The most important issue facing the American Economy is revitalizing our Industrial Base. Finance and money-lending cannot be the basis of our national greatness: all other nations that put all their economic wealth in this singular institution faced ruin, as the examples of Holland, Great Britain and Florence attest.
American Industry was not destroyed because we are uncompetitive. It wasn't destroyed by Union wages and benefits. It wasn't destroyed by the invisible hand. American Industry was destroyed by four, successive punches to the groin, which we never recovered from, because we never knew where the punches came from and as such, we adopted the wrong policies as a result.
The FIRST PUNCH came from the oil crisis of the 1970s. As oil prices went up, the price to produce manufactured goods in the US went up as well.
The SECOND PUNCH came from Monetarism. As Ronald Reagan applied Monetarist policies in the early and mid 1980s to get us out of stagflation, they reduced the number of dollars circulating in the market. This strengthened the dollar domestically, but also made it more expensive to produce goods domestically. As a result, we were at a competitive disadvantage. Together, oil prices and a stronger dollar made it almost 2- 3 times more expensive for Americans to make a single car, than it was for our counterparts abroad, even if they were in mature, high-labor cost markets.
The THIRD PUNCH was Cold War trade policy: to maintain strong relations with Cold War Allies, Germany, South Korea and Japan, and later China, we granted them favored access to our domestic markets, reduced traditional tariffs on their goods, even if it harmed our domestic market. We also didn't rule against them in the Supreme Court, if suits were brought, because national security considerations demanded a blind eye to unfair trade practices. We sold it to the public as the "gospel of free trade," but anybody who reads Supreme Court cases and studies foreign policy history knows about these legal precedents and the role national security concerns played in our foreign trade policy in the 1980s.
The FOURTH PUNCH was the rise of State-Subsidized/Co-Ordinated and Regulated German and Japanese industry. Because competition was more intense, there was less room for mistake: German and Japanese industry was newer, management techniques better and they were intimately cooperating with their national governments, to improve domestic employment and international trade/export goals, necessary for their national recoveries after World War Two. American Business often disdains state intervention in economics, yet it was exactly such state-balanced industries that cleaned our economic clocks in industrial production.
America's disastrous financial, trade and foreign policies allowed us to win the Cold War, but drained us of the needed economic resources necessary for us to secure a place in the sun in the peace that followed. Even Russia is on the upswing, with invigorated oil, energy and natural resource industries. We are on the slow slide downwards.
We must ignore the economic morons who say we are a "POST-INDUSTRIAL ECONOMY." Such a phrase implies that our current lack of strong industry is a good thing, that it is a necessary, good and inevitable trait of a progressing and upwardly evolving economy. Don't kid yourself. Go to Allentown and Bethlehem, Pennsylvania. This is what the whole country will look like in 20 years if we don't get our act together.
Industry is more sustainable, provides better-paying jobs and is more beneficial for the middle class than any other type of economic structure. Finance is not. The so-called "service sector" is not. These are useless crap-shoots. We must re-industrialize and gain our proper place in the sun.