Make Refrigerators! Not Burgers!

My first belief as relates to economics is that a nation’s wealth is determined by how many refrigerators it makes rather than how many hamburgers it flips. So what’s the problem? We don’t make that many refrigerators anymore.

Here are the facts. Approximately 10% of the American workforce works in manufacturing jobs. Currently, 12 million Americans work in some manufacturing capacity. That is down from 20 million in 1980. The last time the manufacturing work force equaled 12 million was in 1940, when the population of the country was less than half of what it is today.

That doesn’t mean our manufacturing base is declining. Total manufacturing about continues to grow as a result of technological advancement and rapidly increasing worker productivity. The total value of manufactured goods in the United States equals the total GDP of Russia. The total amount of manufactured exported goods from the United States equals the total GDP of India. These are incredible figures. Nonetheless, the number of Americans working in manufacturing as a percentage of the total workforce has been in steady decline, with no end in sight.

What does that mean? Well, it means that we have turned into a service and consumption economy…and you can’t eat service and consumption. It means that more and more Americans are working at lower paying jobs. It means that our income is stagnant or declining. It means that we aren’t creating tangible wealth…only paper wealth. Created tangible wealth means you make something, and you sell it. Paper wealth is fleeting, witness these past 10 months.

The decline in American manufacturing is disturbing. It has been ignored equally by Democrats and Republicans. The Democrats, in the guise of unions and environmental extremism, have done a good job of sacrificing American manufacturing jobs on the altar of the new religion worshipping Mother Earth. Republicans, in the guise of free trade agreements and tepid currency policy particularly with China, have equally decimated the manufacturing base. Who stinketh the most?

America’s wealth as we know it is rooted in World War II when we were the only intact manufacturing country in the world. We reaped the benefits for more than 30 years. Now world demographics have caught up with us. Those unionized jobs paying wage and benefit packages of $50.00/hour plus are now competing the worker in China making $2.00/hour; and one India making even less. Guess who is going to win?

Here are three common sense things our government could do to at least stabilize the manufacturing base.

1) Bring common sense to environmental issues. Put ideology aside and be realistic rather than dogmatic in dealing with some of these issues. Humans, and human needs, need to come first.

2) Implement fair trade agreements rather than free trade agreements. I am not anti-NAFTA because all of us in North America are on the same ship, so to speak. On the other hand, China building its manufacturing prowess on the back of the United States consumer rather than the Chinese consumer is intolerable. It should be the policy of the United States to promote the growth of the Chinese and Indians through domestic consumption rather than exports to the United States. And by the way!!! China!!! LET YOUR CURRENCY FLOAT!!!!

3) The United States should have a sane energy policy based on both petroleum products and alternative energy sources, rather than the either or approach of the Obama and Bush administrations. It can’t be either or, it has to be all inclusive. Global warming needs to be identified for the scam that it is. And the oil dudes have to realize that sooner or later, the oil will run out, and we should start planning for it now. Notwithstanding, it is just plain good for not only domestic policy, but foreign policy.

But don’t bet the rent that any of the above will happen. Ideologies are hard to crack. I’m mad as hell….are you?