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Archive for the ‘manufacturing jobs’ Category

The United States is negotiating one of the biggest free trade agreements in history and there is barely a peep about it on the news.  Years ago, Ross Perot warned that if NAFTA was implemented there would be a “giant sucking sound” as millions of jobs left this country. It turns out that he was right. Starting on Tuesday, the next round of negotiations on the Trans-Pacific Partnership (also known as the “NAFTA of the Pacific”) will begin in Chicago.  We have already seen the Obama administration push hard for free trade agreements with Panama, South Korea and Colombia and the administration is making the Trans-Pacific Partnership a very high priority.  Membership in the “NAFTA of the Pacific” already includes Brunei, Chile, New Zealand and Singapore.  The United States, Australia, Peru, Malaysia and Vietnam are scheduled to join.  Canada, Japan and South Korea are also reportedly considering membership.  So once this “free trade” agreement is ratified, will we hear another “giant sucking sound” as millions more of our jobs are shipped overseas?

Look, it is not really that complicated.  If you are a giant U.S. corporation, you can either make stuff here, or you can make stuff overseas where it is far, far less expensive to do so.

To greedy corporate executives, there are a lot of advantages to moving operations out of the country….

*It is legal to pay slave labor wages in many of these other countries.  After all, why pay an American worker 10 or 20 times as much as a worker on the other side of the globe?

*In many of these other countries you do not have to provide any health care for workers.

*In many of these other countries there are virtually no environmental controls to worry about.

*In many of these other countries there are virtually no labor standards to worry about.

*In many of these other countries you only have to deal with a fraction of the “red tape” that you have to deal with in the United States.

By merging our economies with the economies of societies that are far different from our own, we have created a “race to the bottom” that is incredibly destructive to the U.S. economy.

In Vietnam, one dollar an hour is considered to be a very good wage.

So how do you plan to compete against that?

These “free trade agreements” are direct assaults on the big, juicy paychecks of American workers.

If you do not know about the Trans-Pacific Partnership, you need to get educated.

The following is a basic introduction to the TPP from Wikipedia….

The Trans-Pacific Partnership (TPP), also known as the Trans-Pacific Strategic Economic Partnership Agreement, is a multilateral free trade agreement that aims to further liberalise the economies of the Asia-Pacific region; specifically, Article 1.1.3 notes: “The Parties seek to support the wider liberalisation process in APEC consistent with its goals of free and open trade and investment.”[1] The original agreement between the countries of Brunei, Chile, New Zealand and Singapore was signed on June 3, 2005, and entered into force on May 28, 2006. Five additional countries – Australia, Malaysia, Peru, United States, and Vietnam – are negotiating to join the group.

Apparently, one of the goals of the TPP is to reduce all trade tariffs among member nations to zero by the year 2015.  The proponents of “free trade” are absolutely thrilled.

We have all enjoyed the flood of cheap products from overseas.  It is nice to pay a little bit less for things.

But these cheap prices have come at a very high cost.  We are literally destroying the American economy.  If you walk into just about any store today and you start turning over products, you will find that almost all of them are made out of the country.

If our middle class jobs keep getting shipped overseas, our prosperity is going to vanish.  If the American people allow this to continue, the standard of living of American workers is going to continue to fall toward the level of workers in third world countries.

Arthur Stamoulis, the executive director of Citizen Trade Campaign recently had the following to say about why he is opposed to this new free trade agreement….

“They’ve shipped our jobs overseas. They’ve reduced the tax base, they’ve driven down the wages and benefits for the jobs that are left. We’ve had enough”

As you can see from the chart below, we have seen a massive decline in manufacturing jobs in the United States over the last few decades….

It is absolutely amazing that the Obama administration continues to tout more “free trade” agreements as a way to increase employment in the United States.

Sadly, nearly half the country is still going to run out and vote for the guy in the next election.

Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

So the answer is to ship even more of our jobs overseas?

Apparently the Obama administration actually believes that we don’t want those jobs.  The following is what U.S. Trade Representative Ron Kirk told Tim Robertson of the Huffington Post recently….

Let’s increase our competitiveness… the reality is about half of our imports, our trade deficit is because of how much oil [we import], so you take that out of the equation, you look at what percentage of it are things that frankly, we don’t want to make in America, you know, cheaper products, low-skill jobs that frankly college kids that are graduating from, you know, UC Cal and Hastings [don't want], but what we do want is to capture those next generation jobs and build on our investments in our young people, our education infrastructure.

Can you believe that nonsense?  He believes that there are things that “we don’t want to make in America”?

Why is nobody calling for him to resign immediately?

Manufacturing jobs have traditionally been high paying jobs that can support middle class families.

But now we are losing millions of those jobs and the Obama administration simply does not care.

Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

America is being deindustrialized at warp speed and most Americans don’t even understand what is happening.

Look, even if U.S. firms wanted to stay in the United States and try to compete, they face almost insurmountable obstacles….

*Many foreign nations deeply and directly subsidize national industries and the U.S. government lets them get away with it.  That puts our industries at a vast disadvantage.

*The United States has the highest corporate tax rate in the world.  That puts our corporations at a vast disadvantage.

*Many foreign nations do not require businesses to provide health care for their employees.  That puts our businesses at a vast disadvantage.

*Many foreign nations impose very little regulation on businesses.  That puts businesses in the United States at a vast disadvantage.  In the U.S., we have some of the most restrictive regulations in the world.

The truth is that even the “next generation jobs” and the “green jobs” that Obama keeps talking about are rapidly leaving the country.

For example, the third-largest producer of solar panels in the United States, Evergreen Solar, is leaving America.

Evergreen is shutting down its factory in Massachusetts, laying off 800 American workers and moving production over to China.

A recent New York Times article explained why Evergreen is making this move….

Evergreen, in announcing its move to China, was unusually candid about its motives. Michael El-Hillow, the chief executive, said in a statement that his company had decided to close the Massachusetts factory in response to plunging prices for solar panels. World prices have fallen as much as two-thirds in the last three years — including a drop of 10 percent during last year’s fourth quarter alone.

Chinese manufacturers, Mr. El-Hillow said in the statement, have been able to push prices down sharply because they receive considerable help from the Chinese government and state-owned banks, and because manufacturing costs are generally lower in China.

We are losing the “jobs of the future” and Obama is doing nothing about it.

Last year, more than half of all the solar panels in the world were made in China.

China is absolutely killing us on the global economic stage and Obama does not even seem to think that it is a problem.

The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

Not only that, the United States now spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

So don’t listen to any of the nonsense that Obama is spouting about creating jobs.

Not that most of the Republicans are putting forward any good ideas either.

The reality is that our politicians have lied to us.  Globalism is absolutely destroying our economy.

Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

We are losing ground in almost every industry that you could name.  Even the “jobs of tomorrow” are mostly being created overseas.

Andy Grove, the former CEO of Intel, says that our advanced technology companies are creating far more jobs overseas than they are in the United States….

Some 250,000 Foxconn employees in southern China produce Apple’s products. Apple, meanwhile, has about 25,000 employees in the U.S. That means for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods, and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology (STX), and other U.S. tech companies.

When is someone going to wake up America?  If we are even losing “advanced technology” jobs, then what kind of jobs are going to be left?

In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world.  In 2010, that number skyrocketed to $82 billion.

Needless to say, that is not a good trend.

Our politicians promised us that the “global economy” would mean more jobs and more prosperity for us.

Well, that was obviously a giant lie.

Today, if you gathered together all of the unemployed people in the United States, they would make up the 68th largest country in the world.

If we allow all of this “free trade” nonsense to continue, our unemployment nightmare is going to continue to get worse and even more of our formerly great cities will end up looking like total hellholes just like Detroit does.

Sadly, virtually all of our politicians in both political parties are in favor of these “free trade” agreements.  In fact, most of them are pushing these kinds of agreements as one of the “solutions” to our problems.

The U.S. economy is being dismantled and deindustrialized right in front of your eyes.

If you plan on speaking out, you better do it now because it is almost too late to stop what is being done.

It is up to you America.

The Economic Collapse

The Status Quo heavily rewards financialized profiteering and resource extraction while penalizing productive capital investments in manufacturing.

There is so much ideological, quasi-religious fanaticism around “free trade” (there is no such thing as “free trade,” there are only various permutations of managed trade) and “industrial policy” (every nation has one, explicit or implicit) that it is difficult to make any sense of the many intertwined issues.

Ideological purity is not a substitute for knowledge, any more than a superficial admiration of machines equals actually knowing how to assemble, maintain and repair them.

As a background context, we might start by noting that Marx outlined how finance capital comes to dominate industrial capital, as industry comes to depend on the credit extended by the banks/finance capital.

The key takeaway: if you don’t control the banks, then they will end up dominating industrial capital. In the U.S., we have the worst of both worlds: a dominant financial Elite and various cartels (military-industrial, sickcare, agribusiness, etc.) that have captured what little of the Central State that isn’t already beholden to financial capital.

Moving production around the world to exploit cheap labor–also knowns as “wage arbitrage”– is not free trade: it is merely the consequence of free capital flows, and an extension of capital’s dominance of labor. If capital can reap higher returns by flowing elsewhere and abandoning domestic labor, then it will do so, and “lowering the cost to consumers” is the marketing propaganda issued to placate the captive home markets.

Consumers, after all, are not free to travel the globe seeking “higher returns,” i.e. lower prices–that privilege is reserved for capital.

When China sold silk to the Roman Empire in 100 C.E., the cost of capital to produce the silk and the cost of labor was set in China. Traders took the risks of transport and reaped the gigantic profits. The same was true when China sold porcelain made for export to America in the 1800s.

That is “free trade.” Moving capital to China to exploit cheap labor there, then closing the factory and moving production to Vietnam, and so on, is simply free-flowing capital exploiting labor on a global scale.

As further context, we should note the dominance of short-term profiteering as the motivator of management in Corporate America. “Beating quarterly estimates” is basically the only metric of “success” in America, because a corporate management that fails to “beat estimates” won’t last long enough to pursue any long-term capital investments.

The financialization of compensation is also a critical factor: if compensation is mostly stock options, then that creates a huge incentive to boost the stock price and then exercise the options–”pump and dump” on a vast, systemic scale.

This obsessive addiction to boosting short-term profits also leads management to view labor as the “enemy” which is sucking off profits, rather than the partner in the company’s long-term success. Thus relentless cost-cutting and downsizing is heavily incentivized as the one sure way to boost short-term profits, even as the company is being hollowed out.

Management isn’t being rewarded to think about the long-term, any more than a member of the House of Representatives is rewarded for thinking ahead more than two years. Some problems cannot be solved, or even addressed, in short-term thinking. This is one reason why the nation is heading to heck in a handbasket–nothing can be discussed that can’t be “resolved” in 18 months (the election cycle starts six months before every congressional election). Management might only last 18 months, so there is every reason to stripmine the company of assets and know-how, boost the stock price, cash in the millions of dollars in options and hightail it on to the next “opportunity.”

An emphasis on housing as a bedrock of wealth and lending has completely distorted the U.S. economy. The incentives in real estate are massive, and massively perverse: the unlimited mortgage deduction for interest incentivizes borrowing vast sums and “moving up” to ever-larger, ever more wasteful homes, to name just two, and policies aimed at expanding suburbs effectively gutted central cities while heaping subsidies on sprawl and distant exurbs.

The U.S. has a distinct industrial policy: benign neglect, ignorance, favoritism towards real estate development and financialization, and a fanatic devotion to short-term profits and cost-cutting.

What makes any discussion of “free trade” so impossible is the vast ignorance of free trade proponents about our industrial competitors and the history of trade. If you know essentially nothing about industry and industrial policy in China, Japan and Germany, and nothing about the long history of trade in a capitalist framework, then exactly what are you bringing to the discussion other than religious fanaticism to a concept that begs for deep knowledge of other nations and nuanced understanding?

I have studied Japan and China for almost 40 years, both formally in university studies and via visits, research and discussions with my many Japanese and Chinese friends. I have toured many Chinese factories and discussed trade with entrepreneurs and marketing reps, and received inside information from local government sources.

Japan, Germany and China have trade policies which support and encourage specific industrial and export models. For context, please read these two related articles: Outsourcing manufacturing hurts U.S. and a factory that costs $11 million in California costs $5 million in Germany, after tax credits.

If you watched any Japanese television (NHK) after the tsunami and earthquake, and you are a careful observer, you had a rare chance to see industrial Japan from the inside. Japan, Inc, is not just a Toyota factory filled with industrial robots: it’s thousands of small factories producing parts for the global corporations.

For example, one factory affected by the tsunami manufactured special components for satellites. The workers were shown hand-polishing the complex castings by hand.

Let me repeat that, for those who mistakenly think everything can be made by robots or in some Chinese factory by low-skilled workers: by hand, by highly skilled workers.

Industrial robots are costly to buy and maintain; they make no sense on small production runs, or highly skilled, complex tasks. No robot could duplicate the delicate hand-eye coordination required to hand-polish these complex parts.

This is not some outlier, this is standard in Japan, Inc., and also in Germany, Inc. There is a critical need within any broad-based industrial supply chain for skilled labor.

As for automation: yes, it works in producing mass-produced goods, but skilled labor is required to reprogram the robots, maintain them, assemble them, etc. Though the factory floor may have few people present, there is a long supply chain behind the automation that supports multiple levels of value-added labor and manufacturing.

It’s not just moving the assembly offshore, it’s moving the entire value-added chain that feeds it.

As my friend G.F.B. recently noted, the initial invention that is the obsession of America and supposedly its great advantage in the global marketplace leaves off the real value-added proposition, which is the development of the later models and iterations.

Place the production elsewhere and keep the design staff in the home nation is an excellent way to lose the design of the actual parts and workflow–the real value added. Apple has been able to keep ahead of competitors by integrating software that is difficult to copy into hardware, but it not the typical case, it is the outlier, hence its outsized value.

As I repeatedly point out, Apple, Google, Facebook and Twitter together have relatively few domestic employees. As production is overseas, then that’s where the design jobs go, too, eventually.

You have to understand the entire value chain, not just the assembly costs.

The U.S. culture denigrates skilled labor and glorifies the C.E.O. and innovator as god-like heroes. Other nations, notably Germany, maintain a value and education system which recognizes and nurtures technical skills. In the U.S., we fawn over social media companies that generate billions in new wealth for Wall Street and a handful of founders and venture capitalists, and drill into every student’s head the value not of tradecraft skills but of a four-year business degree.

For those not suited for an MBA–sorry, there are few other choices of learning.

In America, we are addicted to the drama of startling, big “innovations,” and we are enamoured with the romance of “instant wealth” from the “hot investment” of the moment.

Extraction is not the same as value-added production. There is temporary value in the equipment set up, but once the resource has been depleted, the wealth is gone and the “gold rush town” dries up and blows away.

The problem with financialization is that it is the gold rush dynamic on steroids. To reap the big gains from financializing, you need ever-greater amounts of credit, leverage, risk and churn–all the elements we saw in the housing bubble and in every stock bubble.

Once the financialization bubble bursts, there is nothing left to extract or leverage. Since productive investments were disincentivized at every turn, then the implosion of the unproductive investments leaves a hollowed-out shell of an economy with a very wealthy layer of managers and financial “winners” and the 90% below them with few prospects in what amounts to a corporate-colonial economy ruled by financial oligarchies and their minions in the Central State.

Of Two Minds

This guest essay by longtime correspondent Kevin Mercadante examines the costs to making short-term profits and government spending the metrics that guide the entire economy.

Political Myopia and America’s Manufacturing Decline
by Kevin Mercadante

For decades voices in the woods have been warning us of impending crises in the foundational systems that make the U.S. economy go. We’ve been advised of impending disasters in Social Security, Medicare, pension funding, the national debt, healthcare, energy and increasingly, employment. Charles and others sounded the alarm on the housing bubble years before it hit.

But as has become our happy little way, we ignore warnings, preferring to dismiss them as the staple fodder of the “gloom-and-doom” crowd.

We should have learned our lesson with the exploding of the real estate bubble, but perhaps we haven’t. It could be that we’re doomed to experience the falling of one domino after another until we come out of our media induced entertainment stupor fully prepared to face more than a few ugly realities.

While the fallout of the housing and mortgage collapse has proven to be a crisis worthy of capturing our attention, other dominos are indeed falling, but doing so with far less fanfare and concern.

A BIG sector where the battle is already lost

Earlier this year, the IMF reported that China has over taken the US as the world’s top manufacturing nation ( IMF Bombshell: Age of America Nears End ). Over the past few decades we’ve had abundant warning that such a transition would occur. Mostly we’ve ignored the signs, contenting ourselves that the service economy and more government spending would more than replace what ever would be lost, and that come what may, America is still No.1!

But manufacturing isn’t just another sector of the economy—it’s the economic foundation of all modern industrial societies. To one degree or another, all other economic sectors rest on the foundation of the nations manufacturing production. It’s preposterous to believe that services and government spending can carry real economic growth in an economy devoid of the production of real goods—certainly not a nation as large as the U.S.

Because manufacturing produces tangible goods, it is the key to exports. Exports, in turn, are the key to trade surpluses and trade surpluses are the source of large international reserves—the kind that produce coveted creditor nation status.

China, Japan and Germany are creditor nations. All have large international surpluses, because all have large manufacturing sectors contributing to outsized exports that produce regular trade surpluses. And while the experts tell us that our manufacturing decline is due to high wages, it’s worth noting that both Japan and Germany have wage levels that are at least as high as the U.S, yet both have thriving manufacturing and export sectors. What is it that they can do that we can’t? We even have far more natural resources than either country!

Is the decline of manufacturing and our status as the world’s biggest debtor nation coincidental? Hardly.

But it gets worse. Manufacturing is also the fulcrum of technology, an area in which the U.S. has long claimed dominance, almost as some sort of birthright. As manufacturing goes, so will military-, computer- and medical-technology—and the high paying jobs they provide. The implications of the manufacturing decline are far more ominous than the collapsing of the housing bubble.

Politics and the manufacturing decline

If manufacturing is so important, we should be asking a critical question: where has our leadership been in the face of our decline?

I’m not talking about the current leadership—but I’m not excluding it either—the blame on this goes back at least a couple of decades. Have we the citizenry been holding our leaders accountable? It appears not.

What’s worse is that there seems be no “good guy” political party on this issue. As much as we might love to believe that there’s a good guy vs. bad guy element behind every issue, alas there isn’t. Both the Republicans and the Democrats have made substantial contributions to the country’s manufacturing decline, albeit from different directions.

What are some of the things Republicans have supported that have had a material negative impact on the nations manufacturing base?

• Advancing favorable tax policies to conglomerates that move manufacturing production overseas.
• Championed brushfire suburban development (“any development is good development”), sucking the life out of urban areas—which once were the very centers of American manufacturing.
• Enthusiastically supported the FIRE economy for its ability to grow and create jobs much more rapidly than capital intensive manufacturing.
• Allowed their patriotism and unbridled optimism over “all things American” to cause them to underestimate the capabilities of foreign competition.
• Demanded balanced budgets when Democrats were in control—but when Republicans are in power they shift to “deficits don’t matter”. Deficit spending creates a false sense that money can be created out of thin air, rather than earned through the production and export of real goods.

And how about the Democrats—the one-time champions of union workers?

• They’re the purveyors of not in “my back yard” (NIMBY)—if it’s ugly, noisy or dirty, move it somewhere else. How does manufacturing grow or even survive in that environment?
• In growing suburban areas, they use “environmental concerns” to keep out manufacturing, businesses with physical inventories and even suburban agriculture (pesticides, animal habitat destruction, etc.)
• They tend to favor “gentrification”, which is code for the elimination of the working class. They want sanitized neighborhoods, clear of work vehicles, chicken coops and physical inventory.
• Though they claim to want to restrict growth in the suburban fringe, many seem to live there anyway.
• Though they tend to cry foul over the corruption of the FIRE economy, they nonetheless tolerate it willingly because it’s “clean”.
• They’re the party of tax-and-regulate. Any tax as a good tax—especially when it’s levied on businesses. That’s a difficult environment for any business to operate in, but more so for manufacturing concerns because they’re capital, inventory and labor intensive.

Not surprisingly, there are common platforms between the parties. For example, both are obsessed with maintaining the escalation of property values. But decades of relentless increases in real estate prices have done more than their share to degrade small business, agriculture and manufacturing. Property becomes so expensive that the land beneath a business enterprise is worth far more than the business itself. The land is then sold to make way for subdivisions, condominiums, office buildings and strip malls—the very nesting grounds of suburban development and the FIRE economy.

Neither party is concerned with true urban renewal or worker retraining—the kinds of efforts that could resuscitate a declining manufacturing base and provide jobs for millions of workers. Generous student loan programs are supported for elite university educations, but little emphasis is placed on community colleges and technical schools training workers for jobs closer to the ground.

What politicians of both stripes have been truly good at is keeping the issue out of public site. They’re as quick to bury the debate as they are to show up at ribbon cutting ceremonies at the opening of brand new (foreign owned) manufacturing plants in their home districts.

Is it at all hard to see why America’s manufacturing base has eroded to second class status?

Our favorite form of political participation: Blame the other party

There’s an article of faith in American politics: what ever is wrong with country is the fault of the other party. It’s not just the leadership of the two parties that engage in the practice either—it’s a common belief of the man on the street. That’s a simplistic belief that shows that we’re not emotionally prepared to face and deal with our problems.

Democrats tend to believe that the nation is in good shape as long as a Dem is in the White House. A March poll on President Obama’s approval rating found that while only 42% of the general population approve of the president’s job, fully 80% of Democrats do. What could explain such an enormous gap in perception?

The Republican faithful are no different. The very economic conditions contributing to Obama’s low approval rating were well in play during 2007-2008 when George W. Bush was at the helm. The economy was heading down the drain while Republicans were in denial—after all, their guy was in and all was well. Now they rail against Obama’s continuation of Bush’s policies as if the economic decline began in January of 2009.

Will that kind of partisanship fix anything?

Charles has written many times that the nation’s ills will not be fixed by tinkering at the fringes, policy adjustments and promises of reform. Yet this is what politicians in both parties promise—and what we choose to believe even as reality screams otherwise. No real sacrifice, no real change—just get rid of the other party and all will be as it should. Is that a solution? Has it saved American manufacturing? Even more important, will that be our strategy for dealing with other major problems?

The truly dark side of ignored problems is that by the time they become front page news, it’s already too late! The task will no longer be to fix a broken system, but to build a new one from the ground up. Will this be the course with deficits, pension funding, healthcare and energy? We can hope not, but the trend is very unsettling.

Kevin Mercadante is a regular reader of Of Two Minds, a professional blogger and the owner of OutOfYourRut.com, a website about careers, business ideas, money and more.

Of Two Minds

From now on, whenever you hear the term “the global economy” you should immediately equate it with the destruction of the U.S. middle class.  Over the past several decades, the American economy has been slowly but surely merged into the emerging one world economic system.  Unfortunately for the middle class, much of the rest of the world does not have the same minimum wage laws and worker protections that we do.  Therefore, the massive global corporations that now dominate our economy are able to pay workers in other countries slave labor wages and import the products that they make into the United States to compete with products made by “expensive” American workers.  This has resulted in a mass exodus of manufacturing facilities and jobs from the United States.

But without good, high paying jobs the U.S. middle class cannot continue to be the U.S middle class.  The only thing that the vast majority of Americans have to offer in the economic marketplace is their labor.  Sadly, that labor has now been dramatically devalued.  American workers now must directly compete for jobs with millions upon millions of workers on the other side of the world that toil away for 15 hours a day at slave labor wages.  This is causing jobs to leave the United States at an almost unbelievable rate, and it is putting tremendous downward pressure on the wages of millions of jobs that are still in the United States.

So when you hear terms such as “globalization” and “the global economy”, it is important to keep in mind that those are code words for the emerging one world economic system that is systematically wiping out the U.S. middle class.

A one world labor pool means that the standard of living for the U.S. middle class will continue falling toward the standard of living in the third world.

We keep hearing about how the U.S. economy is being transformed from a “manufacturing economy” into a “service economy”.  But “service jobs” are generally much lower paying than “manufacturing jobs”.  The number of good paying “middle class jobs” in the United States is rapidly decreasing.  So how can the U.S. middle class survive in such an environment?

What makes things even worse for manufacturers in the United States is that other nations often impose a “value-added tax” of 20 percent or more on U.S. goods entering their shores and yet most of the time we do not reciprocate with similar taxes.

But whenever someone mentions how incredibly unfair and unbalanced our trade agreements with other nations are, they are immediately labeled as a “protectionist”.

Well, someone should be looking out for U.S. interests when it comes to trade, because the current state of the global economy is ripping the U.S. middle class to shreds.

Right now, the United States consumes far more wealth than it produces.  This nation buys much, much more from the rest of the world than they buy from us.  This is called a “trade deficit”, and it is one of the most important economic statistics.  The U.S. runs a massive trade deficit every single year, and it is wiping out our national wealth, it is destroying our surviving industries and it is absolutely shredding middle class America.

We cannot allow tens of thousands of factories to continue to leave the United States.  We cannot allow millions of jobs to continue to be “outsourced” and “offshored”.  We cannot allow tens of billions of dollars of our national wealth to continue to be transferred into foreign hands every single month.

The truth is that the global economy is bad for America.  The following are 23 facts which prove that globalism is pushing the standard of living of the middle class down to third world levels….

#1 From December 2000 to December 2010, the U.S. ran a total trade deficit of 6.1 trillion dollars.

#2 The U.S. trade deficit was about 33 percent larger in 2010 than it was in 2009.

#3 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#4 The U.S. economy is rapidly trading high wage jobs for low wage jobs.  According to a new report from the National Employment Law Project, higher wage industries accounted for 40 percent of the job losses over the past 12 months but only 14 percent of the job growth.  Lower wage industries accounted for just 23 percent of the job losses over the past 12 months and a whopping 49 percent of the job growth.

#5 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

#6 In Germany, exports account for approximately 40 percent of GDP.  In China, exports account for approximately 30 percent of GDP.  In the United States, exports account for approximately 13 percent of GDP.

#7 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

#8 In 2010, South Korea exported 12 times as many automobiles, trucks and parts to us as we exported to them.

#9 The U.S. economy now has 10 percent fewer “middle class jobs” than it did just ten years ago.

#10 The United States currently has 7.7 million fewer payroll jobs than it did back in December 2007.

#11 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

#12 In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world.  In 2010, that number skyrocketed to $82 billion.

#13 The United States now spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#14 In China, working conditions are so bad that large numbers of “employees” regularly try to commit suicide.  One major employer, Foxconn, has even gone so far as to install “anti-suicide nets” in an attempt to keep their employees from jumping off of their buildings.

#15 Wages for workers in China are incredibly low.  For example, one facility in the city of Longhua that makes iPods employs approximately 200,000 workers.  These workers put in endless 15-hour days but they only make about $50 per month.

#16 In Bangladesh, manufacturing workers toil in absolutely horrific conditions and make an average of about $38 per month.

#17 In Vietnam, teenage workers often work seven days a week for as little as 6 cents an hour making promotional Disney toys for McDonald’s.

#18 Since 2001, over 42,000 manufacturing facilities in the United States have been closed.

#19 Half of all American workers now earn $505 or less per week.

#20 In the United States today, 6.2 million Americans have been out of work for 6 months of longer.

#21 8.4 million Americans are currently working part-time jobs for “economic reasons”.  These jobs are mostly very low paying service jobs.

#22 When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971.

#23 According to Willem Buiter, the chief economist at Citigroup, China will be the largest economy in the world by the year 2020, and India will surpass China by the year 2050.

Those that promote “free trade” can never explain how the U.S. middle class is going to continue to have plenty of jobs in the new global economy.

By merging our labor pool with the rest of the world, we have also merged our standard of living with the rest of the world.  High unemployment is rapidly becoming “the new normal” in America, and wages are going to continue to decline in many, many industries.

Already, there are quite a few formerly great U.S. cities (such as Detroit) that are beginning to resemble third world hellholes.  If something is not done about our massive trade imbalance, even more cities are going to follow Detroit into oblivion.

Unfortunately, most of our politicians continue to insist that globalism is good for our society.  They continue to insist that we should not be worried that jobs formerly done by middle class American workers are now being done by slave laborers on the other side of the globe.  They continue to insist that having 43 million Americans on food stamps is a temporary thing and that soon our economy will be better than ever.

Well, it is time to stop listening to the politicians that are promoting “the global economy”.  They are lying to us.

Globalism is great for nations such as China and it is helping multinational corporations make huge profits, but for the U.S. middle class it is an economic death sentence.

If you want an America where there are less jobs, where more Americans are on food stamps and other anti-poverty programs and where our cities continue to be transformed into deindustrialized hellholes, then you should strongly support the emerging global economy.

But if you care about the standard of living of the U.S. middle class and you want for there to be some kind of viable economic future for your children and your grandchildren then you had better start caring about these issues and doing something about them.

Please wake up America.

The Economic Collapse

Once upon a time, the United States was the greatest industrial powerhouse that the world has ever seen.  Our immense economic machinery was the envy of the rest of the globe and it provided the foundation for the largest and most vibrant middle class in the history of the world.  But now the once great U.S. economic machine is being dismantled piece by piece.  The U.S. economy is being gutted, neutered, defanged, declawed and deindustrialized and very few of our leaders even seem to care.  It was the United States that once showed the rest of the world how to mass produce televisions and automobiles and airplanes and computers, but now our industrial base is being ripped to shreds.  Tens of thousands of our factories and millions of our jobs have been shipped overseas.  Many of our proudest manufacturing cities have been transformed into “post-industrial” hellholes that nobody wants to live in anymore.

Meanwhile, wave after wave of shiny new factories is going up in nations such as China, India and Brazil.  This is great for those countries, but for the millions of American workers that desperately needed the jobs that have been sent overseas it is not so great.

This is the legacy of globalism.  Multinational corporations now have the choice whether to hire U.S. workers or to hire workers in countries where it is legal to pay slave labor wages.  The “great sucking sound” that Ross Perot warned us about so long ago is actually happening, and it has left tens of millions of Americans without good jobs.

So what is to become of a nation that consumes more than it ever has and yet continues to produce less and less?

Well, the greatest debt binge in the history of the world has enabled us to maintain (and even increase) our standard of living for several decades, but all of that debt is starting to really catch up with us.

The American people seem to be very confused about what is happening to us because most of them thought that the party was going to last forever.  In fact, most of them still seem convinced that our brightest economic days are still ahead.

After all, every time we have had a “recession” in the past things have always turned around and we have gone on to even greater things, right?

Well, what most Americans simply fail to understand is that we are like a car that is having its insides ripped right out.  Our industrial base is being gutted right in front of our eyes.

Most Americans don’t think much about our “trade deficit”, but it is absolutely central to what is happening to our economy.  Every year, we buy far, far more from the rest of the world than they buy from us.

In 2010, the U.S. trade deficit was just a whisker under $500 billion.  This is money that we could have all spent inside the United States that would have supported thousands of American factories and millions of American jobs.

Instead, we sent all of those hundreds of billions of dollars overseas in exchange for a big pile of stuff that we greedily consumed.  Most of that stuff we probably didn’t need anyway.

Since we spent almost $500 billion more with the rest of the world than they spent with us, at the end of the year the rest of the world was $500 billion wealthier and the American people were collectively $500 billion poorer.

That means that the collective “economic pie” that we are all dividing up is now $500 billion smaller.

Are you starting to understand why times suddenly seem so “hard” in the United States?

Meanwhile, jobs and businesses continue to fly out of the United States at a blinding pace.

This is a national crisis.

We simply cannot expect to continue to have a “great economy” if we allow our economy to be deindustrialized.

A nation that consumes far more than it produces is not going to be wealthy for long.

The following are 21 signs that the once great U.S. economy is being gutted,  neutered, defanged, declawed and deindustrialized….

#1 The U.S. trade deficit with the rest of the world rose to 497.8 billion dollars in 2010.  That represented a 32.8% increase from 2009.

#2 The U.S. trade deficit with China rose to an all-time record of 273.1 billion dollars in 2010.  This is the largest trade deficit that one nation has had with another nation in the history of the world.

#3 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#4 In the years since 1975, the United States had run a total trade deficit of 7.5 trillion dollars with the rest of the world.

#5 The United States spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#6 In 1959, manufacturing represented 28 percent of all U.S. economic output.  In 2008, it represented only 11.5 percent and it continues to fall.

#7 The number of net jobs gained by the U.S. economy during this past decade was smaller than during any other decade since World War 2.

#8 The Bureau of Labor Statistics originally predicted that the U.S. economy would create approximately 22 million jobs during the decade of the 2000s, but it turns out that the U.S. economy only produced about 7 million jobs during that time period.

#9 Japan now manufactures about 5 million more automobiles than the United States does.

#10 China has now become the world’s largest exporter of high technology products.

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

#12 The United States now has 10 percent fewer “middle class jobs” than it did just ten years ago.

#13 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.

#14 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

#15 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

#16 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high.

#17 Half of all American workers now earn $505 or less per week.

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

#19 Since 2001, over 42,000 U.S. factories have closed down for good.

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

#21 Ten years ago, the “employment rate” in the United States was about 64%.  Since then it has been constantly declining and now the “employment rate” in the United States is only about 58%.  So where did all of those jobs go?

The world is changing.

We are bleeding national wealth at a pace that is almost unimaginable.

We are literally being drained dry.

Did you know that China now has the world’s fastest train and the world’s largest high-speed rail network?

They were able to afford those things with all of the money that we have been sending them.

How do you think all of those oil barons in the Middle East became so wealthy and could build such opulent palaces?

They got rich off of all the money that we have been sending them.

Meanwhile, once great U.S. cities such as Detroit, Michigan now look like war zones.

Back in 1985, the U.S. trade deficit with China was about 6 million dollars for the entire year.

As mentioned above, the U.S. trade deficit with China for 2010 was over 273 billion dollars.

What a difference 25 years can make, eh?

What do you find when you go into a Wal-Mart, a Target or a dollar store today?

You find row after row after row of stuff made in China and in other far away countries.

It can be more than a bit difficult to find things that are actually made inside the United States anymore.  In fact, there are quite a few industries that have completely and totally left the United States.  For certain product categories it is now literally impossible to buy something made in America.

So what are we going to do with our tens of millions of blue collar workers?

Should we just tell them that their jobs are not ever coming back so they better learn phrases such as “Welcome to Wal-Mart” and “Would you like fries with that”?

For quite a few years, the gigantic debt bubble that we were living in kind of insulated us from feeling the effects of the deindustrialization of America.

But now the pain is starting to kick in.

It has now become soul-crushingly difficult to find a job in America today.

According to Gallup, the U.S. unemployment rate is currently 10.1% and when you throw in “underemployed” workers that figure rises to 19.6%.

Competition for jobs has become incredibly fierce and it is going to stay that way.

The great U.S. economic machine is being ripped apart and dismantled right in full view of us all.

This is not a “conservative” issue or a “liberal” issue.  This is an American issue.

The United States is rapidly being turned into a “post-industrial” wasteland.

It is time to wake up America.

The Economic Collapse

Those of you counting on getting your old assembly line job back in Detroit can forget it.

The recent eight year forecast published by the Bureau of Labor Statistics shows that 4.19 million jobs will be gained in the US in professional and business services, followed by 4 million health care and social assistance jobs, while 1.2 million will be lost in manufacturing. This is great news for website designers, Internet entrepreneurs,  registered nurses, and masseuses in California, but grim tidings for traditional metal bashers in the rust belt manufacturing states like Michigan, Indiana, and Ohio.

I’m so old now that I am no longer asked for a driver’s license to get into a night club. Instead, they ask for a carbon dating. The real challenge for we aged career advisors is that probably half of these new service jobs haven’t even been invented yet, and if they can be described, it is only in a cheesy science fiction paperback with a half dressed blond on the front cover. After all, who heard of a webmaster, a cell phone contract sales person, or a blogger 40 years ago? Where are all these jobs going to? You guessed it, China, and other lower waged, upstream manufacturing countries like Vietnam, where the Middle Kingdom is increasingly subcontracting its own offshoring.

These forecasts may be optimistic, because they assume that Americans can continue to claw their way up the value chain in the global economy, and not get stuck along the way, as the Japanese did in the nineties. The US desperately needs no less than 27 million new jobs to soak up natural population and immigration growth and get us back to a traditional 5% unemployment rate. The only way that is going to happen is for America to invent something new and big, and fast. Personal computers achieved this during the eighties, and the Internet did the trick in the nineties. The fact that we’ve done diddly squat since 2000 but create a giant paper chase explains why job growth since then has been zero, real wage growth has been negative, and American standards of living are falling.

Alternative energy and biotechnology are two possible drivers for a new economy. Unfortunately, the last administration did everything it could to stymie progress in both these fields, coddling big oil so China could steal a lead in several alternative technologies, and starving stem cell researchers of Federal cash, ceding the lead there to others. While the current crop of politicians extol the virtues of education, the reality is that we are dumbing down our public education system. How do we invent the next “new” thing, while shrinking the University of California’s budget by 20% two years in a row? If my local high school can’t afford new computers, how is it going to feed Silicon Valley with computer literate work force? The US has a “Michael Jackson” economy. It’s still living like a rock star, but hasn’t had a hit in 20 years.

China can have all the $20 a day jobs it wants. But if it accelerates its move up the value chain, as it clearly aspires to do, then America is in for even harder times. I’ll be hoping for the best, but preparing for the worst. How do you say “unemployment check” in Mandarin?