Monday, August 29, 2011

Twice as many government employees....!

There are many comments on twitter to the effect that there are twice as many government employees as there are manufacturing employees, in these good old United States.

Let's look at the behavior of a ratio between two numbers, in this case number of government workers and number of manufacturing workers.  Here is the ratio we are talking about:

Number of government workers
Number of manufacturing workers

The ratio written above means number of government workers divided by number of manufacturing workers.  So what people are saying is that the result of the division is 2 and this number is too high.

We can reduce this number by reducing the number of government workers.  BUT WE CAN ALSO REDUCE THIS NUMBER BY INCREASING THE NUMBER OF MANUFACTURING WORKERS!

Let's say we have

20 million government workers
10 million manufacturing workers

The ratio is 2

But if we increase the number of manufacturing workers, we might have

20 million government workers
12.5 million manufacturing workers

Now the ratio is 1.6

Everything looks better!

My concern is unemployment.  The huge unemployment in America is the cause of all the other problems. 

I am not very concerned about the number of government employees.  Even if we have more government employees than we should, this issue is not the cause of the high unemployment we have in America, and is not the cause of loss of manufacturing jobs in America. 

Anyone who would like to REDUCE the ratio of government workers to manufacturing workers should in my opinion concentrate on INCREASING manufacturing employment.  Efforts to increase manufacturing employment are, again in my opinion, much more beneficial to America, in comparison with worrying about the number of government workers. 

There are two reasons for the decrease in number of manufacturing employees in the time period 1961 to 2011:

+  The major reason is that American manufacturers, voluntarily and on their own initiative, transferred manufacturing jobs to so-called "low cost" regions in the Far East.  Anyone with half a brain could see that transferring manufacturing jobs out of the USA to foreign countries is very unwise and in fact completely insane.  However successive Presidents, Senators, and HR members made no attempt to control matters, and in fact passed laws providing tax incentives that assisted the transfer of jobs out of our country.

+  The secondary and smaller reason is that the American manufacturing sector made improvements in efficiency and thus needs fewer workers for the same manufacturing output.

Why do I pick 1961?  Because in the early 1960s, American manufacturers started to send manufacturing jobs overseas.  During the 50-year period 1961-2011, American manufacturers continuously sent jobs overseas, in an ever-increasing stream.  We have had a 50-year experiment to see if America can get along with much less manufacturing, and the result is a resounding NO!

The tragedy is that in 1961 it was already well-known in economic theory that manufacturing is critically important in maintaining the health of the economy of any country. 

We must reverse our tragic mistake and get our manufacturing jobs back from overseas.  We must put on tariffs or foreign goods sales taxes or both to encourage getting those manufacturing jobs going again in the USA. 

The time is right to take these steps. Professional studies have shown that overall manufacturing/operating costs in some states in the United States are now comparable with those in China, as an example.  Costs in China are rising, and there are other problems as well. 

The President, Senate, and House must act to bring millions of jobs back to America.  There are over 15 million Americans who are unemployed.  Put an initial five million back to work, and America would have a different look! 

Put American-made goods in stores, rather than foreign-made goods.  Then when an American makes a purchase in a store, his or her money stays in America and keeps on working in America.

Get that process going and America will be on a new upward path to prosperity and renewed confidence in America!

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