From An Industrial Economy To A Paper Economy - The Stunning Decline Of Manufacturing In America

Tyler Durden's picture

Submitted by Michael Snyder via The Economic Collapse blog,

Why does it seem like almost everything is made in China these days?  Yesterday I was looking at some pencils that we had laying around the house and I noticed that they had been manufactured in China.  I remarked to my wife that it was such a shame that they don’t make pencils in the United States anymore.  At another point during the day, I turned over my television remote and I noticed that it also had “Made In China” engraved on it.  With Labor Day just hours in the past, I think that it is quite appropriate to write about our transition from an industrial economy to a paper economy today.  Since the year 2000, the United States has lost five million manufacturing jobs even though our population has grown substantially since that time.  Manufacturing in America is in a state of stunning decline, our economic infrastructure is being absolutely gutted, and our formerly great manufacturing cities are in an advanced state of decay.  We consume far more wealth than we produce, and the only way that we are able to do this is by taking on massive amounts of debt.  But is our debt-based paper economy sustainable in the long run?

Back in 1960, 24 percent of all American workers worked in manufacturing.  Today, that number has shriveled all the way down to just 8 percent.  CNN is calling it “the Great Shift”

In 1960, about one in four American workers had a job in manufacturing. Today fewer than one in 10 are employed in the sector, according to government data.

 

Call it the Great Shift. Workers transitioned from the fields to the factories. Now they are moving from factories to service counters and health care centers. The fastest growing jobs in America now are nurses, personal care aides, cooks, waiters, retail salespersons and operations managers.

No wonder the middle class is shrinking so rapidly There aren’t too many cooks, waiters or retail salespersons that can support a middle class family.

Since the turn of the century, we have lost more than 50,000 manufacturing facilities.  Meanwhile, tens of thousands of gleaming new factories have been erected in places like China.

Does anyone else see something wrong with this picture?

At this point, the total number of government employees in the United States exceeds the total number of manufacturing employees by almost 10 million

Government employees in the United States outnumber manufacturing employees by 9,932,000, according to data released today by the Bureau of Labor Statistics.

 

Federal, state and local government employed 22,213,000 people in August, while the manufacturing sector employed 12,281,000.

 

The BLS has published seasonally-adjusted month-by-month employment data for both government and manufacturing going back to 1939. For half a century—from January 1939 through July 1989—manufacturing employment always exceeded government employment in the United States, according to these numbers.

You might be thinking that government jobs are “good jobs”, but the truth is that they don’t produce wealth.

Government employees are really good at pushing paper around and telling other people what to do, but in most instances they don’t actually make anything.

In order to have a sustainable economy, you have got to have people creating and producing things of value.  A debt-based paper economy may seem to work for a while, but eventually the whole thing inevitably comes crashing down when faith in the paper is lost.

Right now, the rest of the world is willing to send us massive amounts of stuff that they produce for our paper.  So we keep producing more and more paper and we keep going into more and more debt, but at some point the gig will be up.

If we want to be a wealthy nation in the long-term, we have got to produce stuff.  That is why the latest news from Caterpillar is so depressing.  In addition to the thousands of layoffs that had been previously announced by the industrial machinery giant, it appears that a fresh wave of layoffs has arrived

Hundreds of mostly office employees received layoff notices at one of the largest Caterpillar Inc. facilities in the Peoria area this week, just as the company announced plans to close overseas production plants and eliminate thousands more positions.

 

A total of 300 support and management employees at Building AC and the Tech Center in Mossville this week received job loss notifications that included severance packages, 60 days notice and mandated Illinois Worker Adjustment and Retraining Notification Act letters.

During this election season, you will hear many of our politicians talk about how good “free trade” is for the global economy.  But that is only true if the trade is balanced.  Unfortunately, we have been running a yearly trade deficit of between 400 billion dollars and 600 billion dollars for many years…

When you have got about half a trillion dollars more going out than you have coming in year after year that has severe consequences.

Let me try to break it down very simply.

Imagine that I am the United States and you are China.  I take one dollar out of my wallet and I give it to you and then you send me some stuff.

After a while, I want more stuff, so I take another dollar out of my wallet and send it to you in exchange for more products.

But that stuff only lasts for so long, and so pretty soon I find myself taking another dollar out of my wallet and giving it to you for even more stuff.

Ultimately, who is going to end up with all the money?

It isn’t a big mystery as to how China ended up with so much money.  And when we can’t pay our bills we have to go and beg them to let us borrow some of the money that we sent to them in the first place.  Since we pay interest on that borrowed money, that makes China even richer.

This is why I am so obsessed with these trade issues.  They truly are at the very heart of our long-term economic problems.

But most Americans don’t understand these things, and they seem to think that our debt-based paper economy can just keep rolling along indefinitely.

In the end, history will be the judge as to who was right and who was wrong.

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Dutti's picture

"I take one dollar out of my wallet and I give it to you and then you send me some stuff."

America is much smarter than that, correction:

I print one dollar and I give it to you and then you send me some stuff.


jewish_master's picture

so chna is plus so ans so dollars and us is 0. in the long run china relativly has all the money, especially in inflationary scenario the ratio matters. i agree its better then us - so an so dolllars china plus

Dutti's picture

"in the long run china relativly has all the money"

no, China will have a lot of inflated US paper$, they will not be able to sell it, otherwise they drive down the value of the paper even more.

cheka's picture

tariff or continue to get bled out by nyc.dc

and that includes the foreign imported labor

bleu's picture
bleu (not verified) cheka Sep 6, 2016 9:20 PM

The America we once knew is GONE forever,its SOUL sold to the HIGHEST BIDDER.
http://wp.me/p4OZ4v-3z

GreatUncle's picture

Best thing is don't take on anymore US paper ...

Then start to unload the shit but do it slow because you got to allow the US CTRL-P to kick in or face the rest turning to shit.

Slow decline is best ... for the accounts consider it all lost anyway then it is easier to deal with and just GTFO.

Beleiving anything otherwise is stupidity.

Archibald Buttle's picture

maybe that's why they are buying up real estate and companies at inflated prices? gotta spend those dolla's, even if it ain't the best deal. real assets for those printed dollars?

bmr22's picture

China buys gold with those fiat dollars. In addition to buying gold China is the largest gold miner yet it exports none. China will soon have all of the money.

looseal's picture

China thinks long term.  They are planning for their country's future. They are also hoarding other minerals.  They know the rest of the globe will collapse under its own weight.  Then Mandarin will be the language of commerce as China will hold all that is necessary to run the world. 

Coke and Hookers's picture

America has become a blood sucking leech that lives on the rest of the world through the reserve dollar.

LetThemEatRand's picture

Marx loosely called it the rentier class.  Unfortunately, it doesn't include the vast majority of Americans.  American oligarchs/bankers have become a blood sucking leech that live on the rest of the world through the reserve dollar.

GreatUncle's picture

+1 GF American not a bloodsucking leach although waking up to what the rentier class is.

Rentier class was a great delight at the time of the Hanseatic League.

Barmaher's picture

"Why does it seem like almost everything is made in China these days?"

   according to Dr John Coleman in his One World Order - Socialist Dictatorship  , the US was intentionally stripped of its manufacturing activities to destroy the middle class and make way for one world government via the committee of 300.  Before there was income tax the government was funded by tarrifs.  They are well on their way!

Lonesome Crow's picture

 

 

And another adjustment for your conceptual magnification:

"I take [PRODUCTIVE WORK] out of my wallet and I give it to you and then you send me some stuff."

I print [PRODUCTIVE WORK] and I give it to you and then you send me some stuff.

The former is made clear and the latter ought to wash away...

junction's picture

Obviously, Mr. Snyder has never heard of Ali Baba.  To go back to why manufacturing in the United States is shot, you have to travel back almost 40 years, when Fed Chairman Volcker used monetary policy to control the stagflation in America in the aftermath of the oil shock, when OPEC raised the barrel price of oil about fivefold.  That deranged move by Volcker not only pushed the prime rate to over 20% but made borrowing by manufacturers vastly more expensive and, at the same time, priced many American products out of international trade.  A strong dollar meant American goods cost much more overseas.  To save money, American companies cut back on R&D.  Some companies moved their factories to low wage countries like Mexico.  Zenith television did that before it folded.  Then, in 1987, China's Deng Xiaoping, taking a page from what was America's playbook, decided to industrialize Communist China, to manufacture high tech products like TVs.  Just like Taiwan.  Meanwhile, in the United States, the age of the IPO dawned, take a manufacturing company private, load it with debt, fire almost everyone, offfshore manufacturing, get rid of pensions, sell off many of its asset, then go public again on Wall Street.  A few people walk away with a ton of money and jobs vanish by the millions.  Look at what happened to the American garment industry.

The United States' manufacturing base, developed over 150 years, was pretty much destroyed in 30 years.  Take a bow, Volcker.

SixIsNinE's picture

destroy our manufacturing, then destroy our farmlands :  Glyphosate (roundup Monsatan's poison)

Over 30 billion pounds of glyphosate used on USA farm crops since 1992

The link is clear now :  autism, obesity/diabetes, parkinsons, alzheimers, dementia - Glyphosate.  Worse, it bioaccumulates in the food chain.  
Try to stay as organic and natural as possible folks, we're f**Ked.  The big job driver will be dealing with all the sickness coming our way...

https://www.youtube.com/watch?v=snNRfAfSeUk  Glyphosate Pretending to be Glycine: Devastating Consequences - Stephanie Seneff, PhD

https://www.youtube.com/watch?v=XDyI10Z8aH0  - Glyphosate - Poisoned Fields

https://www.youtube.com/watch?v=BPhfJx0o38o Glyphosate mimicking glycine  pt2

https://www.youtube.com/watch?v=k33iFXHlOnY  most vaccines contaminated with glyphosate pt1

armageddon addahere's picture

Walmart sends money to China to buy their manufactures. The Chinese put the US dollars in the Bank of China, and they buy US government bonds.

The government spends the money or gives it away, the money ends up at Walmart and they send it to China, the Chinese put it in the Bank of China, they buy US government bonds and so on.

Over the years the Chinese  accumulate billions of US dollars which they are now using to buy up houses, farm land, mines, oil wells and other hard assets all over the world.

In a few more years China will control everything and the US will be broke, and not one person in a million will see it coming.

Archibald Buttle's picture

is this that "economic warfare" i keep hearing about. seems to me it's a winning strategy, just takes a little patience. something that seems to be in short supply in the western financial world.

Anopheles's picture

Manufacturing didn't "leave", they were DRIVEN OUT by Governments.  

Every time a politician gets a "good idea", it's always employers that pay for it.  All those "protections" that government gives to workers?  Meaning salary, vacation, healthcare, benefits, employee rights?  They cost the employer a lot of money, and also time to wade through the bureaucracy.

Add to that bureaucracy environmental regulations, government inspections from all levels of government, safety protocols for every tiny little thing (in some places, you need a fall arrest harness if working more than 4 feet off the ground...  meaning if you stand on a table, if you aren't tied off, you are breaking the law).  

Of course there's payroll taxes, environmental taxes, employment taxes, health care taxes, and of course, carbon taxes.  Oh, don't forget product liability insurance.

And these are incentives for companies to STAY?  

Lonesome Crow's picture

All symptoms but not the cause.

Is there a monopoly on the currency system or not?

Is it domestic or a global cartel?

slicktroutman's picture

You have a point but I say manufacturing left because of pure and simple greed. People like you can never have enough and your type will always want more things for your ego. Corporate pyscho's like you are a big part of the problem.

bloofer's picture

It isn't just corporations he's talking about. Anyone who is a small farmer or runs a small business will tell you the same thing. One thing that is rarely pointed out is that if you start up a business that involves selling things, you have to pay state and local sales taxes (usually quarterly), which means the government gets paid whether the business owner does or not. The owner's profit may well be zero during his/her first year in business, but government still wants their 8% of sales.

The only difference between the small farmer or businessman and the big corporation, in this respect, is that the big corporation will move to another country. The small businessman will just go out of business. And the small farmer will get a job to pay the mortgage instead of trying to earn a living by selling meat, dairy, eggs, and produce.

The taxes and regulations have send corporations abroad, and they've destroyed small business and small farming.

Shadow1275's picture

You pretend to pay me, and I'll pretend to work.

 

Oh goodie, The USSA has officially become the USSR In all but name. Large government and beauracracy? Check. Idiot populace which thinks voting for more government will solve corrupt government? Check. Reminds me of rome when it fell. Taxes were so high that many romans begged for the barbs to conquer them. And politicians were so corrupt that the seat of emperor was essentially up for sale.

 

Way to go leftists, you destroyed another great civilization. See you in another thousand years aftera bloody dark age.

Escrava Isaura's picture

Manufacturing jobs are shitty jobs, and manufacture jobs can be easily replaced by machines .

There’s no such thing as great civilization in a nation that is only 238 years old.

Go become a teacher. Open a commerce in your town.

And try to make that a good life.

 

nope-1004's picture

Teachers like you are the biggest sucks on the system.  The fact that the entire western world is growing "stupider" is a direct correlation to the fact that teachers are total idiots themselves.

Yoos cant teach watchyas dunno.

 

GreatUncle's picture

This is a from a professor ...

Those that can't do teach ..

Figure it out at what point can't we do 1+1 = 2 , we are there.

Escrava Isaura's picture

Your point might have some merits because there are some bad teachers. But those are minorities.

The issue is that everyone is trapped in a capitalist scheme. In a capitalist system if they expose something within the institutions, say something, they will be punished. Some might even lose their jobs and pension. So, they keep quite.

Adam Smith, correctly so in my opinion, foresaw this problem about capitalism over 300 year ago. That mercantilism (capitalism) would make a human as stupid as ignorant as a human can possible be. Where everything is for sale and you cannot think for yourself. Where you’re paid to do a job and not to think or talk. And Smith goes on: “Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

Yes education is a problem. But education is just a branch of capitalism. The real problem is in the tree.

 

By the way, I am not a teacher.

 

Archibald Buttle's picture

hold on a second. "bad teachers...are minorities." ???? dats rayciss!

GreatUncle's picture

UK start of 1800's had less that a couple of thoudand teachers.

Roll on 200 years, you got to have 3-400K with support staff.

Great way to employ people problem is it is not productive it is a service industry and it costs.

Fuck do we know it costs ...

Escrava Isaura's picture

Then, if you can’t pay for education, how would you expect to pay for production?

 

Then, you are face with the GAP dilemma that that is when workers incomes can no longer purchase what they produce.

 

The reason that most can’t afford has not to do with or without production, but because they’re not part of the financial schemes. They will always fall behind, irrelevant of what they produce.

 

 

GreatUncle's picture

Better idea I pretend to employ you government pays me $xxx and we split it so you get half.

We both do fuck all.

Yen Cross's picture

  We should export some of those asswipe fiatskies to Venezuela.

  Let the toilet paper revolution begin,,, I'd love to see that giant turd Maduro suffocate in a pile of used toilet paper.

 Erdogan[ Turkish douche] should be wrapped in a pallet full of used Kotex tampons.

King Tut's picture
King Tut (not verified) Sep 6, 2016 7:06 PM

Cat's sparkling new, soon-to-be-abandoned Peoria HQ will make an awesome meth lab. Oberhelman should be strung up from one of those Bucyrus mining shovels that he overpaid for.

Lonesome Crow's picture

Most Americans don't understand these things because of erroneous analysis that is subject to the Turning of Names.

Were one so obsessed with trade issues, mayhaps one should define precisely what mediates a trade and more importantly a trade of what?

Hohum's picture

Unfortunately, the 24% working in manufacturing isn't coming back.  First, the masses in agriculture, then manufacturing, then services, then ?.

JailBanksters's picture

But it's not even a Paper Economy, it's become too expensive to produce Paper Money.

Cash is becoming accepted less and less, so Cash doesn't have to be mandated out of existance,

cashless is volutarily becoming the default standard.

People just don't realize with cashless you have lost all your amaninity, and everything you

buy and do is all tracked.

 

 

scintillator9's picture

Even IF a lot of the manufacturing were to come back, the employment would not necessarily pick up due to automation and robotics.

Other issues would be possibly not enough power due to the war on infrastructure and energy (talk to coal miners, and conductors and engineers on the NS / CSX / BNSF / UP )

Yen Cross's picture

 The biggest joke on this blue marble is growth. THe world is drowning in debt, and excess liquidity.

 There's so much excess capacity right now, a giant super volcano eruption would be welcome.

GreatUncle's picture

2008 i could envision flat screen TV in a line to the moon and back.

Who going to buy it all.

If not bought it comes as a freebie in a box of cereal because we will all pay to eat.

Yen Cross's picture

 I was looking at flatscreens. I don't need one, but was comparing costs.

 Good Lord, you can get a thirty two inch TV at Target for $125.00 fiats, and the 8-9% bribe [sales tax]

  Non of my TV's are SMART. That's just too creepy.

SixIsNinE's picture

haha - no, the biggest joke is the BLUE MARBLE

 

wwxx's picture

Yen Cross says:  'a giant super volcano eruption would be welcome.'  

 

And there you have it, I have to give you a down vote for such a statement...the same mentality that is driving the present day 'new normal'--- disaster capitalism--- is as obvious and prevalent as it ever was, just notice the charts, and a few basic points made in the article above if nothing else.  According to the vast gubermint employee roles stated in the article, you might think the gubermint could truly handle such a super volcano eruption, and do it with class & style...but most people know that most gubermint processing and handling is usually~~~~~~a fucking joke.

 

The realistic answer is not in destruction, it never was, and shall never be, but that is what the national, state, & even local leadership has determined as their direction.  Is destruction part of life, sure, but to build your foundations on destruction is something insurance salesmen are taught early on.  You don't have to be Clint Eastwood to know that insurance salesmen actually don't produce anything, and gubermint employees that are able to work & produce, are generally there because it keeps their bellies fat.

 

wwxx 

GreatUncle's picture

Reckon it is worse, profit drives the need for efficiency and it means all know tech must be incorporated.

No shit 50% of the population can't work if all tech is used and then you got the government welfare shit

Does nothing for people, you live EBT card to EBT card what life is that? No life.

Better to scrap the automation and allow people to earn, but that is exactly the same as putting a cap on the corporation sallowable profit that better to use an automation tax on the corporation and hand those displaced from work the money.

No way back, it is not negotiable neither, a one way path like the weaving loom of old.

I CAN SAY THIS AS I HAVE BEEN THERE most here never get to know the full consequences of much of what happens.

Archibald Buttle's picture

man you hit that one on the nose.

GreatUncle's picture

Time to change the narrative ... Clinton spoke today for a few seconds lol. Then coughed her guts up because this is the new normal.

The election of Clinton is more of the same, I am really going to find it interesting how 1 illegal (not legal) immigrant as championed by Obama and Clinton can run around fucking fast enough to pretend they are the production of 50 million Amercian people. That is the deal Clinton is offering.

You have to change, believe in yourself people, fuck the elites off and let Trump do his magic, simple magic too of representing you. Choose Clinton? Works only so long as the little slave immigrant can produce enough outsourced or not.

The little ISIS immigrant might have an issue of blowing the fuck out of you but hey shoe leather? It costs.

GOOD MOOD, GOT PISSED, BREMAIN LOST THE FUCKING ARGUMENT OF CHOICE IN THE PUB AND THE VOTE! Great bring it on 17/10/2016 is the day the UK gets to see the traitors in the UK parliament that need hanging squirm as they debate for trying to cede sovereignty to a foreign power = EU.

Watch them squirm, put it in your diary, going to be a joke festival, do not switch of early the killing comes later.

Current bets are by popular surname the first one to bag a UK politician is either a Smith or a Jones after they refuse to honor the referendum. 2nd political body bag is not reserved on the grounds "and seriously hoping"the kill rate climbs too fast for body bags if you hit 651 you get a prize.

Funny, I was never like this but when your government attempts to sell you into slavery it has a chilling effect. Even more so that I know what they tried all the rules = laws are off now chicken shits. That I can perplex how to kill 650 lawmakers in 1 seconds ... nice thought ... best I can do is 650 fuckers crammed in a room and cyanide gas the shits. Takes 20 seconds though so it is a fail.

The concept is slavery as simple as that, you fuckers never had freedom so you do not know what you lose. Vote Clinton though you might find out ...

lucky and good's picture

The real economy exist somewhere far from Wall Street and can be seen in parts of America where most of us live. After eight long years of near or zero interest rates, massive government deficits, and watching tons of money and stimulus being poured into the economy we remain mired in slow growth.

In the end  our future has a way of being tied to reality and certain economic laws as well as laws of nature that hope and delusion cannot defy. While these bonds can be ignored for a time the force they have over us at some point will suddenly pull us crashing to the ground. More details in the article below.

 http://brucewilds.blogspot.com/2016/02/the-real-economy-beyond-our-financial.html

GreatUncle's picture

The real econoy is us ...

The size of our economy is not enough to support trillions in derivatives etc. ...

Being so tiny we cannot support the taxes needed to pay the interest on all the top expects as profit.

Eventually we get economically crushed to death.

WALK AWAY ... NOT WORTH IT.

I get a bollocking tomorrow for not charging enough in the modern world how fucking classy is that?

 

 

Wannabee's picture

It's all good. Walmart says they are bringing the industrial jobs back. Saw it on tv so must be so...
/s