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Monday, August 29, 2011

Manufacturing Epilogue

From the DC Gang:

We are in long term decline now with little prospects for manufacturing or housing industry expansion. The latter was the only industry boomimg under W with a Fed promoting low interest rates and the belief that housing never declines. We now know otherwise. Now Republicans like Newt want to lower capital gains taxes to zero ( he truly said that) so the oligarchs will wind up paying no taxes. Most of the top 400 oligarchs pay taxes close to today's 15% capital gains rates. Our manufacturing base has been declining for the last 15 years with bad decisions made by both parties on free trade and globalization which benefitted the Wall St banks but has killed our manufacturing base.

While we know that in the last 15 years manufacturing has declined from 28% of our GDP to today's 10-11% , it is next to impossible to find more detailed statistics ( companies did not have to report this to the Commerce Dept) on the numbers of jobs loss in large company manufacturing by industry or in industries like pharmaceuticals where there have been no job ads for chemists in this industry in the last 5 years or so. For the drug industry they have all gone to India or China. Novartis says they can only hire in India now. The little purple pill Nexium formerly made by Astra Zenica (AZ) is now made in India by an Dr.Reddy for AZ to market and sell. How much does it cost to make a pill ... it really doesn't matter what drug.. about 10 cents a pill if you look at the $10 price of a 90 day supply from CVS or supermarket generics programs. So our drug industry is becoming a marketing and distribution industry. Our Business people go for high profit margins and cut costs but don't know how to compete ... they would have to know that messy business of technology and manufacturing.

The tax code is a proven method for influencing behavior so I support the comment below to "tax the products manufactured over there (there’s that 4 letter word ‘tax’ again) or subsidize American manufacturers (big government) to incentivize domestic production. With the current Republican Know -nothings" that won't be possible. Let's ask them for details as to how they intend to create jobs beyond their usual list of cut taxes, reduce regulations, more free trade and more globalization.

We are in for long term grid lock with our current polarized political system with its electoral system for electing the President and fillerbustering super majority rules in the Senate. The latter is akin to the " liberum veto" that destroyed Poland as a great power in the 1600 and 1700s. All it took to kill an action in the Polish Parliament was for one member to rise and say "I object" and that killed the proposal and Poland went down the drain to be divided up and ruled by Germany, Russia and Austria for 125 years. Maybe the current Tea Baggers will decide to let the US go bankrupt and we then will be bought by China and become a vassal state like Korea and Viet Nam were in the days of the Chinese Empire of the 1800s.


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