What Once Was New

Posted: December 14, 2008 in Culture, Economics

The imminent collapse of the American automotive industry and its ancillary businesses has inadvertently revealed an uncomfortable truth no one is quite willing to say aloud: in its current phase, the U.S. can longer afford its own manufacturing infrastructure. Although the automobile is a distinctly American creation, other countries have learned how to design, develop, build, and market cars better and cheaper than we can. So except for a few die-hard buy-American types, everyone buys foreign. Free marketers say, “fine, let U.S. companies fail.” We can’t operate that industry profitably anymore, so we should seek other opportunities.

That is the American myth: the land of opportunity. For 150 years, the U.S. has been in the vanguard of scientific and technological development, and as a result, the list of American inventions that have transformed the world is disproportionately long. Some chalk it up to a wellspring of creativity borne out of the melting pot; others assert that the U.S. is a magnet for creative, risk-taking, entrepreneurs. Whatever the cause, it’s undeniable that creative ferment has fueled an impressive array of innovations in the U.S.

However, as other countries catch up and redevelop the technologies that first appeared in the U.S., including our style of economic activity, they are able to exploit their cheaper labor and refined management techniques to pass the U.S. in productivity, efficiency, price, and reliability. In short, what only we could once do they can now do better. This is the cause of disappearing manufacturing infrastructure and heavy industry in the U.S. (except perhaps ordnance, which is underwritten by the government for obvious reasons). Why make clothes, cars, shoes, furniture, etc. here when it can be done better and cheaper abroad? The price of globalization — you build it, we’ll buy it — is finally biting back in the death of a large, once-formidable industry rather than the death by a thousand cuts progressing throughout the entire manufacturing sector for over two decades.

The same trajectory is evident in the service and information industries. So long as it’s not necessary for someone to actually climb a pole or install an appliance in person, jobs are increasingly outsourced to some English-speaking foreigner whose middle-of-the-night work shift accommodates waking hours in North America. The pressures and advantages of cheaper (and better) labor abroad means that we can no longer afford to house those jobs domestically.

As a consequence of sending so many of our jobs away, we are forced to continuously break new ground. Despite some notable remnants, the U.S. is no longer primarily a manufacturing or service economy. Our advantages as an information economy are also ebbing away quickly, especially as the value of that information is revealed to be either a series of financial bubbles and scams or based on the weightlessness of branding. The shoe may cost only $12.50 (or less?) to build in Malaysia, but slap a swoosh on it and it’s magically worth $150. Or buy into a hedge fund paying consistent returns only to find out that the entire edifice is artifice: a long-term Ponzi scheme.

Indeed, the new American style of economic activity may be based on something even more dimwitted. Simply put, the U.S. is now a consumer economy operating on the unwitting complicity of our creditors (suckers to our con men). As with so many multinational corporations now deemed too large to fail, the world’s suppliers of goods and services to the U.S. can’t afford to lose their largest customer. The startling discovery that the U.S. is actually much poorer than anyone thought and that our money has far less intrinsic value is clear on any objective analysis, but the U.S. has essentially been running an international con game for some many years now. We have lost of control over our appetites, and more significantly, our money supply. Print more, consume more, bail out everyone, and stick the world with the bill since we’re too big to fail. We’ve conned ourselves, too. We believe in American exceptionalism — that we’re magically invulnerable to failure. We needn’t apply ourselves too diligently in school or work; nor do we need to produce value because it gets taken care of (or bailed out) in the end anyway. We can’t be allowed to fail.

  1. Kathleen says:

    NYC may well be leading the way in Ponzi schemes and variations on it.
    Most people are happier working, and even working hard, than not working. The next US innovation should be a way to offer workers honest work in return for a living wage.
    But don’t ask me: I wouldn’t know where to begin. We also want our honest work for a living wage to feel significant, creative, and if possible inspiring.
    Making sneakers or cars? I want to write short stories. I’m willing to work toward exhaustion, but I don’t expect to get paid. One in a million likes reading stories.

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