Opinions and Rants #41: America's Economic Crisis: Solved

Is it possible that some lowly nostalgia blog that regularly posts on pancakes and miniskirts would have the answer to America's economic crisis? Not just possible, folks. Reality.

Attribute it to my 'total body immersion' in decades past, if you like. Perhaps it gives me a unique perspective... and mad skills in historical analysis.  Or (more likely) I'm just stating the obvious, but the obvious is often beaten into exile by the media and the political machine.

The problem is simply this: America (and the EU as well) are not playing on a level playing field. But we ourselves have put us in a position to fail - of extreme disadvantage.... of short term gains for global companies and profound losses for the bottom 99 percent.

Take Apple for instance.  They could have kept their manufacturing in the US, but they instead chose to stay solvent... they made the only choice they could make, for indeed it was not a choice.  To provide competitive prices it simply had to be done.

I don't like relaying long quotes on Retrospace; this is a blog not a term paper.  However, this quote from an Apple exec sums it up perfectly. [source]

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight. 
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. 
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

In the United States and Europe that would be illegal! And for those of you who think we should tighten up and 'learn something' from these impoverished workers, think again.  What is their quality of life? And why were we able to be so damn successful in the 1950s through the 1990s without that kind of Third World 'work ethic'?

The answer, my friend, lies in the fact that Bill Clinton and his ilk 'leveled the playing field'.... and at that point we entered a whole new ballgame.  The thought, I guess, was that we would leave the menial labor to the poorer countries in the hopes that their overall dispositions would improve; meanwhile, the US and Europe would sit back and 'man the ship' with our army of engineers, scientists, and highly technical workforce.  WRONG.

Turns out, we've been left in the dust on all fronts. In Asia, 21% of the students get an engineering degree, while in the U.S. it's a measly 4.5%.  Granted, their definition of 'engineer' is often different than ours [source], and their emphasis is perhaps more centered on quantity over quality - the fact remains that with 1.3 billion in China and 1.2 billion in India, we can no longer assume we are the intellectual masters of the global economy.

Think for a moment.  How did Wal-Mart get to be the United States' biggest company? Was it their superb customer service? Was it their brilliant advertising? Was it the wonderful shopping experience they provide? Hell no. They made their crap cheaper than everyone else's and rolled over the competition town by town.  Without the Great Leveling of the playing field via NAFTA and GATT this would never have been possible.

And so here we are.  Our economy has been floundering for years.  Our banks have resorted to Ponzi schemes whilst our billionaires keep their loot in the Camen Islands.  Meanwhile, the country reaches 16 trillion in debt, and the folks in charge of our fiscal policy in Washington are bought and paid for - no longer representing Middle America's greater good.  Some of you listen to Limbaugh and Hannity attack the left, while others of you listen to Maddow and Mahr attack the right.  All the while this Ship of Fools is headed for that great big iceberg.... which is only a knot away.

Fortunately, the answer is quite simple.  Painful but simple.  Americans will need to choose country over globalism.  We re-institute the long tradition of tariffs. We require American companies to manufacture their goods in America or suffer steep penalties.  

Of course, the immediate downside is our prices will go through the roof.  Imagine buying a toaster  not made by homeless 8 year old Filipino orphans!  Instead it's made in Dayton, Ohio.... by (gasp) workers earning a living wage!  And imagine, if you will, buying that toaster not at Wal-Mart which owes its bread and butter to NAFTA and GATT and 0.000 tariffs..... but instead at an appliance store where (gasp again) the workers earn a living wage.  It's unthinkable.  Your simple little toaster will go from $29.99 to $54.00 overnight. 

But, guess what? If you draw back and look at the bigger picture, you'll see that there are hidden costs associated with that cheap foreign made toaster, or iPhone, or shower curtain ring, or whatever.   (1) How much do you pay to the government to cover unemployment costs? (2) How much do you pay the government to handle rampant crime which is unarguably a byproduct of a downward economic climate? (3) How much do you pay for bankruptcy bailouts and foreclosures? (4) How much will you pay for interest on that $16 trillion national debt? (5) And how much does the nation's coffers lose in tax revenue to global companies that set up shop in Sri Lanka and nest their holdings in the Camen Islands?  The list of 'hidden' costs goes on and on.

Suddenly, that toaster isn't so cheap after all.

And a final note: You will not hear Obama or Romney address this.  Our system is broken.  Wrecked by the profiteers.  Our politicians are bought and our public is numbed by a lazy, dumbed down, agenda driven media.   But anyone whose taken a single history class knows that when the masses get too poor, when they are living hand to mouth while the rich eat cake, things tend to get ugly.  And I don't want things to get ugly.


  1. Insightful and oh so true ... we face similar things here in Australia. We are madly digging up all our resources and selling them to China & India then buying them back once they've been turned into the shiny trinkets we so desire. What's worse we now import labour from SE Asia to work our mines because apparently we don't have enough skilled workers left here anymore.

    "Let them eat cake", indeed.

  2. The more important subject here is; where is the original image for the top image? I spent quite a bit of time looking through your flickr images, but couldn't find it there.

    1. http://farm3.staticflickr.com/2702/4382220472_864b5a2d64_o.png

  3. Almost as if you took your ideas directly from the Dan Carlin Common Sense Podcast. Give it a listen and you will hear your same ideas. Hopefully everyone else will start to understand how the USA can start to come back.


  4. I'll tell you one thing though. I've been to Chinese factories and the conditions are very bad. Shocking.

  5. Your article was right on. Just by coincidence, I was having a similar discussion, a couple days ago, with some friends. We had just watched a Sergio Mendes and Brasil 66 video on Youtube. Seeing Lani Hall and Karen Phillips in mini skirts had somehow triggered a comment about how their clothes were made in America and not in some sweatshop in honduras. Then memories of our first color tv (Packard Bell) and how it was made in the U.S. and not asia. We all could think of how virtually everything that you could buy was made here and not overseas. Of course the talk about manufacturing in the U.S. also reminded everyone of the times when someone could make house payments and have a wife and kids at home by having a relatively low level job like being a store clerk or work in a gas station.

  6. *slow clap* You have hit the nail on the head. What also needs to happen is a real change in priorities among the masses. No one saves up for major purchases anymore, instead we just break out the plastic and shop ourselves into massive debt. There's no delayed gratification anymore. Want it? Charge it!! And instead of paying more for a well-made quality product, we just get whatever's cheapest. I've been guilty of both more times than I can count. I'm trying to make changes, asking "do I really need this?" not using credit anymore, and trying to buy stuff at local stores rather than big boxes.

  7. Part of the problem with the Apple quote is that Apple thought a new screen was so important AND the date of release was so important, that they couldn't wait until morning to get started. YOUR STINKIN' IPHONE IS NOT THAT IMPORTANT PEOPLE!

    And I'd rather pay a decent amount for a toaster that will actually toast an entire piece of bread and still toast a piece of bread in ten years.

  8. I would gladly buy the Made In USA higher priced model knowing I would save money in the long run by not having to replace my crappy Filipino toaster every year

  9. That's the way to go, man. If I wrote the law, I would severely punish Western companies that sent production (or, God forbid, services like call centers and IT administration) to China and India.

  10. There's no winning. My mother for example, complains that things aren't made in America, but she also complains that things are "so expensive". There's no winning. Meanwhile, the amount of people who are out of work due to outsourcing and factory closings in absolutely heartbreaking. The textile industry alone is nearly non-existent in America these days. Think of all the jobs lost by older Americans, too old to learn a new trade and too young to retire. It's devestating.

  11. One thing that isn't mentioned is quality. Is the $54 US made toaster better than the $17 Chinese model? Looking at the current crop of new automobiles, I would say probably not.

    I will GLADLY buy a US made product over one made by orphans in sweat-shops, even if it's more expensive. But NOT if it's crap.

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  13. Your "rant" sounds like it could have come from Senator Bernie Sanders (whom I love).

    As far as prices being so much higher for American made products, the answer to that is volume. Several years ago a company tried to start up in the U.S. (it's been a while and I don't remember the name) making basic clothing items like t-shirts, socks, and underwear. They calculated that IF they could produce in about the same volume as the big name brands - Fruit of the Loom or Hanes - they would have to charge only 25¢ more per item than those big names to offer their employees a living wage plus benefits like health insurance, paid holidays, vacation and sick days, plus a modest retirement plan. I'd gladly pay that little bit extra.

    Sadly, they couldn't get the orders at the volume they'd need, and the company didn't make it. We Americans are bargain hunters. Why pay $3.25 for a t-shirt when you can get one for $3.00, right?

    ::sigh:: Now this song is going to be stuck in my head for the rest of the day:

  14. Those low WalMart prices are taxpayer subsidized. So many of their staff work full time for wages that keep them in poverty. They remain eligible for public assistance.

  15. Right On!!! Totally agree with everything you wrote!

  16. What a great post! Concise, easy to read and, best of all, right on! I've been saying these same things for years.

  17. On NPR's This American Life, they had an episode about retracting the Mike Daisey segment on the working conditions in Chinese factories (as Daisey made up big chunks of his story). At the end, they had an economist on who said that the cheap iPad made by Chinese wageslaves is a false moral dilemma.

    He estimated that an American-made iPad would only cost about $10 more than the ones made at Foxconn in China. And even that isn't the real issue. It isn't "Won't Americans pay $10 more for an iPad made by people on a living wage?" The real question is, "Won't Apple cut into its iPad profit margins by a fraction?"

    PS: the first image made me think of the infamous riding mower scene from "Mad Men"

  18. remember Goodfellas the Lufthansa heist and Robert DeNiro was killing mostly all of those involved
    "It made him sick to have to turn money over to the guys who stole it. He'd rather whack 'em."
    That's the American policy, every dollar that goes into the pockets of those people on the factory floor is a dollar not in the pockets of the people on top. Tothem paying workers a living wage, is theft.

  19. Gilligan I love every single miniskirt, boogie track & Spanish skin-comic you share here, but you're a darn good writer & need to get on that soapbox more frequently. This was good common sense stuff.

    I live in Pittsburgh, Pa & up until 35 years ago, this city was flush with money from all the steel it produced--high paying jobs & we were known to have more work than workers, generations of sons followed their dads into the steel mills, it was the thing to do. My Uncle Robert worked 30 years for US Steel, retired & moved to Las Vegas in 1975 on a full pension. Then around 1979, cheap Chinese steel flooded our markets & southwestern PA almost went belly-up. Fortunately the 'Burgh was reborn as a leader in the healthcare & IT industries, but it will never be the city of opportunity it once was. Let's just hope this country can do what Pittsburgh did before it's too late.

  20. Gilligan for President ! Wonderful analysis. You're right about the hidden costs of apparently cheap foreign products. There's also the lack of environmental and proper safety regulations at these factories to which American corporations are outsourcing.

  21. All good points and very true, except for your last paragraph.

    Unemployment does not go up because of outsourcing to foreign climes. People put out of work due to the outsourcing go and do other things. So rather than have tens of thousands of people producing widgets we have a few doing it and the rest can go on to do stuff like be teachers, hairdressers, scientists, or climate change diversity officers.

    It's a good thing that an industry cuts back on workers as it gets bigger and better. That's because jobs are a cost not a benefit - to the business.

  22. Iron law of economics: There are two types of money. 1) Somebody else's money 2) YOUR money.

    If most of you think American manufacturing jobs are so important, then open YOUR own factory or website or whatever and pay YOUR employees twenty dollars an hour plus unionized benefits. YOU, as the company owner, get to keep whatever's left over at year's end. Good luck.

    My Dad was a steelworker who was forced into early retirement in the 1980s when I was in high school, partly owing to health issues. He never blamed politicans or anybody else for his/our plight. The flat truth was the Japanese et al made better steel at better prices because they were willing to live with a slightly lower standard of living. What price are YOU willing to pay?

    I've worked my share of McJobs, because it was my own dumb fault that I didn't major in Engineering or Computer Science or some other high-demand field. Economics is all a big game, with winners and losers. Learn the game, work better and smarter than the next guy.