Strong Manufacturing / Producing Sector Needed in a Vibrant Economy of Our Size

Strong Manufacturing / Producing Sector Needed in a Vibrant Economy of Our Size

My last few blogs, I have indicated the need for the manufacturing/producing sector. I want to directly addresse the reason why – beyond the statement “the sector will not make everyone wealthy, but it will allow those who are willing and capable, the pursuit of happiness”.  If you are as curious as me, I would continue to be that annoying kid and ask, but WHY?  Why can they not pursue happiness in other areas? Why not a service economy? The key words in the title are “OUR SIZE”.   We have diverse group of people in the country.  Also take note that I ended the statement with the pursuit of happiness.   As much as we all have different concepts of religion, we vastly have different concepts of what makes each of us happy.

There are many scholars who believe our economy can be a service economy driven by our minds and intellect.  This reminded me of a dinner conversation I had with Dr. Nariman Behravesh, Chief Economist at IHS Global Insight.  Nariman has always been very cordial with me and I do believe we have entertaining conversations; so I hold a very high regards for his opinions and thoughts. I did have to ponder and eventually confront him on the statement he once made “we (referring to the US), can be a service industry because we have our minds”.  I will take a risk in my statements to perhaps be considered an elitist, but my real life experience is where my response comes from.   At AEP, we served some of the worst economic territories in the country.  

The people in those regions are still happy and they do things for which many parts of the country should take note.  Consumption does not necessarily drive their happiness.  I noted to Nariman, not everyone has ambition or even the desire to drive a fancy car.  There will always be people who just need something to do, no matter how mundane the task from 8-5, Monday-Friday. Their enjoyments come from hunting, TV watching, raising their kids, enjoying the outdoors, etc…We cannot transform to 100% service industry because of this.  If we lived in Cambridge, MA for many years, I can see perhaps how one can envisioned this.  However the US is vast and its own vastness offers a plethora of individuals who hold their own goals in life. 

And as our Declaration of Independence state “Life, Liberty, and the pursuit of happiness” – to each his own on what happiness is.  There is something admirable when the pursuit of your happiness is not part of the rat race to accumulate wealth.   This reminds me of a recent clip I saw while channel surfing from the movie Con Air – “Garland Greene: What if I told you insane was working fifty hours a week in some office for fifty years, at the end of which they tell you to piss off; ending up in some retirement village, hoping to die before suffering the indignity of trying to make it to the toilet on time? Wouldn’t you consider that to be insane?”

I never stated we need to be 100% manufacturing, but I think it is reasonable to say we have dwindled our capabilities of manufacturing too low.  I understand productivity advancements and automation reducing the amount of people required to do a task.   This actually supports my thesis for having to create more of a manufacturing base.   People cannot be allowed to sit around and lose hope and desire to be productive.  And then be expected to be able to jump back on the ship as it passes by.   As much as prisoners can be institutionalized to their environment, people can be institutionalized to their routines.   They need to know how to work.   They need the pattern of waking up Monday-Friday while adding some productivity to society.  With that added productivity, they will be allowed to pursue their happiness on the weekends and nights.  The manufacturing sector gives this capability.   A service industry is lean and mean.  It cannot ever measure up to the scale that a manufacturing sector can do whether it is chemicals, textile, paper, etc…

The latest thinking among many economists is that the US economy will grow sub 3% for many years to come.   This creates increasing unemployment each year by 1%+ with the status quo setup we have.   We need to think about creating jobs that create an added value and some social stability.   This means you can’t just create jobs by creating inefficient process – spoons instead of shovels or even bulldozer in moving and clearing land.   Jobs cannot be priced way above the net value to society.  We cannot have a job paying $40K/yr for a mundane task – e.g. screwing in bolts.   At the same time executive compensation is also taking many of the jobs away and forcing outsourcing in order to balance the unequal productivity to capital.  CEO’s not bringing new ideas and concepts that actually work, but being paid at 800 to 1 their average worker is unsustainable.  Mass institutional holding and crony boards are much to blame for this trend.  I digress slightly, but I did not want to be picking on the lower class exclusively. There is much blame to pass around in all parts of society for our lack of “real” productivity.

I hope I have rationalized to some extent of my thoughts on the value and the requirement of a strong manufacturing base.   We are not all over-achievers, in fact there are probably more under-achievers.  These people, for society sake, need to be part of the productivity cycle, so their kids can have the opportunity to be over-achievers, if so desired.  This is the American dream in my mind – To be given the opportunity to be successful and to create the most fair and balance system to make sure those who cheat the system do not sustain themselves in the upper class.  The last part we have failed given the lack of prosecution in the banking sector.  We can still right the ship by re-aligning our economy from less financial engineering to real engineering.

Perhaps we don’t always agree on seeing things, but it is always good to continually examined different viewpoints.  I look forward to hearing your views.  In the meantime please do consider All Energy Consulting for your consulting needs.  We will always have you in mind once you are our clients.

Your Energy Consultant,

David K. Bellman


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