The US stock market seems to think that we are winning. Are we? I'm not sure. Things feel a little better, and the stock market is all about emotions and perceptions. When people start to feel some confidence, they start to spend. When people gain enough economic security, they are willing to buy cars and houses. When consumers begin to spend, manufacturers begin to invest. They invest in machinery and hire people. Our economy could certainly use some positive feelings to get on a full fledged roll. Right now people have some hope, but I wouldn't guess that this thing is on a roll yet.
I know that everyone says that the US economy is changing to a service economy. They say that our manufacturing can't compete in the world market. Today we do have a world market, whereas thirty years ago the US market was largely separate. Most of the industrial products were made in the USA. A lot of the consumer products were also American made.
There was a very vibrant textile industry centered in South Carolina and stretching from southeastern Alabama up through Virginia and into New England. That has left the country for Asia and Latin America. Electric motors for North America were primarily made in the USA, although a couple of manufacturers had opened plants in Mexico. Now that is virtually all gone to Mexico, China, and Poland. Everything from televisions to furniture to air conditioners is imported today. Why? Can America compete in the manufacturing world?
High labor rates in America are not anything new. In the 1970's, we were all worried that all manufacturing would move to Japan, because the workers over there made such low wages. We competed by having high productivity. We did that with automation better manufacturing methods.
Automation doesn't kill jobs; it actually saves jobs and allows manufacturers to pay higher wages and successfully compete. The automation improves quality, while increasing worker output per labor hour. If more parts are built per hour, the labor cost per part drops, and that can allow a manufacturer to pay more while remaining competitive. Higher quality also makes the end product more valuable to the customer, and the higher price keeps the manufacturer profitable. Automation requires capital investment, and significant volume is needed to justify the investment though. It also requires technically savvy employees to design, install, program, and maintain the equipment.
Will automation save the day today? Not as likely. Today, the low cost countries have automation too. So American manufacturing is doomed, right? Well, not necessarily.
America still has a major advantage. We have very plentiful natural resources. America has everything from oil to coal to metals to land for producing food, cotton, and lumber and everything in between. The excellent supplies of these ingredients and raw materials should drive the prices down. Our cost of energy and materials should be the lowest in the world. However, our costs are rising every year, and this MessAPolitico is happening by design.
The environmentalists are perpetuating the global warming hoax. They have made the claim over and over that global warming is man-made. Over and over, they say that burning fossil fuels is producing carbon dioxide. All we hear these days is that carbon is evil. Supposedly, carbon dioxide and other so-called greenhouse gases let the sun rays through to heat the earth and trap the heat, acting like a greenhouse that is warmed in winter. (I guess the cave men ended the ice age by driving their SUV's. Or maybe it was all of the gases they produced farting after eating dinosaur meat and driving the dinosaurs into extinction.)
So the tree hugger solution to the imaginary problem is to drive the price of energy produced by fossil fuel up, up, up. As the price rises, the demand for fossil fuel drops. Higher prices for fossil fuel based energy sources also will eventually make alternative energy viable. Do you realize how expensive our electricity, natural gas, and gasoline will have to get to make these technologies viable? Probably around triple the price of energy today. Our EPA is doing the best they can to make this happen.
We have energy everywhere, but the government says this place and that place over there and these other places over here are all off limits. We can't have a Keystone XL pipeline, because it might cause some vaguely defined environmental disaster in the state of Nebraska. We can't use oil from ANWR because it is a pristine and beautiful area. We shouldn't use hydraulic fracturing because it might damage the ground water. There's no drilling in the ocean -- look at what happened with the BP oil rig off of the Louisiana coast. Are these real environmental concerns? Is the EPA really trying to protect us from these environmental disasters? Probably not. They just want to drive the price up so high that we won't be able to afford to burn fossil fuels.
Of course, these MessAPolitical policies continue to hold back our economy. They have taken away a huge strategic advantage for America. If we could keep the price of electricity and natural gas low compared to the rest of the world, it would be a very important factor in keeping manufacturing jobs in America -- at least in energy intensive industries like steel, aluminum, paper, and chemicals. Of course, consumers that spend less for gasoline and electricity and natural gas have more money in their pockets to spend on other things. That would boost the other industries outside of the energy sector. The cost of shipping and transportation would drop, and that could bring prices down creating more demand for all goods.
The MessAPolitics of tree hugging is killing the economy in America. Hey Washington, WAKE UP! Man-made global warming is a hoax. Don't hold our energy hostage. Set it free to restart the economy. Please, voters remember what I have written the next time you enter a voting booth.
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