Saturday, March 19, 2016

Reality Check on US-Based Manufacturing

For the last several months, the decline in US manufacturing has been in the headlines.  The usual suspects have blamed "labor costs" because that's what they are told to say.  In reality, a well-run manufacturer's direct labor-cost is only about 5% of the total cost of the goods.

(Yes, I said 5%.  I'll accept quibbling about that--but the number will not change significantly.)

When an influential writer then went on to carpet-bomb what remained of the corpse of domestic manufacturing, there was a reaction. 

This essay digs a little deeper.

...the reality is that since the year 2000 when Permanent Normal Trade Relations with China went into effect, [Bill Clinton signed that treaty] five million manufacturing jobs have been lost, according to data compiled by the Bureau of Labor Statistics
What’s more, the nation’s Gross Domestic Product growth has not exceeded 4 percent since that same year.  In fact, GDP growth hasn’t exceeded 3 percent since 2005 making the past decade the worst for economic growth since the Great Depression....

Then follows a partial list of causes:

...It is the fault of government policies that dictated that incandescent light bulbs could not be sold in the United States, so General Electric (which lobbied for the ban) could close the Virginia plant that made those bulbs and replace it with one in China that makes the federal government mandated ones.

It is the fault of environmental regulatory policies that turned timber mill towns in the Northwest into ghost towns, and are currently in the process of shutting down coal mines and industries related to the coal business shuttering the life blood of towns all over Appalachia. 

And it is the fault of a corporate tax system that makes it undesirable to invest in building things here in America. ...

Oh, yes, there's more!  Regulatory predators such as EEOC create expense, too.  How about the cost of the Fair Labor Standards Act?  (OK--you think a 40-hour week is luxurious?  Change the FLSA!)  Or take OSHA.  Yah, all those safety thingadoodles cost money.  (You don't like the costs?  Repeal OSHA!!)

And we haven't even started on State and local gummint rules, regs, taxes, and fees.

This is Big Gummint, and it is why The Donald is succeeding.  He is playing to the large crowd of people who have been hammered by job losses (without telling them that he will do not one damn thing to change it other than 'build walls.')

HT:  ColdFury


Anonymous said...

.....and what will Cruz do that Donald will not, make the case please.

Dad29 said...

Ted has been for a pure Constitutional gummint--that is to say if it ain't in the Constitution, it shouldn't be in DC.

Trump, on the other hand, is a petty bougeois wannabee dictator with very bad hair.