FedUpUSA

Archive for September 25th, 2010

The United States is rapidly becoming the very first “post-industrial” nation on the globe.  All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing.  It was America that was at the forefront of the industrial revolution.  It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes.  It was the great American manufacturing base that crushed Germany and Japan in World War II.  But now we are witnessing the deindustrialization of America.  Tens of thousands of factories have left the United States in the past decade alone.  Millions upon millions of manufacturing jobs have been lost in the same time period.  The United States has become a nation that consumes everything in sight and yet produces increasingly little.  Do you know what our biggest export is today?  Waste paper.  Yes, trash is the number one thing that we ship out to the rest of the world as we voraciously blow our money on whatever the rest of the world wants to sell to us.  The United States has become bloated and spoiled and our economy is now  just a shadow of what it once was.  Once upon a time America could literally outproduce the rest of the world combined.  Today that is no longer true, but Americans sure do consume more than anyone else in the world.  If the deindustrialization of America continues at this current pace, what possible kind of a future are we going to be leaving to our children?

Any great nation throughout history has been great at making things.  So if the United States continues to allow its manufacturing base to erode at a staggering pace how in the world can the U.S. continue to consider itself to be a great nation?  We have created the biggest debt bubble in the history of the world in an effort to maintain a very high standard of living, but the current state of affairs is not anywhere close to sustainable.  Every single month America does into more debt and every single month America gets poorer.

So what happens when the debt bubble pops?

The deindustrialization of the United States should be a top concern for every man, woman and child in the country.  But sadly, most Americans do not have any idea what is going on around them.

For people like that, take this article and print it out and hand it to them.  Perhaps what they will read below will shock them badly enough to awaken them from their slumber.    

The following are 19 facts about the deindustrialization of America that will blow your mind….

#1 The United States has lost approximately 42,400 factories since 2001.  About 75 percent of those factories employed over 500 people when they were still in operation.

#2 Dell Inc., one of America’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

#3 Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina in November.  Approximately 900 jobs will be lost.

#4 In 2008, 1.2 billion cellphones were sold worldwide.  So how many of them were manufactured inside the United States?  Zero.

#5 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

#6 As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.

#7 The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.

#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

#9 In 1959, manufacturing represented 28 percent of U.S. economic output.  In 2008, it represented 11.5 percent.

#10 Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota. Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford’s new “global” manufacturing strategy.

#11 As of the end of 2009, less than 12 million Americans worked in manufacturing.  The last time less than 12 million Americans were employed in manufacturing was in 1941.

#12 In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.

#13 The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.

#14 In 2001, the United States ranked fourth in the world in per capita broadband Internet use.  Today it ranks 15th.

#15 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#16 Printed circuit boards are used in tens of thousands of different products.  Asia now produces 84 percent of them worldwide.

#17 The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

#18 One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#19 The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans in the 51 years that records have been kept.

So how many tens of thousands more factories do we need to lose before we do something about it?

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?

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?

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?

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

If you disagree with this article, I have a direct challenge for you.  If anyone can explain how a deindustrialized America has any kind of viable economic future, please do so below in the comments section.

America is in deep, deep trouble folks.  It is time to wake up.

The Economic Collapse

The official announcement that the recession is over underscores the massive disconnect between Wall Street and the rest of America.  Wealth inequality in America is at levels last seen right before the Great Depression ravaged our economy.  Yet the inequality has grown even more intense as this crisis has gone forward.  43 million Americans are now classified as being in poverty.  This trend hasn’t shifted in the last decade, recession or no recession.  The system is absolutely flawed and that is why we have over 16 percent underemployment, 41 million Americans on food stamps, 4 out of 10 workers in low paying service sector jobs, the median household income falling under $50,000, record monthly foreclosure filings, and yet the recession is over according to a small group of economists.  The recession may be over for Wall Street but the rest of America is still struggling.

Wealth inequality has been exacerbated by the casino like behavior of investment banks on Wall Street.  A recent study shows how out of touch with the facts most Americans are when it comes to wealth inequality in their own country.  One fascinating finding is that most Americans, even between those that make $50,000 and $100,000 actually envision optimal wealth distributions that are very similar:

Source:   Norton, Ariely

Let us explain the study.  For this part, the researchers asked over 5,000 Americans their ideal wealth distribution in the U.S.  The participants were also asked what they estimated the wealth distribution of the U.S. looked like.  For the most part, their estimates were significantly off.  Most estimated that the top 20 percent controlled roughly 60 percent of all wealth.  In reality, the top 20 percent control over 83 percent of the pie.  We’ve talked about this when the top 1 percent actually controls over 40 percent of all U.S. wealth.  However, when asked for their ideal distribution regardless of income or political affiliation most Americans thought the ideal wealth for the top 20 percent would be 20 to 30 percent.  Ironically the ideal that most Americans have looks more like Sweden than our current system:

The respondents were also given these items below and most preferred the Swedish model.  The equal distribution lost out by a small margin showing that Americans realize that there will be an inequality in the system but nothing like we currently have.  The middle class is being squeezed out of the pie.  The propaganda from Wall Street is that everyone can be rich but the reality shows otherwise.  In fact, Wall Street tries to sell the sizzle of the steak to Americans by conjuring up political fears and other distracters to detract from the fact that Wall Street is robbing Americans blind.  When the politics are put aside, most Americans want a radically different system when it comes to wealth distribution.  Our economy is broken on so many levels and banks are to blame.  Many Americans feel this way:

It is interesting that only 18 percent of Americans have confidence in U.S. banks.  A larger majority have very little confidence in the banking system as they should when you have the broke FDIC backing $13 trillion in banking assets.  With no actual reform in the banking system we can expect another crisis to come up shortly.  Why?  The real economy isn’t responding because what is happening is you have actual real wealth being drained out of the economy through bailouts for the rich.  It doesn’t happen directly but through a connected system.  The absolute richest Americans own the bulk of stocks so the fact that the bailouts have boosted stock values has helped this tiny group of Americans bounce back.  That is why only a few months after the stock market crashed in early 2009 the first folks to start posting billion dollar profits were the banks.  Of course this happened because of the taxpayer funded bailouts.  Shift money from taxpayers, to Wall Street, to the wallets of the elite.

According to the NBER the recession is over but try telling that to Americans:

Over 80 percent of Americans still think we are in a recession.  Why?  Because we are if you define it as a poor economy for the bulk of inhabitants!  Foreclosures remain near peak levels, 1 out of 7 are now in poverty, and good luck finding good work in this economy.  The other 20 percent think things are getting better because the modern day casino known as Wall Street is up by 70 percent from the low in 2009.  Yet what use is that if it doesn’t translate into jobs?  GDP grows because productivity is squeezed out of each worker and CEOs can use the recession as an excuse to cut workers while boosting their own paychecks.  Also, you have banks that are now making the bulk of their profits through speculating on Wall Street without even producing actual value in the real economy.  How is that even good for the economy?  Isn’t speculation the reason we are in this mess in the first place?

Why don’t we hear about the giant inequality gap in America?  Because the mainstream media doesn’t actually report what matters to most Americans.  Just look at the divergence again:

When we set aside politics, most Americans want an economy that allows for a robust middle class.  We expect that people will have differing views in our country but right now much of the political noise is being stoked by Wall Street to keep you from focusing on the above chart.  Which candidate is even bringing up the above as a key issue to their campaign?  The small elite in our country realize they have a sweet thing going and the fact is, most Americans want to make wealth equality a priority when it comes to wealth.  At the very least, banks and Wall Street don’t want Americans wising up to the fact that 83 percent of the nation’s wealth is in the hands of the top 20 percent.

When labels are removed Americans prefer a wealth distribution that looks like Sweden.  If we look carefully at the charts above, you can see how the middle class is being slowly erased.

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