“America seems to be very rich but I never see anyone making anything.”
— Paul Krugman, N.Y. Times Op-ed May 20, 2011
America teeters on the brink of economic disaster — President Barack Obama and the Republican opposition can’t decide whether to put the country in deeper debt now, before the Aug. 2 debt default deadline, or later. But neither seem interested in solving the underlying problem.
The following link is to a multi-media representation of the Black Death sweep of job loss across the U.S.: http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html
What it describes is happening just south of our border — and some 80 per cent of our exports are to the U.S. Their problem is ours.
When you look at the recession job map in the link above, the “healthiest” section of economy is currently experiencing widespread flooding. The agricultural powerhouse of the Midwest, the transportation sector and manufacturing along the Mississippi and Missouri will all be suffering for a long time to come. Floods are expected to last well into August; no early recovery is possible.
My interest in this subject was sparked by listening to a radio show while travelling the U.S. this spring. Apparently U.S. manufacturing now stands at eight per cent of the economy, but according to G20 analysis, a healthy economy requires a manufacturing base of 25 per cent. Some 92 per cent of Americans are now engaged in service industry, knowledge tech and agriculture. But the country hardly makes anything anymore.
So even if the U.S. stumbles through the looming debt crisis, they will still be in the dumper.
We are too close for comfort.
According to the testimony of Richard Baugh of the AFL-CIO on Sept 22, 2010, to the House committee regarding made-in-the-U.S.A. policies, the country has lost some six million manufacturing jobs in the past decade, two million of those in the past two years (2009-2010). Every one job usually accounts for three or five others — a welder needs to be able to buy a truck, a doughnut shop, work clothes, gas, food and a house for his family.
The U.S. is deeply indebted to China. A big export, ironically, is garbage — industrial waste — the original materials mined in the U.S. no doubt. That’s like throwing away good money twice . . . three times if you count the cost of shipping and disposal, four or five times if you count the fact that China will recycle those waste goods and sell them back at a value-added price!
According to Baugh, “Our top 15 exports to China . . . include five categories of waste products (ferrous scrap, paper scrap, copper scrap, aluminum scrap, and offal); two categories of raw materials (soy and polymers), and at least three categories of parts. In contrast, all of China’s top 15 exports to the United States are manufactured products or parts.”
His testimony describes in shocking but simple detail how the U.S. has given up its lead in research and development, development of advanced materials, lost its lead in superalloy production, has outsourced technologies that are then copied and reproduced for much less and sold back to them (and others).
He describes the exponential rise in trade deficit ratios with China. “In 2008, the U.S. goods trade deficit grew to a staggering $821 billion, or $2.2 billion a day. . . . In all manufacturing, China’s share of the U.S. trade deficit rose continually from 28.5 per cent in 2002 to 75.2 per cent in 2009.”
Apparently, the U.S. has no manufacturing policy to speak of and there are complex internal trade/manufacturing issues between states, too. So U.S. companies simply took the freebies that foreign countries offered — free land, wild tax breaks, perks and 24-hour shifts of non-union workers at bargain-basement prices.
According to Andrew Liveris, CEO of Dow Chemicals and author of Make it in America, it’s mostly a function of the U.S. government that doesn’t offer stability.
From an interview on Jan. 25, Liveris says, “well, I not only have high taxes, I have uncertain taxes. Right now, I have more regulations coming at me that are not fact-based, not science-based, not data-based. I actually don’t even know what my costs are going to be in the next five years. And so I’m sitting back waiting for regulatory reform, and the government . . . is now engaged . . . on health care. (We need an) energy policy — we’ve got lots of uncertainty in the energy policy regimen.”
Uncertainty. Debt crisis. It’s killing America. And it’s knocking at our door.
Michelle Stirling-Anosh is a freelance writer living in Ponoka.