Maybe the economy of the United States of America has always been this way. But take a step back and look at the current state and it seems that we are in a scary position and we are still on a dangerous trend.
Manufacturing and industry was the staple of the US economy until the 1950s. World War II brought the US out of the Great Depression, along with building the interstate system. The key to manufacturing is resource extraction. This means literally mining or extracting resources from the earth (coal, gasoline, wood, other fuels and raw materials).
In the 1960s, we began a transition to an information society, where manufacturing became less of a staple. But that doesn’t mean that we have fewer manufactured goods. It means that other countries (primarily in Southeast Asia, Mexico, and to some extent, Canada) were used for manufacturing. Note the way that I stated that last sentance: “other countries were used for manufacturing”. The US industry educates us to believe that this is true. However, this is not true and we are being controlled by other countries.
Using an American’s (Dr. Demming) quality initiatives, Japan was the first country to take some of the steam out of our manufacturing industry. They quickly became better than the US at manufacturing (better means lower cost and higher quality). However, Japan is a smart country, and they started to outsource manufacturing to cheaper countries in southeast Asia.
Japan has become the electronics capital of the world. Have you noticed that there are virtually no US companies that manufacture electronics goods in the US? The reason is that basic components such as resistors, capacitors, and integrated circuits are manufactured in Japan, and if a US company starts producing goods that use those components, a Japanese company will offer to buy the US company. If the US company refuses to sell, Japan will refuse to supply the US company with components to manufacture the good! The US company can either sell, or go out of business.
Fast forward to 2007, and China is rapidly expanding and using the same tactics that Japan has used. However, China’s laws are very relaxed, and they ignore US patents, so they don’t even offer to buy the company. They just start producing copies of the goods, and doing it cheaper. Fortunately, they are generally producing significantly lower quality goods. But that will change…
I’d like you to consider the account balances of several world countries. You can find more about account balances here: http://en.wikipedia.org/wiki/Current_account
China’s account balance is $179,100,000,000.
Japan’s account balance is $174,400,000,000.
Canada’s account balance is $20,560,000,000.
USA’s account balance is -$862,300,000,000.
Should China or Japan stop accepting US debt for goods, our economy would fall apart.
Source: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html
I call this nearsided consumerism because people in the US only are interested in themselves. A large company’s board of directors may outsource jobs because it will boost profits which makes the company stock go up which earns the board of directors a lot of money. They haven’t considered that allowing their intellectual property to go to another country just educates people in other countries which will likely cause competition that can compete at lower costs than the original country! We are paying people in other countries to learn what we know, and then they are turning around and competing with us! All for the sake of the next quarter’s financial statement.
Shortsidedness is scary.
