Long Term Solutions to the Economic Crisis
Products of American Investment Need to be American Made
Oct 16, 2008
Senator Obama touched on it ever so briefly when he mentioned how the United States borrows money from China and sends it to Saudi Arabia. This was similar to the way President Bush mentioned investors from abroad in his address to the nation in late September.
Borrowed Money, From Whom and Why
Senator Obama did not talk about why we borrow money from China, or why China has so much to lend to the United States. The President did not say why foreign investors have enough money to lend to the United States that it affects our economy so profoundly.
The reason no one discusses is there is no manufacturing in the United States. Americans produce little of what the world consumes beyond food and technology. Americans buy what they consume from the rest of the world. Many of the reasons for this are discussed in The Problem with the American Economy and The Wisdom of Henry Ford.
The Products of Alternative Energy
During the debates much reliance was made upon alternative energy development. Technology involving electric cars, windmills and clean coal were referred to and the jobs that would come along with the creation of that technology. American technology has been on the cutting edge for much of the world for the last 75 years and has been a driving force in improving the lives of billions. Investment in alternative energy development is critical as both Senator Obama and Senator McCain stated.
The problem is that technology is not placed in a package, sold to a consumer and consumed. It is not sold over and over again. It does not wear out and once purchased now belongs to the buyer. It is said that economies are driven by consumption, but technology is not consumed. It is created, sold once and the purchaser now benefits permanently.
The products of technology are consumed. Cell phones, high capacity batteries, efficient wind mill blades, computer chips and computers have a useful life. At the end of that life replacements are necessary and if the buyer wants continued benefits of a product he needs another. Long term employment results from making the products of technology, not the development of technology.
Made in America
For the American economy to get back on track it needs to continue to lead in technological advances. For the American economy to stay on track the products of those advancements need to be made in America.
An economic spurt came about in the 1990’s from major leaps in what has been referred to as a tech boom. It was shortly followed later by the bursting of the tech bubble. America received no long term benefit from the tech boom because the products of the boom, things like cell phones and computer chips are being produced elsewhere. Had that production stayed in the United States, there would be many more American jobs and fewer Americans would be unable to be current with their mortgages.
It will do little long term good to use American resources to develop new energy technology if the fuel cells, wind mill blades, high capacity batteries and the resulting products of the investment are made elsewhere. It is critical that government policies remove the disincentives that now exist for American manufacturing.
Selling American Technology is a Matter of National Security
Maintaining an American manufacturing base is critical to our national security. Producing goods adds to the national wealth allowing the government to have strong defenses. However, allowing American technology to be sold endangers us in ways beyond job losses. Chapter Four of David Cay Johnston's Free Lunch. outlines the sale of a General Motors subisidiary that made highly specialized magnets to ultimately a Chinese consortium.
These magnets are used in cars trucks and smart bombs, and targeting systems for military hardware. As a result of the technology transfer, the United States must import a component critical to our military from the Chinese. The Chinese now have the technology to shoot down orbiting satellites. Husbanding technology will not only keep America working, it will keep her safer.
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