Wednesday, March 29, 2006

Where’d American Industry Go?

Here is a scary thought, and it is brought to us today from Akio Morita, founder of Sony Corporation. After advising Third World countries that their best opportunity to become a nation-state is to develop a manufacturing capacity, he also lends a word of caution: "That world power that loses its manufacturing capacity will cease to be a world power." It is eerily prescient for our own future, with our manufacturing sectors decimated from decades of globalization and free trade. America grew and prospered, first and foremost, on the backs of our industrial sectors. We led the world, at one point, in oil production, gold, silver, copper, cotton, corn, steel… it was these core, physical industries upon which we leapfrogged the rest of the world to become the pre-eminent country. Our society was rich from the profits of these industries.

However, as time moved on, these industries became less and less important to the economic power we had created. After WWII, we tried to pry open markets around the world, lowering tariffs and trade barriers to halt the advance of communism. Free trade was heralded as the way to open markets, to generate new jobs for our workers and the open markets would thus prevent the spread of communism. But somewhere along the way free trade took over open and free markets. In order to have a free trade situation that works, you need to implement labor rights, property rights, environmental rights, judicial rights – all of which are conditions for a prospering economy. When Greece and Portugal wanted to enter the Common Market, the member states utilized around $5billion over five years to help their markets reach maturity before free trade was initiated. When China joined the WTO, the pact did not enforce trade, dumping, or environmental laws. It was a boon to big business.

But having opened markets worldwide, the United States is not at the mercy of this global capitalist monster. The jobs have been at a steady outward flux, first coming from the very industrial entities mentioned above. Not to worry, the US is a more service-based economy now. Then call centers, admin staffing and dispatches moved over seas. Still, the United States has its high tech market, the R&D workhorse of the world. But with those facilities also leaving, one can ask, “What is left?”

The company environment has been altering as well. Companies have grown in the rich medium of American capitalism for decades, sometimes centuries, as we created the conditions ripe for them to grow. Now they are metamorphosing into transnational entities. They are shedding this protective cocoon, and we run the risk of becoming the discarded husk of a nation. How did this happen?

The penultimate mistake, as I have long believed, is allowing business into the political arena. Companies are good at one thing, and one thing only: making money. They are designed purely to turn profits out of raw inputs, and with capitalism they have shown they are extremely adept at doing just that. However, companies have no clue how to run a country. But we have allowed them into our politics, and this has caused a disruption of a natural check-and-balance system. Companies, for example, don’t care about worker safety. They are willing to work people as hard and as dangerously as they can still turn a profit. This is not a failing, it is in their economic genetics. It is up to the government to provide for the workers, make sure they have adequate protections and guarantees for their wellbeing.

But if you let in corporations into a political system, you can start to spell disaster. They get influence over the politics and policies of a region, and they are main drivers in policy decisions that might not be the best for the people who live there. Through corporate donations, they are able to insert themselves into nearly any political debate, their lobbying firms strong to protect their interest. Once upon a time, it was in their interest to protect their profits from competition. So America enacted tariffs, blockades, restrictions, quotas, a whole army of regulations aimed at keeping American companies intact. But now, with the companies becoming transnational, they do not look to America to protect them anymore. Actually, they are working against those same legislations they wanted so desperately in the past, because it dilutes their power to do business on a global scale. They were able to secure tax breaks for incorporating offshore, and so now are robbing the United States of nearly $70 billion a year in tax revenue.

And the political parties, as they stand now, are powerless to stop them. They are dependent on these companies for contributions and donations to keep their short-lived spotlight of fame, and in doing so sell out the demands and desires of their constituents, the people. The citizens of this country become marginalized at the expense of the corporate profit machine.

I do not have all the answers as to how to solve America’s disappearing act with respect to jobs, but I can guarantee that it is a good first step to have the people take over our politics once more. With a government looking out for us as a nation first, and company profits a distant second or third, then we can start to build a strong nation. The demise of our industrial sectors may indeed be a premonition of impending decay, as Morita suggested. We should take heed to ensure that his words don’t ring too true.

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