When we stop making things, we become a colony of the countries that do.

18 comments May 17th, 2008

For years I’ve said that countries that don’t manufacture inevitably become colonies of those who do. That’s why our British overlords didn’t want the 13 colonies manufacturing products. We were to provide the raw materials, and Englishmen toiling in factories in the Midlands would make them into products to sell back to us,

That’s the main reason we rebelled. We knew America would never amount to anything if we couldn’t control our own industrial destiny.

Now, we’re blithely ignoring that truism in a rush to move factories off shore in a race for low-clost labor. Soon, those offshore factories will be dictating our economic reality, if they aren’t already.

I’ve been appalled that what we call wealth creation is really just moving old wealth around. Once, Rockford’s movers and shakers were bold men who put their brains to work inventing things that people wanted,  then built the factories to make those things, and sold them all over the world. Rockford added value to raw material. That’s wealth creation.

Today, our movers and shakers  are real-estate developers. These men  and women move existing wealth around, but they create no new wealth.

I bring this up now because I’m impressed by an op-ed  in Sunday’s Washington Post.

Political analyst Kevin Phillips writes in a piece titled “The old titans are collapsed, is America next?” that we may be going the way of other world powers that began to believe that their powerful financial sectors were wealth creators, rather than the product of wealth creation.

As Phillips puts it:

“The most chilling parallel with the failures of the old powers is the United States’ unhealthy reliance on the financial sector as the engine of its growth. In the 18th century, the Dutch thought they could replace their declining industry and physical commerce with grand money-lending schemes to foreign nations and princes. But a series of crashes and bankruptcies in the 1760s and 1770s crippled Holland’s economy. In the early 1900s, one apprehensive minister argued that Britain could not thrive as a “hoarder of invested securities” because “banking is not the creator of our prosperity but the creation of it.” By the late 1940s, the debt loads of two world wars proved the point, and British global economic leadership became history. “

If Phillips is correct, we are in for a long, bumpy ride.