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Sunday, January 22, 2012

For America, it's 'Make Stuff or Die'

I'm not really a fan of Apple, but I do understand why their products are manufactured and assembled in China. We, as a nation, have allowed religion to trump science in our nation's schools. God has become more important than advancing the human condition. As long as we allow that to continue, we will always ride backseat to China. 

Going back to the mid-80s, I've watched the US become a services-based economy. Services feed the need for domestic consumers, but largely aren't exportable - diners from Beijing, Tokyo, and Munich aren't coming to Wichita or Macon or Sioux Falls to eat dinner. They're not coming from Sao Paolo to get a tan in Ithaca. We don't export enough services to bring in foreign dollars.

Maybe the problem is that we're too busy entertaining ourselves, or perhaps distracting ourselves, to focus even momentarily on the issues that are tanking our nation. Even if we manage to pull out of the current economic morass, our economy will remain fragile until we begin to build and export. A nation's economy depends not on domestic consumption of goods and services but rather on how much money it can earn from other nations.

Take this analogy:  Suppose you have 4 teams of 3 people each. Each person has $10, so each team has $30 available to it. Let's say that Team A's people, Members 1, 2, and 3, each have to eat, but Team A doesn't produce food, it provides services, but only to one another, not to other teams. So they have to go to Team B, which produces food, and buy their groceries. Assume that those groceries cost 1/3 of Team A's funds, so it ran them $10. Now Team A only has $20 while Team B now has $40. Now imagine that Team A is the United States and Team B is China. See where this is headed? 

Pretty soon, the Team (nation) that has the most PRODUCTS that other Teams (nations) need has the most money. (Yes, you can export some services, but it's much easier for another nation to step in and underbid you, taking your clients). Remember who we've been borrowing money from? China. Which makes things. We provides services, they provide THINGS. 

We need to rebuild our heavy manufacturing base; ships, planes, heavy mining and earth moving equipment, trucks, cars...THINGS! Some economists have been warning us since the early-80s that what has happened would happen. Obviously they were right. And we're still not doing anything about it. In fact, we're digging a deeper hole by propping up the house of cards that collapsed, the financial sector, causing the Great Recession. 

Our great hope just might be green technology, but if we're going to export better, more efficient, cheaper products than other nations, we MUST get the ball rolling. We MUST focus on manufacturing exportable, durable goods. We MUST!

Failing that, the future doesn't look so bright.