Made in America

Much has been written on the decline of manufacturing in America. Whether this be due to the rise of tech and service sectors, the innate sweat-shop-loving avarice of capitalism, or the increasing encroachment of foreign competitors (China), it must be said that the state of American manufacturing is not what it once was and there is evidence to show that what we have is continuing to be lost.
This is something I know my esteemed colleague (or blogeague) will disagree with me on – but I believe that manufacturing must be the foundation of any economy. My colleague’s attitude has basically been ‘we lost it, we are never getting it back.’ Well I view that as defeatist and actually damning to the United States’ position as a world power. An economy cannot stay afloat in the long term on a sea of insurance, credit card debt, stock, lawsuits and software.
There are two main reasons why manufacturing is needed. The first reason is employment. It seems like not a week goes by when you don’t hear news of another factory closing its doors or another company downsizing its American workforce. Not every American is going to go to law school, let’s face it. People will always need what manufacturers manufacture, and as long as those industries remain on US soil, it will provide steady employment for many.
The second reason is the fundamental nature of manufacturing – that is, actually creating a wanted, tangible thing out of materials that possess inherent value. Every $1.00 in manufactured goods generates an additional $1.37 worth of additional economic activity - more than any other economic sector. Also, manufacturers have been doing approximately ¾ of private sector research and development. As we continue to lose our base, we will continue to lose the patents and innovations that give America an edge.
I remember when the Dot-Com bubble burst. Venture capitalists and other investors were throwing millions of dollars into CONCEPTS and IDEAS. I know some of these former start-up people. At most, a unique algorithm existed along with a website. It was like a gold rush of thought. However, there were no real goods… no real products involved, only services or the promise of service. Granted, the Internet in 2006 is very different than the Internet in 2000. Old theories of what was possible have been laid to rest and individuals have discovered more sober-minded ways of generating money through websites. Now we hear talk of the ‘housing’ bubble preparing to burst, with the downsides of risky adjustable mortgages and “exotic” loans coming back to bite.
In North Carolina, where I live, manufacturing holds a 23% share of the state economy. That places us tied for fourth with Ohio, behind Indiana (30%), Oregon (28%), and Kentucky (26%). Now our country as a whole is approaching a time where we will lose the critical mass of production that makes us a World Leader, and we will not be able to get it back. If factories close and jobs leave the country in North Carolina, what exactly is going to replace 23% of the state economy? Are we going to swipe more tech-jobs from Silicon Valley? Are we going to boost tourism and hope to attain the money that citizens of other states are making? Now think about that on a national scale.
It was only until World War II that the United States finally escaped the Great Depression. Under Roosevelt, war spending doubled the Gross National Product… and America afterwards enjoyed a period of incomparable economic supremacy. Of course, rationing and social programs contributed, but war spending was far greater than any New Deal spending.
Stalin said, “I want to tell you, from the Russian point of view, what the President and the United States have done to win the war. The most important things in this war are machines. The United States has proven that it can turn out from 8,000 to 10,000 airplanes per month. Russia can only turn out, at most, 3,000 a month. England turns out 3,000 to 3,500…The United States, therefore, is the country of machines. Without the use of these machines…we would lose the war.”
I do not profess to be a genius of economics. Economics can at times be as much about philosophy as it can be about facts. But all economic theories will be judged by their outcome. I think it is fairly obvious to see the importance of maintaining, and in fact, energizing our manufacturing base. Today, intra-industry innovation must take place and manufacturers must work to make themselves more efficient in order to contend with rising costs and the appeal of moving overseas. Globalization is all well and good, but let’s have a little bit of self-preservation here, a little bit of economic nationalism! Of course, pure capitalism is not going to solve the problem. Our federal and local governments, both executive and legislative, are responsible for protecting and encouraging the manufacturing base in this country.
- Hamilton


