Rush Limbaugh: The US Manufacturing Myth

RushLimbaugh.com ^ | 02/09/2011 | Rush Limbaugh

[Senator John Blutarski]

Exactly so. There is so much in the way of myth and “myth-understanding” in play here, it’s mind-boggling.

As for out textile industry ... well, Asia may be the textile giant TODAY, but as for all those deserted and shuttered textile mills that dot the New England landscape - all those firms re-located to the American South in the 1970’s and 1980’s. Why? Reduced tax burden and lower labor costs.

[4rcane]

Take for example GM or Crysler. These companies are literally one product line from bankruptcy. They invest all their capital into a product and if that product line don’t become profitable, they’re screwed. Its good that Apple is making a lot of profit, so that they could experiment with various investments and not become one product line from bankruptcy

[Quick Shot]

A wise old friend once told me this very wise comment, that I have personally watched, and being now global it is even more true.

“There are three types of companies, 1) lowest cost-highest volume(low margin). 2) highest cost-lowest volume(High Margin) 3) everyone else in the middle.

When times get tough the two at the end survive and everyone in the middle loses.”

It works in most all markets and now it probably can be looked at by country. If governments get in the way it delays the inevitable, very inefficiently

[neocon1984]

Apple could and can build here and still make a profit. They just don’t.

For that absurd assertion, you need to come up with a falsifiable hypothesis, no matter how weak. I would be wiiling to entertain the notion that they don't want to strengthen American labor unions by building here for fear of rising costs down the line. Any ideas?

[ClearCase_guy]

I agree. I am not aware of a book that covers it, but I think a fascinating story could be told of the great textile mills of the UK -- and how they were replaced by the great textile mills of New England -- which were supplanted by the great textile mills of the American South -- which were supplanted by the great textile mills of Asia.

The story can be told through many industries (New England used to make a great many shoes, as well).

A good economist should be able to clearly lay out the reasons why an industry rises and falls in one area, only to rise up again in a different area. Perhaps the blind could be made to see.

[GBA]

That last quoted paragraph nails it and if you look a bit deeper as to why, you have to blame all the policies they created to 'help the worker' when all it really did was make that worker more expensive.

I don't remember who wrote the editorial on high productivity and low employment, but it gave the example of gas station attendants. I (barely) remember when, if you pulled into a gas station, a small army would come out and get busy checking the tires, cleaning the windshield, checking the oil and filling the tank. Now? Who could afford to run a business like that? All self serve.

If to hire someone, I have to take on all of their medical costs and their retirement for the rest of their life, in addition to workman's comp, SS, etc. etc., plus deal with the paperwork, how much productivity do I need to get out of that person to make hiring them worth it?

And how did all of that become my responsibility when all I'm doing is paying them to help me build widgets? Has public education made us so stupid we can't take care of ourselves any more?

And, if I was wrong about them and this person absolutely sucks and is hurting my business, how much does it then cost me to make them go away, assuming I still can fire them? How much of a case do I need to build to avoid or win the lawsuit?

I'm exaggerating, but not by much and not for much longer since we seem to be embracing the progressive European model. It's no way to run a country unless you are trying to run off business and run the country into the ground.

[ClearCase_guy]

That's the issue I've been harping on lately -- productivity is up, but employment is down. We don't need workers the way we used to. It happened in agriculture. It happened in manufacturing. Our country has a lot of "stuff" but a reduced need for workers. It's not an easy problem to solve -- and if chronic unemployment is 20% or 30%, then the likely solution is more socialism: lots of people sitting at home waiting for their government check, because no one needs their labor.

The end result is a great mass of very unemployable people. No education, no skills, no work history, no work habits, no discipline. They have nothing to offer.

I see this as one of the biggest issues facing the country, but I don't see a lot of people talking about it.

[Huck]

So I'm against Smoot-Hawley-type tariffs.

Which is to say, record-high tariffs. Maybe Rush doesn't know this, but there were already tariffs in place before Smoot-Hawley. The problem with Smoot-Hawley was that it raised tariffs to record levels. It wasn't an either/or situation. Wouldn't surprise me at all if that were news to Rush.

[proxy_user]

It is not correct to say that whatever is not in the manufacturing costs is ‘profit’. Doesn’t Apple have thousands of employees in the US whose wages are paid by these products? Don’t they have rent, utilities, and taxes to pay?

[proxy_user]

What you say is true, but the bottom half was formerly much better educated than they are today, and was able to contribute more productively to society. The teachers they had back then, they whipped knowledge into even the thickest noggins.

[central_va]

OK, I’ve come across as elitist, now I’m going to go whole hog and say someting that sounds Marxist: somebody is making big bucks off the labor arbitrage, so those somebodys need to pay up to fund the welfare needed to support our jobless citizens. The Market would say, “Let them starve”, but that’s too Dickensian for me. Also, I don’t want to have to have to build a security wall around my house like they do in South America.

I totally agree, I guess I am a Marxist too. God forbid we have a real war and had to actually replace the equipment lost in battle with no means of onshore production. Nobody thinks of that....

[Lucius Cornelius Sulla]

If you wish us to use obsolete, labor intensive equipment, might I suggest farming with horse drawn plows and hand held sickles, so that 90% of the country would be needed just to produce food to eat. We could also do away with gasoline engines, modern medicine, and electricity, and live like medieval peasants, or would that be a little too obsolete for you?

[Lucius Cornelius Sulla]

If you wish us to use obsolete, labor intensive equipment, might I suggest farming with horse drawn plows and hand held sickles, so that 90% of the country would be needed just to produce food to eat. We could also do away with gasoline engines, modern medicine, and electricity, and live like medieval peasants, or would that be a little too obsolete for you?

[LS]

Right. People need to understand that the U.S. from the BEGINNING has been, because of the availability of land, a high wage nation that CONSTANTLY sought to replace labor with machines. This was as true with Whitney's mass production and the Slater Mills as it is today with robots and scanners. This has in the past constantly pushed us to higher skills and education.

Instead of blaming the "decline of manufacturing," we need to blame the collapse of liberalism, particularly public education, in leaving behind a couple of generations of people who don't have the job skills to compete for the high-wage jobs in whatever field.

[central_va]

A good economist should be able to clearly lay out the reasons why an industry rises and falls in one area, only to rise up again in a different area. Perhaps the blind could be made to see.

Economist never think about patriotism or when we have to fight a war of attrition. That is NEVER in the calculation.

[edge10]

Lies, damn lies and statistics.

The fact is, millions of jobs have been lost here and put elsewhere.

Sorry Rush, from your ivory tower, you can’t see the truth on this one.

[Hot Tabasco]

People who have never worked in a manufacturing facility or assemby plant have absolutely no idea how automated they’ve become and what their capability is. With that necessary automation has come greater productivity but also the loss of jobs which will never be recovered.

[NonValueAdded]

He’s talking about total dollar value and not actual number of jobs created. So many people get confused or are misled intentinally...

Exactly. I think most people bemoaning the "decline" in US manufacturing are thinking smokestack factories and hordes of unskilled labor. Those days are long gone (but maybe an EMP away). Manufacturing will not be the salvation of the uneducated and unskilled.

[ReleaseTheHounds]

Pure BS.

I'm amazed at the crap being tossed at Rush for this segment he did.

First, I'm amazed at his grasp of the details when a caller brings up a subject like this. He goes on a 5 minute rant detailing the thesis pretty well before he even can put his hands on the article. And he makes the point that despite all the headlines, America remains a powerhouse as a manufacturer -- at least statistically in terms of output. And he's right again when he alludes to all of the improvements in productivity (and the change in "manufacturing") here in the US that supports those statistics.

Give the guy a break: he does 3 hours a day, largely off the cuff, and he rarely gets hardly any of the important points wrong. I'm frankly amazed. Daily.

[Hot Tabasco]

German companies somehow manage to compete and pay very good wages.

Germany is very "employer friendly". German companies also do not provide healthcare for their employees, the govt. does..........However, an average German employee making over $40k a year will pay upwards of 70% of their gross income in taxes.

42% income tax on incomes over $39k

19% Sales Tax

Employee Health Insurance: 15.5% of employee's gross earnings