The Death Of The Rust Belt

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,

Their names are familiar to all of us: Cleveland, Flint, Youngstown, Saginaw, Gary, Toledo, Reading, Akron, Flint and Buffalo were all once booming manufacturing cities that were absolutely packed with thriving middle class families.  But now most of the manufacturing jobs are gone and all of those cities are just shadows of their former selves.  When you drive through many of these communities, you will notice that a lot of people have a really hollow look in their eyes.  Decades of slow, steady economic decline have really taken a toll, and even the architecture in these cities looks depressed.  But despite all of the decay, there is still evidence that there was once something truly great about these communities.  Will we be able to recapture that greatness before it is too late?

A lot of writers make economics really complicated, but the truth is that it does not have to be.  For example, if you want your country to have a great economy it has got to produce wealth.  And one of the primary ways to produce wealth is to make stuff.  Immediately after World War II, the United States had the greatest manufacturing base the world had ever seen and we outproduced the rest of the planet combined.  Great manufacturing cities sprouted up all over America and the middle class thrived.  It was truly a great time to be an American.

But then we decided to start shipping in cheaper products from overseas.  At first it didn't create too much of a problem for our massive economy, but eventually the floodgates opened up and we lost tens of thousands of manufacturing facilities and millions upon millions of good paying jobs.  Our labor pool was merged with the labor pool of countries such as communist China where it is legal to pay slave labor wages to manufacturing workers.  Needless to say, our workers could not compete with that and our middle class started to shrink rapidly.

Today, there are many American cities that were once truly great that are now truly frightening to visit.  For example, a recent CNBC article detailed the plight of Reading, Pennsylvania...

In August 2008, factory workers David and Barbara Ludwig treated themselves to new cars—David a Dodge pickup, Barbara a sporty Mazda 3. With David making $22 an hour and Barbara $19, they could easily afford the payments.

 

A month later, Baldwin Hardware, a unit of Stanley Black & Decker, announced layoffs at the Reading plant where they both worked. David was unemployed for 20 months before finding a janitor job that paid $10 an hour, less than half his previous wage. Barbara hung on, but she, too, lost her shipping-dock job of 26 years as Black & Decker shifted production to Mexico. Now she cleans houses for $10 an hour while looking for something permanent.

 

They still have the cars. The other trappings of their middle-class lifestyle? In the rear-view mirror.

I once had an aunt that lived in Reading.  She is dead now, and so is most of the city.  At this point, more than 40 percent of those living in Reading are impoverished and the city government is flat broke.

But similar things could also be said about the rest of the Rust Belt...

Perhaps no other region in the country has more eerie examples of urban decay than the once dominant industrial region known as the Rust Belt. Covering the Midwestern states of Illinois, Indiana, Michigan, Ohio and Pennsylvania, the region is plagued by a number of abandoned factories, houses and buildings that lay in crumbling ruins.

You can see some incredible photographs by Seph Lawless of the decay in the Rust Belt right here.  The pictures are incredibly depressing, but it doesn't take too much imagination to see that these cities were once truly impressive.

Just take Gary, Indiana for instance.  It was once known as "the Magic City" because it was doing so well, but now it is a rotting, decaying hellhole.  The following is from an excerpt from a Daily Mail article about Gary...

Gary, a struggling city 30 miles south of Chicago along the shores of Lake Michigan, is a prime example of the trend.

 

Known as the ‘Magic City’ in the roaring 1920s for its spectacular growth, Gary is still home to U.S. Steel's largest plant, but the number of mill jobs has shrunk to 5,000 from 30,000 in the 1970s.

 

Gary's population in 1960 was more than 178,000, but it disintegrated to just 79,000 by 2012.

 

Some one-third of its residents live in poverty and the home and business vacancy rate is about 35 percent. Gary recorded 43 murders in 2012 - three times as many per capita as nearby Chicago.

At one time, Gary was the envy of the rest of the globe.

But now very few people would ever want to willingly live there.

The following is how James Kunstler described what he saw when he traveled through Gary, Indiana...

Between the ghostly remnants of factories stood a score of small cities and neighborhoods where the immigrants settled five generations ago. A lot of it was foreclosed and shuttered. They were places of such stunning, relentless dreariness that you felt depressed just imagining how depressed the remaining denizens of these endless blocks of run-down shoebox houses must feel. Judging from the frequency of taquerias in the 1950s-vintage strip-malls, one inferred that the old Eastern European population had been lately supplanted by a new wave of Mexicans. They had inherited an infrastructure for daily life that was utterly devoid of conscious artistry when it was new, and now had the special patina of supernatural rot over it that only comes from materials not found in nature disintegrating in surprising and unexpected ways, sometimes even sublimely, like the sheen of an oil slick on water at a certain angle to the sun. There was a Chernobyl-like grandeur to it, as of the longed-for end of something enormous that hadn't worked out well.

Sadly, what is happening to Reading and Gary is just a preview of what is slowly happening to the entire nation as a whole.

Since 2001, the United States has lost more than 56,000 manufacturing facilities.

That is absolutely astounding.

Most of those jobs have gone overseas.  That is why it seems like most of our products say "Made in China" these days.  They are getting rich while our communities suffer, and then we have to beg the Chinese to lend our money back to us.

Meanwhile, we have a permanent epidemic of unemployment in this country.  Back in the 1980s, over 20 percent of the jobs in the U.S. were manufacturing jobs.  Today, only about 9 percent of the jobs in the U.S. are manufacturing jobs.

And an astounding number of our young men are just sitting at home instead of doing something productive.  As I wrote about the other day, one out of every six men in their prime working years (25 to 54) do not have a job at this point.

Also, the percentage of working age Americans not participating in the labor force is up to 37.2 percent - a 36 year high.

Not only that, but the quality of our jobs has also steadily declined as we have lost good paying manufacturing jobs to overseas workers.

Right now, half the country makes $27,520 a year or less from their jobs.

No wonder the middle class is dying.

And of course there is so much more that could be said about this.  For even more numbers about our manufacturing decline, please see my previous article entitled "Shocking Facts About The Deindustrialization Of America That Everyone Should Know".

These problems were not created overnight, and they are not going to be solved overnight either.

But as a nation, we have got to understand that we cannot consume our way to prosperity.  That is only going to result in even more debt.

Instead, we have got to make the decision to produce our way to prosperity.

In other words, we have got to start making stuff in this country again.

That may sounds "crazy" to a lot of people, but it is possible.  We have just got to have the willingness to do it.

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A Lunatic's picture

What difference does it make..........??

Mr Pink's picture

Accidently drove through downtown Gary a couple of days ago. It smelled like what I imagine Hell smelling like. Every other building was burned out or crumbling and this was on a main street. I've never seen anything like it

I MISS KUDLOW's picture

in reading they sell overstock to the poor out of those big factory buildings

Mr Pink's picture

Not from the factories I saw. Most had a portion of the building missing.

economics9698's picture

High taxes and no gold standard are responsible for trade deficits.  As long as it is cheaper to print and foreign countries accept the paper for real stuff the USA will lose jobs.  A gold standard would balance the current accounts deficit and bring back manufacturing jobs to America.

The rust belt declined because parasites thought the white man had unlimited resources and the ability to pay unlimited taxes.  Guess what?  People take that shit so long and then the first chance they get to move away they do.  As soon as the factories became obsolete the producers moved away from the parasites.  This is why there are so many empty factories. 

No one likes lazy mother fuckers stealing their shit.

Lived through this in Pontiac, Mi. 

RevRex's picture

Thank a Democrat Union for the destruction of our manufacturing base, and thank a Democrat Mayor for fucking up our big cities.....

Surly Bear's picture

I live in Buffalo and we are talking about building a billion dollar stadium for the Bills. We are so fucked.

Mr Pink's picture

I live near Milwaukee and they want to build a new arena for the Bucks at a cost of about 300 million. The "old" one is a whole 30 years old

Cathartes Aura's picture

Colosseums.

entertainment while encouraging "team" mindsets/support.

rah.rah.rah.

DoChenRollingBearing's picture

A friend of mine moved to near Reading, PA from Texas because he landed a better job!  He told me that it was a real dump, the worst place he had ever lived.

He lasted less than a year with his crappy boss and nasty people he could not relate to.

He's now back in the Republic of Texas, which welcomed its son back home.

 

Theosebes Goodfellow's picture

Ah, yes, collosseums. What was that about bread and circuses?

mkkby's picture

This article is raciss.  You want to take jobs away from the Chinks, who have over a billion babies to feed? /s

Sven Sikztu's picture

I fled Buffalo/Niagara Falls last year for Texas-... Niagara Falls police and fire unions still have a rider for spousal plastic surgery in their benefit pkgs! Those stinking republicans have those two towns totally tied up. Avg income in Niagara Falls is $13,700...yet a starting salary for a school principal there is $90k plus benefits-- how the f#ck can republicans also control schools with such an iron fist?? But the irony is further pushed because the city is 30% black, yet police, fire & teacher jobs are around 90% WHITE! Can you believe the retardicans get away with this year after year?? just amazing. Yet every election the citizens/victims keep voting repulican. SOmebody should tell Schumer about this.

zaphod's picture

Not sure if this is a /sarc comment or not, so hard to tell these days.

But if not you should move to my current state of Kalifornia. The Dems have a 100% lock on everything, and I mean everything. And if you thought $90K was high for a prinical, many townships here have public "servants" retiring at 55 at $350K salaries with full pay for life. These retirement packages along are worth a $5M post-tax lifetime savings. Seriously move here, you'd love it.

SF beatnik's picture

@ Surlybear

Maybe the new stadium is to be repurposed as an internment facility.

Theosebes Goodfellow's picture

Heck yeah, Beatnik. But better yet, just take Candlestick, have another "last game" and have the attendees serve 5-15 instead of leaving. It'll take a load off San Quentin. Just be sure that Pelosi, Boxer and Feinstein, (ahem), ...attend.

markpower49's picture

All these cities are Democrat/ progressive run. They need to die, along with the inhabitants. These people are evil.

sethstorm's picture

Thank a staffing agency for the destruction of any non-adversarial relationship at work.

junction's picture

I wonder if peasants in medieval Europe complained about whether their King was a Democrat or Republican as they got sent off to die in wasteful wars.  

The Shape's picture

Ain't this the fucking truth.

Fucking idiots pointing fingers about the false dichotomy as usual.

Seriously, just do us all a favor and stick the gun in your mouth and pull the trigger.

Anyone here still bitching about political parties is a walking abortion.

 

Please. Kill. Yourself.

jaxville's picture

   Your close but its not so much a matter of not having a gold standard as it is allowing fractional reserve banking and credit based money. The financial sector stole a huge amount of wealth through that system. They used that wealth to buy power and public support for their globalist schemes. Removal of tarrifs and trade rules meant highly skilled/paid workers are now competing with foreigners who work for a bowl of rice.

 

   Things will get worse until every last bit of productive wealth has been squeezed dry. It's no doubt that the scoundrels behind our current money system have sizable influence in the countries where America's wealth is relocating. If the West doesn't wake up soon and take decisive measures against those who now own their gov't, media, financial sector etc, third world nation status will arrive shortly.

WonderDawg's picture

Howdy neighbor. I'm a Jax guy myself.

zhandax's picture

Six if you get lucky and get behind one of the Dept of Agriculture guys doing 90.

mkkby's picture

Half the people here would be working for a bowl of rice, if not for welfare in it's many forms.  The only difference between the US and third world shit holes is reserve currency status.  Being able to print Yellen bucks that still buy things is all that's holding the wheels on the wagon.

WonderDawg's picture

The FairTax would go a long way toward bringing capital back to these shores immediately. No corporate tax to avoid, keep operations close to home, large labor pool. It would be the most logical fix with immediate results. And with no income tax, the IRS would be out of business. But, unfortunately, I don't expect it to ever happen.

TimmyB's picture

Maybe if we allowed third world peasants to flood the country, and abolished the minimum wage so they could be treated as semi-slaves, them manufacturing would move back.

Or we could raise tariffs to what they were in the 1960's.

zhandax's picture

I should be preaching to the choir, rather than shouting at a brick wall.  This is not complicated.  As long as you allow a bunch of multi-national trusts to run this country, to attain critical mass via M&A, this is what you get.  Bust those leaches up, turn the S&P 500 into 50,000 small companies, and the problem is mostly solved.  The founding fathers understood this, and I can't comprehend why it is such a foreign concept today.  Even here.

NihilistZero's picture

The founding fathers understood this, and I can't comprehend why it is such a foreign concept today.  Even here.

Because, socialisim.  To many libertards think free market utopia is right around the corner if we can just eliminate the minimum wage.  I'm an anarchist.  I also know .gov is going nowhere soon.  So while they're here I'll gladly support some lefty policies like those of Kucinich or maybe Grayson.  Fuck these large corps sucking at the .gov teet while at the same time crying over regulation.

Big Biz backed by .gov enforced trade suicide killed manufacturing in this country, not unions.  Tax their foreign holdings and goods out the ass and reinstate tarrifs so we can eliminate the income tax.  

asking4it2k's picture

Other countries have high import tariffs and protectionist trade policies. USA does not. We need to change that.

SF beatnik's picture

All I know is, I'm buying almost everything I will ever need, NOW, at Walmart and the Dollar Stores, while stuff is still almost free... underwear, toothpaste, soap, shirts, pants, shoes - you get the picture.

Once the USA fucks China out of its US Treasury holdings, a pack of underdrawers will cost a week's wage, just like it does in China.  

Enjoy it while it lasts.

 

NihilistZero's picture

Bullshit.  Technology and mass manufacturing are natural deflationary forces.  We had a nice equiibrium between wages and cost of goods as well as a huge middle class up until they decided to bankrupt the country fighting Vietnam.  Once that event allowed Nixon to destroy honest money the whole thing fell apart.

barre-de-rire's picture

you have to understand that in europa, the problem is the same,  even french says " no protective jobs, look usa, foreign compagny wanna install, pay taxes here or get the fuck out, national preference, we do not apply that in france", we can ear all days in medias.

 

problem is not really protectionism, fed or not fed, free market of not.

 

the problem of the dumping is the world cannot stabilize until EVERY human being is paid same wage for same amount of work, this is end of slavery, total balance over humans value.

 

this is not acceptable for old civlizations. (took times to get where we are )

 

but if you pay  american & chinese & french & african 20$/h, no more reason to do dumping. local production, local consuming.

usa go back to famous steel production,

french return to  famous food quality & luxe

germany for factories, china... rice, or whatsoever they are good at...

 

mondialization is the most big error/mistake humanity made. that killed each country specificities.

 

sad.

Matt's picture

So, your solution is a global minimum wage (in a global currency) and get rid of automation and do everything by hand?

TimmyB's picture

High taxes and the lack of a gold standard have little to do with the death of manufacturing in this country. Instead, the people who own this country paid Congress to pass laws making it economically advantageous to move manufacturing overseas.

economics9698's picture

Just imagine being a tribe member when a Mexican came to your bank for delivery of a few gold bars.  God damn right the gold standard would mean a balance of trade.

 http://research.stlouisfed.org/fred2/series/NETFI

mkkby's picture

Timmy, 4+ years and you STILLL HAVE NO CLUE about how a gold standard works?  On a gold standard, US would have such high inflation that we would become the global cheap labor and China would become expensive.  So, yes, manufacturing would come back.

I guess reading ZH for several years still can't cure stupid.

zaphod's picture

The problem is partly outright treason by the US government in opening up the US's boarders to full trade while not demanding the same from other nations, but it's also due to the entitlement mentality that is widespread today, but not in the 1920s-50s.

Many people in the US, including some mentioned in this article, simply assumed you could coast by and not work hard, and jobs would magically always be available and high paying. That has never been true at any point in history. If a nation loses it's work ethic, the nation loses it's wealth. 

After going directly from the rust belt to Asia, and seeing how unentitled and hardworking and educated people are there, it is not possible to blame the US government alone. It is the latest generations that simply expect plenty but do not expect to work for it. 

Personally I believe it was a combination of the FED enabling a false and unsustainable wellfare state that eroded America's work ethic. Can it come back, maybe, maybe not.

disabledvet's picture

Freedom.  Democracy.  AND STUFF!

Son of Loki's picture

So. 49 million moar without jobs = 49 million moar EBT'ers and section 8'ers.

economics9698's picture

Importing millions of 93 IQ workers did not help, 47% are on welfare.  Mixing the 85 IQ kids with the 100 IQ kids really fucked up the schools.  The tribe could care less, they will move on.  Their wallet is fat.

thamnosma's picture

Guaranteed votes for Demonrats.

Never One Roach's picture

Off topic but interesting:

 

x-Goldman Trader Says Bonus Cut to $8.25 Million Unfair

 

http://www.bloomberg.com/news/2014-06-18/ex-goldman-trader-says-bonus-cu...

Anusocracy's picture

The dupes want a Soviet Union size government micromanaging every aspect of the economy and then they are baffled about why they have a Soviet Union sized economy.

Stupid useless fools.

yogibear's picture

It's all about reducing costs ( wages) and increasing profits.

Corporations aren't around to create jobs, their around to make as much money as possible. If they can hire people for $2.50/hour rather than $7.50 an hour what do you think they will would do?

mkkby's picture

End the fed and go back to sound money, then the system rights itself.  It's really that simple.