Tuesday, March 6, 2012




Three or four years ago I saw an older gentleman, an economics professor from University of Maryland, interviewed on CNN.  They gave the man about 10 seconds.  He said we have to increase manufacturing in USA to solve our deficit and unemployment problems.

Since then I have not seen or heard even one constructive statement from any economist.  They either keep their heads down, staying out of the most serious economic issue since America was founded, or they come up with disinformation.

Providing disinformation is treason, simple as that.  Disinformation delays solving the problem of deficits and unemployment.  Disinformation creates confusion in the minds of the American people as to what should be done.

What has to be done to solve the problems is cut imports and increase domestic manufacturing, just as the professor from University of Maryland said three or four years ago.  Every day we delay in implementing these ideas damages America in multiple ways. 

Here is what happens every day:

+  Another net $1.4 billion hemorrhaging out of our country to foreign countries to pay them to do manufacturing we could be doing here.

+  China and other foreign countries become richer by $1.4 billion every day while we become poorer by $1.4 billion every day.

+  China and other foreign countries buy up another chunk of our economy and gain further control of our economy.

+  China gains further control of "leaders" in American business and government so that the ordinary working men and women of America have less and less say in our political debate about how to save the American economy.

What do the rich and powerful people of America want?

It seems the rich and powerful people, the heads of corporations, etc., want America to fail.  Why or how they would benefit from a failed and wrecked America I do not know.  I hope they understand that keeping the lid on the true factual situation, and allowing disinformation to run rampant, will cause America to fail.

A new low in disinformation

Or maybe I should refer to it as a new high, because I want to talk about a new case of disinformation which is even more outrageous than previous instances I am aware of.

There was an article in Wall Street Journal (WSJ) on March 3, 2012.  (Or maybe the correct date is March 2.)  Title of the article:

"Economists assail campaign proposals to help factories"

Here are some passages from the first couple of paragraphs of the article:

"Proposals by...(the President and by Republican candidates)...to promote manufacturing are running into skepticism among economists who doubt modern factories can churn out many new jobs."

"Critics of such proposals say the rise in manufacturing employment of the past two years is more a blip than a trend."

The article quotes Susan Lund of the McKinsey Global Institute:  "If job creation is your goal, manufacturing is probably not the sector you'd look to."

One initial comment.  The statement "more a blip than a trend" is absolutely outrageous.  It is gratuitous negativity, with no factual basis.  Only by being a very accurate predictor of the future can anyone tell whether it is a blip or a trend.  It demonstrates my point that there are people who want America to fail.

More generally, I have the strong suspicion that the above three statements come from Americans aligned with China.  China is very afraid of the increasing level of manufacturing in America.

If America were to throw off the chains of China, it could be that other western countries, UK, EU, Canada, Australia, New Zealand, would also get brave and do the same thing.

In numerous western movies, a man finds a valuable gold deposit.  He tries to scare people away from the area by making ghostly noises at night or creating images of fierce animals.  Similarly, the three statements quoted above are transparent and flimsy attempts to scare America away from pursuing increased levels of domestic manufacturing.

Let's look at more gems

The statement that new manufacturing will not create significant numbers of jobs is absolutely false.

At another point in the article Ms Lund says "increasingly factories are not assembly lines with lots of people standing around".  This demeaning and insulting statement is another way of saying the same thing and is irrelevant if not absolutely false.

It is a known principle of economics, stated and re-stated in every textbook, that manufacturing has a ripple or multiplying effect.  Even if it is true that the number of workers in the factory that completes the manufacturing process is smaller, there are still the suppliers.  The suppliers manufacture components and ship them to the factory.  Other suppliers design, manufacture, install, and service the robotic equipment and the automation equipment.

Then the factory itself requires designers, engineers, and personnel in human relations, purchasing, sales, and other categories.

Surely we would rather have all this activity at home here in America, even at a reduced level per unit of output, rather than a ZERO level due to doing the manufacturing in China.

Manufacturing is probably not the sector you'd look to

Ms Lund's statement that "manufacturing is probably not the sector you'd look to" is absolute nonsense.  No other sector in the economy provides the benefits I mention above, and I've hardly begun listing all the benefits!

There is simply no other sector "you'd look to"!

Everyone respects honest work.  The truck driver, the forest ranger, the librarian, the bus driver, the fireman/woman, the hotel chambermaid/man, the gardener, the city clerk helping people, the police officer, the teacher, the nurse, the doctor, do work vital to our well-being.  But in economic terms, these sectors do not provide the benefits provided by manufacturing.

Even if manufacturing returning to America produces fewer new jobs than we might expect, we still get HUGE benefits.

All these people claiming to be economists are clearly not aware of, or don't want to be aware of, a simple fact of economics:

There is a value-added effect, or it can be termed a wealth-creation effect, inherent in manufacturing.  For a given level of output, the value-added effect is the same whether 100 workers or 10,000 workers are required.

The value-added effect subtly but strongly enriches the economy.

In a 50-year fit of insanity, 1962 to 2012, we sent huge amounts of manufacturing activity away to foreign countries.  Thereby we lost a huge amount of the value-added effect of manufacturing.

Result?  We became impoverished while China and other foreign countries became enriched.

Our trade deficit

Our trade deficit in manufactured goods with all foreign countries is over $500 billion per year.

This number is available in publications coming out of the Congressional Research Service and the Bureau of the Census.

$500 billion divided by 365 days in the year provides the $1.4 billion figure (rounded), that I mention above.

Our huge trade deficit is never mentioned by politicians.  Reason: it is too scary to deal with or maybe they don't understand it.  Also, many economists produce the disinformation that the trade deficit is a theoretical figure and is not a real cost we are paying.

All we have to do is look at impoverished America, and compare with rolling-in-money China, to see that the economists are way off base, again.

If we bring manufacturing back to America, and/or if we cut imports to encourage new manufacturing to spring up in America, even if we don't have huge job creation we still lessen the amount of money that hemorrhages out to foreign countries.

Isn't it obvious that reducing the hemorrhage is going to help America?  It's plain common sense!

But the doom/gloom sayers, the people who enjoy seeing failure, the twisted people who want America to fail, don't see it.

PS: I could write an article longer than the WSJ article, demonstrating the nonsense of a dozen more points made in the article.  But maybe the brief discusssion above demonstrates the tone of the article.  Does WSJ want American to fail?


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