Something to Build On, Literally

Harold Meyerson is shrill:

Several recent polls have called the Democrats’ attention to what should have been obvious to them: That helping America regain its industrial preeminence is one government activity that wins support across the board. One recent survey by Democratic pollster Mark Mellman found 78 percent support for having a “national manufacturing strategy,” while 92 percent said they supported infrastructure improvements using only American-made materials. Another survey from Democratic pollster Stan Greenberg found 52 percent of respondents preferred government investment “in the future,” while just 42 percent favored the alternative course of large spending cuts.
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The appeal of bolstering manufacturing and upgrading infrastructure cuts across lines of race, gender and class. Even a demagogue like Rush Limbaugh would have trouble characterizing them, as he did health-care reform, as “reparations.” Just as important, the public is right. Every bit of economic news confirms its apprehensions that by off-shoring our manufacturing, we have not only eliminated millions of good-paying jobs but we have also rendered ourselves incapable of regaining our economic health. The two major economies that are booming amidst the global bust are China’s and Germany’s — that is, the two major economies most oriented to manufacturing. In the month since I first noted this in a column, China has surpassed Japan as the world’s second-largest economy, and German exports have continued to soar. If China and Germany’s growth rates for their second quarter are annualized, they come to 10 percent and 9 percent, respectively.
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When it comes to reviving American manufacturing, however, the Democrats have sounded an uncertain trumpet. The Mellman survey asked whether, on balance, the president and the two parties have bolstered manufacturing or not. While Obama’s ratings were modestly favorable, those of the Democrats were not (45 percent to 48 percent), and those of Republicans were worse (35 percent to 57 percent).
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Democrats have responded to these numbers by throwing together some modest pro-manufacturing legislation, but it’s all fairly small beer. A bolder and more effective proposal is that of Intel’s legendary former chief executive Andy Grove, which ran in Bloomberg BusinessWeek last month: Tax the products of off-shored labor, and put the proceeds in a fund that can be tapped by American businesses increasing their American hiring.
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Throughout his term, Obama has spoken eloquently — but only sporadically — about the need to shift from an economy that makes deals to an economy that makes things. Not only does he need to say that more often, and put some serious legislative substance behind it, but it should be the mantra for congressional Democrats who need all the help they can get in the election looming darkly before them.

75 replies
  1. 1
    Resident Firebagger says:

    The Dems serve their corporate donors just like everybody else.

    American manufacturing just leads to jobs and unions and benefits and all kinds of trouble for pols who need to get rich.

    Not happening…

  2. 2
    Chyron HR says:

    Even a demagogue like Rush Limbaugh would have trouble characterizing [bolstering manufacturing and upgrading infrastructure] as “reparations.”

    Harold Meyerson is optimistic.

  3. 3
    Keith G says:

    That helping America regain its industrial preeminence….

    In a perfect world that would be a wonderful idea, but is it realistic in our current world? Do we have sufficient comparative advantage in industrial production?

    Maybe a better question would be which types of production do we have a comparative advantage in and of what help would it be to pursue those advantages?

  4. 4
    eric says:

    my recollection is the people like krugman and sachs beat up on Reich when he came out strongly for a bigger role for gubment in helping and securing a sound manufacturing sector during the early days of the Clenis administration.

    lost opportunity then too

  5. 5
    roshan says:

    Manufacture what exactly? There is a lot of scope to repair and build national infrastructure even new ones like high speed rail, but what is America supposed to manufacture that Walmart can’t source from China? Is Apple willing to manufacture it’s idevices here? Or are Intel and other e-chip manufacturers willing to shift their sweat shops over here? And what kind of wages can be expected out of these anyways?. The automobile market is quite competitive but the wages and benefits are not what used to be and the market crash was a key factor in putting some sense into the big three of American automobiles (one of which has already disappeared). Going full hog on green power economy might help, but even that needs some deliberation over design, utility and implementation before launching full scale production of any green products like solar panels and such. What else remains?

    EDIT: Health Care Industry can provide many jobs, if folks are willing.

  6. 6
    soonergrunt says:

    As long as our media in particular, and our culture as a whole continues to venerate CEOs and other people who don’t actually MAKE things, this will continue to be the case.

    An a side note, I’m going to talk to my regular doctor about the cardiologist’s report today and have him explain it to me. We’ll see what that has to say. Also, too, I have blown through the $1,500 insurance deductible and I am approaching ‘the donut hole’ window at $10,001 to $15,000 in my wife’s insurance. Thank FSM that I have post-deployment Tricare insurance. So far I haven’t had to spend a dime, and I don’t expect to do so, except for the possibility of some prescriptions that I may get.

  7. 7
    Chad N Freude says:

    @Chyron HR: Indeed. It would be a bailout for the unions.

  8. 8
    Omnes Omnibus says:

    @roshan: How about building the tools and equipment to build and fix the infrastructure for starters?

  9. 9
    roshan says:

    @Omnes Omnibus:
    Seems to be a good thought, but there needs to be a bigger and transparent push towards building and repairing infrastructure nation-wide before that happens, since you know, why build tools and equipment for a purpose which is uncertain?

  10. 10
    SiubhanDuinne says:

    @soonergrunt: Thanks for the update. You have been very much in my thoughts the last several days, and it’s good of you to share. The costs are always staggering, aren’t they? Save every scrap of receipts, bills, Rx copies, and “this-is-not-an-invoice” documents. Then some boring winter afternoon when you have nothing better to do, dump ’em all out on the dining room table and try to make sense of them. More fun that a 5,000-piece jigsaw puzzle!

  11. 11
    matoko_chan says:

    But Obama is doing something about this….his program to bricolage junior colleges into trade schools and enable graduating a year early. its pretty genius because it essentially makes voc-ed competitive with 4yr colleges. we have known for ages that 4yr college isn’t for everyone and that trade school is better for some kids, but america can’t go to euro-style track and test….its un-american.
    but now motivated kids can graduate early from high school, get a trade and be wage earners buying houses and hot cars while the collegebound kids are still sophomores in a four year program.
    but it will be years before that penetrates the system.
    Obama wants to start green manufacturing jobs, but the global warming denialists blocked that.
    there isn’t much he can do while the repubs demagogue the low information base….those people dont have the substrate anymore to realize how they are being scammed.
    i think we have to let them burn it down. we cant stop them.
    its going to be painful, but the demographic timer will run out eventually.

  12. 12
    Chad N Freude says:

    And this just in: Obama at new low for handling economy.

  13. 13
    beltane says:

    The German government does whatever it takes, even things that are not so good for its European neighbors, to ensure that its manufacturing base remains strong and that its people remain employed and relatively prosperous. Americans like to flag wave and beat their chests, but they do not believe in economic nationalism, which is the only kind of nationalism that’s worth a damn.

  14. 14
    mai naem says:

    I constantly look at where stuff is made. Just wondering why we can’t make the same soap and lotion that’s made in Canada, the breathing treatment medication that’s made in Ireland, some other medical related stuff(not equipment) made in Germany, tupperware like containers made in Israel? Also too, relatively expensive stationery made in China/Mexico/Botswana? Is there some reason why hand sanitizer and hand soap has to made in China and not here? I also have bought towels at Costco made in Brazil. I try hard to find American made stuff but this time around I couldn’t even find American made towels. They were either Chinese, Turkish or Brazilian. And forget sheets. Its either crappy quality Pakistani or Chinese sheets or expensive Italian ones.

  15. 15
    matoko_chan says:

    the one thing Obama actually could do is tighten our mil-belt….like gtfo Afghanistan next summer. hold the line on the Iraq withdrawal.
    Stop paying the Lebanese army.
    stop giving aid to Mubarak and court the Muslim Brotherhood instead.
    stop bribing Israel….it doesnt work.

  16. 16
    roshan says:

    @matoko_chan:
    Bribing Israel? Whatchu talkin’ about, Willis?

    “There is going to be an attack” paranoia based defense industry is actually a money maker if you can get your hand into the honey pot called the defense contractors.

  17. 17
    p.a. says:

    The most unbiased numbers I have seen (admitting I never made it past intermediate calculus to statistics) show that while US manufacturing is a smaller %-age of the economy than in, say 1950, this is because other parts of the economy (financial, services) have expanded faster. Manufacturing value has not declined. Manufacturing jobs have cratered.

    ‘Growing’ manufacturing as a %-age of the economy if the growth is through automated processes will have only a modest effect on employment numbers. Of course given the current situation, even modest improvements are helpful.

  18. 18
    WereBear says:

    We can make things again. I’ve love it if we made things again! No more crap appliances that fall apart in six months, no more crap products that raise ulcers on our skin, no more “gee, will my kidneys survive this hot dog?”

    By lowering wages, our Republican overlords have created people who are desperate and want to pay a nickel for food and clothes. Well, I don’t want the kind of food and clothes that cost a nickel.

    I want a real life, dammit!

  19. 19
    cleek says:

    as of 2007, the US was the world leader in manufacturing.

    something to remember, next time you hear someone say the US doesn’t make anything.

  20. 20
    El Cid says:

    On this:

    Even a demagogue like Rush Limbaugh would have trouble characterizing them, as he did health-care reform, as “reparations.”

    They got as much political mileage as might be imagined from calling the auto industry support “soshullism” and “government takeover” and Soviet and so forth.

    It was good enough to get people I knew talking about how the US gov’t was now soshullizing industry.

  21. 21
    Kirk Spencer says:

    Throughout his term, Obama has spoken eloquently—but only sporadically—about the need to shift from an economy that makes deals to an economy that makes things.

    The problem is that this is an article of faith action that is wrong.

    If we make things, it won’t stop the other nations from making things. At that point we make too many things, and the supply becomes so great everyone practically gives them away.

    The real problem – one which we’re well into in the so-called first world countries and rapidly approaching in second world (with glimpses in the rest) – is that our production tools and skills allow HUGE output from a given set of labor. This runs into a lot of social problems; a mix of calvinism (idle hands are the devil’s tools) and distaste for perceived freeloaders (I work so YOU can play? I don’t think so.)

    The superficial answer is to do something tried before. Set a maximum number of hours a person can work for a wage – and make overtime significantly more expensive. It actually worked the first time when we went from practically unlimited (ten to 12 hour days, six days a week) to the magical 40 hour work week with overtime.

    I say superficial as there are problems with the solution. It worked once, and works in Europe, but both times it worked it produced other problems. It also still runs into the social problems, plus the tendency in this nation to insist Bidness is Right.

  22. 22
    El Cid says:

    It’s also important to bear in mind Krugman’s findings.

    In his paper a few years ago (I can search for the link, but just not this morning), he was examining ‘free trade’ effects on US income (there is no such thing as ‘free’ trade, just different trade agreement with different favored parties), and found that what has happened is the outsourcing of parts of the manufacturing labor process.

    There’s still a lot of manufacturing going on in the US, when you look at product output and the money numbers.

    What has happened is that companies have broken up the manufacturing process into its component parts.

    US manufacturers retain the very highest tech, most skill-intensive, least time-intensive labor parts of manufacturing jobs here, mainly because it’s easier to manage and less costly via international back & forths.

    However, US manufacturers have exported those parts of the labor process which formerly would have hired more people at good wages (not the highest) for the less skilled, more time-intensive labor processes.

    That isn’t to say that the jobs outsourced to the 3rd world aren’t high tech or high skill — Krugman was using a relative standard.

    So it’s not necessarily the case that simply increasing manufacturing volume or revenue would actually increase the number of jobs greatly.

  23. 23
    Keith G says:

    @p.a.:

    Manufacturing value has not declined. Manufacturing jobs have cratered.

    Exactly. this feeds into the reality that fewer workers are creating more wealth. How do we shape a humane and stable society based on this premise.

    1950s – Any shmoe can get a factory job and in a few years pull down a middle class income.

    2010s – To even have a shot at a modest middle class income, kids are told to take on tens of thousands of dollars of debt and even then there will be rough seas ahead.

    We are going need a bigger boat.

  24. 24
    WereBear says:

    @Keith G: This goes around and around because the Very Rich continue to skim the cream off the top, leaving the nonfat milk for everyone else.

    It’s like the Republicans complaining we can’t give million dollar heart bypasses to everyone… we can’t afford it!

    Which is bull; a) we can afford to invest in prevention programs for everyone, which cuts down on the people needing bypasses, and b) bypasses don’t have to cost that much, it’s just that the people making the money from bypasses like that it costs that much.

    If we skip the disposable elements of our society, there is far more for everyone… if we don’t have the blood sucking parasites at the top hogging it all.

  25. 25
    soonergrunt says:

    @matoko_chan:
    You know, you REALLY need to actually try, just once in a while, knowing what the fuck you’re posting about. Cause this post is full of fail.
    Get to know the muslim brotherhood? Really?
    This from the person who claims that she’s a muslim because sharia law is better and that people prefer Islamic jurisprudence, but has a strong preference for tequila and demanding to be treated as something more than a uterus with legs.
    So, what other parts, besides the “no drinking alcohol”, of sharia law is optional for you?
    And since the sharia law that they actually practice in the hinterlands of Iraq and Afghanistan and other third-world parts of the Arab world is similar to the sharia practiced in the first world parts in name only, which has fuck-all to do with the sharia that western muslims claim to want, how do you expect to be taken as somebody who actually knows what the hell you’re talking about on that subject?
    I know more people who’ve actually lived under that version of sharia than you have, I’ll wager, and if there’s one thing they all pretty much agree upon is that Ramadan is the time of year where we uphold the letter of the law and the rest of time it’s more honored in the breach. Unless you’re a woman, that is. Because in Kunar province, Afghanistan, you, little one, ARE NOTHING MORE THAN A UTERUS WITH FEET. You are a bargaining chip for your village and a potential source of dowry to your family. The men in the countryside are at least honest about ignoring the rights that sharia grants women on paper only. In the cities they dress it up, but it comes to the same thing.
    If it’s so great, tell that to the women who douse themselves with cooking oil and set themselves on fire to escape abusive marriages, or the ones who survive getting maimed by their brothers and husbands.
    Your behavior here, on this board, would be enough to condemn you to death in any number of places if you either did it in person or were discovered by a male in your family to have done it on the internet.
    Tell us all about how great sharia law and islamic jurisprudence is with respect to the young couple that the Taliban had stoned to death yesterday. I wonder. If we asked the mothers of those two young people, what would they say?
    You have the same millimeter deep understanding of that world as you have of my actual areas of expertise, international relations and conflict management (from college,) and military operational planning and decision-making, which I know from experience. Your inability to discern the difference between a doctrine, a tactic, and a policy are matched only by your continued uninformed blarging on and on and on about it.
    And that millimeter deep understanding coupled with loud, persistent blarging doesn’t seem to be restricted to the above topics, either, as last night’s thread shows. Multiple people trying to discern just how much you know about the stuff you’re on about and deciding that you know the barest essentials without any in-depth understanding which you try to mask by bravura and big words.

    I just remembered where I last saw somebody like you. Sitting in the Student Union, drinking coffee, and taking your third or fourth semester of intro courses. He was very widely read and opinionated, but couldn’t keep a friend for more than a couple of semesters because he didn’t bother to learn anything beyond the content of survey courses and that gets boring quick for people who are actually trying to learn enough to be useful to society. That person now works in the coffee bar for a little better than minimum wage. Really. Whatever it is that you are studying, you need to probably consider taking a couple of electives in Logic and Rhetoric from the Philosophy Department, as well as proceeding to the 200 and 300 level courses in whatever your actual major is. The first will help you to construct a coherent argument, and the second will help you to know something more than the required reading at the introductory level.
    I’ve never used a filter but I’m sorely tempted with you, because you don’t say anything useful, but you sure as hell say it loudly and persistently.

  26. 26
    cat48 says:

    The WashPost mocks Obama everytime he visits one of the battery plants the stimulus helped. Is it because they employ less than 300 people or what?
    This is manufacturing, no?

  27. 27
    Allison W. says:

    Even a demagogue like Rush Limbaugh would have trouble characterizing [bolstering manufacturing and upgrading infrastructure] as “reparations.”

    Didn’t Rush trash Obama for saving the auto industry? nothing is untouchable for this guy as long as it involves Obama and Dems. And WTF? Why the hell does any legislation needs to be approved Rush? fuck him.

  28. 28
    Omnes Omnibus says:

    @soonergrunt: Dayum, soonergrunt. Is that the way you talked to your troops?

  29. 29
    wilfred says:

    Make what, exactly? The perennial capitalist wet dream of FREE TRADE has already come. Nothing that we can make, can’t be made cheaper elsewhere…including in the Pacific.

    Protectionism was once a Republican Party issue, believe it or not. The only way to bring back manufacturing jobs is to re-erect trade barriers. Who’ll take the plunge?

  30. 30
    WereBear says:

    @wilfred: Nothing that we can make, can’t be made cheaper elsewhere…including in the Pacific.

    Not. Any. More.

    Peak Oil is here, now. The days of cheap transport are OVER.

  31. 31
    Omnes Omnibus says:

    @wilfred: Not true. I am in Madison, Wisconsin, which is not really manufacturing central, and if I drive around the area I can find a number of companies that are making things right here in town. Oscar Mayer, Fiskars, TomoTherapy, and many others are building things right here. As wages have risen overseas, the cost advantage of making things there has fallen. As fuel prices rise, the cost of transporting goods will also rise. Manufacturing in the US does have a future.

  32. 32
    trueblood says:

    I know this is a pipe dream, but in terms of repairing infrastructure/public works, manufacturing industrial plumbing supplies to replace our currently rotting pipes wouldn’t be a bad idea, then perhaps repairing/repaving the roads once we’re done? Vastly over-simplified, I know, and easier said than done. And I suppose the big issue is still “where’s the profit?”

  33. 33
    Omnes Omnibus says:

    @Omnes Omnibus: Breweries, also too. Making beer is manufacturing, and everybody loves good beer, right?

  34. 34
    wilfred says:

    @Omnes Omnibus:

    I don’t doubt there are isolated instances of manufacturing > consumption but the older model of a closed industrial circle is long gone. I refer to the Ford example of paying workers enough to consume the very things they produce.

    Elimination of trade barriers was essential to getting the Japanese and Chinese to buy up American debt. I don’t see how re-starting, say, American shirt manufacturers, is going to get Americans to buy American made shirts at 10 times the prices of shirts made in Bangladesh.

  35. 35
    gene108 says:

    Intel’s legendary former chief executive Andy Grove, which ran in Bloomberg BusinessWeek last month: Tax the products of off-shored labor, and put the proceeds in a fund that can be tapped by American businesses increasing their American hiring.

    Why would a special tax-fund need to be created to give businesses the desire to hire American workers? Something sounds fishy about this proposal.

  36. 36
    Omnes Omnibus says:

    @wilfred: Maybe not shirts, not yet, but when you factor in rising wages overseas and increasing transportation costs, companies will start looking at manufacturing here. This is not to say that government policies could not help the matter, but full on protectionism is probably not necessary.

  37. 37
    mclaren says:

    Reviving manufacturing in America is a non-starter. The workers have been automated out of existence. Typical factories in Japan have one or two humans on the entire plant floor — everything else is machines. Japan is just a little farther ahead of curve than we are.

    Manufacturing has had humans automated out of existence, knowledge work is rapidly getting all the high-wage high-skill workers offshored to the third world, where double PhDs in China or India will eagerly work 80 hours a week for $5 an hour.

    So what’s the solution?

    Who says there is one?

  38. 38
    wilfred says:

    Get to know the muslim brotherhood? Really?

    And? I happen to know several members of Muslim Brotherhood. One of my colleagues, Syed Bashir Ahmad Kashmiri, recently finished an English translation of Yusuf al Qaradwi ‘s work entitled “Islam: An Introduction”. The grandson of one of the founders of the Brotherhood is another.

    You know something about Muslim Brotherhood?

  39. 39
    Omnes Omnibus says:

    @mclaren: Aren’t you the cheerful one?

  40. 40
    burnspbesq says:

    @wilfred:

    Nothing that we can make, can’t be made cheaper elsewhere…including in the Pacific.

    True to some extent, but overstated.

    Developed countries are still good at certain kinds of manufacturing. The Japanese, Germans, and Americans (and Italians and Swedes) still make better cars than the Chinese and Indians.

    Walk into any factory anywhere in the world, and most of the most complex equipment in use on the production line will be German and Japanese.

    We’re still very good at designing complex, high-value-add manufacturing processes that trade bodies for machines in order to improve quality and reduce cost. The shoe factory that a client of mine recently opened in Portland, Oregon doesn’t look anything like the factories in China that most shoe companies buy from.

    And as I look at the stuff sitting on my desk as I’m writing this, the computers are made in Asia, but the heart of my desktop stereo was manufactured in Boulder, Colorado and Skokie, Illinois.

  41. 41
  42. 42
    WereBear says:

    @roshan: Woo hoo. Soon we’ll be hosing dead homeless off the streets, too.

  43. 43
    burnspbesq says:

    @Omnes Omnibus:

    A number of things will cause some companies to rethink their supply chain and sourcing strategies.

    If speed to market is a key to your business plan, you can’t manufacture in China. H&M and Zara, whose business models rely on rapid changes in product mix (and boast of being able to go from a design sketch to a finished product in 28 days) don’t source from Asia because it takes too long to get goods to market from there.

    Transportation cost is a factor. When the price of oil spiked from $70/bbl to $140/bbl a few years ago, the cost of moving a standard cargo container from Shanghai to Rotterdam tripled. That got people’s attention. Wage costs may be higher in Romania than in China, but the cost of moving a container by rail from Bucharest to your European distribution center is a fraction of what it costs to get it there from China, Bangladesh, or Indonesia.

    Dock-workers unions have historically been among the most aggressive, and the West Coast unions have maneuevered their contracts so they expire at the worst possible time for shippers. When a strike closed the ports of Los Angeles and Long Beach a few years ago, it left America’s entire Christmas season sitting on the water for a couple of weeks.

    It all adds up – but I’m not sure it adds up to jobs coming back to the US from China. It may add up to jobs moving from China to Honduras.

  44. 44
    p.a. says:

    Infrastructure really is the way to go, at least to get some $$$ flowing down the pyramid. You can’t dig a hole or build a bridge from Bangalore. But please FSM let’s focus more on mass transit and alt energy than the Interstate Highway System.

  45. 45
    roshan says:

    The Food Industry can stand to restructure too. A majority of the fast food chains are dependent upon industrial farming which doesn’t necessarily lend to stable agricultural and environmental practices and is hostile to the independent farmer. A lot of the corn growers are shorted to feed the industrial animal farms which doesn’t generate as much income for the low level participants as much as the owners and the management. A lot of the Farmers Market folks need to be allowed into the local food chains to help keep profits and expenditures local rather than importing food into a community at low prices which in turn keeps the oil industry afloat.

    Polyface Farms is a good example of how agriculture can be local and yet be successful.
    http://www.polyfacefarms.com/

  46. 46
    wilfred says:

    @burnspbesq:

    I think the larger point behind an idea like ‘returning to manufacturing’ is the sort of blue collar possibilities that once existed. Again, I don’t doubt that a shoe factory can open somewhere but what kind of salary does it pay? Can a worker support a family on that salary? Can a man or woman stay home and raise children on the salary of one person? Can he/she send a child to a good school? Is the work steady enough? Will it outlast the increasingly rapid occurrences of recession?

    I could go on. It isn’t just a question of manufacturing jobs but of everything that once went with a good factory job.

    That’s what been lost over the past 25 years or so and, I’m afraid, is not coming back.

  47. 47
    Omnes Omnibus says:

    @burnspbesq:

    It all adds up – but I’m not sure it adds up to jobs coming back to the US from China.

    Perhaps not, but it does affect the viability of manufacturing here. I will make less likely that more jobs move and more likely that companies like the shoe company you mentioned can establish themselves, survive, and prosper.

  48. 48
    BrYan says:

    A “national manufacturing strategy” would sure fire up the Hayekian Harlots

  49. 49
    Kirk Spencer says:

    I’d like to give a concrete example.

    Here in Northwest Georgia, the big employers are carpet mills. Up to about a decade ago, you needed a few dozen people on the floor of some shops to move things around in a coordinated manner. About a decade ago they started buying machines – robots – that would do the moving. All you needed was a supervisor who could draw the required pattern for this move (or select the correct one from a menu, more typically), plus they had a maintenance team for every group of floors. Floors went from ~80 people (three shifts seven days a week) to ~5 people (same rate). Now there’ve been even more cuts due to recessionary cuts, but when things get back to speed they’re going to make just as much carpet but employ a LOT fewer people.

    Bringing back “making things” isn’t the answer, not when fewer people can make a lot more things.

  50. 50
    Omnes Omnibus says:

    @Kirk Spencer: Not the answer, but part of an answer, perhaps?

  51. 51
    roshan says:

    @Kirk Spencer:
    Yeah, bringing back the carpet industry back to its peak profit is clearly not the solution. There can be some restructuring in the manufacturing markets like bringing back off-shored jobs, but there is a desperate need to develop new markets like the eco-industry, mass transit infrastructure like high-speed rails etc, and even rebuild the old dilapidated utilities like water lines, waste disposal systems, roads, bridges, public parks etc. Unfortunately, not everyone would be able to participate in high tech side of the new markets, especially the old workers.

  52. 52
    WereBear says:

    @Kirk Spencer: For now, the answer is to make carpet out of cellulose and beetle parts, so people have to buy carpet every 5 years, instead of 15.

  53. 53
    Omnes Omnibus says:

    @roshan: I like the way you are thinking.

  54. 54
    Anoniminous says:

    @cleek:

    from your link:

    There is also a general correlation between how much a country manufactures and its total GDP. Depending on the percentage of their total economy taken up by manufacturing, a country’s economic and political leaders may wish to take steps to adjust accordingly. For instance, the USA has been losing substantial ground to China in recent decades, meaning that US political leaders have an interest in increasing the total percentage of the country’s GDP dominated by manufacturing.

    When discussing economic policy (eek! we’re heading to the “S” word) “What Is” has a say, but not the decision, due to the fact “What Is” stems from “What Was.”

    Manufacturing is more than putting a product together and selling it. A vibrant manufacturing sector relies on a network of people and suppliers cross-communicating and cross-fertilizing ideas, processes, and products; it relies on scientific investigation, education, technological R & D; each company relies on 5 other people to support 1 employee in their company; manufacturing needs skilled, knowledgeable, assembly workers, engineers, and managers to pump the product out … to assemble a short list.

    For decades, in my certain knowledge since 1964, the US has been purposely removing or weakening various strands of this network, debilitating our ability to move from “What Is” to a prosperous future. Although there are exceptions, new product market segments are no longer manufactured in the US. They are designed in the US but then those designs are shipped to a factory overseas. What happens then is interesting:

    Teaches the overseas competitors how to design the product

    Teaches them how to make the product

    Allows them the opportunity to learn how to improve the product

    Allows them the opportunity to learn how to improve the design

    Simultaneously, the profits of manufacturing allows the country to put money into the network of people and suppliers cross-communicating and cross-fertilizing ideas, processes, and products; it relies on scientific investigation, education, technological R & D and all the rest of it.

    The upshot is (simplifying) …

    Motorola, at one time, had a commanding lead in the mobile telephone industry. Now they are slowly turning into an also-ran as consumers look to other companies for the Next Best Thing.

    The recent Apple FAIL resulted from the CEO over-riding the engineer’s Real World objections because following them would have required a design re-think. The Look-and-Feel of the design was more important than making sure the product worked.

    We’re not doing very well now, as a quick look at the unemployment figures supports. I submit we’re going to be doing worse as the effects, and affects, of the economic policies of the last 30 years continue to roll on.

  55. 55
    mclaren says:

    @burnspbesq:

    If speed to market is a key to your business plan, you can’t manufacture in China. H&M and Zara, whose business models rely on rapid changes in product mix (and boast of being able to go from a design sketch to a finished product in 28 days) don’t source from Asia because it takes too long to get goods to market from there.

    Obviously false. Ignorant nonsense, as usual.

    In actual fact, firms in the U.S. are outsourcing manufacturing to China precisely because the Chinese suppliers are clustered so closely to the factories that it hugely reduces design-sketch-to-finished-product times.

    In America, an LCD maker may well be located in San Francisco while the manufacturer of the power supply is likely to be in Pasadena. In China, the LCD maker is typically next door to the power supply manufacturer.

    See ” Cooperating for supply chain effectiveness: manufacturing strategy for Chinese OEMs,” Bou-Wen Lin, International Journal of Manufacturing Technology and Management, Vol. 5, No. 3, pp. 232-245, 2003.

    Next time, read a peer-reviewed journal before you post this kind of nonsense, burnspbesq.

    Cleek is also spewing gibberish — the standard charts of U.S. manufacturing capacity lump in America’s weapons building.

    In fact, if we strip out the military-industrial production from American manufacturing, we find that the U.S. isn’t even in the top 10.

    Take a look at this eye-popping chart for proof that America now manufactures nothing but weapons.

    This is Floyd Norris’s scary graph of Durable Goods Production. We have so hollowed out our industrial plant that the only thing we are now producing is weapons of war.

    And the weapons America manufactures get blown up, trashed, wrecked, burned, used up. They’re worthless for boosting the economy compared to manufacturing consumer goods. Build a predator drone and it gets flown around Afghanistan until it crashes or gets shot down — no benefit to the U.S. economy aside from the original wages of the workers who built it.

    But build a refrigerator or a truck or a computer, and it gets sold to a business that uses it to employ more workers, who in turn spend more money to boost the economy.

    Cleek parrotts the usual nonsense, based on the foolish claim that building bombs and guns makes America rich, since that’s what almost all our manufacturing is now. But that claim is a lie — military spending offers the worst added value to the economy of any kind of spending.

    “Confirmed: defense spending creates fewer jobs than other kinds of spending.”

    Strip out weapons manufacturing and the U.S. trails far behind the rest of the developed world in manufacturing capacity. TVs? Computers? Cars? iPods? They’re not made in America anymore. Only Abrams M1A1 tanks and hellfire missiles and predator drones and aircraft carriers and nuclear submarines and F-35 fighters are still made in America.

    And all that defense manufacturing creates far fewer jobs than regular manufacturing of consumer goods, so America has not only slipped far behind the rest of the world, it’s rapidly impoverishing itself by building nothing but weapons.

  56. 56
    Anoniminous says:

    @burnspbesq:

    Ask yourself this question:

    Who, and where, did the knowledge of carpet manufacturing for those jobs come from?

    It wasn’t Georgia. It was New England. The South didn’t develop carpet manufacturing; it was gifted with a carpet manufacturing industry when the products of that industry commodified with the ‘knowledge’ of how to make carpets embedded in the machines and the processes, not the workforce. Thus, labor costs became the critical factor and if a factory can move to Georgia from New England it can as easily pick-up and move to Cambodia.

  57. 57
    Anoniminous says:

    @mclaren:

    Yes!

    That’s the result of what I was talking about in my post, above.

  58. 58
    roshan says:

    @Omnes Omnibus:
    Well, no one likes a country especially one as magnificent as America, stalled and staring into the abyss like there is no tomorrow. We need to get it moving and fast and otherwise the present generation faces tumultuous times ahead.

  59. 59
    Omnes Omnibus says:

    @mclaren: You are talking about LCDs and burnspesq was talking about clothing companies. Can you imagine that time to market might be calculated and weighed differently between the two industries?

  60. 60
    soonergrunt says:

    @Omnes Omnibus: A lot more of the word Fuck, and derivations thereof, but yeah, sometimes you gotta slap the youngsters down before they hurt themselves or somebody else. We play with live ammo in the real world, not just figuratively, but literally.

  61. 61
    polyorchnid octopunch says:

    This all goes back to one of the central Marxian points; true wealth only comes from making things.

  62. 62
    Anoniminous says:

    @roshan:

    IMO, to get moving the control of the FIRE complex has to be broken. Producing goods has a Return on Investment (ROI) of four to six percent, averaged out. Averaged out, the ROI of the FIRE complex is eight to multiply hundreds of percent. This drains capital from manufacturing, & the Real Economy as a whole, to shoveling pieces of paper, NIJA loans, & other pointless activity. Simultaneously, it funds Looting of businesses in the Real Economy by sleazeballs jacking-up the near-term profits at the expense of long-term existence of the Looted company.

  63. 63
    Anoniminous says:

    @polyorchnid octopunch:

    Not exactly. We’re focusing here on manufacturing (goods) and pretty much ignoring services. I’d put it:

    Creating true wealth requires an active, vibrant, manufacturing sector but is not limited to such.

  64. 64
    mclaren says:

    We hear reassuring twaddle about knowledge work and America’s primacy in inventiveness from the top 1%, of which burnpbesq has proudly proclaimed himself one, and we need to remember the intellectual qualifications of that top 1%.

    The top 1% cranked up the dot-com bubble and then they gave us the real estate bubble and then they gave us the occupation of Afghanistan and the invasion of Iraq.

    Judging by the results on the ground, the top 1% are grossly incompetent fools. These people are Ivy League lemmings who follow each other off the nearest cliff and then congratulate themselves on their genius and perspicacity while they free-fall toward destruction.

    Out here in the real world, all the bullshit about America’s genius for knowledge work and our ability to stay at the forefront of the creativity envelope is a smoke screen to cover up the fact that the U.S. economy is structurally broken at a basic level.

    Martin Ford has been writing about this. You think I’m pressimistic?

    Take a look at Ford’s articles: “Unemployment: the economists just don’t get it.”

    “What if there’s no fix for high unemployment?”

    And this article sums it all up:

    “Globalization and free trade – wonders of a past era, now enemies of America”

    The top 1% keep pushing these goofy unsustainable trends, not realizing that when they offshore all the decent paying jobs, they leave no middle class able to buy the goods manufactured overseas and shipped back to America for sale so cheaply.

  65. 65
    polyorchnid octopunch says:

    @Anoniminous: Personally, I think that services are important, services are necessary… because services help support making things. However, if all you have are services, then you’re going to lose your wealth. As supporting evidence, I’d like to offer the US experience since 1980.

    It’s manufacturing (creating added value by using materials to create goods) that wealth actually comes from; services are in a very real way parasitic on the goods, much as all animals are parasitic on the plants. The fact that animal shit properly aged is good for the plants doesn’t change the essentially parasitic nature of the relationship.

  66. 66
    Kirk Spencer says:

    @polyorchnid octopunch: Um, no.

    True wealth comes from labor. Marx expanded Smith and Ricardo’s labor theory of value.

  67. 67
    roshan says:

    The health care industry also holds a great employment promise. Think about it, many people are living longer, but that doesn’t mean that all longer living folks are healthy till death. A large amount of medical expenses are coming from folks who are old, have terminal diseases and not yet ready to die. These type of patients demand higher and expensive medical services for a short amount of time. A lot of new research drugs (some not even market tested) are used to help keep these folks alive (the success rates of such efforts is painfully low and doesn’t necessarily alleviate the health of the patient). Also, if we include everyone into the health market it would need to absorb more doctors, specialists, nurses and care-givers into the medical ranks. Yeah, having everyone in the insurance markets does mean that some of it would have to be subsidized but it helps increase the number of folks employed and maintain a healthy society. I do realize that a lot of the above might have already been included into the recent HCR bill.
    It’s not manufacturing related but still it’s something, and needs to happen fairly soon to relieve the high unemployment rate.

  68. 68
    roshan says:

    @Anoniminous:
    I am sorry to be so oblivious, but could you please explain what these terms stand for: FIRE, NIJA.

  69. 69
    Anoniminous says:

    @roshan:

    I beg YOUR pardon. Not only was I spouting jargon I mis-spelled one, to boot.

    FIRE – Finance, Insurance, Real Estate

    NINJA – (not NIJA) No Income, No Job, No Assets

  70. 70
    mclaren says:

    Both manufacturing and services involve labor. The problem is that both are rapidly being automated out of human workers.

    Nobody’s talking about services because it’s a foregone conclusion that human workers are being automated out of existence in manufacturing jobs today — the example given above where the carpet factory went from 50 workers down to 5 is typical. So the only issue now is whether the shift from a manufacturing economy to a service economy will result in high-wage high-skill service economy for America, or a low-skill low-wage service economy.

    Well, that question is being answered for us. And it’s being answered by patents like the one IBM just filed:

    Today’s computers are smaller and thousands of times more powerful than the ones we worked with during the AI boom, but the problem is still one of programming — getting knowledge into the system in an efficient and usable manner. The…solution…according to a just-published IBM patent filing (US29228426A1), might be to find a way to suck knowledge out of the experts then inject it into younger, stronger, cheaper employees, possibly even in other countries.

    IBM’s proposed Platform for Capturing Knowledge describes how to use an imersive gaming environment to transfer expert knowledge held by employees “aged 50 and older” to 18-25 year-old trainees who find manuals “difficult to read and understand.”

    IBM also discusses how its invention could be made available for customers’ use in return for “payment from the customer(s) under a subscription and/or fee agreement.”

    What we’re talking about, then, is a possible revolution in workplace training, one where a lifetime of experience would ideally be sucked from the mind of an experienced worker to be injected into a trainee and then the older worker discarded.

    Source: Robert X. Cringely, “Logan’s Run,” September 2009.

    You think high-skill high-wage professionals will be able to continue making big bucks peddling their highline services?

    Think again. High-skill high-wage professionals like doctors are about to discover the wonders of automation and globalization and global wage arbitrage.

    Robotic surgery offers shorter hospital stays and quicker healing times than conventional surgery. Along the way, surgeons are going to see a sharp drop in their pay.

    People like burnspbesq think they’re going to continue to be able to command big bucks for their highline services? Think again. Databases and neural nets running on Beowulf clusters and offshoring will destroy his job just as the IBM patent will destroy the jobs of programmers and chip designers and molecular biologists and engineers and Wall Street hedge traders and economists employed by giant banks and accountants employed by giant corporations. All those services are going to get offshored, automated, the expert knowledge sucked out of the heads of older workers like burnspbesq and dumped into the heads of younger 18-24 year old workers in Bhopal and Bangalore and Guangdung.

    So what services will be left as viable paying jobs in America?

    Waitress. Barber. Short order fry cook.

    Good luck in building a modern first-world economy on those kinds of jobs, buckaroos.

  71. 71
    Anoniminous says:

    @polyorchnid octopunch:

    I submit the reverse is true, too. (Also.) If all you have is manufacturing your going to lose your wealth as your competitors see what you’re making, research a More Better product, make it, and jump into the market.

    Using your analogy …

    Cows eat the grass. They poop on the grass. The grass uses the poop as fertilizer to grow. And the cycle continues.

    You need both.

  72. 72
    roshan says:

    @Anoniminous:
    Thanks. Got it.
    Yeah, financial and real estate markets serve a very low percentage of the population, especially after the market meltdown of 2008 which included housing and financial market collapse. The stock market rally in recent times is not helping anyone except the folks who already have too much money to care. The middle class folks who still have their 401K’s and other funds in the stock markets are taking a huge risk. The insurance industry is basically a leech on the American patient and the economy as a whole, and cannot remain profit oriented if we expect to drive down the health care costs which are hobbling the growth of small businesses.

  73. 73
    mclaren says:

    @roshan:

    The health care industry also holds a great employment promise.

    Not so much.

    Sanjya Saini was not prepared for the hate mail. A radiologist at Massachusetts General Hospital, Dr. Saini thought he had found a clever way to relieve an acute shortage of specialists who could read X-rays and M.R.I. scans. The hospital would beam images electronically from some scans to India, to be worked on by radiologists there.

    But the arrangement, made late last year with a company in India, has touched off a minor furor. It turns out that even American radiologists, with their years of training and annual salaries of $250,000 or more, worry about their jobs moving to countries with lower wages, in much the same way that garment knitters, blast-furnace operators and data-entry clerks do.

    “Who’s Reading your X-Ray?” by Andrew Pollack, The New York Times, 16 November 2003.

    Robotic surgery, automated medical transcription software, automated hospital lab testing together with medical tourism to India for the really expensive surgical procedures… The only jobs that will be left in American health care pretty soon will be the low-wage grunt jobs: janitor, bedpan-emptier, cafeteria cook.

    “But don’t we need doctors to diagnose illnesses?”

    Why? Once medical records get put online (and it’s happening), all we need is some XML lashup and LAMP kludges to start sifting through the online symptom database and generate a crowdsourced diagnosis.

  74. 74
    roshan says:

    @mclaren:
    Hmmm, interesting, something to think about. Thanks for putting some light on the matter.

  75. 75
    Kirk Spencer says:

    Let me run another one, this time a projection.

    Recently, there was some video of a robot that was able to fold towels. That is, given a jumbled pile of towels, each of different size and fabric, it was able to lift out a towel, check it for size and condition, and fold it correctly. Of little steps are long journeys made.

    Picture. You live in an apartment building. For your laundry you put your dirty clothes in an RFID tagged laundry bag, and set it in a pick-up box – a box that’s inside your apartment, against a hallway wall, that itself has a locked door to the hall. A robot comes, opens the pickup box door with an electronic key, and adds your bundle to what it’s carrying. The bundles go to the basement where their contents are separated, tagged, sorted, cleaned, folded/ironed, hung on hangars if necessary. The same robot runs the load back up the hallway and puts the cleaned clothes in your pickup box.

    The second hardest part was the select and sort section; what the towel-folding robot is doing. Get a robot that can iron ‘everything’ and it’s downhill from there.

    As a bit of trivia, the current small businesses most likely to make millionaires of the owners are laundromat/dry cleaners.

    This won’t do much if anything for people in stand-alone houses. It might work out for row houses or condominiums, depending on a lot of secondary factors.

    Oh – the second or maybe third generation WILL work in houses. Think Laundry Roomba.

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