Why Ohio Needs China's Fertilizer

Just about every Fourth of July, I make the trek from New York City to my home state of Ohio. This year, I made this journey with fresh eyes, having spent a good deal of time in the booming economy of China in recent months.

It's always a bit of a cultural shock. My hometown of Lancaster, Ohio long ago witnessed the meltdown of glassware manufacturer Anchor Hocking Company, now under the stewardship of private equity firm and turnaround specialist Monomoy Capital Partners. The remains of the run-down Lancaster Glass factory right in the center of town greet visitors passing through on Route 33. Storefronts along Main Street are boarded up, and most people drive 30-plus miles north to Columbus to do serious shopping. I don't know of any movie theatres in Lancaster now, though we used to go to the drive-in.

Not that Lancaster doesn't have its good side. The fireworks display at the Fairfield Country Fairgrounds each Independence Day would make all "Buckeyes" proud -- the best fireworks I've seen anywhere! The town's historic Square 13 district, a 24-block area with stately homes and majestic churches, counts such sights as the birthplace of Civil War General Tecumseh Sherman as well as the home of U.S. Senator Thomas Ewing. The downtown also sports the charming Shaw's Restaurant and Inn and a well-stocked library. And the town plays host to weekly summer concerts at the bandstand and the Lancaster Arts Festival each July for nearly two weeks. Lancaster also has a campus of Ohio University, where even Mandarin language classes are now being held.

But I'm not the only one worried about the future of this former factory town and its lush farmlands in the countryside -- aptly named Fairfield County. Acre upon acre of corn and soy bean fields are being sold to developers looking to transform this town into a bedroom community for the fast-growing service economy in nearby Columbus, Ohio.

Unfortunately, Columbus is about the only hope that the state's economy has -- though it too suffers. Can anything be done to bring back the summer series of the Columbus Symphony Orchestra?

A recent column in The Wall Street Journal points to negative numbers for this Midwestern state on many scores -- unemployment, household income and education. The state also ranks 47th in the nation for new businesses -- though on a recent book tour through Columbus and Lancaster, I was encouraged when I met several budding entrepreneurs who were bootstrapping new businesses in the foothills of the Appalachians. Columbus is also home to radio station WOSU, whose daily talk show Open Line is hosted by the talented Fred Andrle - one of the few broadcasters who thoroughly read my book, Silicon Dragon, before he interviewed me.

Despite the occasional bright spots, it makes me sad to see this Rust/Farm Belt of the U.S. Midwest surrendering with a shrug to thriving economies in Asia. There is a vast, blank stare on the faces of many of the mall-goers -- inevitably hugely overweight -- I see in the heartland.
Compared to bustling cities in China I've been frequenting, well ... there's really no comparison. There's a real entrepreneurial spirit you feel as soon as you land at Beijing International Airport, and the vast shopping malls, smooth, wide boulevards and new infrastructure that's being readied in time for the Olympics is only the beginning of this shift in power from the West to the emerging Dragon economy. Most of all, what I sense in China is an optimistic spirit of millions of young people. It is uplifting to be around -- whereas as much as I don't like to admit it, Ohio is depressing and depressed.

Comments

[therealredstateblues]

"happy talk" and "entreprenureal spirit" arent enough to overcome the unfair trade deals and voodoo economics that force US workers to compete with third world workers.

Until we get meaningful trade reform, which includes labor, environmental, product safety standards, intellectual property protection and currency manipulation enforcement, as well as vats and tariffs, midwestern industrial states like OH, IN, and MI willcontinue to shed jobs to the third world who has no such standards or regulations and pays pennies on the dollar wages.

Why do people not understand that a healthy manufacturing base in this country is vital to our economic health and national security?

[iambusto]

anyone want to guess what is the drop out rate of kids in inner city schools who do not graduate.

therein lies a big part of the problem too. people assumed that just after graduating high schools no higher education would be necessary. just go into the factories.

well that doesnt last forever.

its easy to blame the chinese and indians. but compare the huge population of indian and chinese engineers compared to here in the us. We have to start to excel in fields that are not developed in those countries. biotech, clean coal etc etc.

[therealredstateblues]

The US still graduates more technical students than any other country. The US also has the most productive workers in the world. China and India can not currently graduate enough to fill their own needs.

Couple that with all the un and underemployed technical workers and skilled tradesman as mfg has shed 4 million jobs and you can see the this so called shortage of skilled labor in the US is a lie

I read where Michigan has the highest per capita concentration of engineers and skilled tradesman, yet MI also has the highest unemployment in the country.

The bottom line is that flooding the market with more engineers is not the answer. This is another supply sider fallacy that a supply of workers somehow creates demand for them. In fact Alan Greedspan once suggested flooding the market with college grads as a way to bring down middle class wages.

With our glut of tech workers, and high productivity you would think companies would be falling all over themselves to locate in the US. That is how it sued to work. But the lure of cheap labor and lax regulation is too great.

Until we get meaningful trade reform we will continue to shed jobs to the third world

[outnow]

For another point of view, Ambrose Evans-Prichard at the Telegraph sees China "blowing up" because of the oil price shock. The great oil shock of 2008 poses a mortal threat to the whole economic strategy of Asia.

"The manufacturing revolution of China and her satellites has been built on cheap transport over the last decade. At a stroke, the trade model looks obsolete....

No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century.....

Products sent to China for final assembly, then shipped again to Western markets. The snag is obvious. The cost of a forty-foot container from Shanghai to Rotterdam has risen three-fold since the price of oil exploded. .....

China's factories were not uilt with current energy levels in mind. The outcome will be non-linear­...(quotin­g Stephen Jen, currency chief at Morgan Stanley...."

A game changer for Asia. Energy has become a tariff and subsidies will not change that fact. China is at risk of blowing up. "The pendulum will now swing back from China to America. The merchantilists will have to reinvent themselves." Crude markets will be tighter than ever by 2012. The handwriting is on the wall. Ohio may have something to look forward to while China and Britain are out in the cold.

[therealredstateblues]

High fuel costs may actually turn out to be the friend of localization

[outnow]

When the manufacturing jobs are shipped overseas, the former manufacturing centers decline. The shift in manufacturing to China spelled doom for Ohio. Just because the idea was sold by such liberals as Bill Clinton with Robert Rubin, Alan Greenspan, and Lawrence Summers aiding and abetting on behalf of Wall Street investment bankers and filthy rich CEOs, does not make the jobs come back.

Take a long hard look at London's economy as the fraud of the securitized investment paper crashes and the real estate market crashes. That's where free trade got them. The US can still pull back from the brink and regain manufacturing jobs and re-vitalize our agri-business. Self-sufficiency is not a bad idea. Do you want events in the Middle East to control your lives, or the price of beans in China? I thought not.

Our country has resources and hard-working people. We need to re-invest in our own infrastructure, reaffirm our constitution and to educate, employ and provide medical care to our own people. How stupid were the voters! Maybe Ohians "deserve" the fruits of their own political and economic naivite.

[Henry]

In the economics of cities, it was Jane Jacobs who stated: In order to be a city, you must export. Sounds a bit simple, but when you think about it, we are a country with cities that are on a treadmill. Our trade deficits seem invisible, yet they are eviscerating the very substance that was our own internal ability to grow and prosper.
We are still experimenting with money (we have no concept) and globalism has concommitants which are degrading to the top dog, not only in relative but in abosolute terms.

[noam4prez]

The reason factory owners in Ohio fired their workers and moved their factories to China was that Chinese workers were so much easier to exploit, for both economic and political reasons. Relative to Americans, Chinese workers have (had?) far less economic power and virtually no political power. So, they can be coerced to work in much worse conditions and for far less pay than Americans are accustomed to.

As soon as the people of Lancaster have been disempowered enough, the owners will bring the factories back. After all, shipping materials one way and finished goods back again is starting to get expensive!

[KillTheMessenger]

You are suffering from a serious cultural misunderstanding. The Chinese have a 3500 year tradition of educating their children so the next generation shall be better off than their parents. Meanwhile the Americans are debating for the last 80 years on how to bring creationism into schools. And they seem to have made some serious inroads.

Chinese workers have quite a bit of economic power. They can leave their company at any time to join another one that pays better. Retention of trained workers is close to non-existent. Try that in your community when your job is the only one within 100 miles.

[WorkingClass]

I've heard stuff about slave labor in China. Is any of that stuff true? Can slaves be entrepreneurs?

[KillTheMessenger]

You heard wrong. Which is usually a great start to lose a contest.

[DAE]

My son is working in China as an intern at a granite counter top company. He makes a minimal wage but can afford to rent an apartment and live comfortably if not lavishly in a Chinese neighborhood (no restrictions on where he can live). It costs him 30 Chinese cents for a bus to work (about 5 cents US). His rent is about $200 US which he splits with a housemate. He makes about $2.00 US/hr (about $320.00 US or 2000 Chinese Yuan). Of course labor is cheap in China. Prices are like they were here 40 years ago. The average urban Chinese family saves 20% of its income and middle class office workers can now afford to buy Buicks. There's as much freedom for the average Chinese as the average American. All they can't do is vote for tweedle dumb or tweedle dweeb. All the propaganda about China in this country is based on misinformation and ignorance.

[WorkingClass]

I didn't expect such a great reply. Thank you. I have done a wide variety of factory work and can easily imagine working in a granite counter top company. Please forgive me, I have always been a worker and I don't understand the position of "intern". Is your son Chinese? Is he working alongside Chinese workers? What will he do when his "internship" is finished? You are speaking of urban Chinese. Do you have any first had knowledge of living conditions for rural Chinese people? Again, thank you for this reply.

[torrrep]

Rebecca, I am a fellow Buckeye that now lives in California. I grew up in Canton which was a location that had many factory jobs many years ago. Canton and other surrounding areas have all fallen into the same trap as Lancaster. Many kids never went to college because they could walk out of high school and straight into a factory job that paid very good money. The problem is that our communities failed to look towards the future. People assumed that they would always have factory jobs. They assumed that you didn't need an education to make money. They assumed that the economy would always stay good. The problem is that their assumptions were all wrong. Now that the global economy has changed our cities that are stuck in 1950's style mentality have suffered. Older workers who have lost their jobs find that there is no place for them in the modern work force. Younger people who have any common sense move away as soon as they are able. It's sad to see but we have brought this upon ourselves by failing to prepare for the future, failing to educate ourselves, and worst of all, failing to educate our children.

[BetsyMcCall]

The solution is fairly simple. Bring back the jobs we shipped to China and stop forcing Ohioans to compete with low wage, government subsidized workers overseas.

[kingcityguru]

You nailed it!
China has low taxes and a system that now encourages risk and hard work in exchange for reward. It is not booming because of natural resources or any inherent advantage other than its people. That was America 60 years ago before Liberal Democratic policies stiffled initiative.

[DanBest]

Lets see: 60 years ago would be 1948. In 1948 the tax on the highest incomes would have been around 90%. Liberalism would have just been coming out of its political dominance since FDR took the presidency, 1933 to 1945 another term for Harry Truman ending in 1952. The fifties would have been the beginning of the rise of conservatism which by the early 70s was replacing the liberal democratic ideology that you think was on the rise in 1948.

So here are my questions for you:

1) Where did you get such a distorted view of American history?

2) Are you aware that China is a communist country?

3) Is there anything bad that conservatives have ever been responsible for? Or is it some kind of parlour game right wingers play called "blame the liberals for everything"?

[Cathexis]

That was America 60 years ago before Conservati­ve-Corpora­tist policies successfully disempowered Labor.

HTH.