small manufacturers will increase employment if they can be incubated, but small manufacturers need customers to survive, and what US manufacturers are best at is high tech high value added manufacturing. We can compete much better in rockets than raincoats and in X-ray machines more than Y-fronts. Mass high-labor content low value production just doesn't play a large part in the solution. To incubate the specialty manufacturers we have to invest in technology others don't have. We already fell behind in stem-cell biotech. We are not exactly blazing a trail in most alternative energy equipment (although we do well in some of them). What we need to do is set up concentrated industry enterprise zones close to universities to help us develop nanothech, biotech, green energy manufacturers etc.

My only point is not that you are wrong about what could spur employment, but that the typical culprit you refer to of a shrinking manufacturing sector is not true. Our manufacturing sector is putting out more than ever and we remain the world's largest by far. We just make stuff that tends to employ fewer low-skilled workers than before and generates far more $$ per employee than those industries that do.

We buy things made in China that could be manufactured here. If labor costs were not the issue but other things on the income statement were lower to offset labor costs there would not be the need to manufacture so much in China.

Also the difference between what you are saying and what I am saying is that we shouldn't care so much about the macro things you are pointing out but use manufacturing and a means of growing the middle class and thus consumer base for the goods made here.

I'm looking at ants on the ground and you are looking at the planet from space.

We are rich enough as a country to produce huge amounts of goods and still import huge amounts too.

What exactly can/should be lower costs in the US than in LCCs? Environmental? Taxation? Land? How so?

If you think we can get out of an economic slump by creating mfg jobs that's fine but you have to say how consumers will buy that output. Few people want to pay $15-20 for a pair of socks. How will we generate enough jobs producing socks without massively increasing the price? The brutal answer is we cannot. Folks in Thailand or Bangladesh will make socks cheaper. If we try protectionism we will lose both our markets overseas AND the foreign investment in the US (everybody is so quick to whine about Dell call centers in India but why does nobody EVER mention Tata employment here?). Even if by some magical means protectionism worked the cost of high labor low value goods would rise astronomically (because we are paying Americans $12 per hour to make them instead of Bangladeshis $6 per day) so what would that do to our real cost of living? Sure the people making socks would be better off but the 99%+ of US workers NOT making socks would be worse off too.

It's not a question of micro vs. macro. It's a question of knowing the ramifications of economic decisions vs. not knowing them.

different perspective. There is cheap labor because those workers lived in extreme poverty and the manufacturing jobs that they now have takes the up the ladder from poverty. That creates demand for products than never existed before.

If our goal was to improve the lives of people rather than grow the wealth of those who have more than enough already we would not look at things they way you do.

The difference between you and me is that you see the stake holders as the owners of capital and I see the stake holders as the owners of capital as well as the workers and consumers.

I feel we should begin to see economies not in the light of how much wealth we can pile up at the top levels of society but rather how much opportunity we can create for everyone to improve their lives.

Its gone. We could raise protection barriers but that is about all we could do. How exactly are we going to compel China to raise wages? It is a race to the bottom and China won. We are there. Now what happens is that China slowly rises up and we and the rest of the so-called developed world, sink down. Eventually we stabilize at whatever level the Chinese have managed to climb up to.

Now perhaps you think fine, raise them up to our level. We can't and they can't. Global Warming and Peak Oil are in the way. Assume unlimited cheap oil and the asian population rising up to our living standards fries the planet. Allow for the obvious fact that cheap oil is on the way out, and every bump upwards in asian living standards causes oil price economic dislocation.

We are in a rather peculiar dilemma which there is no real political will to resolve.

global economy.
1. Green tech & clean energy somehow eliminate the pressure that widespread economic prosperity would put on the earth's environment. We could pursue American prosperity while, at the same time, encouraging equal prosperity for the rest of the world's population. While this is a politically appealing since it requires no sacrifice from anyone, it is dependent on technological developments that are far, far from certain.
2. We determine that we can't rely on green tech to solve our global "equitable prosperity vs environment" problem, so we have to make tough choices.
a. We accept permanent global inequality as an unfortunate fact of life. Since the globe can't handle 6 billion living a Western lifestyle, we choose to focus on our own country's prosperity. If others can bootstrap themselves up, that is fine but not our main concern.
b. We accept a decline in our standard of living. Since the globe can't handle 6 billion living a current Western lifestyle, we focus on lessening our impact on the environment in order to allow citizens of poorer countries to improve their lifestyles.
3. We make no tough choices, pursue of own prosperity as we always have, perhaps with the vague hope that green technology will save us from seriously damaging the globe's environment. We don't wish any harm on the world's poor. We'll even help them when we can, but we will also keep a wary eye on them lest they impact our prosperity.

Of course, the reality is that the future will probably be some combination of all of these. Green technology may not solve all the globe's "equitable prosperity vs environment" problems, but may make other options easier to achieve or live with.

Option 3 is probably the most likely since it represents little change from how we operate now. Option 1 is the most appealing politically (all things for all people :) ), while #2a's acceptance of inequality would rub most progressives (though not conservatives) the wrong way. Professing #2b would make a politician unelectable even though individual citizens might choose to live more simply so that others may simply live.

2+3 are the same thing and are what we are doing, although I reject the characterization of (3) as pursing 'our' prosperity. Working people in america have been going backwards on the prosperity scale for quite some time. Two workers per home have replaced one and even then family income in real dollars has basically stalled. Bogus inflation calculations hide massive cost shifting onto working families for health care, housing, education and food. 'Our' prosperity really means the prosperity of a very small class of truly wealthy elites, who use the USA primarily as the centurions of their global empire. We don't make shit, but we control the planet with our hightech arsenal keeping the world safe for the global power elites.

The path we are on most likely leads to a disaster of staggering proportions, unless one accepts the false noise theory that this whole global warming thing is just a scam by algore to get rich while imposing socialism on free america. Catastrophic climate change is real and we are counting down the years until that reality blows up the world as we know it while our leaders play Monopoly with real lives and fake money.

Option 5 is to advocate the US emulate the EU, and then to claim ignorance as to any EU crises that may be (and in fact are) occurring.