A New Birth of Freedom


Somewhere on the way to the sea, South Carolina, United States of America
December 31
Major General
Military Division of the Mississippi (Army of the Ohio, Army of the Cumberland, Army of the Tennessee)
I root out and destroy secession, wherever it is found.


MARCH 20, 2010 5:41PM

Re-Industrializing America

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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.

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you forgot one. The absolute "why change now?" conservative mindset that is a leftover of The Industrial Age.

We don't need an "Industrial Age" anymore. We need a technological age, as they are doing in many parts of Europe and Japan.

We need technology, computers, science, digital fiber cable, not vacuum tubes. We need automatic steering, we need automatic windows and door locks, not manual mechanical door and window locks.

We need to get rid of the idea that only a human hand can do something well, especially when the human hand builds something that is doing the work.

We need more people to worry about CUSTOMER SERVICE and being polite and kind to customers, and stop trying to sell us on old, outdated crap that no one wants, and won't even work in 5, 10, 20 years.

WE NEED ADVANCEMENT, not just "industry", remember it was The Industrial Revolution that did a hell of a lot of doom to the environment, We can't depend on old, dirty ways of doing things anymore, We need new, better ways

And if we do THAT, then the other issues you list seem to take care of themselves.
Heavy Industry is still key, even if it is technologically advanced. Japanese and German Industry keeps those countries rich and with higher employment. Making things is key. And to make things, you must manufacture them, regardless of their level of technological sophistication. Computers are manufactured, as are fiber-optic cables, as are microchips. Ships are still manufactured, cars, airplanes, as are most consumer goods. Don't kid yourself: service sector jobs wont salvage the national economy. If no net-profits are being produced from "productive enterprises," i.e., manufacturing, nobody will be making the wages necessary to utilize said "services." Service-based jobs require a major productive industry. Look at Detroit. It had an enormous service-sector. When industry left, so did the service jobs. You can't make money servicing the impoverished and destitute.
And of course, we can't throw the baby out with the bathwater. Sure, 19th through mid 20th century agricultural and industrial practices damaged the environment, but that doesn't mean that agriculture and industry are inherent vices. As Cicero once said, "Abu abusum at usum sint non valet consequentia." You can't judge the value of a thing by its mis-use.

Germany and Japan are highly industrialized, even today. Their industry is also highly environmentally conscious. The Germans are at the forefront of the Green Movement, yet they have some of the best industry on earth. Germany and Japan are not "Service Economies." China is also not a "Service Economy" and this is why they are on the ascent. However, China is industrializing without regard to the environment, and this is bad.
Well then there needs to be a vocabulary change, because to me, industry means natural resources refining, and general destruction of the Earth. If you want true technology, okay, because there is enough silicon and the other elements (for now) to produce the technological advancement we need for computers, cell phones, hybrid cars. But those hybrid cars aren't going to be running on gasoline or coal or natural gas within 20-50 years, so the cities that depended on those industries are bound to fail, unless they learn how to bring people from other sectors to their city, and it takes PEOPLE, psychologists, sociologists, advertising execs to figure out how to bring the product to a city.

It's just a different starting point, really. You want to figure out the product to sell, I believe that a good honest marketing campaign can sell darn near anything to anyone, anywhere.

And that isn't always a bad quality, as some people make it out to be. 30 years ago, NOBODY, not even Steve Jobs believed that as many people would want computers as how many currently own one.

As much as I'd like to see the Ohio-Pa corridor between Cleveland and Pittsburgh to become the next Silicon valley, I just don't see it, because I don't see anyone wanting to market this area strongly enough to make it into the next Silicon valley tech Mecca
You are still wrong. Silicon valley made lots of money, due to the tech-boom, but this was unsustainable. R&D are crucial, yes, but manufacturing, GREEN MANUFACTURING is still crucial. For every scientist inventing a faster microchip, hundreds of thousands are employed manufacturing the computers. Yes, robots do lots of work, and yes, its not as labor intensive as it once was, but it employs hundreds of thousands of people all over the world. The auto industry, the shipping industry, manufacturing is still the single most productive and employment heavy business enterprise on earth. China is not rising b/c of R&D. They are rising because of manufacturing.
it's really much simpler than that. If you were a potential business owner, where would you set up shop, sunny warm california, or frigid lake-effect-snow affected Ohio/Pa?

And how, as a marketer of this area, do you convince the business owner to give up Ca for Ohio?

No matter what the poduct is, or how it's produced, WHERE it is produced is just as important, because people are all naturally going to gravitate to the same areas.

It's no coincidence that the tech/computer industry sprouted up close to the Hollywood media industry in California, because their relationship is symbiotic. In a few years, when we get ethanol production under control, you'll probably see a mass exodus to Iowa for the corn.

What does Ohio and Pa have to offer now without the coal and steel plants?
My argument concerns the necessity and benefits of manufacturing in the new global economy, and you addressed this in your first post. Now you are arguing a different issue altogether. You started out by debating manufacturing, but now you are attempting to change the subject and discuss geography and sunshine.

BMW, Mercedes, Honda, Toyota, Boeing, Lockheed, Krupp, Mitsubishi and Hyundai are not in a sunbelt, yet they produce more money than the IT industry of Silicon Valley does. How is this? Clearly, sunshine is not necessary for business. The Coast of China, where the majority of global manufacturing now takes place, is also not filled with sunshine, nor do they have access to mass-media, as you mention.

I think we are actually passing like two ships in the night. We are not discussing the same issue.
I will concede, though, that there is a convergence of heavy/light industry and high technology. That, too, creates jobs. This is good. But these jobs should be in America, rather than overseas. Tariffs can help us bring jobs back to America.
I find the suggestion that the fix was in on Court's decisions offensive and w.o any evidence to support the imsinuations, stunningly offensive. As to economic strategy, it's nowhere near my fields so I cannot comment on what is said here by the both of you.
I will get you the cases. It wasn't "fixed," but the Court said in some trade cases that although trade law was violated, the policy can continue, b/c treaties with foreign nations over-ride national statute. Any attorney knows this is true.
Its even more offensive for somebody to think that the sacred, hallowed Supreme Court is somehow incapable of the same political nonsense that the other 2 branches of government are. As if judges are really, truly a-political. BS. Look at those judges in PA who sent kids to privatized Juveneille Delinquent facilities, just to get money. Look at how unethical the Court was in its Dredd Scott Decision. Look at the Lochner Decision. Look at how it got Bush in the White House. Don't for a second think, as many establishment liberals do, that the "legal system" is a sacred alter of unbiased ethical behavior, even at its highest level.

That being said, the SC decision I mention above was clearly legal. TREATIES TRUMP STATUTE. They always have. They come right under the Constitution in any CONFLICT OF LAWS situation.
Indeed, even the US Civil Rights Act cannot trump a treaty, and if a Treaty Nation violates US Civil Rights law, they are allowed to, if they have certain treaty provisions. I also learned this at law school.

I'm simply pointing out that, when you are starting a new business, whether in manufacturing, or any other sector of the economy, there are numerous issues that need to be addressed, and that one issue does affect another.

You talk about the economy, and yet you seem fine with California getting all the potential new manufacturing jobs, when it is Ohio and Pa and the midwest in general who need the money faster. California has Hollywood...What New Manufacturing jobs are viable in this area (Ohio/Pa) that are willing to come to this area when all things are considered? It's NOT just a matter of saying "I'm going to corner the market in X industry", there are a million steps that need to be considered and evaluated, location being one of them, product being another. How do you plan to get "Product X" from Ohio to California? Light rail? Truck? If light rail, can they be built on traditional rail lines or do new lines need to be built?

You need to think in real, practical terms if you're going to talk about these things
Placebo--you're absolutely right. All those things must, indeed, be considered. That being said, I never said industry should be built in Ohio or PA. Hell, if the industries all want to go to CA, b/c it is better for them, then so be it.
Thanks for making me a favorite. I hope I can continue to deserve the honor.
Your post is excellent! To put it simply, we gotta make something or we'll never get off our butts. And that's all I have to say about that!
Just pulled up my laptop based notes from law school. The Supreme Court Case is: MATSUSHITA ELECTRIC INDUSTRIAL CO. v. ZENITH RADIO CORP. 106 S.Ct. 1348.
PLEASE WRITE MORE!!!!!!!!!!!!!!!!!!
Thank you for qualifying. The initial impression left was that the outcomes of the Court cases were somehow pre-determined, fixed. The qualification and explanation are helpful.
The problem is that US economic policy is made in an erratic, ad-hoc manner, without regard to the various aspects of the economy. Military strategy and hawkish Cold War enthusiasts wrote into Treaties, economic deals and "special treatment" that, although helpful to the Japanese and Germans as they re-industrialized in the 1950s, would hurt the US in the 1970s and 1980s. When addressing economic issues, from a legal perspective, there are countless other documents, treaties and statutes dealing with trade, that aren't even mentioned in "trade statutes" or "trade treaties," per se, but included in extraneous, disparate statutes that, on first glance, have nothing to do with trade, such as National Security Treaties. We need to consolidate these laws, analyze them in full and, if need be, rescind those aspects that are no-longer helpful to our national economic well-being.