The Quiet Demise of American Manufacturing?
In the Huffington Post, Ian Fletcher writes about American industry, and the complex way in which it is falling apart.
Many understand the demise of American manufacturing, and its potential for revitalization, as a simple process. Fletcher argues that it is by far the contrary. He writes:
To take just one example, when American producers are pushed out of foreign markets by protectionism abroad and out of domestic markets by the export subsidies of foreign nations, it is not just immediate profits that are lost. Declining sales undermine their scale economies, driving up their costs and making them even less competitive. Less profit means less money to plow into future technology development. Less access to sophisticated foreign markets means less exposure to sophisticated foreign technology and diverse foreign buyer needs.
When an industry shrinks, it ceases to support the complex web of skills, many of them outside the industry itself, upon which it depends. These skills often take years to master, so they only survive if the industry (and its supporting industries, several tiers deep into the supply chain) remain in continuous operation. The same goes for specialized suppliers.
Fletcher is also dead on when he talks about how if American innovation is increasingly manufacturing abroad, we will lose out technological edge, and how the lack of a comprehensive industrial policy places us even further behind nations like Germany and China, which are currently flexing their well-oiled manufacturing muscles.
According to Fletcher, "It is not yet too late to reverse these dynamics, but we are definitely running out of time. So the sooner we start questioning the sacred myth of free trade, which is largely responsible for this mess, the better."
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