Thursday, January 19, 2012

Killing US Manufacturing, Part 2

Yesterday we noted a Bloomberg article about US manufacturing.

Today we have Part Two.  The author has some weaker arguments here, (see the link), but some are very compelling.

...When federal fuel-economy rules required Detroit automakers to produce some fuel-efficient cars, they decided to make them in places like Mexico because two decades of trade deals, under Republicans and Democrats, protected American banks, agriculture, drug companies and Hollywood -- but not manufacturing. (Gas-guzzling trucks, intriguingly, continued to enjoy tariff protection -- one reason Detroit made so many.)

The final nail in Detroit’s coffin was also hammered by Washington. It was gasoline priced at almost $4 a gallon. For decades, the U.S. government let the Saudis manipulate the market -- periodically flooding it with cheap oil to discourage the U.S. from making serious efforts to reduce our demand for oil, which, ironically, is the only way to ensure cheap oil.

That last line is half-right.  There are TWO parts to the equasion:  supply and demand.  Supply is also restricted by the FedGov (see below post).

This line, however, is key:

Former Intel CEO Andy Grove warns that the whole “scaling” process by which innovation led to mass production has broken down in the U.S. As he put it in a 2010 essay in Bloomberg Businessweek, “How America Can Create Jobs,” both politicians and business leaders bought into a “general undervaluing of manufacturing -- the idea that as long as ‘knowledge work’ stays in the U.S., it doesn’t matter what happens to factory jobs.

In other words, the Utopians in Gummint (and other places) decided that people who do NOT do "knowledge work" are irrelevant and immaterial to the US and its economy.

Talk about 'elitism writ large'....

Ironically, the author is the ex-President of the Sierra Club--which explains his animus toward "gas guzzlers." 

Perhaps he should look at KeystoneXL and 'splain that, too.

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