This fascinating article about the state of manufacturing in America starts with a surprising premise: manufacturing jobs are not going overseas because of lower wages. In fact, Germany and Japan have higher wages than the US, yet they are both strong manufacturing nations. So what's going on? This article argues that the US has set up a serious of policies that take away the incentive for businesses to create American factories. These range from unions to high taxes to other regulatory pressures. One example is a man who wanted to build a plant on Long Island, until he was told that in case of an emergency, the golf courses would receive water before the factory did. Regardless of whether or not manufacturing is an area that America wants to revive, this kind of anti-business attitude will only hurt the economy.
4 comments:
Interesting. It makes sense that the policy process plays a large role in jump-starting businesses - that's what made Hong Kong into the giant that it is today. I wonder how areas with higher taxes and more regulation - notably France - are dealing with this problem.
As seen in the article "Vive la difference!" France maintains high unemployment (8% in good years) and difficulty in financing smaller firms because it is better at working with larger firms and projects. Not much is mentioned about manufacturing though.
The German model was able to keep manufacturing in the country so it would be best to look there, or Japan like the article mentions, for ways to encourage manufacturing jobs to come to America.
It is always interesting to see people argue that Americans manufacture industry is decaying for like tens of years while still ranks as one of the top producer in the world.
This article talked about one reality that factories no long work like before where it conglomerated into one or two places and employ millions of workers. But as the globalization trend, multinational corporations wonder around the world seek the cheapest labor and capital places to lay eggs, and then put them together.
With the increasing productivity, really, fewer and fewer workers are needed to do the same work as ten years ago.
Also, certain productions and industries are no longer needed or as needed as before due to the change of technology and shifts of consumer's tastes. Certain industries are facing a natural decay.
However, I don't see those are reasons that American government has to do something to recover those "full employment" situation for all manufacturing industries.
The current situation is more formed due to free market capitalism than due to government policies. If U.S. government force to make certain changes, it will only be like Soviet Union, where planned economy does not fit the need of the market, and leads to inefficiencies.
Of course manufacturing in the U.S. has shed workers in response to increased productivity. However that is not the whole story.
The other part is that companies are increasingly finding it impossible to build factories in the U.S.
What the American government needs to do is rebuild our crumbling infrastructure, and rewrite poorly constructed regulations.
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