By Alan Caruba
Let me begin by saying I am not an economist, but I have had a rather unique “education” in the way American’s make a living, thanks to a long career as a public relations counselor working with corporations, trade associations, and others across a broad band of manufacturing and other activities, including agricultural.
My working philosophy was that, if I could understand what they were doing, anyone else could as well. Along the way I learned that farming has got to be one of the hardest ways to make a living. It is just dawn to dusk work. Next to that is manufacturing anything.
So, naturally, when Business Week magazine asked on its cover, “Can the future be built in America? Inside the U.S. Manufacturing Crisis”, it caught my eye. As Pete Engardio, the reporter, put it “The good news is that the U.S. is at or near the cutting edge in most of the emerging product areas,” particularly high tech, the bad news is that “Unless the U.S. can magically resurrect its manufacturing base, the good-paying jobs from these breakthroughs will be offshore.”
The irony is that the high tech breakthroughs were paid for with billions of U.S. taxpayer dollars that funded research at federal and university science labs, going back to the 1960s when the new products were just in the idea stage.
The numbers, too, tell the story. “In 2000 the U.S. exported $29 billion more high-tech products than it imported”, but “by 2007 that had turned into a $54 billion trade deficit.”
This is attributed to “two decades of unconstrained out-sourcing to Asia” that has “hallowed out much of America’s base of suppliers, factory managers, and skilled technicians.”
Not mentioned in the article is the way America’s schools have since the 1960s been turning out students with poor math and science skills, along with writing and reading skills. The average freshman college student spends time in “remedial” courses for things earlier generations routinely learned. Add to that the crushing costs of a college education and you have a recipe for a dumbed down and debt-ridden work force.
While we’re being told that the recession is “technically” over and jobs are a “lagging indicator” of recovery, my own worst suspicions are that jobs in general are going to be lagging for a long time to come, especially the skilled ones that nations like China and India are developing with rigorous educational systems.
“Nations in Asia and Europe aggressively court strategic high-tech industries with generous tax breaks, cash grants, cheap credit, low-cost utilities, and speedy regulatory approval.”
“By comparison, the U.S. has been indifferent to manufacturing; even when tax breaks are factored in.” Philosophically, the Obama administration appears to regard both Wall Street and corporations as an enemy that must be subdued with greater and greater regulatory oversight.
The fact that the existing oversight agencies failed in their duties does not seem to be understood. That’s why ponzi schemer, Bernie Madoff, and others were able to get away with it for years.
“Also, it can take two years to obtain all the environmental, health, and safety permits for a modern electronics plant—a lifetime in the tech world.” It’s a lifetime in any business enterprise. The U.S. manufacturing base may be the most heavily regulated segment of society of any nation with which we must compete.
Consider, too, the guiding philosophy of the Obama administration. Anything that contributes to the provision of energy is bad. Coal mines, bad. Offshore oil and natural gas drilling, bad. Anything, too, that uses energy is bad.
America’s auto manufacturers (the federal government and the unions now own General Motors and Chrysler) are being told they must get more mileage out of a gallon of gas, forcing them to modify automobiles in ways that simply make them more dangerous to drive.
In response to a survey by Deloitte Research and the Manufacturing Institute, U.S. executives said they believe that America’s competitiveness will decline further by 2012. An overhaul of the corporate tax code would be a good place to begin to reverse that. U.S. corporations pay higher taxes than just about anywhere else in the world!
These and other indicators are signs of decline in what used to be the greatest economy the world had ever seen. Other nations have watched and learned the lessons we have forgotten or reject. They are going to eat our lunch.