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This story starts in a town called Every Town USA (ET)Ben, an inventor, develops a new product and decides to manufacture it. His product, called a widget, is a huge success. Soon he is selling lots of them outside his community. As his business grows, he has to hire more people - a lot more people. His work force consists of his managers, engineers, draftsmen, supervisors, assemblers, machinists, tool makers, marketing staff, repair staff, accountants, marketing, purchasing, and more positions. There are lots of many different kinds of jobs. As Ben's business grows, something amazing begins to happen to the small town of ET. People hear about the job opportunities and move to ET. New homes are built, new stores, and restaurants open. ET booms. This healthy economic growth is the result of the Money Multiplier, The Money Multiplier works by bringing money into ET from outside the community. Ben pays his workers and they in turn go into the community and buy groceries. Then the grocer pays his workers and they buy gas. The gas station workers are then paid. Studies show that when "new" money is brought into a community, it circulates 3-4 times before it leaves the community for other goods. Healthy retail & service industries ride on the back of the manufacturing industry. If manufacturing is unhealthy the community is unhealthy.
Disaster strikes ETEverything was rosy in the town of ET. There are lots of good paying jobs. The future looked bright until disaster stuck. A fellow named Rob R (Rob for short) ran a large chain of retail stores. He recognized the financial success of the widget product.Rob found manufacturer in China that could produce the same widget for 1/10 of Ben's costs. Rob began selling widgets for much less, actually about half Ben's price. Rob made a lot of money because he didn't have any of the manufacturing overhead that Ben had - all those employees, machinery, and facilities. Ben tried to compete but was totally unable to. Ben's sales dropped off quickly, and he was forced to shut down his plant. His work force had to be laid off. ET quickly felt the impact. People out of work don't buy much. The housing market collapsed, stores closed, and people moved out of ET. Prosperity left ET.
Our nation is no different than EveryTown USA.Our nation is no different than the hypothetical town of ET. When we had a trade surplus, our economy was vibrant with lots of good paying jobs. Our retail & service industries rode on healthy manufacturing industries. Now we have a trade deficit close to 700 billion dollars a year. Our nation is similar to the dying city of ET. We are trying to make believe that it isn't important to maintain our manufacturing base - when it is vital. WE HAVE LOST THE MONEY MULTIPLIER ! It has moved to China.WE HAVE LOST THE MONEY MULTIPLIER!When we had a trade surplus, we were creating and accumulating wealth. Now we are using up our accumulated wealth with our trade deficit. We no longer are creating wealth, we are consuming it.THIS IS THE BASIC ECONOMIC PROBLEM WE FACE AS A NATION. If we restore manufacturing with its Money Multiplier with its related good paying jobs, we can rise above all of the other ancillary economic problems. If we fail to address this problem, all of our efforts are similar to building a building without a foundation.
"Manufacturing has direct and substantial links to other sectors of the economy. These links work both backward — to mining and construction — and forward, to the transportation,finance and wholesale trade sectors that help deliver goods to final consumers." -National Association of Manufacturers Restoring and saving what manufacturing we have left, has to be a national priority. Some may say this is not a problem and state all kinds of statistics. The simple irrefutable proof of the loss of our manufacturing base can be made by a review of our trade balances over the past 20 years - from surpluses to huge deficits. Also checking out labels on different products at Wal Mart will tell the same story. Try to find something "made in USA". Manufacturing is dying in the USA. Manufacturing is dying in the USA!
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