I understand Hap's longing to return to his roots and good old days... (I'm kidding Hap
) Hap spent his life in steel manufacturing and he and I discussed manufacturing more than a few times here in the past, particularly about the decline of heavy manufacturing in the US.
Not only does Buchanan persist in spreading myths, so do others here.
1. Manufacturing is not dead in America. Manufacturing contribution to real (inflation adjusted) GDP has been relatively stable for the last 30 years at 16-18%.
2. Domestic factors played a large role in the decline of manufacturing employment. Increased productivity and automation eliminated many jobs, not simply shifting them overseas.
3. Direct investment in the US by foreign companies has contributed to keeping more Americans employed in US manufacturing. For example, Japanese companies employ more people outside Japan than inside Japan. And contrary to the myth, profits are not repatriated to Japan. They count as consolidated earnings, but the foreign units, such as in the US, operate as separate P&L centers. The profits are retained earnings (something US companies have almost completely discarded in favor of executive consumption of profits) and reinvested into equipment, R&D or facilities for growth, eliminating the costs of credit for investment.
4. I say the following with no malice toward BigGun. I believe you are sincere in your fiduciary duty to your clients, but there is, in my opinion, a fundamental flaw in the American philosophy of competition. Instead of seriously competing in the global market with a unified goal, the US is eating itself by pitting Americans against Americans under the guise of competition. Only in America would a pension fund be willing to destroy the pensions of other citizens, and tell them they were doing it for their own good because they were inefficient.
A sense of class warfare has evolved. The investor and executive classes are willing to sacrifice their employees' long-term future for a quick buck. What about the fiduciary duty to invest in and make the best decisions for a company for growth and not simply gamble on the stock price, abandoning the company when investment is most needed?
5. People who "play" economics using the freshman course model of a market economy as their only source of answers and opinions are still just playing. There is no true free-market model in reality, so those opinions are better left in the freshman classroom. They are irrelevant to the real world. There will never be enough real service industry jobs to outgrow the decline in other jobs.
If you back out the health care and fear-of-terror industries, there has been no growth in US employment in the last 6 years. None. All the gains have been in those two industries alone and investing in those industries is a path to nowhere. Average real income has declined in the past six years also. If you look at the history of the economics of war, you see that the diversion of investment from long-term growth industries and jobs begins to take a toll after four years. We're there now and the burden is being piled onto the coming burden of the baby boomer retirement. Which leads to this...
6. The persistence of the current health care model for the US is strangling the life out of the nations competitive potential.
