Leave it to David Letterman to make the most critical economic point this year in one of his Top Ten lists. Maybe he should be the next Secretary of Commerce. Why? Because the late show host simply gets it in a way that most policymakers and pundits on the left and right don't.
Here's Letterman from the Top Ten list on his February 17 show:
I'm going to tell you something you already know. I go every now and then to a toy store because I have a 5 year old son. And I think maybe a toy would hit the spot. You start looking around and it's a long time before you find something made in the United States. And I think that's the problem. You wonder where the hell did the money go. Well, we're not making anything here in this country. I don't know what to do about it...
You don't see this line of thinking from Davos, the Fed, editorial boards, or Washington think thanks. But Letterman is right. Our trade policy is a Madoff scheme. We buy cheap goods from China, run up debt; China buys the debt, and sells us more cheap goods. Rinse and repeat.
Well now the music has stopped, a chair has been removed, and America's over-consuming fanny has nowhere to sit.
And here's my point: unless we fundamentally shift our economic point of view from consumption to production, we'll end up back in this same spot, even if housing and credit stabilize in the near future.
We need to start making things in America again. We have tremendous human capital and innovative potential, but it's being squandered on get-rich-quick schemes that leave us all worse off. Until our society and policies value production -- actually making stuff like steel, fuel-efficient autos, high-tech widgets, and lead-free toys -- we'll be poorer and weaker as a nation. Our manufacturing base is highly productive, but it is shrinking every day. Wal-Mart established the "China Price" for its sourcing that drove thousands of factories overseas. Other policies, like our lack of trade enforcement to combat foreign subsidies and intellectual property theft, high health care costs, and a tax system that promotes offshoring, have simply heaped it on.
The White House had a budget summit this week. It will have a health care summit next week. In the near future -- before it's too late -- we urgently need a manufacturing summit to chart the course for economic renewal. Maybe invite Letterman?
There's your Econ 101. Good Luck To You All.
But we used to produce a lot of things. Until the early 1980s, the US led the world in manufacturing. We were also the leading exporter of goods. Maybe it's coincidence, but our decline as a manufacturing nation began w/ the rise of the Reagan era.
I go to Pike Market and see the craptastic $20 wooden toys made for Abraham Lincoln's son. Letterman is talking about toys made in America for *todays* American kids....
One Proof-of-Concept prototype was said to be analogous to the early work on the transistor, which eventually led to a Nobel Prize and the creation of Silicon Valley.
A generator under development is expected to provide sufficient power to demonstrate replacement of the plug needed by a plug-in hybrid car. This will be a harbinger of automobiles that need no conventional fuel or recharge. A prototype system is anticipated to replace an automobile engine within three years. That goal might be achieved much more rapidly if development involves four teams of engineers and technicians working on a 24/7 basis. The prototype will open a path to mass production of an entirely new variety of automotive power plant. Electric vehicles powered by these generators will breathe new life into auto manufacturing. Independent laboratory validation, Demonstration Devices and toys are included in the program. Who will not want an electric car that never requires fuel or recharge? Car companies will see demand in excess of production capacity. A beacon of hope can be found here for the entire world economy.
See: magneticpowerinc.com
Turn Technology loose.
Stop holding it back to profit from each small release !
Let Technology serve man instead of man serving Technology !!!
"You don't see this line of thinking from Davos, the Fed, editorial boards, or Washington think thanks. But Letterman is right. Our trade policy is a Madoff scheme. We buy cheap goods from China, run up debt; China buys the debt, and sells us more cheap goods. Rinse and repeat."
It's kind of like the bank execs who literally RIP OFF the AMERICAN PEOPLE, under the pretense that they need a BAIL OUT for their outrageously FAILED leadership, and THEN....they get BILLIONS, while MISREPRESENTING HOW THOSE FUNDS ARE BEING USED, are NOT HELD ACCOUNTABLE, only then for us to be told that THEY and other FAILED LEADERSHIP MODELS NEED MORE BAIL OUT FUNDS OF TAX PAYERS DOLLARS. Rinse, repeat.
It's like the haunting questions around Mr. Delay who waxes on about what constitutes "hypocrisy" while he somehow escapes federal indictments for concerns regarding his role - if any, in the JACK ABRAMOFF SCANDAL, that his AIDES were indicted for their involvement in that scandal.
The criminal conduct is kept to the minimum from public view, so that more corruption can continue in private. Rinse, repeat.
There's some kind of perverted business mindset in our nation, that views employees as the biggest drag on their profits. The irony is, all of us at the plant drove new cars, and most traded in those cars for a new one every couple of years.
Well guess what 90 percent of the products we made went into? That's right! The auto industry. Everytime some smart guy figured out a way to eliminate a job in our plant, he also eliminated a customer for his products.
Today that plant has only a small fraction of the employees it did when I began working there in the 70's, and they're talking layoff because of the worldwide mess the auto industry's in. It's funny how people quit buying cars when they either don't have jobs, or don't know it they'll be working next week.
1) Lesson Number One - Letterman is not an economist.
2) Lesson Number Two - America's economic problem is NOT that the toys are made in China. It is ACTUALLY good for Americans that they are made in China. After all they were "designed" / "created" in America, sold and distributed in America. Of the $1 of economic value created by the toy (along with the joy for the little kid) - as long as 0.80 cents stayed in America, it is a good deal. That is why most of us don't farm anymore.
3) IF CHINA did not get that 0.20 cents what would THEY DO? Who would buy the 100 million iPods or the 300 million Blackberrys and Nokias? IN ECONOMICS, The bigger the PIE, the better off EVERYONE is.
4) THE PROBLEM WITH AMERICA's economy is EDUCATION. WE CONSUME like we have Ph.D's but we dropped out of high school. If we fix education, America will continue to dominate the world economy. For the portion of the population that will still be without education, there will be enough high paying jobs. AS LONG AS we have enough people with education to "create" things, we do not actually need to "make" them. That is why an ENGINEER makes more than a BLACKSMITH.
There is was, laid out in the first chapter, all of the things that have led the US closer and closer to becoming a banana republic in the last few years. Offshore accounts, and shipping as many jobs to low pay countries as possible.
Avoiding environmental labor laws. Doing every possible thing you can to make sure the profit from the business ends up in the fewest hands.
Do you not find it ironic that the country that was booming the most before this big economic meltdown, was the newly industrialized CHINA? And isn't it quaint, that the only country not hurting from this economic mess is the REGULATED Canada?
You can take your US Economics 101, and flush it down the toilet of history.
There's been a lot of products built to last and worth the money.