This article was written by Michael Snyder and originally published at his Economic Collapse blog.
Editor’s Comment: Perhaps Donald Trump will inspire some sort of economic recovery through a renewed America that manufactures again. But that trend will have to face up to the advances in robotics, computers taking over for everything, and the new world order that has multiple axes of power.
Unless our course is altered, the mainstream economy is headed for a terrible crash, in which jobs will remain paralyzed. In the end, there will have be new breakthroughs, and a rediscovery of purpose, and hence new things for people to do that will have tradable value. Right now, no one seems to know what that is, and things may hang in jeopardy as long as that remains unsolved. Will prosperity return to our society soon, or remain a specter that haunts us all?
From An Industrial Economy To A Paper Economy – The Stunning Decline Of Manufacturing In America
by Michael Snyder
Why does it seem like almost everything is made in China these days? Yesterday I was looking at some pencils that we had laying around the house and I noticed that they had been manufactured in China. I remarked to my wife that it was such a shame that they don’t make pencils in the United States anymore. At another point during the day, I turned over my television remote and I noticed that it also had “Made In China” engraved on it. It is still Labor Day as I write this article, and so I think that it is quite appropriate to write about our transition from an industrial economy to a paper economy today. Since the year 2000, the United States has lost five million manufacturing jobs even though our population has grown substantially since that time. Manufacturing in America is in a state of stunning decline, our economic infrastructure is being absolutely gutted, and our formerly great manufacturing cities are in an advanced state of decay. We consume far more wealth than we produce, and the only way that we are able to do this is by taking on massive amounts of debt. But is our debt-based paper economy sustainable in the long run?
Back in 1960, 24 percent of all American workers worked in manufacturing. Today, that number has shriveled all the way down to just 8 percent. CNN is calling it “the Great Shift”…
In 1960, about one in four American workers had a job in manufacturing. Today fewer than one in 10 are employed in the sector, according to government data.
Call it the Great Shift. Workers transitioned from the fields to the factories. Now they are moving from factories to service counters and health care centers. The fastest growing jobs in America now are nurses, personal care aides, cooks, waiters, retail salespersons and operations managers.
No wonder the middle class is shrinking so rapidly. There aren’t too many cooks, waiters or retail salespersons that can support a middle class family.
Since the turn of the century, we have lost more than 50,000 manufacturing facilities. Meanwhile, tens of thousands of gleaming new factories have been erected in places like China.
Does anyone else see something wrong with this picture?
At this point, the total number of government employees in the United States exceeds the total number of manufacturing employees by almost 10 million…
Government employees in the United States outnumber manufacturing employees by 9,932,000, according to data released today by the Bureau of Labor Statistics.
Federal, state and local government employed 22,213,000 people in August, while the manufacturing sector employed 12,281,000.
The BLS has published seasonally-adjusted month-by-month employment data for both government and manufacturing going back to 1939. For half a century—from January 1939 through July 1989—manufacturing employment always exceeded government employment in the United States, according to these numbers.
You might be thinking that government jobs are “good jobs”, but the truth is that they don’t produce wealth. Government employees are really good at pushing paper around and telling other people what to do, but in most instances they don’t actually make anything.
In order to have a sustainable economy, you have got to have people creating and producing things of value. A debt-based paper economy may seem to work for a while, but eventually the whole thing inevitably comes crashing down when faith in the paper is lost.
Right now, the rest of the world is willing to send us massive amounts of stuff that they produce for our paper. So we keep producing more and more paper and we keep going into more and more debt, but at some point the gig will be up.
If we want to be a wealthy nation in the long-term, we have got to produce stuff. That is why the latest news from Caterpillar is so depressing. In addition to the thousands of layoffs that had been previously announced by the industrial machinery giant, it appears that a fresh wave of layoffs has arrived…
Hundreds of mostly office employees received layoff notices at one of the largest Caterpillar Inc. facilities in the Peoria area this week, just as the company announced plans to close overseas production plants and eliminate thousands more positions.
A total of 300 support and management employees at Building AC and the Tech Center in Mossville this week received job loss notifications that included severance packages, 60 days notice and mandated Illinois Worker Adjustment and Retraining Notification Act letters.
During this election season, you will hear many of our politicians talk about how good “free trade” is for the global economy. But that is only true if the trade is balanced. Unfortunately, we have been running a yearly trade deficit of between 400 billion dollars and 600 billion dollars for many years…
When you have got about half a trillion dollars more going out than you have coming in year after year that has severe consequences.
Let me try to break it down very simply.
Imagine that I am the United States and you are China. I take one dollar out of my wallet and I give it to you and then you send me some stuff.
After a while, I want more stuff, so I take another dollar out of my wallet and send it to you in exchange for more products.
But that stuff only lasts for so long, and so pretty soon I find myself taking another dollar out of my wallet and giving it to you for even more stuff.
Ultimately, who is going to end up with all the money?
It isn’t a big mystery as to how China ended up with so much money. And when we can’t pay our bills we have to go and beg them to let us borrow some of the money that we sent to them in the first place. Since we pay interest on that borrowed money, that makes China even richer.
This is why I am so obsessed with these trade issues. They truly are at the very heart of our long-term economic problems.
But most Americans don’t understand these things, and they seem to think that our debt-based paper economy can just keep rolling along indefinitely.
In the end, history will be the judge as to who was right and who was wrong.
Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.
Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream.
If you want to know what is coming and what you can do to prepare, read his latest book [amazon text=Get Prepared Now!: Why A Great Crisis Is Coming & How You Can Survive It&asin=150522599X].
Silver has been on a tear for the last few days with no retracement. It just keeps climbing. That’s a good Bull sign.
Today Tues 9:35AM $19.64 +0.36 +1.89%
I think we will blast right up to $23-$24 shortly.
~WWTI…
Bulls for Silver, Up over $20.06 Mid day high. Lets hold and keep on pushing. Gold is up $20 also to $1347.
~WWTI…
Silver over $20 now, gold is past $1353!
Yep. Looks like a great Bull Mkt on silver going forward. When it closes on an uptick at the high it will keep climbing the next day. 4.75% up today.
~WWTI…
Keep in mind – “what goes up … must come down”
As is … $20 bucks an ounce for Silver is a slap in the face to physical holders … I would not be getting exited on a slow increase of this “manipulative market” of metals.
As I’ve said in the past … even if Silver hit $100 an ounce when a market crashes … do you think a bank is going to honor such a thing?
Answer: is an obvious NO
Silver/Gold is a necessity – for future F@ck ups that the Banking Community has provided for us all … but … you will not get “face/market value” when you decide to turn it in.
What you will have … is a start up … to their new ponzi scheme of a new world currency … and the “game” gets played all over again.
In the End …
Bankers Win
You & I Lose
Now consider the fact that the price of gold / silver has been artificially held down for a while.
Fake money drives the stock market. If it didn’t, Soros wouldn’t be buying shitloads of gold.
Owning gold / silver at this point is only going to be a hedge against inflation – preserving what wealth you have accumulated.
I’m putting my money into both, but more into the tangibles that I can shoot with and eat with.
Another priceless commodity is knowledge – because it can’t be stolen, it’s easily hidden, and it’s easily transportable.
all just part of the Fourth Turning
recognize that change is happening
and adjust to that change
OR
perish
““Imagine some national (and probably global) volcanic eruption, initially flowing along channels of distress that were created during the Unraveling era and further widened by the catalyst. Trying to foresee where the eruption will go once it bursts free of the channels is like trying to predict the exact fault line of an earthquake. All you know in advance is something about the molten ingredients of the climax, which could include the following:
Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation)
Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities
Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionism, authoritarianism, and altered national borders
Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction”
it’s gonna get a WHOLE LOT WORSE before it gets better
Finland is considering giving every citizen a basic income
h ttp://qz.com/566702/finland-plans-to-give-every-citizen-a-basic-income-of-800-euros-a-month/
this may very well HAVE to be the norm in the not too distant future
we are going to have tens of millions of people who will basically be unemployable
jobs like taxi drivers,truck drivers,waiters,fast food workers etc will be non-existent in our life time
a PERMANENT underclass is well under development
test run to see if the few thousand people who get it actually spend it. They have to since it replaces other handouts. On a large scale it means more dollars chase a limited amount of goods. That’s a recipe for hyper inflation. It sounds like they loaded the test run to then be able to say it works.
If helicopter money starts here on a grand scale, spend it as soon as you get it. Food, clothes, PMs, pay off debt ahead of time….buy tangible things. Those who think they’ll save it will see inflation destroy it.
Boyo:
I agree that inflation eats up cash. But it is always wise to keep some cash for emergencies and unforeseen events. People who spend their money as soon as they get it almost always regret it.
Spending money on steak for the freezer, or designer clothes, and electronics or sports events is how most waste their cash.
If you have an income that allows you to enjoy these luxuries, you can afford to really Prep.
I would buy property. If that’s out of reach, I would buy tools, make cages or buy them to raise rabbits. I would hire a horticulturist (I did) and turn your backyard into an edible paradise.
You don’t know everything. Give some college kid a chance to make some money. By paying someone who knows something about plants (trees, shrubs, edible flowers, grape vines on fences and over head), your backyard can become a gift that keeps on giving.
Also, when buying a house. Make sure the seller has planted and now the property has mature trees and perennial shrubs that are edible.
___
Free Trade Agreements with 3rd would Countries, is a race to the bottom, creating many more 3rd world countries. And guess who profited on these agreements? Yep the 1%’ers and Hillary financial supporters wanting more of the same.
Trump wants to make America Great again for everybody, by stopping these shoddy agreements. He’s got my vote. Sure if you throw some tariffs on certain imports or industries, it creates a vacuum inside America, to compete by US manufactures to building the same products, at competitive pricing which creates more jobs.
After 25 years of NAFTA playing out, it didn’t work and was a failure for America, Obama’s TPP will be more of the same. Ross Perot was right, The “Giant Sucking Sound” it sucked American Jobs out of our country, including lost technology and skilled jobs. How many 18 Year Olds today, know how to run a layth, or a Bridgeport drill press working within a few 1000th tollerances. I did that when I was 18.
100 Million American People are eager to get back to work. Nov 8th Vote.
~WWTI…
Perot was an insider that had no intention of winning and his meteoric rise in the campaign made him a real contender in a three way split. Perot sabotaged his own campaign on purpose. Perot’s “Job” was to make NAFTA an issue thus drawling votes from GH Bush 41 and facilitating a Clinton victory. Bill Clinton, in the pocket of the globalists campaigned with promises against NAFTA but did not make it his focal point and immediately upon entry into the White House secured vital Democrat votes for NAFTA passage that eluded GH Bush 41. The Main Stream Media, the PRAVDA mouthpiece for TPTB sat conspicuously silent.
TPTB play chess and the body politic are not even good checker players. Little that appears is how it truly is.
WhoWTFKnows…good post, (((1%))) aka (((dasjuden))) (((THEY))) OWN the souls of ALL of the politicians. People crack me up when they say that they are going to contact their senators or congressman… I laugh out loud in their faces. I tell them (((who))) owns them and they get this stupid look on their faces… it’s too much… AND that goes for some of the trolls on here. Always have hurt little feelings for the (((zionist juden)))…amazing
Got gold?
The US manufactures currency and weapons. The latter insures that the world uses the former.
Weapons yes, currency no and if you did then the USA would not be in such debt to the jewish banking system and you would not be paying interest on the money.
Your military act like thugs around the world for the bankers and this is why most of the world now hates americans and i think they are cowards for not doing something about 9/11 when the truth came out a few years later.
Walk into any bar in Europe as an american, buy some beers and then start singing the praise of the US of A and see if you walk out of the bar afterwards. I say this because i have seen it myself
These free trade ‘agreements’ have been the root cause of most of our economic failures. Other economies have been established by selling their natural resources like Russia and Nigeria by selling the oil and gas reserves. Maybe the U.S. can sell some coal instead of shutting down a whole industry?
The coal industry will be given to the Chinese in payment for our debt, along with the rail system to transport it to the west coast… there will be jobs for the slaves to mine it, transport it and load it into the awaiting ships in California.
Kevin2, right on the spot about Perot. His reward was to be that his company, EDS, would be given the contract to handle the Clinton Health Care operation. The Republicans buried that plan as pay back.
Observer
In effect beware of those that claim to be your friend. In hindsight a Bush 41 victory would have put more sand in the gears of the globalists than the Bill Clinton victory. Vote for political kayos so literally nothing gets accomplished because none of it is in your favor regardless what it is or how its presented. Gridlock may not roll back what has occurred but it thwarts further advancement.
the law, judges, lawyers are the real problem in this country running a system of legal plunder, racketeering, greed, corruption and injustice. Then the politicians, bankers, corp. ceo’s and the filthy rich that back these, you are now nothing more than victims of these people, and americans are too stupid to understand or even care
This is going on for 35 years now. Tell me some good news, PLEASE!!!
I guess I grew up in the USA best years. 50’s-60’s-70’s. Sure there was some mumps, but they were the best.
Sgt.
I got the mumps in the 60s, too.
I got the mumps in the 50’s. Now those were the good old days, much better than getting them in the 60’s or 70’s!
Seriously, though, Sgt. Dale is correct.
It was grand back then. As a kid I could go anywhere in small town Iowa and not have a worry.
Cause in small town USA, what ever you did-good/bad-it always got home before you did.
Went to a Karl King Concert in Ft. Dodge this past June. They played at Olsen Park, evening. Lawn chairs in front of the bandstand. Cake and homemade ice cream from a church. Shades of sun on the green grass. Nice breeze through the trees. America the way she was in the 50s/60s.
It’s still out there. Just have to look real hard to find it.
ITT schools have just closed their doors without warning. 40,000 students locked out. 8,000 employees laid off. The Feds were involved. Haven’t seen any good news in years.
And guess who will be stuck with the bill to bail out the former students of ITT? You, me, Jolene and everyone else:
http://www.wsj.com/articles/itt-technical-institute-to-close-after-government-cuts-off-new-funding-1473163181
“This industry shakeup is leaving taxpayers with a potentially enormous tab. In addition to the hundreds of millions of dollars in federal loans that could be forgiven for students who attended the now-closed ITT, a new Department of Education plan to forgive loans for defrauded students at for-profit and nonprofit institutions could cost up to $43 billion, according to department estimates.
At ITT, which is operated by ITT Educational Services Inc., government officials estimated that current and recent students could seek forgiveness on as much as $500 million in federal loans, on par with what they projected when Corinthian Colleges liquidated last summer. The government in June agreed to forgive $171 million in student debt held by former students of Corinthian Colleges so far.
Taxpayers will be on the hook for most of that amount because they are government-backed loans; ITT currently has about $90 million set aside to cover forgiven loans.
In a statement, ITT said: “The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable.”
If you want see item mark USA made go to yard sales of people over 70. My mother has great stuff that one day I will have to sell off.
I do not believe that people in their early 20’s and 30’s are going to be loving life in the near future. Actually if your if you are in your 60’s it becomes a matter on how much longer you will live. Then plan your preps around that time line.
Severance packages (employees) do not get included in the unemployment rate, if I remember correctly, and is a cheaper alternative to businesses than paying unemployment benefits.
Theory: Demand is the key. World demand relies on population growth and by one periodical the world birth rate has declined from over 5.__ per family to 2.1 from four decades ago. Additionally, note that US millennials spend 37% more than they make and 10,000 baby boomers are retiring every day. Who is buying the baby boomer redeemed mutual fund (IRA and 401k) shares?
When the first Bush marketed “New World Order” it opened up – temporarily – the rest of the world to expansion by reducing laws, rules, business costs and prices. Establishment politicians helped establishment corporations make short term gains leaving the general US population out. Has the world growth come to maximum fruition?
The equation is obvious.
Dave
‘World demand relies on population growth”
Actually rising productivity and with it standards of living create consumer demand. The African tribal woman with six living children produces and consumes far less than the two children in a South Korean family.
There is some logic beyond greed to what is globally occurring. The rapidity of the growth of developing nations and its impact upon those already developed is the problem. If a nation moves up the economic ladder and a pause takes effect to equalize the global impact then the classic, “rising tide raises all ships” occurs. What has happened is 2.5 billion people crashed a party with food for far less that number and our portion is shrinking.
Another thought…what would happen if all those public employees were paid in cash and not have their pay cycled through banks and mutual funds? I remembered the days when military personnel had unit pay officers and paid troops with cash.
Dave
Saudi Arabia is in big trouble. They have squandered their oil profits. The oil price war, started by the Saudis, has come back to bite them in the rear end. They had to borrow over 100 billion dollars to keep the government afloat. They are cutting their budget by tens of billions. Problem. Saudi Arabia is loaded with radicals that receive government program money. The radicals are being cut off from that money, more and more, every day. Could we see a new ISIS state soon? Good chance.
” Could we see a new ISIS state soon?”
And it would be on purpose as TPTB are intentionally destroying functioning governments that have resources or strategic geography (Iraq, Libya and attempting Syria). They desire terrorists in control as the oil still flows and there is no political cohesion to go against dictates from TPTB. Strong functioning governments are destroyed and the vacuum is filled with politically fragile one’s that are within a half step of the next revolution. Saudi Arabia, the cornerstone of the Islamic faith is the last domino. To paraphrase Otter’s discussion with Flounder in the movie Animal House; “Saudi, Saudi, face it, you fucked up, you trusted us”. I think they believe that they’re somehow the exception to the rule.
Kevin2 – Saudi and Russia have entered into an agreement to reduce the production of oil to tighten up the market and restore profits. Did not get all the details on that, just the headline, but it will take a while since there is a huge glut sitting around on the globe.
~WWTI…
Fracking / horizontal drilling and a per capita declining demand due to the economy and increased efficiencies might make that difficult.
From every angle, from every perspective, economic, social, political, significant change is happening at a very rapid rate. The change is difficult enough; the rate of change is destabilizing. Add in the intentional, “stirring up the soup” and you have guaranteed volatility.
Before I retired, I was a quality manager. This job travels well and there are openings here and there if you’re willing to relo.
The problem is quality managers are tied to manufacturing and there are only a few areas where America still makes things:
Automotive
Pharmaceuticals
Software
High tech
Foods
I qualified for none of these but was lucky enough to be hired by family owned companies making niche products.
I was lucky. Most in manufacturing will probably not be unless in one of the fields above.
Damn sad the globalists want our economy to collapse to make the takeover of America all the more easy.
To many takers to few makers. Can you blame Caterpillar? They are in Ill. The absolute worst state to try and operate any business. high taxes, Too much union, bankrupt state. They cant compete in price with the overseas imported machinery. Stay in ill go broke or leave and make a profit?
“Can you blame Caterpillar?”
Caterpillar is not to blame as they operate in an environment the government establishes. I think its quite plausible that Caterpillar or its parent owners were part of the campaign contributors to get Free Trade passed to begin with.
“They cant compete in price with the overseas imported machinery.”
The Free Trade Agreements allows this machinery to be imported duty free. The duty, “leveled the playing field” between civilized wage nations and those that are sub par. Don’t blame Unions as even the Textile Industry at $15 / hr fled to sub $1 Asian labor. If the US cannot pay its manufacturing workers a livable wage whats the point? Free Trade lowers the bar and thats certainly not in the best interests of, “We The People”.
Two separate thought here. First, the government employees. It’s not just an issue of who is out there today doing the producing that is necessary to generate the taxes to pay these people, it’s the pension and benefits they’re going to collect for the rest of their life tomorrow. The fund vehicles that are supposed to pay out those pensions and benefits are underfunded to begin with, and can not generate the rate of return necessary to meet their projected payouts because of what they are supposed to be invested in. Negative interest rate or negative yield securities only serve to make them more underfunded because they’re guaranteed to lose money on the investment. When the bubble on negative interest/yield bonds pops like a Palin cherry, and these garbage debt instruments achieve their appropriate fair market value of zero, these pension and benefit funds are toast. The question would then become bailouts, since the Pension Guarantee Corporation, which is supposed to backstop these funds, is, for all intents and purposes, insolvent. I don’t see the public taking kindly to such a bailout potentially being shoved down their throats.
Then there’s the issue of fair trade with China. The one question I have on taking that one dollar out of the wallet and sending it to China in return for goods: are you only receiving one dollar’s worth of goods in return? When the US first started importing from China, the US was still a legitimate economic force to be reckoned with and, consequently, the dollar was a much stronger currency than it is today. I see it this way: if I’m sending a strong dollar to China for things like pencils, I’m expecting a lot more than one dollar’s worth of pencils in return. A strong dollar is the product of a robust manufacturing economy that produces stuff of real value which, in turn, will continue to produce stuff of value. If you willingly trade one dollar of that for a single dollar’s worth of pencils, you are screwing yourself out of what you really should be getting in return and, in the process, creating a trade deficit.
First off the us shouldn’t be trading with communist nations like China for the simple reason that their people are forced to work for peanuts. The American worker cannot compete with that unless our wages become lower than the Chinese. You would have to live 50 people to an apartment to afford a roof over your head. Americans don’t live like this. But the way things are going we might have to. If you think trump is gonna fix this your fooling yourself. He has his line f suits made in nations that exploit people. If he cared about American workers he’d have them made here. The reason he doesn’t is cause it’s not cost effective. He is a greedy rich corporate snob and this is how he thinks. Rich corporate elite have been exploiting labor forever and show no sign of stopping. In fact it’s gotten worst since I’ve been in the workforce. I’ve never got raises bonuses just paycuts. That’s been 25 years. I’m not falling for the same bullshit lies from capitalists. They can repackage it use celebrity’s to promote it not buying it. It’s simple economics people if you can produce a suit for $5 in China as opposed to $100 in the USA you’ve increased your profit $95 by using cheap foreign labor and you haven’t marked up the sale price yet. We will never win as long as there is trade with communist nations with poor human rights records.
“Let me try to break it down very simply.
Imagine that I am the United States and you are China. I take one dollar out of my wallet and I give it to you and then you send me some stuff.
After a while, I want more stuff, so I take another dollar out of my wallet and send it to you in exchange for more products.
But that stuff only lasts for so long, and so pretty soon I find myself taking another dollar out of my wallet and giving it to you for even more stuff.
Ultimately, who is going to end up with all the money?”
…hm….I’m not sure i follow….sorry, but I am not capable of speaking this lawyer-ese…
lol
too bad all too many people neither understand nor care about what actually made the U.S.A. exceptional..
and left wing, socialistic statists are working overtime to fool the next generation that we are at fault for all the failures the rest of the world have created.
I’m ALWAYS taking jabs from euro trash, middle eastern towel heads and rusky comrads constantly trying to bash the U.S. and sow the seeds of dissent here…
bullet to your heads is all I want to say to those evil pieces of Scheisse.
Your analysis is correct but the reason we can’t become a manufacturing economy any longer is the cost of labor. No one is willing to work for those wages that a seller can pay for them to sell at a competitive price. Labor cost in China allows seller to make a profit and sell goods at a price people are willing to pay for an item.
If Apple sold iPhones that were produced here the price would have to be considerably higher than the present to allow Apple to pay a wage that is workers would accept, and allow Apple to make the same profit. It’s calls “price theory econ 101”.
I do have a lot of time for the Chinese. They have their faults but in the main you will get the truth from a Chinese person because they are not bathed in political correctness and anti-science thinking. As an example, the inflight magazine from Air China had this to say about London: “London is generally safe – but be careful in areas populated by Indians, Pakistanis and black people. We advise tourists not to go out alone at night, and females always to be accompanied by another person when travelling.”
I trust the Chinese perspective because it is what an outsider sees and experiences. The brightest spotlight on a society is usually held by the outsider. It is also not racist because Chinese people are not white and are also a minority group.
even back in 1890s they said why hire a man when i can get a child for half. then mad when no one can buy their crap. in in 1970 brought new ford, 3 yrs of payments. today 5 to 7 yrs of payments, our gov’t does not care been brought off.