03/29/2009 05:12 am ET Updated May 25, 2011

'Late Show' Economics 101

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?