October 18, 2009
The highly anti-American labor practice of outsourcing and the continued decline of domestic manufacturing jobs have caused irreparable harm to the fabric of the United States. The weakening of our industrial core, combined with an ever growing level of distrust towards big business and government, has contributed to this period of doubt and distress in which we are sitting right smack in the middle of right now.
One of the signature aspects of the United States and allied forces victory in World War II was our nation’s ability to out produce the Axis powers of Germany, Japan and Italy. Throughout the course of the war, the allied powers doubled the Axis’ rate of production. The United States alone produced three times as many bomber aircraft, two and a half times the number of machine guns and nearly five times as many military trucks as the Germans and Japanese combined.
The reason for this simply remarkable level of production was our country’s ability to transform its manufacturing infrastructure into a war production infrastructure. Led by the heroic women laborers known as “Rosie the Riveter,” the United State’s prowess in the area of mass production, both in terms of technology and worker ability, provided a domestic weapon too powerful for the Axis powers to combat.
The city of Detroit was ground zero for domestic war production. The big three automakers (General Motors, Ford, Chrysler) converted their automobile assemblies into assembly lines dedicated exclusively to military support products.
“The government charged the auto companies with building 75 percent of all aircraft engines, and nearly 80 percent of all tanks and tank parts for the war effort. The auto industry also provided more than 12 billion rounds of small arms ammunition and nearly six million guns,” according to the Michigan Business Report.
In fact, the big three ceased automobile manufacturing from 1942 through the end of the war in 1945.
As the 1950’s progressed, the United States witnessed both a “baby boom” and an economic boom, resulting from a growing number of consumers and an ability to once again devour goods and services post-war. Auto manufacturing pivoted back into full production and industries involving the assembly of everything from televisions, kitchenware and aviation grew exponentially.
As a result of this growth, the Gross National Product of the United States rose from $200 billion in 1940 to $500 billion in 1960. The country had been transformed by the advent of the suburbs, affordable tract housing and the $25 billion Federal Aid and Highway Act of 1956. Signed into law by President Dwight Eisenhower, this act led to the construction of more than 41,000 miles of interstate highways, linking the country together via automobile.
The beauty of this transformation was that no matter if a worker was in production, sales, marketing or at the executive level, their jobs were almost always based in America. The financial successes of American business trickled down from the very top of a given company, all the way to its least paid employees. The greatest aspect of this trickle down was that Americans at all levels of society were earning their money from Americans and subsequently spending their money with fellow Americans. The flow of money was continually circulated from American business to the American consumer and back again. A CEO’s success went hand-in-hand with the success of his American workers.
Fast forward to early 1980’s, where the phrase “trickle down” actually became a part of the economic lexicon in conjunction with the election of President Ronald Reagan. “Trickle Down” economics, which closely resembles Supply Side economics, states that if people at the top of the economic strata have more money at their disposal, in turn, the rest of society will benefit from the upper class’ increased spending.
I absolutely believe the Reagan period spawned the “me before we” philosophy that continues to this day with obscene bonuses, lavish corporate retreats, excessive political influence with both parties and $1,200 wastebaskets like the one used by former Merrill Lynch CEO and Bank of America Executive John Thain.
Outsourcing, corporate malfeasance, performance bonuses despite bad performances, lending that satisfies short term quotas instead of the incurring of actual money and downright entitlement has been the long term effect of this approach to life and business.
Examples of this transformation go as follows. The United States possessed 19.1 million manufacturing jobs in 1980. Today, that figure sits at 12.4 million manufacturing jobs. A Forrester Research report estimates that more than 3.3 million jobs will be lost to outsourcing by 2015.
The average CEO earned 364 times what the average worker earned in 2006. This figure stood at 42 times in 1980. The high point for this pay scale was in 2000 when the figure stood at 525 times according to the AFL-CIO.
The rich get richer while those in the middle and lower classes see their jobs either disappear into thin air or take a slow boat to China, India or Mexico.
In the short term, the end result of this situation is the precipitous decline in capable purchasers of goods and services in this country. The pockets of people in New Delhi and Beijing are being lined with a fraction of the income that used to be deposited into bank accounts of people who lived in Cleveland and Milwaukee. The jobs that well qualified Americans used to enjoy are now being enjoyed by people who can do nothing to improve the day-to-day economic climate of our country because they do not live in our country. CEO’s have increased their personal fortune by taking money out of the mattresses of those beneath them.
The long term conundrum of this situation ties to the connection between a manufacturing base and victory in World War II. We live in an unstable world. If a regional war were to break out, let’s say in the Middle East, and that war escalated into a worldwide conflict, the tools of manufacturing that allowed the U.S. to prevail 64 years ago do not exist at the level they once did. It is absolutely far fetched, but if the most dreadful situation occurred, would we be prepared? Sadly, I am not so sure.