Sunday, April 17, 2011

When Chickens Come Home To Roost

I have worried and preached against our industries going off shore for quite some time. In the case that currently is going to bite the consumers on the butt, is auto parts. Most Japanese cars, such as Toyota, Honda, Subaru,Mazda and Nissan assembly lines have either been shut down for lack of parts, or severely curtailed. Even American cars get many electronic and other parts from Japan. Soon the aircraft industry will be similarly hit, since Boeing gets many assemblies from Japan.

Years ago, in the interest of saving money, manufacturers in the United States began shipping electronic components off shore. It has been years since any television sets have been manufactured here. All but a few electronic components, such as micro-chips are gone. Sent to Japan and other oriental places like Taiwan or Singapore.

This and other manufacturing areas is known as putting all of your eggs in one basket, to coin an old phrase. This is a wake-up call to the US government as well as the industries affected. When trees can be shipped to Japan, and milled there cheaper than here, something is wrong. When iron ore can be shipped to Japan, processed into steel, then shipped back to the US market and sold cheaper than our own steel mills, something is wrong.

Currently, according the the Philadelphia Inquirer, and published in the Spokesman-Review, car dealers of many makes are not bargaining with buyers. It's full price or walk.

If we ever get into another war in the Orient, and some fear with China, our supply lines will be compromised in a way that defeated Japan in World War 11. Even without war, a country can blackmail us with the withholding of strategic materials, which could strangle our economy. We had better tool backup for these many items or float through the world at the mercy of others. We used to use Tariffs to even the playing fields until free market became a religious mantra. We are not supporting jobs for Americans with high wages, we are just eliminating their jobs when their labor no longer is competitive.

Practically every consumer item purchased in this country is made in China. Our national debt, for the most part is owned by China. We, in fact have become a third world country by skipping what made us great. In the quest to bring everyone into at least middle income classes, we have eliminated our ability to compete with lower incomes in other countries. We need to use this example of a natural disaster, to rethink how we do business with the rest of the world. My definition of "third world," is that country or area that sells their raw materials to an industrial country for manufacturing. We fit that model.

Ask yourself how many steel workers are employed today compared to 30 years ago. How about the aforementioned electronic industry, here where most were invented. We need to control imports and live within our own economy like we used to when times were much brighter.

Perhaps we ought to re-examine the laws that were passed post great deppression, whereby banks and investment houses could not intermix. The desertion of these laws were a definite contribution factor in our current debacle. Adhering to knee-jerk political philosophy is an extremely limiting way of thinking. Let's get out of the box and find ways that improve the economy for all Americans, not just investors.

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