Posts for December, 2011
To paraphrase lines from a 50's Kingston Trio/Pete Seeger folk song: "Where have all the jobs gone? Gone to China every one. When will they ever learn; when will they e-ver learn?" There is a jobs crisis in this country, which comes as news only to those living under a rock. The current 8.6% official jobless rate is only the tip of the iceberg. Not counted are the many thousands who have given up searching for a job as well as those who have taken underpaying jobs just to have something coming in--the so-called underemployed.
There is a third category seldom mentioned: those who have accepted unemployment as a preferred lifestyle. They have decided that living on unemployment, which threatens perpetuity in this re-election driven political climate, is an acceptable lifestyle, having made the necessary adjustments. These folks, along with those who have given up the job search, threaten to create an underclass of the permanently unemployed. This is a substantial danger, as these folks contribute nothing to the economy while living off of it.
So, there is a problem, I submit a good deal larger and more dangerous than many think. In the current difficult economic climate, which shows little inclination to return to the happy-go-lucky days of yesteryear, we can ill afford a constant and increasing drain on our already strained economy. The world situation offers little hope as Europe is, if anything, in deeper doo-doo than we are.
To the real problem. For decades, the United States has been exporting jobs overseas, mainly to the Pacific Rim. The prospect of much lower labor rates and an increasingly competent workforce has enticed--yes--greedy corporations to export most of our manufacturing across the Pacific. An additional small amount goes to the African Third World and places like the Philippines and Indonesia.
Manufacturing in this country is a hollow shadow of what it once was. I don't think there is a single piece of consumer electronic equipment built in this country. The last U.S. television set manufacturer was Zenith, and they're long gone. Much of our automotive production is out-country in Mexico and Canada, thanks to that unmitigated economic disaster called NAFTA. The simple reason, of course, is the undeniable fact that we cannot compete in labor costs.
There is no way to compensate for a wage differential of $2 an hour (or less) versus $20. So long as U.S. manufacturers are expected to compete with foreign goods manufactured at one-tenth the labor cost, they will lose every time regardless of our superior technology and innovation. With the effective elimination of trade barriers due to the World Trade Organization (WTO), headquartered in Geneva, Switzerland, we are forced to compete on an impossibly tilted playing field, and we are failing.
There is only one solution to the American jobs problem, and that is to rebuild a manufacturing base around our huge reservoir of skills and technology. I'm talking about tariffs based on differential wage rates. If China manufactures with an average wage rate of $2 and hour, we erect a tariff barrier to Chinese goods the equivalent of $18 an hour, or whatever figure is realistic for the industry in question. The result of this policy would be dramatic in the extreme.
First, a U.S. manufacturing base would arise with unbelievable speed. We certainly can build HDTV sets as well and as good--if not better--quality as the Japanese (mostly built in China) and Koreans. The same is true in every other manufacturing industry decimated by unfair foreign competition, from clothing to microwave ovens. The tariff concept is inherent in the economic system created in the early days of our history. Tariffs were a legitimate mechanism for levelling the playing field against foreign competition, a problem that was recognized by our Founders.
Would there be repercussions? For certain. China's economy would plummet and the WTO would threaten an all-out trade war. Fine. Let's see who would win that one. Frankly, they need us more than we need them. Any loss in foreign sales would be more than made up domestically. Would prices rise? Definitely, but the benefit to our economy would, in my opinion, more than compensate. Anyway, it would be patriotic to swallow the price rise to be able again to buy American goods without a laborious search. Frankly, with our ability to produce with great efficiency, the increase might not be all that great.
Recently, a home builder decided to build a house completely with American-made materials, from the nails to the toilets. To his surprise, the cost increase was very slight and more than made up in better quality--his nail guns jammed less frequently. So, it can be done. We don't need them! There will be other obstacles, but I firmly believe we can overcome them all and return well-paying manufacturing jobs to the U.S.A., where they belong. We can do it better than anyone.
Am I advocating economic isolationism? Yes, indeed.
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