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re: another one bites the dust

May 4, 2009

My friend, Chris, comments:

You can’t rely on manufacturing to save us when you are off shoring our manufacturing. The auto industry is simply the last area that hasn’t entirely gone out of this country. Oh sure we may have toilet paper factories here and there, but they don’t add up as much as you’d think. How much of that do we export? We lost our worth in the world economy by “switching over” to a service based economy instead of a product based economy. Too bad we off shore that too. So what do we have? Nothing. Even the IRS’s 800 support line is in India. Fixing the auto industry is both good and bad in a sense that you can put a patch on it to stop the bleeding with funds, but will it help in the long run if we don’t bring back what we’ve lost already in other industries? Think about how much is stamped with “Made in ..”. So what do we do? Take a card from the socialists and let government intervene everywhere? A big pill to swallow, because how do we assure ourselves that those in DC aren’t the same ones who made the decisions to off shore to begin with? It isn’t a political party thing, it’s a money thing.

My response:

Exactly. China is now one the world’s manufacturing giants. Just look at the steel industry, for example. We used to be the world’s largest producer of steel, now, according to the International Iron and Steel Institute, China is currently the leading producer while we are fourth in terms of metric tonnes. India is quickly becoming one of the new IT giants. The United States has very little left in the way of manufacturing and exports besides things like subsidized corn, which, thanks to NAFTA, we dump off in places like Mexico. The real question is, as you have already pointed out, What do we do?

One of the main problems I see is the fact that U.S. based multinational corporations are beyond borders. They can pack up and ship their capital and resources, like manufacturing and tech support, to almost anywhere in the world with cheaper wages and and lower taxes while still technically being headquartered in the U.S. One thing we need to do is to make this more difficult, otherwise there won’t be anything left to outsource. It may be good for a company’s profit margins, but it is devastating to our economy as a whole.

You posed the question of whether we should take a card from the socialists and let the government intervene everywhere, and then rightly pointed out that the very people in DC are quite possibly the ones who made is easier for domestic companies to offshore production to begin with. That is why I think a better solution is to give the workers a bigger voice in the decision-making process and more power in the work place, which is real socialism. The reason is that the workers themselves benefit by having manufacturing and other product based jobs stay here. CEOs and shareholders, on the other hand, generally get paid big bucks no matter where the jobs are located, and even benefit more when they are able to ship them offshore where wages and taxes are considerably lower.

I am not a big fan of all organized labour, and I think that many unions have become just as corrupt and greedy as any board of directors, but without greater government involvement or worker participation in the decision-making process we are never going to keep the jobs we still have or get the ones we lost back. Unless, of course, the U.S., becomes more like a developing nation than a developed one, with high rates of unemployment, and the jobs get shipped back here due to the massive pool of cheap labour and lower taxes, which will mean things like our quality of life and social safety nets like Medicaid and Medicare, Social Security, unemployment etc. will take even more of a beating.

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