In this era of global economic downturn, two countries, Germany and China, aren't doing too shabbily. Now they can't be further apart: Germany is a stable democracy with a mature economy and China is an authoritarian government with a nascent yet rapidly growing economy.
So, why are they surviving the recession better than the rest of us? Harold Meyerson of the Washington Post suggests an interesting answer: It's The Factories, Stupid.
What sets them apart from the world's other major powers, purely and simply, is manufacturing. Their predominantly industrial economies meet their own needs and those of other nations, and have made them flourish while others flounder. [...]
For the past three decades, with few exceptions, America's CEOs, financiers, establishment economists and editorialists assured us that the transition from a manufacturing to a post-industrial economy was both inevitable and positive: American workers would move to more productive jobs, and the nation's financial security would only grow. But after rising steadily during the quarter-century following World War II, wages have stagnated since the manufacturing sector began to contract.
Harold went on to explain why most Americans are wrong when thinking that we can't compete with China's cheap labor (after all, Germany's labor cost is even more expensive than ours): Link
Impossible.
WTF MY WORLD I CAN SEE LIGHT
WHITE LIGHT
SCATTERING LIKE GLASS
"A prominent group of 18th century economic thinkers – the Physiocrats – argued that the ultimate source of all wealth is agriculture. They regarded the then-just-emerging industrial sector to be sterile.
Harold Meyerson is a member of a group that we might call the “Factoryocrats.” Just as the Physiocrats misread the once-dominant role of agriculture as proof that the only truly productive activity is farming, Mr. Meyerson’s histrionic fear about the decline of manufacturing employment in America suggests that he misreads the once-dominant role of factory work as proof that the only truly productive activity is manufacturing (“In recession battle, Germany and China are winners,” July 1).
The Physiocrats would be astonished to learn that Americans today are very well fed (and otherwise provided for) even though a mere 2 percent of the work force is in agriculture. Similarly, if Mr. Meyerson weren’t blinded by Factoryocratic myths, he’d see that Americans today are very well supplied with manufactured goods (and food and services) even though a mere 10 percent of the work force is in manufacturing.
Sincerely,
Donald J. Boudreaux"
http://cafehayek.com/2010/07/factoryocracy.html
This country has been bleeding manufacturing jobs for decades. At some point when we lose enough, the economy will collapse completely.
It's not just a matter of buying American, as many American companies are moving manufacturing facilities to Mexico where not only labor is cheaper, but also where they don't have to worry about costs associated with worker's compensation, unemployment compensation, environmental laws and other factors that save more money than the savings on labor costs.
I could never understand how profits derived from loaning money and interest collected and banks selling debts as assets could be a healthy thing for the economy.
I'm shocked! Shocked! There is gambling going on in the Casino!
http://www.nytimes.com/2010/07/02/business/economy/02manufacturing.html
The manufacturing sector increasingly relies on automated and computer-controlled machines, which are run by technically-skilled operators. Factories are hard pressed to find candidates who can read at a ninth-grade level, much less program a milling machine.
Overpaid, Over-benefitted, Overstaffed, 'Featherbedded', Over-regulating toward the carcos they're staffed in (the rulebook weighs ~22 pounds), Disincentivized toward productivity, self-improvement and collective improvement. +AND on top of that they make unreliable crap that's ugly inside and out.
We ~may have the Capability to make something almost as well-engineered as a German car (the reliability would be similar though, hehe!) but almost everything about US car companies, especially GM, and their culture is broken.
It's a shame that the big 2.5 still deal with them, and that they haven't gone through the proper bankruptcy proceedings to give all the bolt-tighteners a 'thank you for your service' check and then just move on without them. Sadly, because of the Ford Family, Ford never will. GM will probably go BK 2x more before it's gone.
If you want to see what awesome US-based manufacturing can do, go have a look at Hyundai's plant in Alabama. They are probably the best.
Any comment about US manufacturing would probably be lacking if it didn't include a link to one of the best screeds on it, and the companies involved, The GM Deathwatch Series at TTAC: http://www.thetruthaboutcars.com/category/editorials/gm-death-watch/