SEARCH BLOG: ECONOMICS
This morning was supposed to be golf, but with the temperature and brisk wind and spotty rain, posting an article here seems much more satisfying.
As gloomy as this day is, it doesn't compare with the more pervasive gloom settling over the State of Michigan. April statistics verify that there were fewer people employed in April, 2007 than in April 1997. Ten years of stagnation and decline.
Why? Many reasons. An auto industry that lost its focus (Jacques Nasser was busy buying junk yards instead of shortening the product renewal cycle). Unions that refused to accept the fact that their employers were not their adversaries, but that other workers in other states working for other companies were their competition. State government that refused to see that it could not continue to expand while the state itself was shriveling.
But is it because Michigan was uniquely inept or because Michigan was uniquely American? While other states decided that it was better to join the movement to lose manufacturing to other countries or import cheap [and illegal?] labor from countries south of us, Michigan held fast to the post-WWII approach that building American and buying American was not only good business, but good for the country. It appears that Michigan may have been somewhat mistaken.
It appears that wealth is now imported in the form of labor and parts and raw materials and finished goods. It appears that distribution and "servicing" is the key to wealth... for some.
As Paul C. Roberts, Assistant Secretary of the Treasury in the Reagan Administration, says:
Economists are governed by the illusion that America’s post World War II prosperity is based on free trade. It is not. America’s post-war prosperity was based on the destruction of the economic capability of the rest of the world by World War II and communism/socialism. America was prosperous in its trade, because no one else could produce anything.I hope that I'm wrong. I hope that Michigan is an anomaly. I hope that Roberts is wrong. I hope that the fall of the American dollar and subsequent rise in the cost of essentials that we are seeing is temporary. I hope that wealth destruction really doesn't happen.
But I'm not confident... given what is happening in Michigan.