Submitted by Michael Snyder via The Economic Collapse blog,
Why does it seem like almost everything is made in China these days? Yesterday I was looking at some pencils that we had laying around the house and I noticed that they had been manufactured in China. I remarked to my wife that it was such a shame that they don’t make pencils in the United States anymore. At another point during the day, I turned over my television remote and I noticed that it also had “Made In China” engraved on it. With Labor Day just hours in the past, I think that it is quite appropriate to write about our transition from an industrial economy to a paper economy today. Since the year 2000, the United States has lost five million manufacturing jobs even though our population has grown substantially since that time. Manufacturing in America is in a state of stunning decline, our economic infrastructure is being absolutely gutted, and our formerly great manufacturing cities are in an advanced state of decay. We consume far more wealth than we produce, and the only way that we are able to do this is by taking on massive amounts of debt. But is our debt-based paper economy sustainable in the long run?
Back in 1960, 24 percent of all American workers worked in manufacturing. Today, that number has shriveled all the way down to just 8 percent. CNN is calling it “the Great Shift”…
In 1960, about one in four American workers had a job in manufacturing. Today fewer than one in 10 are employed in the sector, according to government data.
Call it the Great Shift. Workers transitioned from the fields to the factories. Now they are moving from factories to service counters and health care centers. The fastest growing jobs in America now are nurses, personal care aides, cooks, waiters, retail salespersons and operations managers.
No wonder the middle class is shrinking so rapidly. There aren’t too many cooks, waiters or retail salespersons that can support a middle class family.
Since the turn of the century, we have lost more than 50,000 manufacturing facilities. Meanwhile, tens of thousands of gleaming new factories have been erected in places like China.
Does anyone else see something wrong with this picture?
At this point, the total number of government employees in the United States exceeds the total number of manufacturing employees by almost 10 million…
Government employees in the United States outnumber manufacturing employees by 9,932,000, according to data released today by the Bureau of Labor Statistics.
Federal, state and local government employed 22,213,000 people in August, while the manufacturing sector employed 12,281,000.
The BLS has published seasonally-adjusted month-by-month employment data for both government and manufacturing going back to 1939. For half a century—from January 1939 through July 1989—manufacturing employment always exceeded government employment in the United States, according to these numbers.
You might be thinking that government jobs are “good jobs”, but the truth is that they don’t produce wealth.
Government employees are really good at pushing paper around and telling other people what to do, but in most instances they don’t actually make anything.
In order to have a sustainable economy, you have got to have people creating and producing things of value. A debt-based paper economy may seem to work for a while, but eventually the whole thing inevitably comes crashing down when faith in the paper is lost.
Right now, the rest of the world is willing to send us massive amounts of stuff that they produce for our paper. So we keep producing more and more paper and we keep going into more and more debt, but at some point the gig will be up.
If we want to be a wealthy nation in the long-term, we have got to produce stuff. That is why the latest news from Caterpillar is so depressing. In addition to the thousands of layoffs that had been previously announced by the industrial machinery giant, it appears that a fresh wave of layoffs has arrived…
Hundreds of mostly office employees received layoff notices at one of the largest Caterpillar Inc. facilities in the Peoria area this week, just as the company announced plans to close overseas production plants and eliminate thousands more positions.
A total of 300 support and management employees at Building AC and the Tech Center in Mossville this week received job loss notifications that included severance packages, 60 days notice and mandated Illinois Worker Adjustment and Retraining Notification Act letters.
During this election season, you will hear many of our politicians talk about how good “free trade” is for the global economy. But that is only true if the trade is balanced. Unfortunately, we have been running a yearly trade deficit of between 400 billion dollars and 600 billion dollars for many years…
When you have got about half a trillion dollars more going out than you have coming in year after year that has severe consequences.
Let me try to break it down very simply.
Imagine that I am the United States and you are China. I take one dollar out of my wallet and I give it to you and then you send me some stuff.
After a while, I want more stuff, so I take another dollar out of my wallet and send it to you in exchange for more products.
But that stuff only lasts for so long, and so pretty soon I find myself taking another dollar out of my wallet and giving it to you for even more stuff.
Ultimately, who is going to end up with all the money?
It isn’t a big mystery as to how China ended up with so much money. And when we can’t pay our bills we have to go and beg them to let us borrow some of the money that we sent to them in the first place. Since we pay interest on that borrowed money, that makes China even richer.
This is why I am so obsessed with these trade issues. They truly are at the very heart of our long-term economic problems.
But most Americans don’t understand these things, and they seem to think that our debt-based paper economy can just keep rolling along indefinitely.
In the end, history will be the judge as to who was right and who was wrong.
The case provided was the U.S.; I need two more of same examples repeated by other countries, else this is just a correlation and does not prove causation.
According to Dr. John Coleman in “One World Order- Socialists Dictatorship” the stripping of manufacturing from the US was intentional (via the Committee of 300) to destroy the middle class. Check!
I agree it was intentional, by both Rep and Dem leadership.
Kokoda is right.
Once again, the facts. Manufacturing gets much more efficient, year after year. The average is around 2 to 2.5 per cent more efficient each year.
There are currently around 13 million manufacturing jobs. The article says that 5 million jobs were lost since 2000, so that means there were 18 million jobs then. Multiplying 18 million by .975 15 times you get …… 12 million. Of course the population has grown since then.
So, factoring in population growth and efficiency, if there were no outsourcing of jobs, I would expect the number of manufacturing jobs to be around 14 million. A loss of 4 million. So, the US has lost around 1 million manufacturing jobs to outsourcing since 2000, and around 4 million to efficiency gains.
Here is another way to prove the point. Say we bring back all the 400 billion dollars of goods he talks about. That would reflect no more than $100 billion in wages, probably more like $50 billion. Using $75 billion divided by $50,000 per person wages, = 1.5 million employees.
So, my statement above checks out roughly correc.
If we bring back all the excess imports, we would only create 1.5 million jobs, yet we lost 5 million.
Do you guys get it yet? The major portion of job losses have to do with ever increasing efficiency. And that will not change.
Manufacturing will continue to shed around 2.5% time 13 million = 300,000 jobs per year, year after year after year. I expect final manufacturing numbers to settle around say 5 to 7 million jobs, plus or minus. So over the next twenty years or so, manufacturing will shed a further 6 to 8 million jobs.
Nothing – absolutely nothing – will stop that.
Manufacturing is a mature business. It is the equivalent to the buggy whip industry of old.
Snyder is like almost every one else – he has no clue of the underlying issue. He just sees cheap consumer goods made in China.
For chuckles, go take a look at what the US EXPORTS. Those are high tech goods you do not see on your retail shelves.
If you get in a trade war, you really want to lose high tech goods, and bring back pencils and sneakers? Really?
The issue is manufacturing jobs are in terminal decline, via automation, and nothing will stop that. That is what needs to be realised and addressed. Those 5 million jobs were lost mostly to automation. They are never coming back.
I remember back in the late 70’s all of the manufacturing plants in my little city were automating. These men were getting $20.00+ per hour. I worked for my father in law as a painter and worked in damn near every plant.
I noticed when a worker retired these plants did not rehire, money was spent on efficiency and automation.
Today any shop jobs left pay $15-18 per hour, 35 years later and wages have gone backwards, the future of manufacturing is bleak indeed.
Card – the late 70s was the last hurrah. Before then, the US had almost no competition. And remember how good quality was then? It was horrible – no competition meant shitty goods. Remember how bad cars were then? Then came the Japs.
In any event, the days of manufacturing as a major employer are over. Used to be 1/2 of all workers were in agriculture, and now there are hardly any. Same goes for manufacturing. It is mature, and that is that.
llpoh, you need to write a big article using little words. Even then, I doubt most will get it.
Greetings,
I have very mixed feeling about this. See, I grew up in the Rust Belt and I was in High School right around the time things got really bad. I lived in one of the little towns that existed around a few factories. Our little town of 18,000 had a General Motors Foundry (where my father worked) and a Johns-Mansville (world leader in asbestos products).
During my Sophomore year, Johns-Mansville filed for bankruptcy due to the liability claims from asbestos. There was no fantasy reality where those guys could have even paid on 1% of the claims that people were demanding.
About that time as well, the automotive factories around us began to go to Mexico. In some smaller towns, the loss of their factory was an event that destroyed the town. It was like waiting for some random hammer to just drop from the sky. I’ve seen with my own eyes what real depression era unemployment actually looks like and it is downright fantastic.
Am I sad the factories are gone? No
No, because the pollution was damn near unbearable at times. On one side of town they were making asbestos. On the other side they were running a foundry. Sometimes a stench would envelope us if the wind was just right and it would cover everything in soot. Finally, we were entirely surrounded by farms with the farmers just pouring who knows what all over the ground and themselves. That they do this stuff somewhere else is fine by me.
In the end, the workers needed to be torn free of the unions. The workers were acting like entitled princesses and producing a shitty product was never cause for termination as anyone that lived in that time knows. It was time for it to go and I have capitalism to thank for it.
It wasn’t fun living through it. The anger, despair and violence that came with being forced into a 2nd world status still haunts me. All things come to an end and that time I got to be in the audience.
In this conversation someone invariably brings up Grmany. Hey! German manufacturing is doing great!
There once was a gardener. His business was collapsing – no one needed ther lawns mowed as they all had cheap, efficient mowers and could do itself,
The gardener had an idea! Those folks in the Thirty a Blocks of Squalor do not have mowers! I will lend them the money to get their lawns mowed – by me – and my business will boom!
And so he did. He loaned the people $10, who then paid him the $10, to mow their lawns! Eureka! Lawn mowing is booming again.
But – oops – those folks in the a Thirty Blocks of Squalor are not paying back their loans! Oh, no!
The gardener is Getmany. The Thirty Blocks folks are Greece, Hungary, etc.
Germany is screwed. It paid itself to mfg. it will not be repaid.
No other country will out produce the US when it comes to …..dollars! America is the world’s leading producer of Dollars. The US produces more dollars from thin air than the rest of the world combined!
America unselfishly giving the world its manufacturing jobs so that the people of the world have meaningful work!
I always tell everyone, “why work when you can print all the money you need”.
We give them paper, they give us stuff… It is a great deal. It reminds me of them movie Big. Josh got the job at the toy company and his kid friend is visiting him. Josh explains that he gets paid for playing with the toys and then gives his opinion of them…. ..then is friend says “..suckers”…. It is the same thing US says to the rest of the world, then they give the US stuff for paper… suckers…
Actually, it’s a bit different then that. Other countries take US paper or they get bombed, in the name of freedom and democracy of course.
I became an adult in the early 70’s, and I can testify that the cars made then were all pieces of crap. One big concern at the time was acid rain from industrial smokestacks, which fell on our crummy cars and etched spots on them, and I’m sure it didn’t do wonders for our health. The big river near me is the Naugatuck River, and it was so polluted back then the rocks in it were green and blue and yellow…..I am not kidding. Today you can fish in it and many people do, although I wouldn’t even think about eating anything from that former toxic waste dump.
So, there’s good and bad in everything. The low wage jobs with no healthcare or pension sucks moose dick, but at least when we working class slobs are finally forced to live under a bridge or in the woods because monthly rent costs three weeks salary, the environment we will starve in is a lot cleaner.