When we stop making things, we become a colony of the countries that do.
May 17th, 2008 at 11:40pm Chuck Sweeny
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.
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18 Comments Add your own
1. Right Of The Star Blog | May 19th, 2008 at 2:11 am
Chuck, while I agree that manufacturing is important to a society I am not sure I understand your supporting examples.
The items you list have far more to do with free trade, excess taxation and regulation, a strong defensive posture, and open markets then they do with industrial production, what you call the main reason for the rebellion.
For example, while the Iron Act of 1750 was intended to limit manufacturing in British Colonies it was rarely enforced and was one of the minor issues at the time. The Iron Act was just ONE of the Navigation Acts that limited free trade. The remainder of the Navigation Acts, designed to limit import and export with other nations restricted to British controlled shipping (to build up the Royal Navy), had the greater impact.
As a matter of fact the Colonies were one of the largest exporters of raw iron in the world during this period, creating large amounts of wealth. They also operated foundries that supplied the revolutionary army with needed supplies — many of which were built while the Iron Act was in force.
The Sugar Act and Stamp Act, both involving taxation and additional enforcement measures were far more important in the causes of the revolution then was the Iron Act. (If I remember right Hamilton thought manufacturing was our destiny after the revolution but others like Madison didn’t believe a gentleman would think manufacturing a respectable way of life and Jefferson believed the nations destiny belonged in the west)
This taxation along with trade restrictions were keys. As a matter of fact the Declaration’s list of grievances specifically includes the cutting of of free trade with the world as well as the imposition of taxes without consent, but does not mention industrial production.
Our ability to export raw materials also created wealth and an understanding that, unlike the old world one’s status was not fixed by heritage.
It wasn’t control of our industrial destiny that led to revolution, but control of our destiny in general and our founding fathers understood that restricted trade, excessive taxation, and overbearing government directly impacted that control.
In addition to the Revolution the Washington Post column mentions the Dutch but fails to mention some of the very important issues, disproportionate taxation, regulation, weakened defense posture, that doomed the Dutch Republic. These were among the reasons the merchant class relocated to London eliminating capital from the Dutch economy that led to the financial collapse. As this was happening the Dutch entered alliances for protection while allowing their own naval fleet to deteriorate. With the earlier establishment of the Bank of England the English could loan money at a lower rate and with more reliability and less risk then the Dutch as they were fending off a French invasion. These events combined causing massive debt and crippling taxation that further constrained the economy.
The way to prevent a similar fate returns us to the Revolutionary ideas, free trade, less taxation, less regulation, less government, the willingness to tap our natural resources, and the unrestrained imagination of the American people.
Our corporate tax rate is the second highest of the industrial nations, not because we raised ours but because they lowered theirs in order to attract our manufacturing. The regulatory cost required to start new large scale manufacturing can run into the millions and take years. We don’t have the political will to access our own natural resources.
Also while Main Street may create a widget, Wall Street provides the funds necessary to make that widget. Manufacturing without the necessary financial system to support it would not survive for long, or would concentrate wealth in the hands of very few. Main Street creates a widget but Wall Street creates and supplies the factory, arguably just as responsible for creating wealth as is the guy on the line.
I’m with you in expansion of manufacturing, but in order to do so we need a government that doesn’t punish and hamstring manufacturers.
David
2. redrover | May 19th, 2008 at 7:54 am
This is an issue that you, Mr. Sweeny, and your RRS editorial board should have been raising with our pious fraud and treasonous commie-lover of Congressman, Dishonest Don Manzullo, for many years now. But that has NEVER happened!
Instead of presenting him with this important issue and demanding straightforward answers, you have flattered him with disgusting puff pieces and repeatedly endorsed his cowardly butt for re-election.
Indeed, Mr. Sweeny, when Manzullo was faced with a challenger in 2002, John Kutsch, who raised the very issues that you are writing about in your blog, you and your editorial board endorsed Dishonest Don and dismissed Mr. Kutsch as “a one-note candidate” for daring to raise those issues.
And let’s not forget how our congressman voted for the Singapore Free Trade Agreement which facilitated the wholesale shift of manufacturing jobs from Sundstrand’s to that corporate fascist police state.
The RRStar reported this fact but never bothered to get Dishonest Don’s reaction to it. Rather it praised him for getting an earmark to finance yet another ugly scar upon our formerly charming downtown, namely a gargantuan and over-priced federal courthouse.
Manzullo raises over a million dollars every election cycle to pay for flattering campaign ads, but he still gets them from you all for nothing. That’s a pretty good deal for him and, frankly, I don’t see any signs of that ever changing.
So perhaps you will understand why I am skeptical when you write as you have in this blog. When you and your colleagues begin to subject Dishonest Don to the tough questions he needs to answer, I will begin to believe that you are really sincere about your concern for this country’s economic and industrial security.
3. George Washington | May 19th, 2008 at 11:10 am
Chuck, I know you’re tired of hearing from me, but this column is another reason why you should declare for mayor, IMHO. These are the kinds of subjects that are so important to our future — but today’s politicians just won’t touch. We don’t want a panderer - we want a clear talker, someone who knows and loves the area and who can get things done. Be the man.
4. Chuck Sweeny | May 19th, 2008 at 6:24 pm
First off, I’m impressed by the first responder’s knowledge of the Iron Act of 1750.
We loosened regulations on business and where did it get us? Companies got rid of American jobs as fast as they could. How about laws that say, if you want to sell your stuff here, you’ve got to make at least 50 percent of it here?
Next, John Kutsch was just not a serious candidate for Congress.
On balance, Don’s been a pretty good congressman, he’d be even better if he didn’t have to fight his own party’s leaders on manufacturing laws and policies that favor multinationals over small, local businesses.
5. Right Of The Star Blog | May 19th, 2008 at 6:46 pm
Thanks Chuck, I did a paper on the Iron Act’s impact (too) many years ago.
The regulations I was referring to was those that hamper opening a new manufacturing business, such as excessive environmental regulations.
How about instead of requiring 50% manufacturing here we lower corporate income taxes to the average of industrial nations (about 25% down from the 35.% now) and for any business that does manufacture 50% here (verifiable, REAL manufacturing) we drop off another 10 or 15%. This would make our business more competitive relative to nations that have a VAT and are allowed to refund those taxes to the company.
Both Obama and Hillary have discussed eliminating the tax refund companies get for overseas manufacturing, but that isn’t a US refund! The US can’t eliminate it no matter who is President.
It is actually included in long standing trade agreements dating back to the Marshall Plan days when we allowed European companies to refund sales (VAT’s) taxes as a means of stimulating their post war economies.
Unfortunately these nations refuse to renegotiate the matter. Every President since Nixon has attempted to get this changed. As a matter of fact Congress has changed our own tax law to specifically counter this one item, if I recall correctly 4 times, and each time it was judged an illegal change by the WTO. Yes, changing our tax law was judged illegal.
That is what gets me, McCain wants tax cuts to encourage domestic manufacturing. The Dems claim they will stop companies from getting a rebate for off shore manufacturing — something no President or legislative move has been able to do for nearly 40 years.
David
6. redrover | May 20th, 2008 at 1:28 pm
Mr. Sweeny:
How does one get to be “a serious candidate for Congress”?
Don Manzullo voted for all the so-called “free trade” legislation that facilitated what you have condemned, namely, “a rush to move factories off shore in a race for low-cost labor.”
This “rush” would not have been possible but for the lifting of tariffs and other barriers to imports from low-wage countries, some of them brutal, anti-democratic dictatorships that manufacture goods for export using de facto slave labor.
Since you have condemned the consequences of the policies that Manzullo has steadfastly supported, how can you say that Manzullo has “been a pretty good congressman”?
Finally, with regard to offshore manufacturers “dictating our economic reality”, I would suggest that our economic reality is the least of our worries. America’s political reality and moral/ethical reality are much more important to our retaining genuine sovereignty and are both greatly endangered by the off-shoring process.
A Congressional hearing, entitled “Chinese Influence On U.S. Foreign Policy Through U.S. Educational Institutions, Multilateral Organizations And Corporate America” held on 14 February 2006 examined these issues.
http://commdocs.house.gov/committees/intlrel/hfa26076.000/hfa26076_0f.htm
Perhaps the statements of ALAN TONELSON and ROSS TERRILL will make you reassess your support for Don Manzullo and his Chinese commie-loving ways. And perhaps not.
7. Right Of The Star Blog | May 21st, 2008 at 5:05 am
Chuck, FYI -
The lower dollar had made US exports more attractive to much of the world. Toyota is beginning to export US manufactured vehicles for the first time. This is on top of GM sending Buicks to China (of all places!).
David
8. Chuck Sweeny | May 25th, 2008 at 9:22 pm
Dear Anonymous Rover:
You get to be a serious candidate for Congress by raising enough money to mount a credible campaign, which Mr. Kutsch was never able to do. Also, the Democratic Party has never targeted Mr. Manzullo for defeat. Every election campaign, both parties pick the top 20 to 30 Congressional seats they think they can win.
The Democrats never did that in the past. This year, they convinced Bob Abboud, mayor of Barrington Hills, to give it a try, and he shows every indication of mounting a serious campaign. However, the party hasn’t sent a signal yet whether it is going to send money his way.
Without at least a million dollars, Abboud will have trouble defeating Manzullo, who remains popular in his district regardless of what you think of his record.
9. redrover | May 27th, 2008 at 12:32 pm
Yes, of course, Mr. Sweeny, since, in our great greedy, capitalist society, Money is the Measure of a Man, it therefore follows that the ability to “raise enough money to mount a credible campaign” is the measure of a “serious candidate” for office in what P.J. O’Rourke called our “Parliament of Whores”.
I cannot dispute your analysis of this phenomenon, but I wonder why journalists like yourself and the others on the RRStar editorial board would be so eager to defend it by carefully ignoring and in the end, even denouncing the issues that Mr. Kutsch raised in his campaign simply because he had no money to make the voters aware of them.
A proper community newspaper would have strived to level the playing field that had been tilted in Manzullo’s favor not by the superiority of his positions but the by the million dollars he raised and then spent to drown out any real discussion of the issues. But the RRStar did not do that and thereby did the voters of our district a great disservice.
Mr. Abboud is a multi-millionaire, so of course he is a “serious candidate”. But what of his positions on the issues: Are they really any more “serious” than those presented by Kutsch or the other good men who have run against Manzullo, all of whom you have dismissed as not being serious candidates?
I think that thanks to widespread acceptance of your standards for being a so-called “serious candidate”, what we have in this country is not a democracy but an auction of elected positions to those individuals who are able to collect the most money through a process of legalized bribery.
I find that disgusting and therefore unacceptable. What about you?
10. Leatherneck | May 28th, 2008 at 9:34 pm
Rover, I agree with Sweeney on this one. Unless a candidate can communicate his message effectively… it’s as if he doesn’t have a message. No matter what his “positions” on the issues, it is about as effective as singing in the mirror with a hairbrush.
11. redrover | May 29th, 2008 at 12:37 pm
But this is not about communication, Leatherneck, it’s about raising money. That’s the criterion that Mr. Sweeny said is the measure of a serious candidate.
Of course, without money to buy media space and time, it’s pretty darn hard for a candidate to communicate anything to a media-dependent public, no matter how articulate one might be.
But should that be a barrier to being taken seriously as a candidate running for office?
Are we to be a nation whose candidates for elective office must and need only demonstrate that they can raise money using a campaign financing system that reeks of bribery in order to prove that they are to be taken seriously?
If so, then please do not call what we have “democracy” because it has almost nothing to do with the rule of the entire people and almost everything to do with the rule of the minority of wealthy people and organizations whose “campaign contributions” fund these so-called “serious candidates”.
Plutocracy, and not Democracy, is the proper name for what you and Mr. Sweeny seem to be supporting. Is that acceptable to you?
12. Chuck Sweeny | May 29th, 2008 at 12:44 pm
I’m not labeling what we have a particular “ocracy,” Pluto’s or anyone else’s. I’m just commenting on life as it presently exists. Under our Constiitution, free speech includes the right pay for speech — i.e. a campaign.
Mr. Kutsch did not raise sufficient money to be taken seriously.
13. Leatherneck | May 29th, 2008 at 7:15 pm
Rover, it is just political reality. Now, John Kutsch was a neat guy. But Sweeney is right, Kutsch did not raise sufficient money to get his message out, via direct mail or tv. Is that what it takes? (Yes) The 2nd time Kutsch ran, he was really a no-show and he raised even less money, if that was possible. The Democrats did not take him seriously. He was a what we call a sacrificial lamb. He was not even “on the radar” as far as the general electorate. But I give him credit for at least putting his name on the ballot and giving voters a choice. That is democracy, yes, but it was never a competitive race. Even John B. Anderson and Lynn Martin had opponents.
Manzullo has not had even CLOSE to a viable challenger except for maybe once, Catherine Lee in 1996. And even her candidacy had fizzed by August.
14. redrover | May 30th, 2008 at 10:13 am
Of course, Leatherneck, you aren’t applying labels to those aspects of “life as it presently exists” that you choose to comment upon. Why would you want to do anything like that?
Doing such a thing would surely involve engaging in some sort of critical thought, examining the issue in an analytical manner, and referring to ones core moral, ethical and political values in order to evaluate that particular aspect of “life as it presently exists”.
So much work, so little reward. It’s just so much easier to accept the injustices that one comes across in everyday life as “political reality”.
You know, if our Founding Fathers had just practiced that philosophy, we would have a currency, the UK pound sterling, that’s worth a whole lot more than our lousy dollar is.
And instead of being decorated with all those old pictures of Dead White Men, our currency would have the Queen’s cute face to brighten our days and pay for our fish and chips.
I mean, why start a revolution over a political reality like the Stamp Act and the other colonists’ grievances of the pre-Revolutionary era?
Regarding your views on the First Amendment’s application to the legalized bribery scheme better known as campaign fund-raising, consider this:
Legislators make the laws.
Police Officers enforce the laws.
Judges interpret the laws.
If a citizen offers money to a judge in response to the way he interprets the law, that’s a bribe.
If a citizen offers money to a cop in response to the way he enforces the law, that’s a bribe.
But if a citizen or organization offers money to an elected legislator in response to the way he makes the laws, that’s just campaign fund-raising and not at all illegal or unethical.
So how does the First Amendment apply to the last of these three activities but not the other two?
Manzullo used “campaign fund-raising” to raise and spend nearly or more than $1 million in each of the last 3 campaigns, and outspent his opponents by as much as 300 to 1. You can call that “democracy” but, as I wrote above, plutocracy (rule by the wealthy, or power provided by wealth) is the appropriate term. More on this at:
http://en.wikipedia.org/wiki/Plutocracy
I think that the thinking people of this country and our district deserve better than what Manzullo and the other political whores of both parties give them. But I don’t see them ever getting it until journalists like Mr. Sweeny and his colleagues at the RRStar, who supposedly depend upon thinking people to buy and read their newspaper, begin to demand a better and fairer system of running for office in their editorials and attempt to rectify the unfairness of the current system through their coverage of political campaigns and candidates.
As for the non-thinking people of this country: They should kindly stay away from the polls and just accept what happens to them as “political reality”.
15. Chuck Sweeny | May 30th, 2008 at 10:34 am
Unfortunately, our Founding Fathers failed miserably to deal with an appalling cancer called slavery — and accepted life as it then existed when crafting the Constitution. They left slavery for another generation to deal with, in a horrific civil war in which battles or disease killed 600,000 Americans.
140 years after that war, we are still dealing with the aftershocks.
I would like to go back and ask the Founders, “Gentlemen, what were you thinking?”
16. Leatherneck | May 30th, 2008 at 7:00 pm
Mr. Kutsch: Getting back to manufacturing, have you read the book “The World is Flat”? What are your thoughts on that? Also are you aware of a more current trend called “insourcing”?
17. redrover | June 2nd, 2008 at 8:57 am
First of all, I apologize Mr. Sweeny for not addressing some of my remarks to you in my previous posting. I missed that it was you who posted some of those things that I commented on, mainly because your name was not hyperlinked in blue as it usually is.
Yes, chattel slavery was a cancer and the Founding Fathers who institutionalized it in the original Constitution were hypocrites who were putting their greed ahead of the good of the entire country.
But, the Civil War did not eliminate slavery. It only abolished chattel slavery so that it could be replaced with the more profitable wage slavery.
Why own a slave when you can rent one? That’s the big difference between the forced labor system that was used down on the plantations of the Deep South before the Civil War and the forced labor system that was used in the sweatshops of the industrial North during the industrial revolution in this country.
There is an excellent discussion on the differences between chattel and wage slavery here:
http://en.wikipedia.org/wiki/Wage_slavery#Comparison_with_chattel_slavery
I would argue that the outsourcing of high wage US manufacturing jobs to countries where the costs of production are much lower is still exploiting slave labor, just as earlier generations of US wage slaves were exploited in this country before worker protection legislation was passed and the union movement took hold.
Workers in these low-wage countries are usually subjected to long hours under sweatshop working conditions and routinely exposed in their workplaces to threats to their health and safety, just as my immigrant grandparents were early in the 20th century while working at Nelson Knitting and the Geo. D. Roper Corporation right here in Rockford.
My grandfather and my great uncle, his brother-in-law, both suffered long and died young from lung diseases they acquired while working at Ropers.
Trade barriers could be used to protect American workers from having to compete, unfairly, with the exploited and abused workers in these low wage countries, but those have been done away with by our well-paid hypocrites in Congress who have put satisfying the greed of their corporate sugar daddies ahead of the welfare of the workers of this country and the basic human rights of the exploited workers in those countries to which our manufacturing jobs have been outsourced.
18. redrover | June 2nd, 2008 at 9:21 am
Leatherneck
I am not John Kutsch, but I know who he is and supported his candidacy.
I, too, was disappointed in his second campaign, but the man went into debt and lost income from his job just trying to present his views to the public the first time around, so it’s understandable that he was reluctant to do so the second time around.
However, if he hadn’t run, Manzullo would have been re-elected unchallenged, and that is a real crime, in my opinion.
And the criminals, in my opinion, are none other than the clique of spineless hypocrites who make up the local branch of the Democratic Party. They have this sweetheart deal with their counterparts in the Republican Party to basically divvy up the elective offices in our area and give free rides into elective office for some of their members.
This is a criminal abuse of the electoral process, but it is business as usual for the two-party tyranny.
The other thing that Democrats and Republicans agree upon is using the election law to limit access to the ballot to their own members.
They have long simply refused to abolish legislation that requires an independent or 3rd party candidate to obtain often 10 or more times as many petition signatures to get on the primary election ballot as Democrat and Republican candidates must obtain.
If that’s not a violation of the Equal Protection Clause of the 14th amendment of the U.S. Constitution, then what is?
I haven’t read Tom Friedman’s book, but I know enough about him to have no use for him or anything he has to say on nearly any topic.
He supported this criminal war in Iraq and swallowed and regurgitated, hook, line and sinker, the Bush administration’s propaganda lies about its motives and justifications for that war.
Why should I care to read anything else by such a dummy?!
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