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Jan 02 2011

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Deindustrialization of America is a National Crisis?

I recently received a forwarded email bemoaning the “deindustrialization of America is a national crisis.” I usually do not give much thought to forwarded emails, but since this one was full of red herrings and questionable facts / statistics and questionable use of the same, I thought I would reply since the email pushed some of my conspiracy-despising buttons. The content of the email can mostly be found here. Or, simply Google “19 Facts About The Deindustrialization Of America” and you’ll see the blogosphere is littered with copy-and-paste posts referring to this list.

As the great art rock singer and lyricist David Byrne of the Talking Heads sang three decades ago in “Crosseyed & Painless:”

Facts are simple and facts are straight
Facts are lazy and facts are late
Facts all come with points of view
Facts don’t do what I want them to
Facts just twist the truth around
Facts are living turned inside out
Facts are getting the best of them

Please allow me to “twist the truth around” some more. My response follows (snippets of original email in bold).


Claiming “deindustrialization” as a “national crisis” and thus impying “reindustrialization” as a solution to unemployment, poverty, etc. is a red herring.  The United States is still the world’s largest manufacturer with more manufacturing output than China, India, and Brazil combined, while the U.S. has just 11% the population of those three countries.
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Sent: Sun, January 2, 2011 5:48:06 PM
Subject: Bottom of Hole–Stop Digging

This is a lot of food for thought, interesting–some disgusting.
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How many millions more Americans are going to become unemployed before we all admit that we have a very, very serious problem on our hands?

What’s the “very, very serious problem on our hands?” Unemployment? Poverty? Losing wealth? And “whose” hands are we talking about? The USA need not worry about “losing wealth” when it is still by far the wealthiest country on this planet.  If the problems at stake are unemployment and poverty, then let’s reorient our priorities to educate our children better than every other country on earth so we can increase the US’s share of high-paying “service” jobs like engineers, computer programmers, financial services, professional scientists, medical technicians, doctors, nurses, and so on …  The answer to unemployment is “reindustrialization?” The forces of global capitalism are only going to bring back manufacturing jobs if the wages are low enough.  Is that what “we” want?  Paying minimum wage to people to manufacture T-shirts for Walmart and toys for McDonald’s Happy Meals?

How many more trillions of dollars are going to leave the country before we realize that we are losing wealth at a pace that is killing our economy?

Total red herring. US GDP has remained fairly consistent for 40 years at around 27% of global GDP and retains the highest per capita GDP of the populous countries, some 30% higher than #2 among the populous countries, Germany, and SEVEN TIMES the productivity of China.

How many once great manufacturing cities are going to become rotting war zones like Detroit before we understand that we are committing national economic suicide?

We must first recognize the latent racism in this question since more than 80% of the city of Detroit is black (e.g. Buffalo, NY, has a comparably high total crime rate to Detroit, a similar history of “deindustrialization,” though 80% of Buffalo is white; why not use Buffalo as the example?). Second, we must recognize the fallacy of correlation with causation when talking about cities as “rotting war zones,” i.e. places of higher than average violent crime rates; even the libertarian, free-marketeer Thomas Sowell recognizes this fallacy in his book, Economic Facts and Fallacies. Third, violent crime in Detroit has actually decreased in the last three years during the Great Recession. Fourth, while it’s true that a significant chunk of the manufacturing base of the U.S. has left the country, before the globalization trend picked up there was the redistribution of manufacturing capacity from cities to rural areas and collar counties where corporations got tax incentives, access to more land, and where wages were lower. Why not bemoan the deindustrialization of rural America as leading to the surge of meth labs, pot farms, drug addiction, alcoholism, suicide, and depression?

The deindustrialization of America is a national crisis. It needs to be treated like one.

Got it … though “deindustrialization” is still a red herring crisis.

If you disagree with this article, I have a direct challenge for you.  Can anyone explain how a deindustrialized, mortgaged America has any kind of viable economic future?

Anyone?  Sure. How about history’s most successful allocator of capital?  Warren Buffett: “This country will solve its problems. We’re not so good at avoiding problems but we’re pretty good at solving problems. In the early ’80s we thought Germany and Japan would be eating our lunch and we’d all just be working at McDonald’s and cutting hair to keep busy. We’ve added tens of millions of jobs. We do come up with things you can’t predict; we’ll have a software industry or a great aircraft industry; those things come along. To the world right now 12% of our GDP is going to export and 35 years ago only 5% was. So we’re making make things the world wants. I agree with you, governor [Ed Rendell], you’ve really got–you’ve got to count on the potential of people that you and I don’t even know coming up with new things to do that the world wants. Historically we’ve been very good at that and I think we’ll be good at it in the future.”

America is in deep, deep trouble folks.  It is time to wake up.  Do you have the courage to do something/anything about it?

Yes. Stop whining about massive shifts in global capitalism and do something to make the system work better for everyone. In the end, it’s entirely possible robots will manufacture everything, so then what will we humans do? What happens to the massive energy sector when humans create viable commercial fusion reactors with Helium-3 from the moon, thus displacing countless millions of workers employed in jobs related to the processing of fossil fuels for energy? If we need to “wake up” to realize anything we need to wake up and realize we need to stimulate societal valuation and esteem of “humanitarian” jobs in the arts, social services, education, health care, hospitality, etc.

Who would have thought just twelve years ago that a feisty little start up in a Bay-area garage would today be a $200 billion juggernaut–Google–that does not manufacture anything!  Recently a private equity deal values Facebook at $50 billion.  What does Facebook manufacture? Nothing! Disney is a $73 billion company. What do they manufacture? Answer: essentially nothing but “dreams” and “happiness.”

    Permanent link to this article: http://eunhyeandchris.com/deindustrialization-america-national-crisis/

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