Manufacturing and the Economic Crisis
Now Playing: It's the factory; not the house
    Our current economic crisis may have been precipitated by the end of the housing bubble but its fundamental cause is the off-shoring of one manufacturing industry after another.  This has been developing since 1979 but has accelerated in the last 10 years.  During the last decade many of these jobs were replaced by construction and finance positions but this demand was fueled by the financial manipulations of Wall Street.  Even if home buyers could afford new houses, many of those who had purchased their old one may have required “creative” financing to complete the purchase.  In addition, artificial increases to real estate values increased local government/public education tax revenues and second mortgages fueled consumer spending.  Commercial real estate development also contributed.
      Meanwhile, the shutdown and offshore migration of American industry continued unabated.  High and low tech plants closed in both urban and rural areas.  Whereas Carnegie, Rockefeller, and Ford made their fortunes creating large productive industries, many of today’s million/billionaires found financial riches in taking over industries with well-paid American workforces, shutting down the American factories, replacing them with offshore production, and pocketing the difference in wages and benefits.  Financial manipulations with no substantive economic basis created many fortunes as well.  While the abandoned industrial plants are very obvious in urban areas, deindustrialization has been particularly destructive in rural areas because factories were often a significant economic base for these communities.
    We cannot go back to the economy as it existed just before the 2008 economic collapse.  It had been sustained primarily by credit.  Rather, we must find some way to rebuild manufacturing to the extent necessary to gainfully employ all Americans.  We may be unable to manufacture ipads and cell phones at competitive prices but there are many industries that could be rebuilt by using the same policies used in Asia to take them from us.  At lower technical levels, there is no reason why Pennsylvania hardwood shipped to Asia cannot be used in restoring furniture manufacturing here.  The energy tax credits for wind and solar power could be restricted to products that have mostly American content.  Whenever we identify a threatened industry or company, we can provide whatever assistance needed to maintain it in its current location.  If a manufacturing plant has survived the 30-year onslaught from foreign imports, it must have resources that would render it competitive in our markets.  When we preserve consumer goods production, we also support suppliers of the manufacturing equipment that it requires.  By throughly studying the manufacturing economy, we can surely recreate enough employment that will not only restore jobs but also check our economic decline.
    Long term we may work with South Korea, Japan, and Singapore because they have significant technological and engineering assets without a large population base that must be employed in industrial production.  If they can be encouraged to preserve American markets by moving some portion of industrial production here, then employment will also be enhanced.