“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Saturday, September 26, 2009

US Manufacturing IS important and neglected --Quirk

Quirk said...

Rufus, your assertion that the US is still number one in manufacturing completely misses the point. Our current position is based on where we started from and on the tremendous inreases we have seen in productivity. Even so it's now estimated that in the next ten years China will pass us to take the number one spot in manufacturing.

The gross manufacturing numbers are mere factoids thrown out by clowns like Tom Friedman and the financial elites on the east and west coasts who would be content for the US to turn into the next Dubai, a financial services paradise. However, what's important is the percentage of GPD that manufacturing represents. It has gone from over 25% 50 years ago to around 10% today. Employment in manufacturing has dropped from about 50% of total employment to less than 10%. We have lost about 3 million manufacturing jobs in the last decade.

This effects everything from middle class jobs to GDP to national security. It's been estimated that every $1 of manufactured sales price supports about $1.40 in other economic activity. This compares to about $.50 for the wholesale and finance industries. That's almost a 3:1 multiplier advantage for manufacturing jobs.

Likewise the middle class in this country was built on manufacturing jobs. Early on they shared in the benefit of the productivity increases. Now real median income has been flat for the past 30 years. Without an industrial base and a vibrant middle class the US will decline. And all these clowns in Washington and New York will stop laughing when their financial services jobs are shipped overseas because it can be done cheaper.

Most important though is that we need a strong industrial base for national security reasons. Critical industries such as tool making are being exported in the name of globalization. You'll remember that as soon as we entered WWII, the auto factories shut down and the next day started building vehicles, motors, planes, etc. to support the war effort. Can't happen again if the manufacturing base is located in China.

It was interesting to note that after 9/11 GM and Ford donated $millions towards the relief effort in NY. Toyota sent a sympathy card


  1. And, My Answer Was:

    You're stretching a little bit, Q. China doesn't build B2's, and F22's, and F35's. We do. They don't build missiles that can shoot down missiles. We do. They don't build artillery systems that can, literally, shoot around corners. We do. They don't build M1A2 Tanks, and Global Hawks. We do.

    They Don't build build Boeing 777's. We do. They don't build advance desalination systems. We do. They don't build advanced MRI units. We do.

    They build cheap microwaves, and weedeaters. We build John Deere Harvestors, and Caterpillars.

    They pick their corn by hand (honest.) You folks need to lighten up a bit. They have to have some jobs.

  2. If you bozos want to bet against the Country that invents, designs, and builds all of the "Advanced" Computer, Biotechnology, Pharmaceutical, and Agricultural systems in the world in favor of the country to which they assign the honor of building cheap dvds, and toaster ovens, go ahead.

    Nice picture of a steel mill. BTW, we're the number one "Steel" producer in the world, also.

  3. Again you miss the point Rufus. It's the trend.

    People can talk about Reagan or Pope Paul II defeating the Soviet Union all they want. In fact it was the US economy that defeated the Soviet Union as they went broke trying to keep up with us.

    In a couple of years China's GPD will surpass that of number 2, Japan. This year China is suffering from the same recession we are going through and their GPD growth is projected to be around 8%. In 10 years they will surpass the US in manufacturing. I pointed out the multiplier disparity between manufacturing and service jobs.

    Not protecting our industrial base is a big mistake.

  4. Both you fellows are right.

    The basic industrial base of the US is important and has been neglected, by design. Those entry level industries shipped overseas or across the Rio Grande.
    Part and parcel of the "New Whirled Order"

    There has been a stagnation of wages and a decrease in manufacturing as a percentage of GDP here in the US. Cause for some concern and the realization of why those policies have been pursued, in a bi-partisan manner.
    We have been expanding foreign manufacturing capacity, as US policy, for all my life.

    The US still retains the lion's share of both total manufacturing and "added value" on the whirled stage.
    Representing only 3% of the whirled population, the US still maintains a qualitative and quantitative manufacturing advantage over everyone else. The infrastructural advantages that the US had in the aftermath of WWII have vanished. The other parts of the whirled have been rebuilt.

    The US should not expect to maintain the supremacy it held in that post war era. It is not a rational scenario for the future.

  5. All of the infrastructure after WWII is obsolete, or gone.

    Manufacturing, today, is about computers controlling robots, and writing the programs for same.

  6. A farmer, today, in the U.S. can sit in his air-conditioned cab, listen to music from Nashville, or Nanking, play internet poker with a gal from singapore, and a guy from London while his John Deere, 24 row planter, and GPS system plants 500 acres in 2 days.

    A manager at one of Poet's ethanol refineries (who had originally gone to work for the company as a maintenance man, I believe) operated his refinery for 3 days during the flood from the Computer at his home.

    The number of man-hours in a modern car built in a state of the art automobile facory is, probably, 1/5th of what it was in the 50's.

    If you're in a wreck, tonight, your X-Rays/MRIs might be read by someone in India.

    You probably live no more than 1 hour from someone capable of the most advanced Brain Surgery.

    If you lose a finger, tonight, you won't really lose it as long as you remember to take it with you to the hospital.

    Forget about losing our manufacturing base. We're keeping the important stuff. We're outsourcing the primitive stuff. Nobody can do it All.

  7. "Manufacturing, today, is about computers controlling robots, and writing the programs for same."

    Nice observation, but what is the point?

    Again the trend is against us. About a third of US bachelor degrees are in Science and Engineering. In Japan, it's a little over 60%. In China, a little less than 60%. In the US, about 5% of bachelor degrees are in engineering; in Asia, it's about 20%.

  8. "Forget about losing our manufacturing base. We're keeping the important stuff. We're outsourcing the primitive stuff. Nobody can do it All."

    The important stuff? Hell, the only sectors of the economy that are growing are government jobs and healthcare.

    If you can believe CNBC, 65 - 70% of our GDP is based on consumer spending. One would think our GDP may take a slight hit as more and more people move from the manufacturing to the service industries.

    Of course it's good to know that when the ex-toolmaker cuts off his finger while working at McDonalds there will be a lot of healthcare workers around to help him.

  9. Okay, you win. We'll put everybody to work making little plastic Christmas Trees.

    Happy now?

  10. I'll take the ocean, the deck,the crab cake and the BM with cool breezes if you please.

    Which conversation would I have enjoyed? The one with the good looking Israeli or the Swedish business man? I imagine both would have been interesting but apparently the Israeli eye candy would have been a bonus.

  11. "Okay, you win. We'll put everybody to work making little plastic Christmas Trees."

    Well, the other alternative is to put them out in the fields cutting agave to turn into ethanol. That would cover a couple of your bete noires.


  12. The thing is, if we did agave we'd do it with machines, or we'd import Mexicans to do it.

    We couldn't get Americans to work in the fields in the "Sixties." I know damned well it ain't gonna happen in 2010.

    The fact is we hustle, and work to send our daughters to school to become computer programmers, and software engineers. We're not the least interested in having them make $11.00/hr for the rest of their life assembling microwaves, and hedge trimmers.

    When the robots become precise enough to assemble DVRs we might start building them here, again.

    On the other hand, it's doubtful, since there will be another product of much greater value upon which we would much rather expend our limited resources.

  13. You know, I feel bad that I can't remember her name. But I know the shop.

  14. whit: whit said...
    I'll take the ocean, the deck,the crab cake and the BM with cool breezes if you please.

    I've had some amazing conversations over the years, from the beaches of Israel to the Heights of overlook in Hong Kong, On small trains in the south of france to nights at the bulldog in amsterdam...

    international conversation with literate people...

    (with scotch, rum, vodka or whatever and a cool breeze...)

    one winter day, walking and discussing history and art in st emilion with my own bottle and glass...

    quite remarkable

  15. About a third of US bachelor degrees are in Science and Engineering. In Japan, it's a little over 60%. In China, a little less than 60%. In the US, about 5% of bachelor degrees are in engineering; in Asia, it's about 20%.

    So, why is all the "cutting edge" stuff invented, designed, and produced in the U.S.?

    Could it be that 9 out of 10 of those Chinese "engineers" are basically the equivalent of "bicycle mechanics," and that we steal the other 1?

  16. Warm breeze, What Is. Warm breeze.

    We'll have no cool breezes, please. Please.

    Focus, for God's sake.

  17. Oh, Ash isn't going to be happy about this:
    The Obama administration reaffirmed its belief this week that it has the power to indefinitely detain prisoners at Guantanamo and said it would not reach out and ask Congress to craft legislation to give them the authority.

  18. Why, did Canada offer to take them?

  19. Rufus, sorry, I was rushing to walk the dog and I inadvertantly brought up the E-word in a post to you. I forgot about the memo that was forwarded in your absence by the proprietors of the EB indicating that anyone who did such a thing while you were on the blog would be subject to fines and/or possible barring from the bar.

  20. "Could it be that 9 out of 10 of those Chinese "engineers" are basically the equivalent of "bicycle mechanics," and that we steal the other 1?"

    Your stuck in a time warp, Ruf, and don't see the trends. I'm concerned about manufacturing jobs for the reasons I've stated; however, in the absence of reasonable government policies (trade, taxes, tort reform, regulations, etc.), you might as well dump that money your spending on your daughter's degree as "computer programmers, and software engineers" down a rat hole. Those will be the next jobs to go. Heck, there is no cost involved. All you need is a computer.

  21. geeze Rufus:

    World Steel in Figures lists the top steel-producing countries and companies around the world.

    In 2008 the five major steel producing countries were:

    China 500.5 mmt

    Japan 118.7 mmt

    United States 91.4 mmt

    Russia 68.5 mmt

    India 55.2 mmt

  22. Whit:
    For once their totalitarian ways are in the United State's interest!

  23. Good job, Doug. You're right. Now, I gotta figure out where I went wrong.

  24. I think it was when you were picking things outta your arse!

  25. Oh, I get it, Q; you're arguing for Import Tariffs. I forgot you were one of them.


  26. 1st, 3rd? What's the Dif in Obamaworld?

  27. I woulda thot Korea would be up there.
    They made a gigantic investment in shipbuilding just in time for the great glut on the seas of excess capacity.

  28. The one that surprises me is Japan.

  29. I guess they're selling most of it to China. I don't think even the fairly well-read Westerners have any concept of the scope of the "building" in China.

  30. quirk, only 3% of the people on the earth live in the US, if more than 12% of all the engineers graduating from school are US, then we are still way ahead.

    If half the engineers graduating are Chinese, they are still far behind, per capita.

  31. This little exercise proves that I sure don't.

  32. "Oh, I get it, Q; you're arguing for Import Tariffs. I forgot you were one of them."

    Ruf, usually your posts involve hyperbole, but now a straw man? Come on.

  33. Q, answer me this: Why in the world would I want to manufacture a microwave when I can buy one from China for $40.00 (and, this is retail, after Walmart has taken their cut, and after shipping, and taxes,) and loan me the money on an "open-ended" note to buy it?

    Why would I DO That?

  34. Did I misunderstand?

    in the absence of reasonable government policies (trade, taxes, tort reform, regulations, etc.),

  35. Did I forget to mention shrimp? My God we had the most marvelous shrimp at Eddie's.

  36. Did I forget to mention sunburn?

    Dry Tortuga.

    But was it worth it? Fuck, yes.

  37. Hey, Trish. How was your Trip?

  38. This comment has been removed by the author.

  39. It was awesome. Truly.

    You know, you bitch about ROE in Afghanistan, but you were supremely blithe about it in Iraq, comparing it not unfavorably to Vietnam.

  40. Why would I DO That?

    You wouldn't. (However, I must note one inconsistency. You are the same guy who would pay extra, er sorry, are the guy who would have everyone pay extra to guarantee that everyone in the US even those who don't want it have health care.)

    It makes perfect sense to buy the cheap microwave. That is up to the point that you lose your job and are unable to buy it.

  41. You have selective memory, Toots. I screamed to Holy Hell when they had my guys doing plumbing instead of doing bad guys.

    Although, in all honesty, I don't remember any Marines being turned down in their requests for Artillery Support when they were in the shit.

  42. Did I misunderstand?

    I take it the answer is, "No, I did not Misunderstand."

    Q, let me say this: On the philosophical side, (1) "Trading" Societies have always been Prosperous Societies," and,

    (2) Pick a Trade War with "China?!?"


  43. It's simple, Q; I want a Healthy workforce, and I want them doing something higher Value-Added than making the World's cheapest Microwave.

  44. "You have selective memory, Toots."

    Not that selective. And you did indeed defend strange ROE for OIF, chiding the rest of us for supposedly never having met ROE before.

  45. "Did I misunderstand?"

    Not much more than you usually do.

    Example, the G20 is trying to convince China to concentrate more on internal consumption than on exports to the US to drive growth. Why would they do this? The consensus within the G20 is that two things drove the current financial crisis.

    1. The lopsided trade imbalance between the U.S. and China is considered a root cause. "Analysts say the credit and housing bubbles that caused the crisis were fed by the constant flow of large sums of money into U.S. securities markets from China as it recycled more than $1 trillion of earnings on exports to the U.S. The Chinese inflows helped reduce conventional mortgage rates to record lows and helped spawn a subprime mortgage industry whose goal was to quench investors' desire for higher-yielding mortgage investments."

    2. "...the U.S. is faulted for spending beyond its means, saving too little and going deeply into debt to purchase all manner of goods from China and the rest of the world." (Quotes from Washington Times)

    So is there any reason to believe that China has been pushing exports and ignoring their own consumers. Yea, I'd say so. One example is silk shirts. When I was working in China (maybe 12 years ago) men's silk shirts were big. Most of them were made in China. Initially, you could get them here for around $40, but the price quickly dropped and you could buy them for around $10. At the same time, if you visited any of the shops on Nanjing Liu in Shanghai you would have to pay $60-$80. If you visited the mall under the China World hotel in Beijing you would pay over $100 for the same shirt.

    So was China dumping or breaking any trade laws? No, not if you believe what they tell you about costs. But that is the point. There is no transparency in China. There is no transparency in their financial system. They manipulate their currency. Half their companies are owned wholly or partially by the government. Safety and environmental regulations are pretty much non-existent. Healthcare? What the hell is that? Etc. Etc.

    In addition, you can't say they have open markets. The only way you can set up a joint venture is through a transfer of technology. Deuce has already posted about the intellectual piracy issues there. If you want to have a wholly-owned manufacturing company there, you better plan on purchasing anywhere from 60-90% of your supplies from Chinese companies. Not an easy task. I know.

    So is it fair trade we have with China? Well I guess it depends on what your definition of is is.

    So am I arguing for import tariffs?
    No. What I'm arguing for are realistic trade negotiations that address these issues, not selling out to lobbyists from the big multinationals that profit from the China trade.

  46. It wuz done the Chinee fault. They made us take all that cheep money.

    Thanks, that's the first really good giggle I've had all day. Kwik, sumbody call Barney Fag, and Dubya; it wasn't their fault after all. Holy Smokes :)

    Yep, you're right that all anti-dumping laws should be enforced. I'll give you that one.

    I'm under the impression, though (and I could be wrong as dirt,) that they're doing better. I know they are with their currency.

    Ah, my heart's not in this one, Q. We have some really big stuff going on, and I just can't get excited over taxing silk shirts. Especially, since we don't have a silk industry. I know, I know, if I worked in a textile mill I would be much more interested. So, you win this round. I'm in a spirited ethanol argument over on Rapier's blog, and I'm going to go get a few more licks in before my computer blows up.

  47. Thanks for the warning Ruf. I'll make sure and avoid the Rapier blog until I know it's safe. :)

  48. One Thing,

    Trish, Afghanistan, and Vietnam had/have one thing in common. There was/is nothing to win.

    At least, in Iraq, we were/are in the middle of 40% of the oil in the world. And, you might have noticed, it's not exactly a "spiffy" neighborhood.

  49. Well, I guess we can become the new Opium Lords. We're running the "Protection Racket," already.

  50. Some day you'll thank me for dragging you through this particular asscrack.

    Trust me.

  51. Look, Trish, I know you and your husband want to believe; but, I spent my time in the soup knowing it was a bunch of nonsense. I guess you all might just have to do the same. I'm sorry. I'm sure as hell not knocking the Old Man's effort. It's just not to be. You know we all wish him luck. But, there ain't much you can do when you're in the predicament Obama's going to put you in.

  52. Trish, let me ask you something. How's it going to affect your husband when he has to tell the artillery to "Stand Down," and let Rangers die?

  53. "Look, Trish, I know you and your husband want to believe; but, I spent my time in the soup..."

    And so have we. C'mon, guy. War sucks. The last good one was picking 'em off like ducks in a pond in Desert Storm. And that's not what we've got.

    Nor do we have Vietman. Because at least there we had Saigon.

    Rufus, I'm sorry it's not better.

  54. No, Trish, it's much, much worse. At least, in Vietnam we Never had anyone order the artillery to "Stand Down."

  55. Not meaning to be mean, Trish. But, you need to recognize it for what it is - up front. It might be a sonofabitch.

  56. rufus said...
    " No, Trish, it's much, much worse. At least, in Vietnam we Never had anyone order the artillery to "Stand Down."
    I'll be damned if my son would fight under a Turkey like McChrystal if I had anything to say about it.
    That's BS:
    Four Men die for no good reason at all.

  57. 4 U.S. Marines die in Afghan ambush

    Now cut again, this time to Sept. 8, when four U.S. Marines were killed when the Taliban ambushed their patrol in Kunar province.

    The Marines were taken completely by surprise and pinned down under heavy Taliban fire. McClatchy reporter Jonathan Landay was with them and wrote a harrowing account of their desperate battle to survive.

    The rules of engagement again played a role.
    "U.S. commanders, citing new rules to avoid civilian casualties, rejected repeated calls to unleash artillery rounds at attackers dug into the slopes and treelines,"
    Landay wrote,
    "despite being told repeatedly that they weren't near the village."
    At 5:50 a.m., Army Capt. Will Swenson, of Seattle, WA, the trainer of the Afghan Border Police unit in Shakani, began calling for air support or artillery fire from a unit of the Army's 10th Mountain Division. The responses came back: No helicopters were available.

    "This is unbelievable.
    We have a platoon (of Afghan army) out there and we've got no Hotel Echo," Swenson shouted above the din of gunfire, using the military acronym for high explosive artillery shells.

    "We're pinned down."

  58. "Chandrasekaran reported that McChrystal "seemed caught off guard." Wardak clarified a bit more: "We've been too nice to the thugs," he said.

    So instead of receiving an angry lecture on America's disregard for Afghan life, the general received an angry lecture on America's hesitance to go after the enemy.

  59. Doug:
    That's certainly one way to expedite our departure from Afghanistan. Let articles like that appear in the daily paper and it won't take long to turn Americans against the whole Charley Foxtrot.