Manufacturing will move

What I said was that you can't maintain employment without a healthy rate of growth. That applies to goods-producing industries in general, and to individual companies in particular. I've never tried to sort it out for the whole economy, but the pattern has been clear for years now in manufacturing.

Here's employment in goods-producing industries since 1940:

Here's the growth it took to sustain those levels of employment: Since about 1970, the output of goods produced in the US has had to be on a pretty steep incline just to keep manufacturing employment about level. In other words, you need a lot of growth to keep from laying people off in manufacturing, due largely to improvements in productivity. And if you have even a slight downturn in manufacturing output, you get a big dip in employment.

All of this is happening, of course, while the population is increasing. So the percentage of people in manufacturing keeps dropping, even though the total number is fairly flat. Where do the others go? As I've said, I've never tried a full analysis, but a lot of them never return to manufacturing.

So, as I said to Tom, it doesn't matter if you're chasing wages or not; your competition is automating, here and abroad, and you have to, as well. And unless you grow, you're going to wind up with fewer people.

All well and good. That requires getting into another business. If he wants to keep all of his people employed, he'll need to sell more than brushes.

-- Ed Huntress

It would seem that obamanomics already has us sliding down that particular razor blade.

Thanks, Rich

And where was it headed before the stimulus, Rich? Have you studied the patterns in recessions sufficiently to evaluate this one, in comparison?

-- Ed Huntress

John, you just don't get it! Not everybody IS trainable. "Robert is 62 years old, a felon and an IQ of maybe 70. You would have him not enjoy work or the satisfaction of doing something useful. I think there should be employment available for every one of the "Roberts". Do you propose we euthanize them? THEN you can realize YOUR version of the American Dream.

We DO belong to WECO which is a neighborhood organization mandated to help train people, deal with neighborhood issues, interface businesses and government and steer plans for development. My sister and I have always been the LAST to get paid when we were in the process of tripling sales. I have employees that make more than I do, they're practically irreplaceable. So, "Bite me"!

I want the highest paid, happiest and smartest workforce in the world. But if everybody had your mindset and threw away everybody that didn't meet your lofty standards, is that a world I want to live in? Not really. I have friends that will never amount to anything, it's not possible. Do I love them any less? Do I have a duty to other human beings even if I make less money? I guess you'll never know the joy one can get from the joy of people of even lesser stature than yourself nor the satisfaction of a bit of sacrifice. Too bad.

If Trig needs a job when he's older, I'll find something for him. Obviously the party of equality and tolerance won't, they would have killed him.

Yep, or at least new products into new markets. 80% of what I make today, didn't exist 10 years ago. The trick for me is to find a market/product that is hard to make, over priced and nobody want's to really do but they have to keep customers happy with "me-too" items. Then I'll just tell my guys that it can't be done.

Nobody wants to deal with flat wire, it's a bitch. We're now the biggest and best in the world. It's a little niche but it's a nice little niche and not even the Chinese want anything to do with it.

To be fair, I should be self-contradictory and confusing here by pointing out that you're more or less making John's point, and contradicting mine. d8-)

This is one of the enigmas of mixing micro- and macroeconomics, because your effort to seek new products and markets is what John is talking about, and it's the way to look at things from the point of view of a businessman, or of a microeconomist. Looking at you and what you do, from the point of view of a microeconomist, one sees the necessity to keep innovating and pushing the boundaries of what your business does. From that microeconomist's point of view, that *is* what you do. As an economic agent, you don't just make brushes. You discover or create brush markets and fulfill them. That's John's mindset, too.

Then the macroeconomist looks at the situation and puts it into a different context -- the national statistics and trend lines in manufacturing, finance, etc. -- and sees that it doesn't matter very much what you do. You're like Brownian motion in a problem that, to that macroeconomist, is a problem of gas pressure and volume. A businessman or a microeconomist looks at Ohio Brush and sees a dynamic system that has an individual path and a fate of its own. The macroeconomist sees a particle taking its random walk in a stochastic process, and he isn't concerned with where you're going, as an individual or an individual company.

In this thread I've been talking about the pressure/volume issue: the macroeconomics. John is talking about the microeconomics. The self-contradictory part is where I'll agree with him and say that you can indeed find ways to employ Robert and that your emotional involvement in his welfare, and that of your other employees, is hardly in vain. You can do something about it. The goals of your enterprise are yours to choose.

But the macroeconomist will say, that's interesting and good human interest copy for page 3 of your local newspaper, but I only read the index tables in the business section. I want to know the parameters as they're being set by economic conditions. Individual particles can go where they may; they're not my concern, any more than the behavior of individual vapor molecules are a concern to someone trying to adjust the running of a steam engine. No matter how any individual particle may behave, the dynamics I'm looking at are based on the safe assumption that they'll behave in a certain average way.

Many of the enigmas, frustrations, and arguments that arise in talking about business, trade, employment, wages, and so on are the result of not keeping the macro and micro in their appropriate boxes. When you're looking at government wage policies and the state of competition with China, you're looking at macro issues, which have their own driving forces and desired outcomes. When you consider how to run your business, those are among the parameters you're working with. The confusion and frustration come from assuming that the micro benefits you would gain if we followed some different policy would project to general benefits across the economy, ones that are greater than the negative macro consequences. Lower wages would keep more people employed -- for a while. But the consequences of driving down wages would be a running down of the entire clock mechanism that is our economy. Everyone will be hurt by it, once the particles are averaged out into units of pressure and volume.

You won't solve our problems with competition, or even of a slumping economy, by starting a race to the bottom.

-- Ed Huntress

Tom's building could use a coat of paint. So could the entire neighborhood. I'm sure there is something. A lot of things, as a matter of fact. I had two guys cooking for breaks on three shifts for eighty people. It was cheap and you would be surprised at the connection you can make to the people you work with through the simple act of sharing a meal or snack. The benefit far exceeded the both the cost and any expectation I had initially. People that know me still talk about it and the practice continues to this day even though I'm no longer involved. The same two guys, plus another, are creating something that binds all of those people together on a daily basis. The value of that isn't imaginary or trivial.

I'm sure "Robert" could master that with little supervision. Simple acts like this can and do have profound consequences.

Well, obviously, the Cheney/Bush "bailout" got us started. I suspect they just wanted to dump the worst possible mess they could create right onto Barry's lap.

I got sickened by Obama's little speech: "Hey, I inherited this huge deficit!" (wah, wah). So what's the first thing he does? TRIPLES IT!

I fear it's reached the point where the best that we Freedom-lovers are going to be able to do is to hunker down, protect our jewels, and hope we enjoy the ride when the whole card house collapses around us.

Thanks, Rich

The irony of this downturn is that all those years of deficit spending (with no good reason) has left no choice but more deficit spending -- unless you want to do another Herbert Hoover and have the government sit there with its collective thumb up its butt, watching the economy go down in flames. In other words, now there *is* a good reason for it. And it's 'way more painful than it should have been, because we're digging in a place where there already was a big hole.

Seriously, there is no alternative, except in the academic theories of some of the free-market extremists. And they don't have a single example from history to draw upon, to support their ideas.

-- Ed Huntress

It's better than that Ed (for irony, anyway). Without the continuing support of China and, to a slightly lesser extent, Japan. The US would probably be having to go to the IMF for a bailout, with all of the pain that goes with that.

People, mostly in other fora, may get very exercised about the Chinese, but they are the ones that are loaning the money for all that deficit spending.

regards Mark Rand RTFM

For the record, as of the first of this year, China held 7.4% of the public debt of the US. Japan held 6.3%. Those are large amounts, but let's not get carried away.

-- Ed Huntress

It would be interesting to study a group as close to communism as one could get- our girls in the slammer. Federal Prison Industries pays about fifty cents an hour. The living expenses of the inmates are paid for from another account, so to speak. The prices are hard to beat, and the quality is good. (Metalworking Content) The fellows at work that deal with FPI tell me that clusters of machine shops, started and staffed by ex-cons, have sprung up around the prisons, to supply the manufacturing inside. I have been told that the redivicisim rate among ex FPI employees is very low.

Kevin Gallimore

Mike, you know me better than that!

Wouldn't the US be better off concentrating on wealth creation rather than redistribution? Is it purely a political decision to abandon wealth creation?

Hmmm. Have you stopped beating your wife yet?

What do you mean by that question, Tom? And who is the "US" that has to do this concentrating?

-- Ed Huntress

Yes, but you have thought it, more than once. ;-)

I've shaken my head and rolled my eyes more than once too! It's the "Blink, blink, blink" that still astonishes me.

Purely philosophical, but...real wealth is created by agriculture (grow it), mining (dig it up or pump it), manufacturing (put it together and add value) and maybe intellectual property (units of unique valuable labor). It seems the US is writing IOUs for future wealth creation or existing land. With a trade deficit, the US is creating less wealth than it's buying with IOUs. Is this a sustainable situation or should we be growing, mining and making as much as we can and selling it for the other guy's IOUs? Eventually, it seems, people outside the US will own every acre of land, decades of future labor and everything the US can grow and mine. As much as we try to devalue the unit s of IOUs so when they have to get paid back, they will be worth less, there is still a big loss.

I know a thousands books could be and have been written but I think in simple terms of payables/receivables. We should export (build receivables) as hard as we can and reduce imports with equal vigor. But is the rest of the world willing to pay more for the same unit of labor (value added), all else being equal on manufactured goods?

Um, I believe you've gotten this ass-backwards. The Govermnent is now trying to do EVERYTHING, and the economy IS going down in flames.

I WISH the government would sit on its collective butt and do as little as humanly possible - then, the Free Market woluld pull us out of this mess in a matter of months.

But, I guess we're going to have to learn the hard way once again.

Thanks, Rich