Sunday, September 26, 2010

America's Downward Spiral = Deindustrialization

19 Facts About The Deindustrialization Of America That Will Blow Your Mind
Sept 26, 2010
The United States is rapidly becoming the very first “post-industrial” nation on the globe. All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing. It was America that was at the forefront of the industrial revolution. It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes. It was the great American manufacturing base that crushed Germany and Japan in World War II. But now we are witnessing the deindustrialization of America. Tens of thousands of factories have left the United States in the past decade alone. Millions upon millions of manufacturing jobs have been lost in the same time period. The United States has become a nation that consumes everything in sight and yet produces increasingly little. Do you know what our biggest export is today? Waste paper. Yes, trash is the number one thing that we ship out to the rest of the world as we voraciously blow our money on whatever the rest of the world wants to sell to us. The United States has become bloated and spoiled and our economy is now just a shadow of what it once was. Once upon a time America could literally outproduce the rest of the world combined. Today that is no longer true, but Americans sure do consume more than anyone else in the world. If the deindustrialization of America continues at this current pace, what possible kind of a future are we going to be leaving to our children?
Any great nation throughout history has been great at making things. So if the United States continues to allow its manufacturing base to erode at a staggering pace how in the world can the U.S. continue to consider itself to be a great nation? We have created the biggest debt bubble in the history of the world in an effort to maintain a very high standard of living, but the current state of affairs is not anywhere close to sustainable. Every single month America does into more debt and every single month America gets poorer.
So what happens when the debt bubble pops?
The deindustrialization of the United States should be a top concern for every man, woman and child in the country. But sadly, most Americans do not have any idea what is going on around them.
For people like that, take this article and print it out and hand it to them. Perhaps what they will read below will shock them badly enough to awaken them from their slumber.

The following are 19 facts about the deindustrialization of America that will blow your mind….
#1 The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed over 500 people when they were still in operation.
#2 Dell Inc., one of America’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.
#3 Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina in November. Approximately 900 jobs will be lost.
#4 In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.
#5 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.
#6 As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.
#7 The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.
#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.
#9 In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.
#10 Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota. Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford’s new “global” manufacturing strategy.
#11 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.
#12 In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.
#13 The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.
#14 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.
#15 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.
#16 Printed circuit boards are used in tens of thousands of different products. Asia now produces 84 percent of them worldwide.
#17 The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.
#18 One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.
#19 The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans in the 51 years that records have been kept.
So how many tens of thousands more factories do we need to lose before we do something about it?
How many millions more Americans are going to become unemployed before we all admit that we have a very, very serious problem on our hands?
How many more trillions of dollars are going to leave the country before we realize that we are losing wealth at a pace that is killing our economy?
How many once great manufacturing cities are going to become rotting war zones like Detroit before we understand that we are committing national economic suicide?
The deindustrialization of America is a national crisis. It needs to be treated like one.
If you disagree with this article, I have a direct challenge for you. If anyone can explain how a deindustrialized America has any kind of viable economic future, please do so below in the comments section.
America is in deep, deep trouble folks. It is time to wake up.

1 comment:

Fletch said...

The 19 facts mentioned that allegedly prove deindustrialization in the U.S. are interesting, but hardly mind-blowing. Some can be dismissed immediately. #3 and #10, for example: Specific factories close all the time, while new facilities open all the time. That's the nature of an economy able to respond to changes in consumer tastes and new technologies. Finally, #14: What does broadband internet usage have to do with deindustrialization? We've fallen behind by this metric much more out of neglect of rural communities, something the government is trying to remedy.

Now, let's move on to specific products that somehow should be made in America but aren't - #4, #15, and #16 claims, respectively. I could dwell on and on about the law of comparative advantage and how assembly of these goods requires lots of unskilled labor abundant in places like, China, and lacking in places like, the U.S. Again, countries specialize in the production of new goods and services all the time, while letting others specialize in their own manufactures. Why is it necessary to produce circuit boards here, for example, when they can be made abroad cheaper, thus improving the living standards of them and us?

Those are microeconomic concerns and, to your credit, are limited to the six claims above. Your core argument can be divided in half: Manufacturing has become less relevant over time (by whatever metric) and the rise of China is a menace. Let's start with #9 and #12, which are closely related. Domestic manufacturing is far, far more productive than it was back in 1959, accessing robotics and I.T. today only dreamt of then. Consumers have not kept up with this bounty on the demand side, however, thus resources that would otherwise have been employed in goods production have been deployed instead to services. As incomes have grown over the past several decades, consumers have demanded more services relative to goods, thus more resources have been put to work there.

That primarily explains #1, #7, #11, and #13 too: Technological change and consumer tastes have rendered much of the capital and labor that, absent those trends would have been needed, obsolete. Robots and I.T. have replaced people and consumers have responded to those productivity gains by pocketing the money and spending more on services. That's why America remains the #2 manufacturing power by production volume, even after plugging more than 100 million Chinese peasants into the global labor force.

So, at last, there's China. Our trade deficit with them is driven fundamentally, again, by consumer tastes: They, for whatever reason, save a much higher percentage of their income than we do. As long as they aren't buying our exports, but are instead investing in dollar-denominated assets, the trade gap is going to persist. That is a very serious problem as the global economy recovers: We need them to start driving demand. So, #6 and #17 are valid claims if your argument is that industrial production has disappeared, or failed to appear, in the U.S.

But the notion that the U.S. has, overall, deindustrialized since 1941, or 1959, or whatever date in the distant past you wish to give is nonsense.