Whirlpool will close plant in Evansville explains that Evansville, Indiana, once produced more refrigerators than anywhere on the planet, but will soon produce none. The IndyStar article adds that Navistar recently closed a diesel engine manufacturing plant in Indianapolis. The state of Indiana has lost 20% of its industrial jobs since the recession began, many of them permanently.
Unless there are barriers such as taxes or shipping costs, does anyone believe they can manufacture a product cheaper in America (or any western country) than China or Vietnam? I am not melancholic for the factory - the gritty lyrics of Simon and Garfunkel's 'My Little Town', "flying my bike past the gates, Of the factories", reminds me that many desperately wanted to leave those factory towns. Ironically most got their wish - because those little towns no longer have employment.
An economy is frustratingly difficult to describe. Wiki has one definition that I prefer - a circular flow of income and output. Adam Smith identified that an economy must satisfy the needs of the populace. As we recall from economic courses, a market economy is where the prices of goods and services are determined primarily by supply and demand. The problem confronting America and other western countries is - what product or services can they provide?
How science can create millions of new jobs argues that a self-inflicted drought in American scientific research has left the nation without the intellectual capital to create new goods and services. The Business Week article tells that after the 1990s, American business research and development turned to end product development instead of the basic research originally pursued by Bell Labs, HP Labs, Xerox, IBM, McDonnell Douglas, etc. Mmm. There is something else that has happened - the rise of multinational corporations.
Today's giants have no nationality favorites. They are content and profitable with the present global economy. In Is America Falling Off the Flat Earth, Intel's Jim Jarrett is quoted, "We go to where the smart people are, and there are smart people all over the world." Today there are more engineers in a single city of India working on 64-bit microprocessors than anywhere else in the world.
I like the Business Week suggestion of turning around the American economy through research and development. I believe it is going to take deft management by the national government to achieve the desired results. The prescription is similar for all western countries - whether Germany, U.K., or Japan. It does not have to be zero-sum. The retirement of fossil fuels would be a win-win for everyone. But policy-makers take note: our present economy is not sustainable.