The Death of an Economy

Every generation has to deal to some extent with the challenge of reminding the next generation of its roots. It has been so as long as man has walked this planet. Take for example, Moses after he had led the Israelites out of Egypt to the Promised Land. Listen to his first State of the Union Address as he challenged them to remember who they were and how they came to be:

And these words that I command you today shall be on your heart. You shall teach them diligently to your children, and shall talk of them when you sit in your house, and when you walk by the way, and when you lie down, and when you rise. You shall bind them as a sign on your hand, and they shall be as frontlets between your eyes. You shall write them on the doorposts of your house and on your gates. And when the Lord your God brings you into the land that he swore to your fathers, to Abraham, to Isaac, and to Jacob, to give you—with great and good cities that you did not build, and houses full of all good things that you did not fill, and cisterns that you did not dig, and vineyards and olive trees that you did not plant—and when you eat and are full, then take care lest you forget the Lord, who brought you out of the land of Egypt, out of the house of slavery.

Deuteronomy 6:4-12

America’s Economic Heritage

Among the many things that made America great was its drive to expand, build, and create.  Much of that was due to what some a term that has come into great disfavor in our day, “The Puritan Work Ethic.” Those pre-Revolution colonists to the Americas carried with them a committed belief that every endeavor was an act of devotion to God. Craftsmanship, hard work, and inventiveness all were seen as logical expressions of our purpose for existing. All was to bring glory to the Creator, and anything less than man’s best was an affront to the One who made him.

While the spiritual underpinnings of this ethic may have become lost to many, its lasting effect was not. America, like all great and lasting nations before it, was a nation that made things. As a result, the United States was at the head of mankind’s charge into the Industrial Revolution. We were a nation of inventors, explorers, and entrepreneurs. While the rest of the world struggled with production and quality, it was the Henry Fords of America that invented ways to mass-produce everything.  And, while the rest of the world struggled to hold off a Germany that had learned how produce efficiently, it was the manufacturing base of America that enabled us to carry the load of two global wars at the same time.

Producers and Consumers

One need only look back to what happened to Rome to understand what happens when a nation becomes more a consumer than a producer. With its increased expansion and the ever-softening citizens of its capital, Rome depended more and more on external sources for almost everything. The result was an empire that fell from within long before the Barbarians came knocking on Caesar’s door.

The question to ask now is simple: How much longer can America as we know it survive its ability to create and produce continues to erode at its current pace? The United States is rapidly becoming the very first “post-industrial” nation on the globe. Every economic empire in history became bloated, lazy, and greedy, squandering the wealth accumulated by those who came before them.  Rome took centuries to accomplish this, but the United States is on a much faster pace.

In less than half a century, we have witnesses the deindustrialization of America.  Over the past decade, tens of thousands of factories have left the United States along with multiple millions of manufacturing jobs. There was a time when our nation could out-produce the rest of the world combined, but that day is past!

Some mistakenly believe the problem with our economy is our consumption. Consumption of goods is never a problem as long as production outpaces it. The problem is that most Americans have no clue what is going on around them. While we focus on the “debt crisis” debate in Washington, we forget what we were taught in Economics 101. When our nation’s gross domestic product falls to 3%, the economy is stagnant. Anything below that, and economic disaster is inevitable.  At the beginning of August 2011, our GDP stood at 1.9%.

The Hard Facts

• Since 2001, the United States has lost just over 43,000 factories. 75 percent of those factories employed over 500 Americans.
• In 2008, 1.2 billion cell phones were sold worldwide.  The number manufactured inside the United States – zero.
• One of America’s largest manufacturers of computers, Dell, is closing its last major manufacturing facility in the States and expanding operations in China to the tune of a $100 billion investment in the next ten years. They are simply following suit with what IBM did years ago.
• The U.S. trade deficit with China rose almost 20 percent in first quarter compared with just one year ago. The Economic Policy Institute calculates that rate of deficit will equate to half a million lost jobs this year alone.
• The United States spends nearly four dollars on Chinese goods for every dollar the Chinese spend on goods produced in the United States.
• Manufacturing employment in the U.S. computer industry is lower in 2010 than it was in 1975.
• Asia produces 84 percent of the printed circuit boards made in the world.
• Since 1999, employment at foreign affiliates of U.S. parent companies rose a shocking 30 percent to 10.1 million. During that same time period, U.S. employment at American multinational corporations fell 8 percent to 21.1 million.
• Manufacturing once represented 28 percent of U.S. economic output. That figure fell to 11.5 percent in 2008.
• At the beginning of 2010, less than 12 million Americans worked in manufacturing. The last time manufacturing employment was that low was at the beginning of 1941. During that same period, the population for the United States more than doubled.
• Consumption comprises 70 percent of the GDP. Half of that consumption is for services rather than manufactured goods.
• The United States has lost 32 percent of its manufacturing jobs since the year 2000.
• The U.S. Census Bureau shows 43.6 million Americans living in poverty, the highest in the 51 years records have been kept.

Forget the Numbers

One of the problems with economics is that our eyes glaze over with all the numbers and charts and graphs. It is simpler to boil it down to the essentials: When we consume more than we produce, we are in trouble. Let that go on for too long, and we are in big trouble. There is no reason we have to continue on this path, but we do have to make some hard decisions. The first one being is to take our heads out of the sand and be honest as a nation where things stand.

©2011 Off the Grid News