4/11/2012 8:09 PM ET|
The return of 'Made in America'
For all our problems, the stage is set for a renaissance of US manufacturing. That's largely because our dollars are worth less and our pay is shrinking.
Clearly, something's still wrong with the economy. By the metrics that matter to most people, the Great Recession has not ended. Employment, retail sales, industrial production, home prices, most of the stock market and real incomes are all below their 2007 peaks. Food stamp usage is at a record high and rising.
But something's going right, too. And I want to focus on that this week.
American competitiveness is back, albeit largely because of the pain we've endured. Our dollars are worth less, and real wages are lower. Corporations are responding, with new factories springing up and manufacturing jobs blooming like flowers welcoming the spring. Overall, the U.S. has added nearly 500,000 manufacturing jobs since the beginning of 2010 -- the first period of significant growth since the late 1990s.
Meanwhile, the costs of producing goods overseas, and getting them here, are rising. Workers in places like China are demanding more, and oil prices make shipping costlier.
Experts say these trends are likely to continue.
Bank of America Merrill Lynch researcher John Inch wrote in a recent note to clients that the "U.S. economy is in the early stages of a long-term manufacturing renaissance." Analysts at the Boston Consulting Group add that rising wages and other forces have steadily eroded China's "once-overwhelming cost advantage as an export platform for North America."
Thanks to higher U.S. worker productivity, as well as supply chain, cheap energy (natural gas) and logistical advantages, the BCG team says that by around 2015 "it may start to be more economical to manufacture many goods in the U.S."
In short, we could be on the cusp of revival of "Made in America," with workers paid good wages for building things again. And for the millions in the army of the unemployed, it can't come soon enough.
Silver lining to storm clouds?
Don't get me wrong. Our problems still run deep, and I'm not saying happy days are here again; I'm merely pointing out one of the few silver linings to be found.
We've long been too reliant on credit to supplement stagnant wages -- and that's left the West with an $8 trillion debt hole, according to Credit Suisse calculations. This fueled two bubbles and a financial crisis, and it resulted in the pitiful "recovery" we're in now.
And so far, if the economy is reviving, most workers aren't sharing in it. Real, inflation-adjusted wages have fallen in three of the past four months. This has never happened outside recession before. So it's very possible we're following Europe into the depths of a new downturn.
Last September, I argued that "the real recession never ended" and that, in reality, it started a decade or more ago as labor participation peaked in the late 1990s. We've been sliding lower ever since, trying to compensate for a lack of high-quality jobs and stagnant pay, with voodoo stimulus efforts out of Washington and an extreme, inflation-igniting easy-money policy from the Federal Reserve.
The core problem has been a hollowing-out of America's manufacturing base because of increased globalization, the manipulative trade policies of China and others, and rapid technological change.
Washington, of course, hasn't done anything about trade or jobs (except talk, of course). But the U.S. economy may find a way out of the hole anyway.
The depth of the problem
Before moving on, it's worth remembering that something similar has happened before.
In many respects, the current situation resembles the Gilded Age of the late 1800s and the Long Depression, a global downturn that lasted from the 1870s through the 1890s. Replace the robber barons with hedge-fund managers and multinational CEOs, and the agitation over the Free Silver Movement with the Tea Party and the debate over the Federal Reserve's stimulus efforts, and the similarities are striking.
The downturn was preceded by a period of global economic integration as steam power, the telegraph and railroads made the world smaller. Workers lost jobs to technology and foreign competition. The banking system was rocked by the panics of 1873, 1884 and 1893, driven by real-estate bubbles and stock speculation.
Our current role was played by the United Kingdom, an aging sovereign struggling to maintain its role as the world's superpower. The role of the upstart United States is now played by vigorous up-and-comers like China and India. Check out this excerpt from A.E. Musson's "The Great Depression in Britain, 1873-1896: A Reappraisal":
"Britain was losing her technological lead; she was failing to modernize her plant, to develop new processes, or to modify her industrial structure with the same rapidity as Germany and the United States -- owing to conservatism, the heavy cost of replacing old plant, and deficiencies in technical education."
In other words, the British got lazy, making them vulnerable. We have the same problem now, and I outlined in "Are American workers getting lazy?"
VIDEO ON MSN MONEY
Always buy Made In USA products - pay 20% more for the quality .
Stay away from those made in china inferior Junk !!!
We need to learn from Germany, pay people fairly and make a superior
product, (BEER, Guns, cars etc). I believe they are 4th in exporting, which is amazing
for such a small country.
The American people have been duped into sending
our good manufacturing jobs overseas and then being forced to buy crappy Chinese
and Mexican made products. Only 3rd world countries have no manufacturing base.
Has nothing to do with OWEBAMA or Im with stupid Bush Jr.
bought some jeans made in TN a couple of weeks ago. my work boots are from Wisconsin, some of my shirts are USA made. boot socks are made here. I had to pay more for some or them but I feel better when I wear American made clothes. I hope your hundai breaks down on the way to the unemployment office.
God bless America
If we as Americans keep pressure on our elected minions, eventually we will prevail.
Made in America, what a beautiful sound. I can't wait to see it and I think it will happen.
Made in america sounds great, now for all of you trolls out there this great country is being built by nationals and foreigners alike. do not blame reps or dems ,religion , creed or race back ground if you want to make this great nation grow , pick up a shovel and put somemuscle into it . america is the steam locomotive pulling the planet .contribute just like dad and gramps . do not sit on your arce behind a desk and whine . sit and rot or work and grow.
YOu, SHould all shut your fat gobs and buy something made in usa,
90% of chinese products are junk, its up to the people, the politicians
wont change this.
Websites such as Madeinusaforever and alllusaclothing are good places
to buy American made Products.
I bought a pair of Lee mexican made Jeans and
they were total garbage, ripped after a few months. Lee sent me two more pairs
and each ripped in the exact same spot. The retail price is 40$ on thes POS jeans!
I found US made Jeans on All usa clothing for 40$, the quality is amazing.
America mades great clothing, always did. Chinese and most Mexican made
products are junk.
You bet they will, it is all about money. Long gone are the days of WW2 and the large economic boom after the war. Now we have soldiers coming home and finding the world has gone to hell and they have nothing here. We have CEOs pulling in hundreds of millions as salary and the basic worker can't get more than 10 an hour. We have the FED thinking that throwing OUR money at industry will fix things instead of giving it back to us so we may spend it.
I have a solution to the whole problem but, just like the FED everyone wants to argue the politics of the plan.
It will continue to be a poor economy until people pull their heads out.
"made in America" fine by me as long as the quality is equal to or better than the imports.
I hear people saying, "Just don't buy the stuff from other nations." I agree with that in principle, but for most products it's not economically prudent, and in some cases impossible, because the US has completely surrendered some markets to others, for example electronics have been gone since the 80's. This has been a thirty year process of poor trade agreements, devaluing US currency by overleveraged securities trading, and corporate greed--outsourcing. All of this has eroded the middle class to the extent that we have very few choices as consumers.
Stagnant wages and outsourced labor have eliminated disposable incomes from households. Shoppers must buy the China products, because that is all they afford. We are also forced to compete with each other for these low paying jobs. It's like all of the crabs in the crab barrel, climbing onto of each other to get to the top in order not to drown. The rich have us so busy and worried that we are turning upon one another--poor against poor; meanwhile, they are deflecting the blame and raking in the cash. I cannot stand it when someone says, "You should just be happy you have a job." Is that what the majority of this nation is reduced to?
I just opened up a store in Naples, FL and will only sale products MADE in USA. We even manufacture some of our own products! And guess what? The prices are really reasonable. And, I have to say, the products are very high quality, unlike some products imported from China. Chef Connoisseur.
The only power you have as a consumer, is to stop buying the Chinese made stuff..where possible.
A shovel, fishing lures, auto parts, housewares, etc etc, all have options. Even at a considerable price premium, products made elseware than China typically last much longer. You can buy to own, not buy to use for a few months and toss it to the landfill.
Start looking at the labels and decide for yourself where you want the country to go.
Government sure isn't going to do anything, and a nation that makes nothing is nothing.
We can't expect to sit on our laurels and just consume foreign goods without the economic consequences to come.
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