A crumbling house in Detroit
The year is 2015.It is estimated that over 4 million american jobs will have shifted overseas.Initially, it was the manufacturing jobs,now it seems that even the IT,accounting and several categories of white collar jobs are moving to China,India,Mexico and other cheap labour destinations.I cannot imagine how the manufacturing belt let alone the US will be like in 2018 when all these jobs will have left.However,there are several questions pending on why these jobs are leaving the US.I know.All of you reading this article have already started thinking; the blood-sucking corporates on wall street.While that may be true,the Governments since the Regan era are also to blame.Before we delve into the mattter of politics and the economy,Let us go back to when it all started.
The Golden Fiftees was an era of American Industrial expansion.Manufacturing provided the’real ‘jobs for the average american and it was this era that saw the rise of many major american cities like Detroit,Pittsburg(though a major industrial city before the 50s it expanded most during this period).America was the dominant trade partner of virtually every nation in the world.The profits that came from manufacturing went into innovation and with that America became the technological power of the planet ravalle only by Japan.Then the 70s came
The oil embargo of 1974 did a lot of damage to virtually every nation in the world but more so the major manufacturing nations like The US,Japan and Germany.The costs of production suddenly shot up as the rising costs of labour,inputs and fuel went up.The japanese and the germans responded differently to the US on how they began to handle the situation.Germany had taken in a lot of Turkish immigrants during the post war industrial boom.The Bonn government had to take the painful decision to restrucure and automate most German factories so as to cut on labour costs.The guest worker program ended and it resulted to mass unemployment of many turks and even many native germans.West Germany also tried to boost both domestic consumption and exports simultanously.By the late 70s,German industry had survived .The new German industries were more automated, more energy efficient and used less labour.This gave the Germans a competitive edge over virtually all industrialised nations(except Japan) and that is when Germany’s rise to become the world’s largest exporter began(toppled by china in 2009).Japan is an example of restucturing gone wrong.Everyone knows how Japan rose to become an industrial and technological power by hard work an innovation.Unlike Germany and the US,Japan never ever imported foreign immigrants for its industry.Rather,it recruited women and rural folk to the low end industry.Unlike Germany which at least had a few resources like Coal and Iron which are essential for industry,Japan had none hence when the oil embargo hit.It was hit the hardest.Unlike Germany which retained the low end consumer and manufacturing industries although with a much smaller workforce.Japan decided to completely de industrialise this sector and concentrate on high end goods only like Televisions,cars, and electronics.These goods all though very profitable in boom times,they are the ones people cut down on whenever there is a recession which is why Japan always has negative growth whenever there is a recession.Since these industries rely on computers rather than human labour,they do not contribute much in terms of employment although they do give back alot in taxes.This is why even in boom times like when Japan exceeded The USin terms of per capita income,their unemployment levels remained high for and advanced nation.The US did the worst when it came to providing a solution for the manufacturing sector.Instead of automating,they began to recriut the unskilled poor sections of the population and when the minimum wage went up,the latin americans began streaming in in large numbers.The Regan amnesty only encouraged more to come.Innovation in manufacturing took a backseat unlike in IT.American factories consumed too much energy,too much pollution and were ageing.That is when the death of manufacturing began.
you can watch this you tube video to see just how bad things are.