The incredible economic power of manufacturing
It’s no secret that the U.S. economy is in a precarious state. How did we get where we are, and what can be done to improve conditions? Longtime industry professional Jim O’Leary believes the answer lies in encouraging manufacturing and the time to choose a pro-manufacturing agenda is now.
Editor’s Note: This article represents the opinion of the author solely and is not intended to be a reflection of the views of any person or entity other than the author. Feel free to leave your comments either in support or opposition of the author’s view in the comment section below the article.
Have you ever closed your eyes in a quiet moment and contemplated what your life would be like if you did not live in a home with today’s conveniences—seriously tried to imagine living without electricity, natural gas, indoor plumbing, and all of the appliances that run off of these resources?
Imagine a Life Without
Never done this? Take a few minutes right now and pretend that your life is a permanent campout without any of the modern daily conveniences. No cheating now! You can’t have anything with you except a few handmade tools that you crafted from local natural resources, such as wood and stone. By the way, you can eat only what you personally grow or harvest from the local environs.
Got the picture yet? Good! Now let’s expand this exercise a bit. There is no modern transportation in your life. Airplanes, cars, buses, trucks, trains, and bicycles have no place here. Petroleum and coal products are not available to you. Yes, this means no gasoline, diesel, or any fossil fuel of any kind. The only transportation mode available is your legs, or, if you can catch and train one, a horse.
The same goes for electronic gadgets. No cell phones, computers, or anything else that needs electricity to run. This also includes items such as paper, pencils, or, for that matter, anything that you did not make with your own hands.
Let’s see, winter will be here shortly, and you will need some sort of shelter. You have to figure out how to survive the howling wind and snow. You are going to have to secure enough food and clothing to survive through this time and enough wood to provide heat for cooking and warmth. Remember, you do not have access to anything other than your personal labor and handmade tools.
No modern building materials are available. You have to build something from the local natural resources, such as stone, timber, earth, and sod. By the way, you are going to need to build this shelter near a water source, preferably a clean flowing stream. If you want to live at this site permanently, the surrounding soil has to be naturally fertile; modern fertilizers and tillage methods aren’t available to you. Remember, you have to grow your own food or harvest from nature. The alternative is starvation.
If you are fortunate, you are married to a physically fit, hard-working spouse. You did not marry for love. You came together for mutual support in this tough game of survival. It is this survival mode of thinking that drives all of your decisions and actions.
Chances are you have children. It is natural for parents to want their kids to have more opportunities than they had. This would mean education for the little ones. Time and resources to educate them are unavailable. They also are too busy working to help the family survive winter, hunger, pestilence, and so on, and school is pretty much out of the question.
The children are growing up doing hard physical labor while learning the folklore and skills necessary to survive a very hard life. You and your family are in pure survival mode with no time or resources for anything else.
Heaven forbid that you or a loved one should suffer a major injury or illness! There are no modern medical facilities and technology available to diagnose and treat you. Yes, that’s right—no equipment that runs on electricity and no drugs, pain killers, or antibiotics. The local doctor or healer is severely limited in his efforts because he has only local plants and herbs to treat you. If you have a broken bone, it will be set without the aid of anesthesia. Forget about surgery and other advanced medical techniques that are commonplace today.
And so it goes, on and on. Everywhere you turn the only resources available are those in your immediate surroundings and what you can produce with your own physical labor.
This is the typical life story in much of human history and many third-world countries today. With such severely limited resources, more than likely your life would be short—a life expectancy around 40, if you survive childhood— diseased, and painful. All of your waking hours are spent working hard to barely secure a subsistence survival for you and your loved ones. This is neither an appealing nor pretty picture, is it?
A Life With
If you live in the U.S., your life probably doesn’t look anything like the imagined scenario. You live in a house with the basic amenities including electricity, natural gas or fuel oil, indoor plumbing, and an assortment of appliances and tools that bring comfort and ease to your life.
Your children are not working for survival every day. They attend a well-appointed school that provides a good and safe learning environment. You have access to top medical care that is remarkable by any standard known to mankind. You have the convenience of modern transportation that can take you anywhere you wish in the world within a few hours of your time. And you have an abundance of nourishing food that is readily available to you, thanks to modern agriculture and shipping.
The average American’s life today is only a distant dream for many of the world’s population. Here in the U.S., we have access to an unbelievable abundance of material goods, readily available, and at a price that almost any average, productive, working citizen can afford.
OK, so how did America achieve such wonderful abundance? No, this isn’t a rhetorical question. Really, how did America develop one of the highest living standards in the entire world?
The answer is simple, yet ingenious. The American people had the freedom to develop a passion for inventing value-added activities that maximized natural resource utilization. This activity developed and evolved into what we now know as manufacturing. Today’s manufacturing activities are responsible for creating virtually all of the material possessions and services in our lives. Even artisans depend on manufacturing to deliver the resources they use in their work.
Other countries have developed a passion for manufacturing as well. There is a very simple reason for this: Manufacturing is a tremendous wealth creator. This wealth raises the living standard of the people and gives power and strength to the national government. The countries that make manufacturing a top national priority become wealthy and strong. A strong manufacturing foundation moves these nations to world leadership positions.
Both Germany and Japan were devastated after World War II. Their industries were decimated. In Germany’s case, the country was divided under the theory that it would never be permitted to have the economic strength to commit war again. West Germany became a prosperous free economy. East Germany’s economy languished under harsh Soviet rule for over four and a half decades.
Both West Germany and Japan had the freedom to rebuild their manufacturing industries and trade with other nations. Both became leading world economic powerhouses with an incredibly high standard of living for their people.
In the early 1990s West and East Germany were reunited after the fall of the Soviet Union. East Germany was an economic basket case. Its industries were in shambles, and its people lived poor and almost destitute lives. The concern at that time was that West Germany didn’t have the resources to rebuild the eastern half of the reunited country.
Twenty years later, the reunited Germany is the economic powerhouse that is sustaining the entirety of the European Union and the euro currency. How did this happen? How Germany went from a struggling reunited country to supporting the financial base of western Europe in 20 years is a fascinating story.
In a nutshell, West Germany had accumulated enough wealth from manufacturing and trade that it had the resources to rebuild East Germany’s economy by rebuilding its manufacturing base. This, in turn, raised the living standard of the poor eastern countrymen and spawned their wealth creation economy. Today, for the most part, what was once East Germany is pretty much indistinguishable from West Germany; the united Germany is an economic power of the first order.
Today’s Germany and its recent history clearly demonstrate manufacturing’s incredible ability to create wealth and prosperity for the German people. From utter devastation and a divided country 67 years ago to its economy today, Germany is a powerful example of what manufacturing’s wealth creation does for a country and its people of all generations.
The lifestyles described in this article represent the extreme ends of the human condition. At one end is privation and hardship. At the other, life lived with dignity and comfort. The only difference is the economic model based on freedom to pursue natural resource utilization using modern manufacturing to create wealth that benefits the people.
The United States was founded on the concept that its people are endowed with certain unalienable rights, among which are “life, liberty, and the pursuit of happiness.” At the time the Constitution was adopted, most of the population lived in the conditions described at the beginning of this article. Very few lived in comfort and safety.
Today a very small minority live in those sparse conditions—some by their personal choice. The difference between then and now is attributable to the freedom that our forefathers had to create the economic model of wealth and prosperity using natural resources and manufacturing as the foundation.
50 Years Ago and Now
Fifty years ago, our economy was vibrant with a strong currency and a plus-balance of trade payments. We had full access to natural resources that we processed through manufacturing industries to make products for ourselves and the world. Our wealth was the envy of the world, and we were the largest creditor nation. Young people leaving school had bright futures ahead of them if they worked hard. There were ample opportunities available to them.
Today is a different story. Access to natural resources is severely reduced, but not because we have run out of them. This country has an amazing abundance of resources, including the world’s largest deposits of recoverable oil, natural gas, and high-grade coal. They are unavailable by regulatory law and harassing environmental lawsuits.
Our industries have withered because we couldn’t compete in a global economy with confiscatory taxes and smothering regulations heaped upon us by an alphabet soup of government agencies. Our wealth is evaporating and we now owe obscene amounts of money to creditor nations. Many of our youth have very limited futures despite high academic achievement.
The U.S. government isn’t responsive to the people’s desire for freedom. It no longer seeks to protect our freedoms but works to enslave us with law and regulations. It has been captured by special-interest groups that trade campaign donations for special legislative dispensations. Both political parties are equally guilty of selling the American people down the river to protect and boost their political cronies’ fortunes.
The federal and state governments, along with both political parties, have chosen to enact laws and regulations that are deliberately designed to curtail our freedoms to secure and protect our living standard and our children’s. Instead of protecting and encouraging manufacturing’s wealth creation and its benefits, the government has shown favor to those who wish to destroy it along with our freedoms and lead us into poverty and servitude.
The national wealth that our forefathers created and built up for us is almost exhausted. We have been living in a serious national deficit since 2000 that has greatly accelerated during the past four years. Our national credit card is maxed out, and our currency is losing value in the world market almost daily. The creditor nations will no longer buy our debt, and we have lost their faith in our national integrity.
Our living standard can be sustained only by one of two ways. We either create the wealth by restoring our freedoms and nationally supporting the proven manufacturing wealth creation model given to us by our forefathers, or borrow the money, which in the long run jeopardizes our children’s future for generations to come. Yes, the choice is that simple and clear.
And the time to make that choice is now. Do we restore our freedoms and rebuild the economic manufacturing model that brought us so much wealth and prosperity, or do we continue to borrow money while rapidly approaching the financial cliff that will destroy us as a free nation?