Made in America

There was a time when the United States was known for quality. Whether clothes, appliances, or cars, Made in America meant it was built to last and worth paying for. In the not so recent past, the United States possessed a strong manufacturing base and a skilled labor force that took pride in its work; it was a time when blue-collar jobs came with comprehensive health benefits, retirement plans, vacation time and holiday bonuses, and paid enough to raise a family and own a home. Manufacturing plants were locally owned and represented the economic heart of their communities. The money workers earned at the factory supported a secondary service sector of local retail stores, restaurants, car dealerships, and other businesses. As a result, the United States developed into a series of vibrant, self-sufficient towns characterized by their strong sense of community, unique identity, and quality of life.

Today these same communities have become ghost towns as manufacturing moves abroad for cheaper labor, and blue-collar workers are laid off and often have to relocate and gain new skills to find future employment. Those that remain in the manufacturing sector have lost many of their benefits, and their wages have declined relative to inflation and are no longer sufficient to buy a home and raise a family. How did this happen? Without going into detail, after the post World War II economic boom, and coming to a head in the ‘80’s and ‘90’s, businesses began to incorporate and conglomerate through hostile takeover or otherwise. The result was shareholder control of businesses that were once local, and the pursuit of profit with disregard for workers’ rights and community life.

We’re all familiar with the film Wall Street (1987) in which Gordon Gekko, the successful stockbroker, speculates on brick and mortar businesses, concerned more with making a profit than producing anything of value. He represents the transition in America from an industrial to an information economy, and the film anticipates well the early ‘90’s high tech boom and the internet boom of the late ‘90’s. Gekko is heir to a long line of corporate parasites that prey on economic producers though anti-competitive or illegal business practices, often in collusion with government, exemplified by the robber barons of the 19th century, the most notorious of which were “The Big Four” of the Central Pacific Railroad, who fleeced agricultural producer by charging exorbitant rates to transport their produce to market. In regard to the collapse of America’s modern industrial economy, corporate shareholder profiteering was abetted by Ronald Reagan’s war on labor, initiated in 1981 when he fired 13,000 striking air traffic controllers and destroyed their union. That was the beginning of the end for workers rights in America. Reagan appointed management representatives opposed to unions to the National Labor Relations Board, which then abandoned its legal obligation to promote collective bargaining and permitted employers to permanently replace workers who exercised their legal right to strike. By repealing many of the benefits American workers had earned through political activism and labor reform, the Reagan administration had effectively set us back nearly a hundred years to the time of Upton Sinclair’s The Jungle (1907), the seminal muckraking novel which depicted the poverty, unsafe working conditions, and hopelessness of a working class that lacked the legal means and political agency to protect their own interests. Relatively speaking, the American worker today finds himself in a similar marginalized position. Now that the bottom limit of wages and workers’ rights have been reached, and with the legal restrictions posed by environmental health and safety laws in the United States, corporations have moved their operations abroad where these restrictions to do not apply, local labor cost is much cheaper as a result of poverty and desperation, and raw materials are readily available for exploitation. In effect, the reality of “the jungle” has simple been exported abroad in order to increase shareholder profits, while blue-collar workers have lost their jobs and done their best to adapt to a service economy.

Service Economy

The myth of the service economy is that it replaces low-wage, low-skilled, manual labor with high-skilled, high-tech, service labor. Industrial jobs were traditionally neither low-wage nor low-skilled. In order to make a product, workers had to have an understanding of the materials and assembly of a product throughout the production process. Alternatively, modern service labor is low-paid compared to its traditional manual counterpart, is not high-skilled, and employs technology at the end user level, in the form of a cash register, credit card machine, word processor, database, etc. When the services are abstract, such as the provision of insurance, the service worker is nothing more than a clerk managing client information, billing, and claims. There is nothing particularly high-skilled or high-tech about this service. The distinction between the service economy and the information economy is consequently porous and vague. Most of what people claim for information economy falls into the information management category, i.e. the above-mentioned insurance example. These are services that have been around since before computers and have subsequently been made more efficient and less personal, often resulting in a lack of quality. High-tech information management is the modern equivalent of copying and filing; no one wants to do it because it is repetitive and boring; nevertheless, it needs to be done. Ultimately, only a small percentage of information jobs are creative, and these are often related to the creation of hardware and programs to facilitate certain lower level tasks performed by high-tech clerks. The hardware may be either primary hardware used for manufacturing, or as an end product; if it is the former and very specialized, it is likely to be produced in the developed world to be sold later to the developing world; if the latter, it is produced in the developing world. So it seems that the reality of the modern service cum information economy is one of administrative work that is neither high-skilled nor creative, and lower paid that the manufacturing jobs of the past. By outsourcing manufacturing abroad, the United States has passed from being a producer nation with skilled labor to a consumer nation with unskilled labor.

Globalization

The problem with the globalization is two-fold: wages have not increased relative to the cost of living, so we have less buying power; and we have become consumers not producers, with our savings replaced by debt. Today, the majority of the products we consume are manufactured abroad with the result that they have become cheaper due to the efficiencies of cheap labor, lack of environmental regulation, economies of scale and global distribution networks. Corporate consolidation means that fewer and fewer companies are providing the products we use, and when this is not the case competing products often come off the same assembly line of factories abroad. In reality, what we get is not greater choice, but the illusion of choice in homogenization and production consolidation. The combination of cost saving measures, including the use of low quality materials, and subsistence wages and high production quotas for workers, results in an inferior product that is not built to last. On the material level, this formula produces a lot of losers: namely, the worker, the consumer, the environment, the small businessman, and the local community. The only winner is the multinational corporation. Taking the corporate growth model the extreme, global free market capitalism begins to resemble communism, in the sense that individual companies seek to monopolize markets, resulting in Brand X for everything from cars to clothes to banking. Because nearly all companies are hierarchical in structure, this produces an increasingly exclusive business elite that can dictate with impunity the price of goods and the wages, benefits, and working conditions of their employees. While a global monopoly of all goods and services has not come to pass, monopoly, or centralized control, is the agenda of all corporations, as certain sectors of the economy demonstrate, and the ultimate goal of capitalism as an ideology. As corporations cannibalize each other to increase market share, quality, privacy, diversity, individuality, personal freedom, consumer choice, labor rights and environment health are increasingly sacrificed.

Throw-Away Culture

We live in a time of ubiquitously available low-priced goods, and as a result we either do not value craftsmanship and quality, or can’t tell the difference at face value between a product made with care and on a small scale, and mass-produced short-lived junk. It seems so-called durable goods aren’t so durable any longer. Corporations have taken this one step further by designing products to be prematurely obsolete, and convincing us that novelty and instant gratification of our material wants supercede the long term utility value of a product. No longer do they produce quality goods, but rather goods that fail, degrade, or break prematurely so as to ensure future consumption. Another strategy to bolster consumption is to produce so called “next generation” goods that are superficially different in design, or in the case of electronics supposedly “improved” in function, where these functions are often unnecessary vanity extras that feed on that human need for acceptance and status. The result is glut of discarded, obsolete, worn-out or fad products that are not only a waste of resources, but an environmental hazard. This philosophy of production is not merely wasteful but a case of criminal negligence. The earth can afford neither overproduction nor waste in the production process. By embracing the reduce, reuse, recycle philosophy product life cycles can be extended, and negative environmental and social externalities can be eliminated. In order to develop a more efficient system of production, a sea change is necessary in the way we perceive our world; this requires that producers and consumers alike accept that the material world is finite and discard outmoded illusory perceptions of abundance. Because we need to consume to produce, and reproduce, it is essential that we find a way to do so that does not exhaust our resources. Technological innovation, coupled with an attitude and behavior adjustment that embraces moderation and thrift, can help us to reach our goal of sustainability.

Consumer Responsibility

Through their cynical marketing campaigns, corporations have taught people to believe their self-worth and individuality is determined not by the content of their character but by their material possessions. Consequently, we have accepted materialism as an ideology. We all know better, but it is much easier to buy a new product to show status to others than to learn a new skill or improve our character. Easy is the operative word of the modern capitalist ethos. Everything is supposed to be easy, but we all know through the management of our daily lives and in our relationships, that it’s not. What is easy is by definition not rewarding. What is easy is ultimately not worth having. Our common sense tells us that there is no fulfillment in conspicuous consumption; if prosperity is what we seek, we should pursue it in the tried and true American fashion of thrift and moderation which allows us to best conserve and apply our accumulated resources where they will produce the most benefit, instead of wasting our time and money on material one-upmanship with the Joneses. Ultimately, it is the responsibility of the individual to see the game for what it is, and to have to backbone and strength of character to develop their own identity, form their own opinions, and make socio-economic decisions that reflect a balanced emotional, spiritual, and material well-being. Consumers have the choice to buy products that are sustainable for labor, the environment and the community, and boycott those which are not, thereby sending a message to industry to improve their operations, business practices, and the quality of their products.

Speculative Economy

United States prosperity has come to depend on cheap energy, foreign sponsored debt, and market speculation. Aside from a few prosperous and innovative industries, we are in the unenviable position of being a consumer nation that produces few material goods of its own. As a result we have become reliant on the service sector to create wealth. The services we provide are primarily related to finance, R & D, management, marketing, and distribution of goods produced elsewhere. We have been able to position ourselves as the middleman of global commerce largely because of the trust the world has placed in our currency and our consumer market. The acceptance of the dollar as the global fiat currency is the result of our historical legacy as a producer nation with abundant natural resources and an educated and productive workforce. The value of a fiat currency is based on trust and not concrete commodities or resources of a certain value and scarcity, such as gold. Ironically, our fiat currency has become our Achilles’ heel, given that the federal government can inject or withdraw money from circulation as it sees fit. This speculative addition of “funny money” into the economy resulted in the boom and bust of the dot-com bubble from 1995–2001. The gains made by certain fortunate and connected investors were then transferred to the housing market where they created another speculation bubble abetted by low interest rates and predatory lending policies to average Americans resulting in overvalued housing stock nationwide and culminating in market failure by 2007. Housing was the biggest asset and source of wealth for most Americans, and when it lost its value and could no longer provide equity for additional consumption, or interest rates increased and forced foreclosures, then the economy slowed and the dollar declined. That decline in the dollar was the consequence of government and corporate opportunism and mismanagement that resulted in a fundamental and justified loss of trust in the U.S. economy worldwide. Instead of seeing the light, the Federal Reserve mistakenly continued to lower interest rates to stimulate falling domestic consumption based on job insecurity, low wages, high cost of living and other factors, thereby prompting capital flight from U.S. markets and a further decline in the dollar. The last and perhaps final straw of financial mismanagement can be seen in the proposed $15 billion bailout of Fannie May and Freddie Mac by the U.S .Treasury and the Federal Reserve; this further addition of currency into the domestic money supply will continue to undermine the value of the dollar because it is not backed by tangible commodities or resources. The failure of the housing market was a natural systemic adjustment to a nation living beyond its means. When the majority of the population can’t afford a home unless mortgage lenders give it to them at no money down or rock bottom interest rates, then homes are too expensive. Furthermore, the federal government can’t keep printing money to bail out speculators and promote domestic consumption and expect the rest of the world to continue carrying our debt in the form of excessive dollar reserves of declining worth.

The question that remains is how long is the U.S. economy going to continue to play chicken with reality? Now we are seeing a third stage of asset transfer from housing to commodities. While for many in America and elsewhere in the world these are difficult economic times, according to the Financial Times the very wealth are reporting an increase in value of their portfolios. The result of this speculation, by the wealthy and others who are seeking to protect their money, is an increase in the cost of everything from oil to steel to foodstuffs. According to Global Research, “As much as as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds.” As for food, when the cost of oil goes up so does the cost of transporting food to market. So what’s really happening? Basically, large investors and corporations manipulate financial markets while governments facilitate their operations with lax regulation and at times collusion, prompted by special interests, resulting in a speculative trade of goods and service not based on their true value as defined by the economic fundamentals of supply and demand. This game always ends with market failure where the small investor is left holding the bag while the profits are concentrated in the hands of large investors, banks, and shareholders who have increasing power to manipulate markets for their benefit. Aside from irresponsible and excessive printing of fiat dollars, the money they’re taking is yours and your neighbors.

Back to Basics

It might be unpopular to say it, but we can’t go on like this. In terms of speculation, commodities are the final stop. The market failure that comes from speculating in food, oil, and other natural resources we need to survive, is one that sows the seeds for political instability. It would be a mistake for those in control of the speculative globalized financial and economic regime to think that they are immune from the potential conflicts that could result from artificial scarcity. A prosperous nation is one that effectively manages its natural resources and produces what it can while trading to acquire what it needs and does not already possess. From that model comes a strong culture that is unique to its geography and history. Such a culture bases its wealth on what is tangible, and does not allow the concept of wealth to become disconnected from the land and the labor of the people. Furthermore, this successful culture does not base its value system on individual success, but the success of the community as a whole in all its administrative gradations. In other words, it is not permitted in a healthy society for the individual to be a coward, avoiding the difficulties of social living and political debate in favor of leisure and self-gratification. The America I have just described existed once and can come to exist again. But first we must do some necessary soul searching to properly understand what we have become, and to make the tough decisions that will help us change for the better. This journey to recovery will be facilitated by our impending economic decline, which ironically has the power to bring out the best in people, in terms of hard work, thrift, solidarity, compassion and hope. For some time now, the rest of the world has indicated that it prefers we change course from our selfish, greedy, unilateral, fear-based, and uncompromising attitude and behavior and become the America we once were, and that they looked up to. This process starts with each of us from the bottom up.