American Pie....From China?

I enjoyed my college economics classes, but am hardly an expert in the field. In fact, since much of it is :

a) theoretical
b) open to different interpretations,

one could say that it is more of an ART than a SCIENCE. Truly, get 10 economists in a room and try to get any two of them to agree on anything.

Almost impossible.

One area where economic theory may be sound (and SOMEWHAT begrudgingly agreed upon) is the notion that goods and services should be produced by those entities (be they companies or countries) that most EFFICIENTLY deliver them to market.

Unfortunately, while solid economically, it could have disastrous effects on our national security—as manufacturing is rapidly exiting the American landscape.

Other countries, which largely have no labor unions and no enforceable labor laws---are proving that they indeed can produce products more cheaply than the U.S. This allows Walmart to pass along those Chinese-made products to American consumers. Viola! Our standard of living has increased……but at what cost?

At one time, the United States was the undisputed manufacturing center for the world. From refined raw materials like steel to finished products like automobiles, the U.S. output was the engine that essentially won World War II.

A dormant economy in the wake of the Great Depression, we got a big wakeup call from the Japanese on December 7, 1941. Factories were re-tooled almost overnight—and the consumer products which they used to churn out now became the implements of war. Planes, tanks, jeeps and guns. Our incredible output made the war’s eventual outcome a foregone conclusion.

Since then, our manufacturing base has eroded. Jobs have been shipped overseas by AMERICAN COMPANIES looking to cut costs. With every factory closed, we have grown incrementally more vulnerable to any enemy who threatens to launch an attack.

What would have happened in 1941 if 40% of our steel came from…Japan? If our auto industry imported 20% of its cars from…Germany?

So, economics be damned. There needs to be a baseline capacity for this country to conduct wartime production. In peace, perhaps it is used to make toaster ovens and pontoon party boats. If an aggressor materializes—and threatens our nation, we can hardly build, tool and train factories and workers from the ground up.

If national security is the federal government’s main job (and I believe it is), then here’s a federal program that creates jobs in peacetime—AND allows for rapid retooling of factories in wartime.

Select critical industries for which America needs to continue to produce goods. Steel is clearly one. Automobiles and aviation factories are a couple more. If whatever peacetime goods these factories produce cannot compete on the world market (due to higher production costs), they become collective loss leaders for Uncle Sam. We’ll gladly take that loss—while providing tens of thousands of jobs—in order to turn on a dime if and when (God forbid) we need to take over those factories for wartime production.

Speaking of Uncle Sam, check out this humorous—yet sadly true video of how we’ve abandoned the “making goods” scene for the “providing services” arena. Funny-yet also chilling:




http://www.youtube.com/watch?v=Vq8wbXAR4ZQ


We can reverse this trend if we have the national recognition of a problem—and the national will to change it.

If you’d like my blog in your weekday box, just let me know: tim.moore@citcomm.com