 On Tuesday April 1, 2008, the Institute for Supply Management reported that its manufacturing index registered 48.6 last month, though a slower contraction than February’s 48.3, which had been the weakest in five years, still a sign that manufacturers are still struggling with less orders and increases in the cost of raw materials. The next day, the Commerce Department reported that home building fell for 24th straight month, and Bernanke told lawmakers that it “appears likely that gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly.” The week ended with Friday’s Labor Department's report showing a net loss of 80,000 jobs last month with manufacturing accounting for 48,000. One positive note in all the negative news was that the index measuring exports of our manufactured goods rose to 56.5 last month, up slightly from 56.0 in February. But, most analysts attribute that rise to the falling dollar.
Shrinking demand is found in orders falling by 1.1 percent for durable goods, such as motor vehicles, heavy machinery and iron and steel, and by 1.5 percent for non-durable goods, products such as oil and chemicals. Orders for motor vehicles fell by 2 percent, orders for heavy machinery plunged by 12.3 percent, and orders for iron and steel fell by 2.3 percent.
Facts such as these are simply the facts. The questions come from causes and solutions which are far from simple. To find the root causes to our current manufacturing slump requires looking at what has caused the overall economy of the United States to be teetering on the edge of disaster which includes our dependency on the Federal Reserve Bank, government regulations that cripple American manufacturing, and our government’s lopsided dealings with the World Trade Organization (WTO) which has flooded our markets with cheap, and cheaply made, foreign products such as the torrent of clothes, electronics, toys, pet foods, and other products surging out of China, and made fair trade difficult for American manufacturers.
By allowing a private bank, the Federal Reserve, or “The Feds,” our central bank run by unelected officials who are not required to be open or accountable to anyone, to continue to increase the money supply, our government continues to make each dollar worth less so the cost of raw materials for manufacturers continues to increase and the buying power of the American consumer decrease. Why would our Congress do such an illogical thing? The answer seems fairly obvious, our politicians appear to be intent on spending America into bankruptcy, and the Feds are happy to print money to assist them in running up our more than nine trillion dollar debt, much of which is owed to them and their cronies, the central banks of China and Saudi Arabia. Then, of course, our government’s solution to “our” debt is always higher taxes and less tax breaks for companies and individuals alike, which in turn lowers profits for companies and decreases the spendable cash of American consumers.
The huge numbers of new government regulations that have been imposed over the last four decades have further crippled American manufacturing companies’ ability to be competitive on the world market. A 2003 study by the National Association of Manufacturers Businesses (NAM) showed that the cost to American manufacturers for environmental, addition business taxes, health care and OSHA compliance was $160 billion. In 2003, these costs were about 22.4 percent higher for American manufacturers than for their foreign competitors, and with the rising cost of energy and the falling dollar, our manufacturers face an even greater disadvantage over their competitors. It would seem, however, that the importance of manufacturing as a major backbone of our economy and our true defense against recession is beyond the comprehension of our brilliant Washington policymakers and the three comrades that main stream media hails as our only presidential candidates.
Our government’s dealings with the WTO has flooded our markets with cheap, and cheaply made, foreign products such as the torrent of clothes, electronics, toys, pet foods, and other products surging out of China and has dictated import and export regulations that put our manufacturers at a distinct disadvantage. The WTO, established in 1995, establishes and enforces rules for global trading. As long as we remain a member, the United States is subject to WTO disciplines on its own "market access" trade laws. The WTO has ruled that the steel tariffs imposed by President Bush were illegal. This ruling was the sixth consecutive major loss in safeguard cases for the United States at the WTO. The trade panel also awarded Europe the right to impose $4 billion worth of trade sanctions against the United States for giving tax breaks to American exporters through foreign sales corporations. In its first decision on an Internet-related dispute, the WTO ruled that the United States policy prohibiting online gambling violates international trade law. When an organization from abroad starts dictating American internal policies and laws and crippling our manufacturers, our politicians should reconsider our involvement with the WTO.
While a strong U.S. manufacturing sector is critical to pulling our country out of its economic woes, few of our politicians appear capable of comprehending that sending our best blue collar jobs overseas creates consumer havoc here. What our politicians need to do is to stop letting the Feds print money that drives us deeper in debt and ensure that the economic and political freedoms that let true capitalism work are in place for our country’s manufacturers and let the best workforce in the world get to work. The American consumer and worker must also take on some responsibility and quit buying low dollar, and perhaps deadly as we have seen in the recalls of the last year, foreign products and demand American products.
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