patrick.net

That's interesting. I'd like to see some info on that. As a positive note I do recall seeing that even though our manufacturing output has fallen, the overall efficiency we have is very high. I can't recall the exact figures but the US is very slightly lower than China in regards to manufacturing yet does almost the same amount with 1/10th the workforce. Then again that also means less overall people working in manufacturing.

I think the arbitrage of cheap labor overseas was there during the late 80's and 90's. So US evolved from a nation with a strong manufacturing base to a nation with a strong services base. Finance and Real Estate grew beyond proportions (obviously not very healthy for the overall economy as finance is just secondary to economic growth and real estate is consumption-based).

This cheap labor arbitrage is dead (or will be dead soon) given that the world is running out of cheap oil. So manufacturing will come back whether we like it or not. Cost to private enterprises are increasing due to oil supply shortages, so they'll move back.

I see strong growth in localized de-centralized private enterprises that produce useful stuff.

You all have very good points. Efficiency has grown in manufacturing and agriculture and is part of the reason for the decrease in manufacturing and agricultural jobs over the last decades. The decrease in manufacturing over the last 10 years has been caused by the Chinese manipulation of their currency and their consequent ability to manufacture and export products at a far lower cost than American companies. Plain and simple. Hopefully America can regain much of its lost manufacturing capacity. It needs to, because America is dependant on China now for most of its goods.

I've also wondered if perhaps the US could transition from trying to compete via low costs and instead do something more along the lines of Germany and other higher labor cost countries: Go upscale. For example I own a set of All-Clad pans made in Pottstown PA. They were expensive pieces but they're the brand you almost always see in any high end restaurant. They'll last forever and the quality is amazing. People don't buy them because they're cheap. They do so because its a good product. The same is true for a lot of German products ranging from cars, watches, and high end consumer goods. Because they've got a reputation for quality they can manage to sell for more because people are willing to pay more due to that reputation.

The US was basically the same as China in regards to what we manufactured: Cheap goods made with cheap labor. We can't really do that as easily today. But perhaps by instead focusing on upper end products we could reverse things.

edvard2 says

Take apart an old radio and all of the tubes, capacitors, coils, resistors, rheostats, and chassis components were made by some US form somewhere. The same goes for anything else that was made up to the 1960's.

A young kid tears apart products, understand how they work and has a passion to come up with something new. This is how all the former inventors started. They have an interest on how things work You just see that happening these days.

shrekgrinch says

But when that labor is replaced by robots, Chinese export manufacturing will be at disadvantage. See, a robot slaving away 24/7 in a US factory is just as productive as one in a Chinese one. And the costs are roughly the same, too.

In your town of Fremont, we had MFG sites from Apple, Sun, and many others using robotics to manufacture, everthing from Computer Stations, PC, Storage, components, and many other enterprise products. In SCC, Robotics plants were also running 24/7 with 2-3 and sometimes 4 shifts cranking out 70-80% of world semi production.

Difference is the state/county/city imposed very high property and sales tax on the equipment many companies invested in.

edvard2 says

I've also wondered if perhaps the US could transition from trying to compete via low costs and instead do something more along the lines of Germany and other higher labor cost countries: Go upscale.

AMD to Build Factory in New York

Ruiz offered few details on the companys plans or the economic package offered it by New York. Published reports put subsidies for the plant, which are subject to the passage of appropriations, at about $1.2 billion. Given that he indicated that the New York AMD plant will turn out 32-nanometer chips, AMD will need to complete building the plant in 2009.

The fab is expected to bring 4,000 to 5,000 jobs to the area, including 1,200 inside the fab itself.

Perhaps most crucially, companies rely on the willingness of governments to lure factories with massive incentives. New York committed $1.2 billion to land GlobalFoundries' factory in Malta.

"It's kind of like competing for baseball stadiums these days. Cities around the world, regions around the world, are competing for all sorts of manufacturing activity, and semiconductors are high-tech, high-human capital and high wage," said JoAnne Feeney, senior analyst at FTN Equity Capital Markets.

The United States can be more attractive to chip makers than Europe when it comes to labor laws and environmental regulations, said Jim McGregor, chief technology strategist for market researcher In-Stat. Intel has seven U.S. factories: three in Oregon, two in Arizona and one each in Massachusetts and New Mexico. Even South Korea's Samsung Electronics Co. makes chips in Austin, Texas.

GlobalFoundries Chairman Hector Ruiz said the state incentives and the company's desire for a U.S. presence helped lure the chip maker to an industrial park 150 miles north of New York City. Ruiz noted that the chip factory, known as a fab, will be near two research partners: the state-run College of Nanoscale Science and Engineering in Albany, and IBM Corp., which has a facility farther down the Hudson Valley in East Fishkill.

edvard2 says

The same is true for a lot of German products ranging from cars, watches, and high end consumer goods. Because they've got a reputation for quality they can manage to sell for more because people are willing to pay more due to that reputation.

Your looking at the consumer market only, and ignoring the corporate buyers. Germanys other commercial markets were equally hit hard, as our were due to Japanese competition in the late 90s and Japan, teamed their Govt, Industries and Labor to dump products on the market below their cost and run the competition in the ground.

So its not making more expensive goods that counts. As you can see many products marketed by Euro Giants like Siemens and Philips are also made in China.

Fables and Reality...

BMW parts made in China...

BMW Parts» BMW Parts 3 / 5 / 7 Series 1995-2010

http://cnsaiding.en.made-in-china.com/product/RohJZGaYIqpE/China-BMW-Parts-3-5-7-Series-1995-2010.html

This one lists about 3700 parts for BMW

http://www.made-in-china.com/productdirectory.do?action=hunt&code=2902000000&code4BrowerHistory=EOJRmmnUPxxQ&order=0&style=b&page=1&memberLevel=&asFlag=&comProvince=&propertyValues=&from=hunt&word=bmw&mode=and&comName=&comCode=&subCode=&size=30&viewType=1&toTradeMarkets=&sizeHasChanged=0&viewMoreOrLessClass=viewMore&isProdCom=

I call BS that we produce more stuff. The economists DO NOT KNOW HOW TO DO SCIENTIFIC MEASUREMENT ! To put it more specifically, if a product is manufactured in China but assembled in USA, then it's considered US Manufacturing. Really.

Don't even get me started on BMW parts made in China. I have owned & maintained my '91 3 series for over a decade now. I have seen a marked decrease in quality in the last couple of years as Chinese made junk has gotten into the supply system. Even something as simple as a rubber PCV hose is crap...after about 1 month it was split & I had a vacuum leak on my rebuilt motor. Hoses are supplied by CRP Industries (China Rubber Products?)...the name is one vowel short of describing its products...CRAP!

It not true that we don't manufacture anything but it is in most high tech specialized industries like weapon design manufacturing. But now the Chinese are even taking us on in that area as well.

I read an interesting article in the Wall Street Journal this year about how Russia used to be the premier weapons supplier to China and other countries like Iran for Fighter Jets and weapons. The Chinese were buying planes from Russia in the 80's and 90's. But recently the Chinese stopped buying jets and started selling the same re-branded fighter jets at weapon trade shows. The Chinese had reverse engineered the planes down to the last screw and now the Russians were under priced out of a market they once dominated.

But the cost of living and labor costs are rising in China and now we are seeing competition to the Chinese from the little dragon countries like Vietnam who are now poised to take a lot of their manufacturing business away due to cheaper labor. It will be interesting to see how it all shakes out.

Just a final thought. If labor costs in this country ever drop to close to what corporations can get overseas, low wage manufacturing jobs will come back. Of course our standard of living will drop as well and we'll all be poorer. These free trade agreements that were sold to the American people as job creators were really job killers. I would love to see these jobs come back to the America but the government can't force large corporations to make their products here since they are beholden to their share holders and not the American people. And that is clearer now than it has ever been in our nations history.

If the German factory owner could make an ordinary toilet and sell to their version of Pentagon for 64k DM or Euro, he wouldn't make watches either. If the German worker could earn 100k Euro/DM by adding one more bathroom to his house or someone else' house at the cost of 5k, he wouldn't bother working for export manufacturer either.

Our national trade deficit is simply the result of government largess on the biggest welfare queens: the Pentagon and the TBTF banks. When the government bid worker's wages and material to build toilets (and other sh*t boxes) for Pentagon and extra bathrooms (and other financial vomitorium) in an engineered asset boom, private sector employers and consumers simply can not compete against the government, which can print money! In order to stay alive and without suffering even further decreased standards of living, both private sector employers and consumers then would have to find cheap substitutes from overseas.

I think if Americans can remember Ross Perot saying there was going to be a big sucking sound when NAFTA passed, we must say using hindsight that he was right. We passed it with a popular Democratic President Clinton and he also helped the Stock Exchange jerks who have no ethics. If we want a repeat of that we'll re-elect Obama and he will kiss Wall St's ass some more and get re-elected and let the Republicans screw the ex middle clasers in favor of them because he is a player. Republicans are so mean-spirited and childish they will continue to ruin his base by holding us hostage till they are back in power and they can de-regulate and undo whatever good that happened during Obama's presidency. So, I am hoping Hilary gets elected President cuz she has the nerve to diplomatically say what is right. Just too much anti female sentiment against Republicans because the white man knows she can work circles around any man... by the way, now that we have a Black president he will go down as hurting his own people during his first term due to lots of Republican lying on Fox News and all over the tv. I say screw China, let's go back to making quality consumer items and tell them we want no more of their defective junk. I make typos on this Sony laptop because the cursor flies up to where the mouse is while I am typing and it has been like this for a few years while I've been too broke and crazy to fight with them. This is my third Sony laptop and all are made in China and they are defective and crap. Used to be a good name you could rely upon, but now it is pure junk and I can't be efficient if I constantly have to fight with my typing and cursor not being compatible. If we banned products from countries or taxed the hell out of them when they are not reciprocal with environmental laws and paying living wages to their workers, we could open up our own factories and get some of their business by producing something that really lasts, like a German car or crystal glasses that are quality products you can say are "worth" what you paid for because they actually work and last beyond a short-term warranty. Hair dryers are quickly replaced but why should I have to buy one every year? So some guy can have a lousey low-paying job behind at a warehouse store that sells only stuff that is junk or chinese. The other big problem with American companies is they are top heavy paying CEOs a sinfully amount of money to make their companies more efficient while they hire expensive consultants to get their taxes down and they layoffInalf the workers or more to have robots produce products. Men's stupid fascination with gagets has gotten us guns, war and all things associated with it including the Military Industrial Complex which is famous for $600 toilet seats and other meglomaniac articles which only proves women are better shoppers and we don't like the crap at the mall cuz it is all chinese. Thank George Bush who stole two elections because he knew the next guy would have some pigment in his skin because that's the way the population is growing, more colorful. White guys who reach the top were to be envyed for their large homes, trophy wives, beautiful clothes, cars, golf clubs and other gagets, well-educated children and they have sold out their children's future because they had to get piggy and greedy and unethical. It is beyond me why we can't recognize unethical behavior in business and politics, because there are too many sheep following the likes of Limbaugh and the elite's bidding, which is high paid lobbyists writing laws for the Republicans and big biz represented in the Supreme Court. My rant is about liars, cheaters and wall streeters running this country when it is just a rigged gambling game not meant to enrich anyone but themselves. I say put them in the alley behind wall street and tell them to gamble there with their own money and we'll see who can afford a mortgage payment or rent or food. While we throw away the old people because Americans are youthful, according to magazine and tv pictures we get a new world where I trust no one under 60 (my age) and few of them are worth my time. Just a rant, but a disgusted activist spirit becoming a poor person, thanks to unregulated out of control banks and politicians so they can think short term and run us into a third world country real fast! While we do nothing and not hold them accountable for their crimes I am convinced human nature is mostly self-centered narssists who would rather fake doing a good job or not work at all. After all, if you can't produce something you're proud of then you are really "worthless" - might as well be a bum. Your comments are appreciated because I feel all alone here in my opinions. I deal with value every day and I see there is a price for everything, but a value to nothing. Most of the manufactured stuff is getting better like autos are being more creative since they got rid of the fat at the top and stopped making so many SUVs that guzzle gas, but we still have a long way to go!

bmwman91 says

Don't even get me started on BMW parts made in China.

Kudos on your 318i, I had a used 84 318i. Sold it and bought a very old Alfa Spyder as my new joy toy.

Your thumbs might be touching the touch pad unintentionally when typing if your cursor is jumping to where the mouse pointer is. I always preferred the IBM mini-joystick on laptops made by Lenovo for that exact reason . . . but alas, the cost of touch pad is lower and that's what the consumers buy.

Goods from China, and from Taiwan/Korea/Japan before that, and from Vietnam, Egypt, etc. in the future as Chinese labor price go up . . . they all show up here for one reason and one reason only: American consumers buy them. Having jack-booted thugs telling American consumers not to buy them would only drive even more Americans into poverty because jack booted thugs do not work for free. Economy is not helped by putting jack boots and uniforms on larger and larger cross section of the population to mind the businesses of others. The soviets and national socialists already tried that in the last century.

Check out the auction site www.hoff-hilk.com, where the machines of sometimes 3 or 4 machine shops a week are auctioned off to the highest bidder. I wonder if the machines are getting sold to the Chinese. Anyway, the big sucking sound is still happening, as Ross-Perot once said.

I would like to hire but I can't...

Most American workers aren't qualified to do the highly skilled service jobs required. They only want desk jobs or computer jobs or management jobs. Nothing labor intensive. If you want a job, know how to read an electrical schematic and diagnose problems with simple common sense.

I can't afford to pay them because the government wants a piece of the action in the form of unemployment insurance, workers compensation insurance, health insurance, state disability insurance and social security insurance.

Americans think they deserve $20/hr when in the real world, you worth only $7.50/hr. Go ahead and try to find a $20/hr job. It's not there because everything is outsourced to China.

And even if we can find somewhat decent workers at $7.50/hr, Americans are lazy. The quality American worker that we once had back in the day is gone. They have rights, they can sue anyone and they will, too many criminals in jail, not enough quality education for the students for the real world.

That's alright though. When America is down in the dumps and they finally get off their lazy asses, maybe they'll sweat a little bit more and work for pennies till things start getting better.

Earn your living, don't spend it.

There is a fundamental difference between the US and Germany: the US prints the world's reserve currency, whereas Germany doesn't. When a country exports money, it has to run a "trade deficit" in goods and services. That's just simple math by definition. Many countries with comparable or higher per capita GDP than the US or Germany have net trade surplus yet do not engage in much manufacturing export: Luxemburg, Switzerland, Denmark, Sweden, Sigapore, Ireland, Iceland, etc. etc.. They have net trade surpluses simply because they do not export money. Keep in mind however, all of them also have far higher percentage of imported goods on their store shelves; they just found some other goods and services to export that are not money or military.

After WWII, there was a reason why the world financial system was set up in such a way that the US provided the world reserve currency: besides obvious economic size of the US compared to the war-torn Europe, the US military had to be funded by goods and services imported from allied countries. When a disproportionately large American resources are spent on the military (almost half of the entire world's military expenditure today), goods and services imported from other countries just serve to stave off decline in standards of living.

Attempting to lock out imports without addressing the structural problem in government spending would only lead to collapse in standards of living in the US: even more jobs would be lost in retailing and distribution of imported goods and services. It would be like if New York City tried to lock out imports of food and t-shirts in an attempt to revive farming and sweatshop jobs that existed in Manhattan in the 19th century and the first 2/3 of 20th century.

The real problem Americans face is not so much import per se (the list of countries above have even higher per centage of imported goods in their markets), but why so many people are witnessing declining standards of living despite the imported goods and services. Just like the city of New York (or any commercial hub cities in any country or state), the imports of goods from outside its boundaries should make the place more vibrant and prosperous than it would be otherwise . . . however, the city fathers can still potentially counteract and outdo that uplifting effect of commerce and ruin the place with taxes and regulations, just like the city of Detroit. Huge mortgages function just like a tax, on living.

"How can the US expect to retain any sort of middle class or a significant foothold in the world economy if we continue to diminish our manufacturing output?"

It can't. We've become another UK: produce virtually nothing, but shuffle around a lot of money while stealing as much as you can.

Hahahaha "US manufacturing will come back" ha ha ha ha!
I think I have to save that one...

If robots make our stuff, what are people going to do for money to buy that stuff?

"Efficiency is the straightest road to Hell." James Howard Kunstler

Back before WWII, people generally paid 40% of their income for food. The agricultural 'green revolution' brought them cheap food so they could spend that money on junk they didn't need, working at jobs to make junk that nobody else needed. Cheaper food brought even more people.
Humans are no smarter than cows, and we've got too many in the barn that can't be milked by the corporations anymore. What do you THINK will happen? You think we aren't going to get slaughtered for soylent green?
Oh, that's right, we're magically going to all be 'given' service jobs that pay us to buy more stuff and the resources will all magically appear because TV says so.
No problems will be solved by decree (or from 'on high'). Only random chance will change the future, and that randomness is looking more like descent into a quagmire of blood and famine.

Manufacturing. It's Why We Should Eliminate The Corporate Income Tax -- And Impose High Tariffs.

Before you jump out of your Vietnamese made Nike’s, pound your Chinese made keyboard, or smash your Korean made computer monitor, let me explain:
The U.S. is simply not creating jobs. And if I hear one more politician or talking head say "those lost jobs just aren’t coming back", I’ll throw a bottle of Chilean wine through my Japanese television.

We need to rebuild our manufacturing base that has been stolen by cheap imports over the last 20 years. We need a bulwark against the globalization mafia that continue to transfer the wealth of this Country into foreign lands. And we need a way to start now.

And we need some radical new thinking to achieve new jobs, start new businesses, and develop a strong economy.

So here’s a proposal. Let’s eliminate the Corporate Income Tax and Substitute a 100% Duty on all Imported Consumer Goods.

Take a look at the numbers on a macro scale (Source CBO):
2009 Tax Reciepts (Link: http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter4.shtml)

Receipts in Billions

Corporate Income Tax $138

Customs Duties (all goods) $ 22

Total $160 (corporate tax and tariff receipts)

Consumer Goods Imports In Billions

2009 Consumer Goods Imports(Link: http://www.census.gov/foreign-trade/Press-Release/2009pr/final_revisions/exh5a.pdf) $428

100% Duty on Net Consumer Goods Imports (Hypothetical) $428

On the face of it, the Treasury would receive $268 Billion more revenue by eliminating the Corporate Income Tax and raising import duties to 100% on consumer goods ($428 – $160).

What about ‘trade wars’?

Note that this proposal is ONLY for Consumer Goods. Fuel, Foods, Capital Goods, Vehicles and Other Goods would not be affected. But even if we have to subsidize companies currently exporting consumer goods for the lost exports ($150B per year) that they might lose from the tariff retaliation, the Treasury would still gain somewhere between $100B-$200B additional revenue per year.

Plus, Corporations have $1.8 Tillion on the sidelines overseas waiting to be put to use.

The Federal Reserve reported in June 2010 that U.S. Companies are holding more cash in the bank than at any point on record. They are hording an estimated $1.8 Trillion (or $1,800 Billion) in liquid assets waiting to see which way the wind blows with the U.S. and World economies (link).

Plus, another $1 Trillion sucked out of the U.S. Economy.

Multinational Corporations shield much of their profits from the IRS by using “Transfer Pricing”, essentially using foreign subsidiaries in tax haven countries to avoid taxes. U.S. companies amassed at least $1 trillion in foreign profits not taxed in the U.S. according to Bloomberg. This money must be invested abroad to avoid taxes in the U.S. – and so will never be used to produce wealth or jobs in the USA. (Link)

Higher taxes = Less Revenue.

President Obama’s first chair of his Council of Economic Advisers, Christina Romer and her Husband David Romer published a study in American Economic Revue. The Key Results?

A tax increase of 1% of GDP results in a decline of 3% of GDP over 3 years. (Link)

Taxes simply will not create the jobs that America so desperately needs.

What about Consumer’s? How much more will we be paying for consumer goods?

This proposal will undoubtedly cause prices for clothing, home electronics, golf clubs, etc. to rise. But will prices double? Not once manufacturing is re-established in the United States, because basic material costs are the same in the USA as in China. Only overhead, labor and benefit costs differ.

I recently broke down the costs of the new Apple iPhone 4 in a blog post. (Link). Material costs are estimated at $187.51. These materials will cost the same if put together in China or the USA. The only real difference in manufacturing costs will be employee costs, benefits and overhead costs.

It is estimated that each iPhone costs about $6 in employee, benefit and overhead costs manufacturing in China, adding about 3.2% to production costs. Even if manufacturing the iPhone in the USA would increase employee, benefits and overhead costs by a factor of 5 to 16% of production costs, the result would be an increased production cost of $24. At retail, this would translate into a additional $75 per unit as demonstrated by the chart below:
iPhone Manufacturing Costs*

China Manufacturing Material Costs $187.50

USA Manufacturing Material Costs $187.50

Labor/Overhead/Benefits China $6 (estimate)

Labor/Overhead/Benefits USA $30 (estimate)

Total Price China $193.51

Total Price USA $217.51

Apple Profit Markup %: 67.8%

Retail Price CHINA MADE: $600

Retail Price USA MADE: $675

*These are estimates based on available data.

The incentive to Apple to manufacture in the USA would be obvious: With a 100% tariff, their landed cost for a iPhone manufactured in China would be $387 (2 x $193.51). Manufacturing in the USA, their cost per unit would drop to $217.

How fast do you think factories would start opening up to take advantage of the cost benefit of manufacturing in the USA PLUS No Corporate Taxes?

It’s the Economy and Jobs, Stupid.

If the United States is to become the powerhouse of freedom, democracy and economic prosperity that is our destiny, then we need to start thinking creatively. Taxing global corporations is like trying to hold on to an eel without gloves – it is just too easy for them to slip through the system.

However, if corporations want access to sell to our market and our economy, then we should treat our market and our economy as the precious property that it is, and protect it with the same vigor that any company would protect its patent and trademark rights.

If a corporation wants to sell here, then they should manufacturer here. And for manufacturing here, they should be rewarded with the elimination of a tax burden.

The American People will need jobs, industry, and wealth flowing back into our Country. Let’s start thinking about how we can make that happen.

When robots (and foreigners) make our stuff, people (here) can make new things that robots (and foreigners) can not yet do. A Midwesterner grow corn with his combine, and sell a bushel of it (60 lbs), then spend the entire sum on one corn-dog on his visit to New York City.

Like wise, the Chinese can sell us a brand new car for $5k-10k, then blow the entire sum in one week visiting this country, taking a few rides on the same car as taxicab.

Why would they do that? You tell me; people are still visiting NYC in droves despite each corn-dog weighing less than 1/3 lb costing more than 60 lbs of corn in Iowa.

We can keep that up so long as we are still the dreams and aspirations of the world. Incidentally, Germans blew their wad on something even more silly than corn-dogs from street vendors: they gave us tens of thousands of Mercedes for free when they took a bath on Chrysler.

Robots? well, they will make cars and stuff for the cost electricity and grease. People can make the small amount of money needed to pay for the electricity and grease by designing and maintaining robots . . . or coming up with new ways of crashing cars in movies and destruction derbies for other people who do design and maintain robots.

Economy is simply gainful exchanges that optimize resource distribution/allocation. That can take place quite naturally when people are free to engage in voluntary exchanges. The civilization would not end if the sky rained down brand new cars, big screen TV's and stainless kitchens/whirlpools (all parashuted to protect content of course). So why would cheap imports of the same goods from foreign countries and robots? It's not a problem so long as people are allowed to make a living on their own, instead of relying on government largesse, like chronic foreign aid recipient nations. When money only flows down from up high in the government monopoly, even a little free food to keep people alive can ruin the society.

An iPhone is wealth before it's obsolete; productivity increase and new business opportunities found with the use of the iPhone is also wealth. The manufacturing of iPhone is not wealth: it's pollution . . . and from what we can gather, rather depressing, so depressing that the Chinese line workers at the contract manufacturer have a higher than usual suicide rate.

Why then do Chinese (Koreans, Taiwanese, Japanese before them in reverse-chronological order, and Vietnamese, Indians, Egyptians after them in forward chronological order) do that? because the depressing manufacturing job was thought of as less depressing than scratching a living out of the dirt as a farmer without modern equipment.

Wealth is not a zero-sum blob that moves from one place to another. Wealth is generated through division of labor enabled by free market mutually willing exchanges. Coercions would only serve to destroy wealth: none of the jack-booted thugs at the tariff collection point would work for free!

Hiring half the NYC population to post watches on all the bridges/tunnels leading into Manhattan, and check on each other so that no food or t-shirts could be smuggled across the East River and Hudson by boats . . . that might revive some farming in Central Park as they existed before the 1840's canal opening brought in food and some sweatshops back to SoHo as they existed before the 1960's . . . however, don't even think for one moment the standards of living in NYC would improve as a result.

This was a planned outcome. In the 70's we started "free trade" policies in which America and its trading partners would focus on economic activity in which it and they had a "competitive advantage."
America's principle competitive advantages were in finance and agriculture and entertainment, and its principle uncompetitive activities were in assembly. Simple put, cheap foreign labor could assemble things better (read cheaper) than American's could. So assembly jobs left the US (textiles, radios and TV, etc) and went elsewhere. Now, assembly is very close to manufacturing so foreign competitors began manufacturing, the nuts, bolts, nails, household items, etc that you find in WalMart. Once manufacturing moved overseas they found that Engineering services were needed. Thus, the rise of Chinese/Indian/Korean/Japanese Engineers.
Bottom line, we are still big in finance (we just need to bail the Banksters out now and then when greed overwhelms them) and Agriculture (thank God for the American farmer) and we still make movies.
Buy your plasma TV knowing full well it cost American jobs, and that it was all planned that way.

Reality says

Wealth is not a zero-sum blob that moves from one place to another. Wealth is generated through division of labor enabled by free market mutually willing exchanges. Coercions would only serve to destroy wealth: none of the jack-booted thugs at the tariff collection point would work for free!

Funny that the 10,000,000 manufacturing jobs lost in the USA has helped cause a depression, while the 10,000,000 manufacturing jobs gained in China has resulted in a boom -- and transfer of wealth.

If it isn't clear to you, let me explain. Free Trade is not Free. It only benefits international corporations, while hurting or benefiting target nations, based upon their intrinsic cost of doing business.

The standard of living that America achieved was/is the envy of much of the world. To say that we should capitulate our manufacturing base so that a few International Corporations and Foreign Countries can profit at the expense of the American Citizen is just about the most foolish idea I can think of.

The fact is that technology keeps adding efficiency and if we are to be honest the number of "ditch diggers" the US needs is far less relative to the total workforce. Is there such a thing as an office receptionist anymore? If so, are they more efficient than the computer phone tree? Does the computer call in sick, demand health benefits or file a harassment suit through a no merit attorney? The unions have voted themselves raises and benefits with no relation to performance that are unsustainable. Upper management has created golden parachutes with no relation to performance. The voters want all the free cheese available. God forbid someone tell the truth about what is happening and they are tar and feathered into 15 second soundbites the "sheeple" base their decisions on.

CitizenNYC,

Manufacturing jobs are commodidized. China has them for now. Japan, Korea, Taiwan and Singapore had those jobs after the US then "lost" them to China; likewise, Vietnam, India and soon Egypt + the entire "middeast spring" will take the same "jobs" from the China in the near future.

Assembly line manufacturing is more mind-numbing than burger flipping. At least in burger flipping, one gets to take orders and deliver food directly to the customer. Burger flippers do not engage in widespread suicide attempts on the employers' premise, like some of the Chinese contract manufacturing facilities face. Why would anyone want to pay ridiculously expensive jack booted thugs to enforce the revival burger flipping jobs and worse?

The US is suffering from a depression not because of the availability of cheap goods, but due to regulations and taxation schemes (including mortgage, which is a tax on living) that predicated upon the super fast economic growth that early phases of global free trade provided. Just like the internet, cheaper sources like Amazon and Ebay put many local bookstores and mom-pop shops out of business . . . they even had a bubble in their stock valuation and bankrupted many investors who went on margin (i.e. unserviceable loans that had been set up at optimistic times). The solution is not to ban internet and ban international trade, but liquidate bad debts now that the earlier growth projections have been found to be too rosy. The real sustained growth rate, even with the wonders of new ways of doing business, is simply not as fantastic when matured as it was during early adoption period. All the taxes (including mortgage and margin loans) constructed based on early adoption period growth rate simply can not be serviced.

Having cheap goods is the only silver lining in a depression. To destroy or ban that would lead to drastic decline in standards of living, just like the government did in the 1930's, dumping milk into the ocean and slaughtering animals to be burned and buried, all in an attempt to artificially jack up prices. The result was mass starvation. You can not successfully run an economy by having jack-booted thugs enforcing price levels at gun point. The purpose of any production is consumption. Restricting trade directly reduces what's available for consumption, and the cost of maintaining the jackboots is even more expensive, in terms of both economics and civil liberty.

We could have created a CCC for rehabing homes vs. having the banks bulldoze, sadly solutions are usually pretty simple. Last I checked the trend was still laziness and greed. Until that changes, nothing will change. So, what do we do?, we wait, and we wonder.

bmwman91 says

Don't even get me started on BMW parts made in China. I have owned & maintained my '91 3 series for over a decade now. I have seen a marked decrease in quality in the last couple of years as Chinese made junk has gotten into the supply system.

The automotive industry stopped providing products built in corporate headquarter home countries a long time ago. My Toyota truck is about 65% American made. The Tundra is currently the "Most American" truck you can buy and is around 80-85% domestic content. I recently looked at a new Chevy Cruze recently and the car was full of parts from all over the place. They make BMWs in South Carolina. I replaced the water pump on my truck 6 years ago. The unit was made in China. So far its held up fine. In fact, the new clutch, flywheel, and master cylinder I installed a year and a half ago was also made in China. I felt funny buying these but they were a LOT cheaper than the factory unit. The truck had 235,000 miles at that point so I didn't feel like blowing lots of money. So far so good.

Interestingly enough the current Buick Lacrosse is a perfect example of global corporate enterprise. The car's exterior design was done at the Detroit studio by a younger guy. The interior was designed in China. Why there? Because unlike in the US, Buick is a highly regarded, desirable brand in China and its one of the best selling brands there. The reason is because Buicks have been marketed as upscale for years there. There was a lot of emphasis placed on the interiors because in many cases the owner of the car would get driven around. The owner would sit in the back. As a result GM put a lot of effort in making the interiors of their Chinese spec models upscale. Some have fold down tables in the back- like you would see in a Rolls or something. Hence why the Shanghai studio was chosen to do the interior design because it made sense. The drivetrain is a German design. It was also tested on the track in Germany. The car is built in the US. Its all interesting to me.

Read the book "The world is flat" by Friedman. America has become a service economy. Plain and simple. Cheaper prices(aka: wal-mart effect) has replaced american mfg jobs. New economic norms are replacing older ones. The question is: what are they? Higher unemployment? Lower GDP? Let's hope these new norms are only temporary.

I think we should look to the German model. Their workers are the highest paid and they are busy. It means a more socalized economy, but it also means that everyone has a high standard of living.

How do they do it? Well they did not do it by dismanteling the government, which seems to be the Republican plan, that the Democrats are passively accepting.

In fact its the opposite. The Germans have achieved their sucess thru careful management, and lots of collective decision making. Like add back the unions, and interested community members, and the various governments working together. Its only when you have a collective decision making process are everyone's best interests are taken care of. It ends up being in fact a more true open and "free" market, than the one we currently have. Oh yes and lets not forget a more successful one too.

In comparison the American model seems to have a lopsided decision making process, where only the ultra wealthy are taken care of at everyone else's expense, since they are the only ones involved in the decision making process, (not free at all). You should expect impoverishing results.

This is not the way a great and wealthy country is made, this is the way you get a bannana republic. A despot at the top of the heap, and a few wealthy hangers on and everyone else treated like slaves.

I recently launched an aftermarket video game accessory. When I came up with the idea for the product, all roads led to China for manufacturing. 99% of the products in this category are Chinese made.

There are 6 separate individual American manufacturers who all contribute to my product, 5 of which are here in Southern California (endangered species to say the least). The product helps support and maintain over 250 American manufacturing jobs. I felt is was more important to benefit these jobs and plant the US flag on the shelves than it was to put a little more $ in my pocket.

Liberal or conservative, these arguments/discussions are exactly what the string pullers intend to keep us occupied with. At what point do we stop, separate ourselves from a false media seeking to drive our own selfish ambitions, and consider our neighbors?

There is no shortage of people who are willing and able to identify any number of problems. You can hear them running their mouths all day on Fox News or MSNBC. We shouldn't be relying on information from the cronies on either side of a corrupt fence. They are like doctors prescribing treatments that are never meant to actually cure the underlying issue, but rather keep you hooked.

The government is not going to solve our problems and neither will large corporations free from government constraints. We have to stop looking at the overwhelming problems facing this nation and begin to address our immediate situations. Figure out how and where you can begin to sacrifice in order to benefit those with whom you have direct contact.

Also, if you own a Kinect for Xbox 360, check out PRITECT on Amazon. Support an American made product and help us change the tide in this market category.

Bernard,

Read up on the real definition of "Fascism" (not to be confused with the dumbed down cartoonism Nazism). Yes, lots of management and collective decision making.

For what it's worth, Germans still have a lower standards of living than Americans, and more importantly, lower standards of living than almost all their Western European neighbors. If not for the FED's bailout in 2008-09, Deutchbank, Dressdner, BMW, Mercedes and VW would all be bankrupt. The big German banks may still go bankrupt; that's why they are lobbying for the bailout of borrowers to whom they should never have lent money.

Not sure why this turned into politics. The truth of matter is that we're a country that functions via capitalism. The classic saying is that Capitalism is creative destruction. Its just that everyone tries to catch a little money on its way down.

Neither party is right in their ideology on how to handle the economy because that's all do: Spout ideological rhetoric, most of which is totally impractical.

Political meddling in economics is seldom beneficial. Most of the things you mentioned were more along the lines of social issues rather than economic ones.

The way I see it is this:

1: Democrats like the idea of using government to grow the economy.
2: Republicans think we should fully trust private enterprise to " Do the right thing"

Neither idea works. At least not long-term, which is why if one side stays in power too long the economy tends to slump into recession either because the government starts to go broke or the lack of regulations inflates a bubble.

We still have the following high end industries:

1) Aircraft manufacturing (Boeing)
2) Medical devices (GE Healthcare)
3) Biotech R&D
4) Energy Turbines (Gas, Oil, & Wind)
5) Some appliance manufacturing.

Ok, so I used to work at GE...but I remember we were still manufacturing in the states. My job was to provide ERP systems for those facilities.

Government is a creation of man. It is as good or bad, as the people who compose it. Who are drawn from and chosen by the general population.

The problem I see with viewing government as an automatic evil, is this demonization has only one ending, when Grover Norquist "strangles it in the bathtub". Because ultraconservatives love the imagery of killing children they think are defective.

Anyhow, government has it's job to do, and when we run it right, it's a levelling force that counters the natural anarchy that would rule otherwise. Would you rather for example that we let disputes resolve on their own by vendetta and clan warfare like Hatfields & McCoys? No we set up neutral agencies that dispense something approximating justice, in this way avoiding anarchy and needless additional suffering.

The entire USA mentality is so infested with the idea that NOTHING can ever be done properly by government that it's difficult to even have a reasonable discussion about it. Reagan and his "fellow travelers" did such a good job of propagandizing this notion that government should either die or do nothing, that even when faced with PLAIN EVIDENCE that free markets are not efficient and need regulation, proponents prefer to ignore it. Alan Greenspan used to say "fraud doesn't exist" as a crime, and that all we needed to do was stay out of the way and the magic of the free markets would punish bad actors without government. Clearly this failed and he ADMITTED HIS MISTAKE saying there was "a flaw in his model" and perhaps he was wrong. Then of course he glided on into public speaking, and the adherents of deregulation who worshipped Greenspan for decades just ignore this admission of failure.

GLASS-STEAGALL WORKED!

How's that for government meddling in economics. It brought us decades of stability and slow-growing prosperity. Pretty heavy-handed meddling too, you may grow this big and no bigger, you must have this capital reserve, you may not merge disparate banking interests under one roof.

Then the financiers decided they didn't need safety valves and brakes on our train, and in a few short years KABLOOEY a train wreck.

Vincente,

There is a huge difference between government vs. private sector decisions: if you don't like a particular vendor's goods/service, you can shop elsewhere. The same is not true for government: you have to pay tax to fund the programs regardless whether you know a better solution. Seeing that change and progress is constant in this universe, whatever the government legislates into the stone tablet is bound to be obsolete in short order. People often confuse "anarchy" with "chaos." A state of anarchy exists whenever you are not forced by government against your own will, like in your own private bedroom. Chaos is a whole different ball game. A government that is too intrusive actually creates chaos. That which rules the least rules the best.

Glass-Steagal would not be necessary if not for central banking and fiat money laws that guarantee bailouts for insiders. The TBTF institutions launching themselves into wild gambling binges was not a free market failure but a government failure: those institutions are the real animators/controllers of the government . . . or at least those who control those institutions are also the ones who control the governments for their own benefits. Free market would not have provided the bailouts. The wild gamblers would have taken their own just desserts. Glass-Steagal is simply a salve to limit the scope of that "government put" transferring gambling losses to the public. The cost of G-S is financial stagnation . . . simply because the government bureaucrats do not know in advance what financial schemes work and when. Entreprenuers have to be allowed to take chances and at their own risks.

Reality says

Glass-Steagal would not be necessary if not for central banking and fiat money laws that guarantee bailouts for insiders.

Excuse me "Reality", when was Glass-Steagall enacted? Weren't we on a "real money" standard when that started? Oh yes, always "fiat money" in some way to blame even when not accurate it's a reliable whipping boy. Glass-Steagall WORKED and worked brilliantly and that's why fraudsters and banksters hated it. It got in the way of the fraud and wealth extraction.

We had numerous quite serious depressions prior to the "Great Depression" that name was even recycled from an earlier one. Happened frequently and were devastating, to the point something had to be done. And it was.

I'm going to not address the rest of your "free market" diatribe, because it's so demonstrably unproven and unprovable. Zealots of unregulated "free markets" reminds me a lot of Soviets, the last 5 Year Plan didn't work so let's try it again but sterner, and it'll work this time, it'll all just regulate itself you watch. Glass-Steagall WORKED and worked for a LONG LONG time. So long that all the people who remembered why we needed it, were long dead. Thus it could be tossed away by ignorant youngsters enthralled over "financial innovation". Saint Alan Greenspan said clearly he could keep his cops in the donut shop since the miracle of the markets would handle and ferret out fraud on it's own for it's own preservation and long-term good. Clearly this did not happen it was one big criminal circle jerk. YOU got handed the soggy biscuit. Eat up!

Entreprenuers have to be allowed to take chances and at their own risks.

Let's remove all regulations and let the banks gobble each other up until we have one GIANT bank which is "too big to fail". Then, let's let it fail and see what happens. What great fun! Rather you try that experiment on your own country and economy, not on mine thanks.