The following article appeared on The Economic Collapse blog here.
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.
#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.
Free banking and choice in currency may not only be the solution to monetary reform but also trade reform. It appears we cannot always count on the entities that manage the money creation monopoly to do whats right for the US. Remember, the money printing stimulus packages have allowed the US multinationals to receive record profits. So money was created out of thin air to fund their R&D, to pay for the outsourcing of US jobs and to bail them out when things went south. Contrary to what is told, the stimulus packages did create a lot of jobs but just not in the US. Besides that, the US faces trade competitors that create new money out of thin air faster so that based on paper exchange rates foreign labor is cheaper to employ with US technology and it allows foreign products to be artificially cheaper. Additionally, some countries back their private companies endlessly with the printing press whether they are profitable or not which allows these companies to dump products overseas below cost. So for example if it costs 5K to make a product they will sell it overseas for 3K in which the central bank will create money to cover the difference between the cost to make and price sold below cost abroad.
The Soviet style central economic planning from WTO, NAFTA and Central Banks have bankrupted the US. These entities decided a lot of things behind the scenes like what industries are going to be benefited at the expense of others and what sectors jobs are going to be outsourced. So these entities are hardly a model for free trade but more like protectionist trade for the special interests. Central planning from the former Soviet Unions planning boards to NAFTA, WTO and central banks all have one thing in common in that they led their countries to bankruptcy. Maybe communities should issue their own currencies like Hayek spoke about in his works, Choice in Currency and the Denationalization of Money. Various cities and towns in the US run trade surpluses and deficits with each other. Only these communities themselves know what amount of credit is right for them. At least if communities issued their own currency, they would have sovereignty over their own trade policies. Communities that issued their own currencies could undervalue their currency against the dollar so that based on paper exchange rates labor costs could be just as cheap as China and other developing countries. And just to note, North Dakota doesn’t have their own currency but they have their own state bank which allowed it to remain largely unaffected by the credit crisis of 2008-2009.
This paragraph from Michael Hudson’ article, Why the US has launched a new Financial World War sums up the current financial situation:
Finance is the new form of warfare – without the expense of a military overhead and an
occupation against unwilling hosts. It is a competition in credit creation to buy foreign
resources, real estate, public and privatized infrastructure, bonds and corporate stock
ownership. Who needs an army when you can obtain the usual objective (monetary wealth
An America Lost in Squanderville
The United States’ trade gap is the proverbial “leak-in the-dike” with its de-simulative effect on our recovery. In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Media coverage that China has kept it currency undervalued is a gross understatement, it has actually been keeping the U.S. dollar over-valued; which adversely affects all our trade with all our trading partners, not just trade with China. Until positive action is taken on Buffett’s or a similar balanced trade model, by the powers that be, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
The Reshoring Initiative pursues a partial solution: educating companies on what it actually costs them to offshore, on average 20% to 30% more than they recognize. See http://www.reshorenow.org. You can help by encouraging your company to use the tools the Initiative provides.
You can email me for more information at harry.moser@comcast.net.
Wow! These 19 facts certainly are mind blowing. The challenge is to act now before it is too late. The consumer power that Americans still have must be used to protect our standard of living by buying American Made goods so that we can save the factories and jobs that are left. If you still make something in the US, please consider joining American Made Matters and use our logos so that those who care about the American Dream can easily find your products. If you are a consumer (and that means everyone) look for our logos on products when shopping. Our government is not acting fast enough. WE must act now!
Forty-years ago, America had a trade surplus (though trade was a small part of our economy- only 3% of GDP), the strongest currency, was the world’s largest lending nation, had the highest worker’s wages, the highest standard of living, and net positive personal savings. America was a strong country based- primarily- on Americans working for Americans building things and providing services for Americans.
America has fallen to have huge trade deficits, an ever-declining dollar (now worth half a British pound and even weaker than the Canadian dollar), being the world’s largest international borrower, and many of our companies and assets have been purchased by foreigners. In addition, worker’s wages (in real terms- “adjusted for inflation”) have fallen and we have net personal debt (“total indebtedness- even when assets are figured in”). Much can be blamed for these (such as our federal gov’ts. huge annual budget deficits- largely financed by foreigners, now), but part of it is America’s stance in the “global economy”.
America’s “openness” (often-times “one-way”- not fair) in the “global economy” has meant huge trade deficits (“can’t compete with near-slave labor and lack of pollution controls in places like China or socialized competition in countries like Japan where companies don’t shoulder retirement or healthcare costs”) leading to lost jobs, reduced wages, and the flight of wealth from us. These $700 billion dollar-per-year trade deficits (again, along with gov’t’s. massive borrowing) take much money from the US and put it in foreign hands. Our trade deficits started in the late 70’s. “Coincidentally”- by mid-80’s the US incurred ever-increasing, yearly “net international investment deficits” (foreigners buying more of our land and assets than we theirs). In the year 2003, this figure was over $2 trillion dollars negative.
The Chicago Toll Roads is owned by a Spanish-Australian consortium and Budweiser beer is owned by Germans (“profits go overseas”), Miller Brewing by South Africans- the list could go on forever. Warren Buffett wrote a Fortune article, “America’s Growing Trade Deficit Is Selling The Nation Out From Under Us” (2003- “google” it). He, also, said, “A ‘Sharecropper’s Society’- that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.”
http://www.forbes.com/2005/03/07/030…acescan01.html
Many things need to be done in America, but it’s time we tell our politicians to defend our borders economically and turn inward (on trade and fiscal policies), because a society cannot consume its way to prosperity- we must produce our way to prosperity. Check out http://www.americaneconomicalert.com and http://www.economyincrisis.org.
Politically, we are in a HUGE uphill battle fighting against this “global, ‘free trade’ system” and fighting for American jobs and true, “We The People” prosperity (“opportunity” for all willing to work, innovate, risk, etc.). I think we all realize this (and we’ve got some good “allies” on our side in the reality of “joblessness”, indebtedness to foreigners, foreign purchasing of our assets, etc.).
BUT, there is the other side of the coin. INFLATION in America has caused everything to be MUCH, MUCH more expensive. Healthcare (which we gotta’ have) and “higher education” (which we THINK we gotta’ have) are two areas that have inflated in price, greatly, the last thirty years.
We have financed our desire/need for these two things with ALOT of debt (both government debt- “healthcare has, truly, been socialized in many ways- waaay before “Obamacare”- and personal, household debt- of course, that “higher education” was “supposed” to pay back dividends). We have allowed ourselves to consume/utilize these more and more expensive things by “sacrificing” manufacturing for “cheaper goodies” made overseas (after all, if you’re spending more and more on “eds and meds”- not to mention energy, food, housing, etc.- all of which cannot be “gotten” from overseas, you gotta’ save the budget, somewhere).
So, how do we resolve to FORCE “ourselves” to buy things manufactured by “ourselves” which- of course- will be more expensive than “overseas stuff”????
Seems to me that we have to resolve ourselves/”convince our neighbors” that “paying the price” is not only “worthwhile”, but imminently necessary! We must caption a slogan that, “A nation produces its way to prosperity; it cannot ‘consume’ its way to proserity”!!!
We have to resolve ourselves that our children get two good quality, “Made In USA” toys under the Christmas tree, instead of ten junky “Made In China” gifts. We have to become more responsible and less of a “throwaway” society (if little Johnny/Sally are irresponsible and destroy/lose that $ 150 Made In USA portable DVD player, it will not automatically be “replaced” thru Mommy/Daddy buying a new one like the $ 60 Made In China model would’ve been).
This battle- fighting irresponsibility, selfishness, the “throway” mentality, and pig-headed, “Me first”, short-sighted “consumerism”- is, probably, a BIGGER UPHILL battle than the political one.
But, it is where we stand in Modern-day America floating amidst the “globalized economy” (and, yes, I know I’ve left out the “pie in the sky” dream of America somehow booming in manufacturing through selling to foreign markets, BUT we LIVE right in the middle of the- still- largest market in the world, so I’d rather focus on “regaining domestic consumption”, rather than that “pie in the sky”).
“All great economic empires eventually become fat and lazy” – amazing that this is leveled at the US when the board of this association is comprised of two things – unions and farmers – probably two very big reasons the US working population is a. Fat, and b. losing manufacturing to countries like China, where labor unions and wage legislation haven’t crippled the largest manufacturers of US consumed products.
I think much of what you have stated is true, but through omission, there are some misleading messages.
30 years ago, the United States didn’t have knowledge workers making $80,000/year (or equivalent in 1980 dollars) providing an upper-middle class lifestyle. 30 years ago, Americans spent almost 14% of income on food, now it is less than 10%. The cost of goods as a percentage of income continues to drop as the Americans put pressure on manufacturers to sell cheaper. How do the manufacturers respond? They look at the most expensive line item (labor) and reduce it by being creative and manufacturing off-shore.
Discount stores such as Wal-Mart and Target have had as much impact on manufacturing numbers as any other influence you have mentioned. If Americans were willing to pay more for the products they buy, and there was less pressure from shareholders to increase profitability by lowering costs, then North America could save their middle class.
It’s tough to ask people to pay more when they are losing their middle class jobs. So when you hear “buy American” and the population goes to Wal-Mart, you are truly buying Chinese.
Totally agree with this article, in fact my company published one with similar sentiments back in December, titled “Where did all the jobs go?”
http://www.catalystanalytics.com/jobs/
I do have a response to this article. It is a sector of industry that has been neglected by most people since the 1950’s and CAN solve a lot of these problems. The answer is agriculture. I’m an argibuisness major at Texas A&M and have doing a lot with community supported farming. Community supported farming is an idea that small family based farms will support communities rather than large corporate agriculture ventures. I know this may sound shocking but less than one percent of population of the United States are full time farmers. As a result, rural communities and families are suffering. The largest amount of population that is in poverty today is located in rural communities. Along with that, schools and public services in rural areas are deteriorating at an alarming rate. If the United States switched from corporate farming methods to sustainable community supported farm based, many agriculture economists believe some 30 to 60 million jobs could be created! Right now, unemployment in the United States is around 10% or 30 million people. Thus, nearly everyone who is unemployed COULD potentially have jobs with still an abundance of jobs that could be filled! At the same time, this switch would be able to solve most of the nation’s problems we are seeing today. Let me make my argument:
Environment: Corporate farming methods have actually harmed the environment accounting for 70% of water contamination in the US according to the EPA. This method is also responsible for the destruction of arable land in the nation with 15% of the US farmland being deemed “unusable” because of the overuse of Nitrogen fertilizers. There are plenty of other problems corporate farming has caused. Check out the links I left below for more information.
On the contrary to all this, community supported farming can actually solve all these issues with sustainable farming methods. The use of natural fertilizers and environmentally sustainable methods of farming will solve and environment threat posed by the agriculture sector and reduce the United States’ carbon footprint.
National Security: If the US continues to be the world’s number one producer of food (which it is) and even expand production to lower food prices globally many nations across the world will rely on the US for this good. Food and water are commodities are that the world’s number one necessity, even above oil. Without food, no one would survive. If the United States monopolized this industry globally, every nation would rely on the US for this commodity keeping the US a key factor in global politics indefinitely.
National Debt: The US according to the national treasury department spends $500 million on farming subsidies to the corporate farming industry. If the United States removes this wasteful spending and supports community supporting farming ventures all that money could be used on the national debt. Also, community farming methods rely on consumers buying locally, if the government taxed out of region markets, the United States could potentially raise 1 trillion dollars each year depending on how the setup the regions (I did it by states). All that money could be used to lessen our debt.
Unemployment: Stated Above, community farming could create 30 to 60 million jobs
Public Services: Rural areas are notorious for having the worst public service. If more people lived in rural areas with community farming ventures, more tax revenues that could be used to better schools and public services for the elderly and poor.
Immigration: With the abundance of jobs the United States could boost production with out of state workers without harming American citizens. This would not only give the United States greater production marks, it would also give the US more people to compete with China’s 1.5 billion people. There would be many laws that would have to be changed for out of state workers could it could possibly solve certain immigration issues.
This list could go on for a while so I’ll stop here. Listen, America’s manufacturing age may be over, but we got to be great by being a nation of farmers. Thomas Jefferson believed a nation of farmers would be America’s greatest defense and allow for the United States to spread blessings of liberty across the nation and the world. Perhaps it’s time to be a nation of farmers once more! I think if a politician was smart, this would be the direction to take the country in. America, let’s be the garden of the world.
Here a few links for what I posted above:
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1240832/pdf/ehp0110-000445.pdf
http://www.soc.iastate.edu/class/325/Is%20Sustainable%20Agriculture%20an%20Elixir%20for%20Rural%20Comm.pdf
http://www.ask-force.org/web/Discourse/Ikerd-Need-Systems-Approach-1993.pdf
http://www2.ucsc.edu/globalinterns/cpapers/Hinrichs_paper.pdf
Remember only some type of Soviet central economic planning could have deindustrialized America in so short a period of time. It wasn’t the free market at work but some coordinated planning that went on behind the scenes with NAFTA, WTO and central banks. The multinationals are actually against free trade because if they were for free trade then they wouldn’t have access to the printing press. Currently it appears they get money created out of thin air to fund their R&D expenses, outsourcing of American jobs overseas and to bail them out when things go south.
It is easy to solve this: But we must ensure that politicians are Americans first, not self aggrandizing mouthpieces for other countries’ lobbyists.
Just devise a system (much like we do for our per diem rates for various countries around the world per the IRS-see deemed substantiated rates for CONUS and International)
Just use a similar chart for an import levy.
The levy would account for each country’s differential in healthcare, ecology, labor safety and compensation.
Those countries who abuse their workers and rape the environment will pay a higher levy. Those who adhere to the same standards as the U.S. will pay no levy.
This would be an easy way to “level the playing field.”
But, alas, our legislators are for sale. What happened to Buy American. Look at Australia, they are very conscious of this.
Cheers,
Ek
Ellen, what is your answer to the problem you have identified.
We could sure use some leadership in this country to help build some pride and some hope. We could use some Ronald Reagan right now.