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Rush Limbaugh: The US Manufacturing Myth
RushLimbaugh.com ^ | 02/09/2011 | Rush Limbaugh

Posted on 02/09/2011 11:32:17 PM PST by iowamark

BEGIN TRANSCRIPT

RUSH: Here's Robert in Los Angeles. Robert, welcome, sir, to the EIB Network, great to have you with us. Hello.

CALLER: Thank you, Rush. It's a pleasure to talk to you. I just want to take a minute of your time and I want to ask your opinion on something. I constantly keep hearing the president and government officials saying that we need jobs, jobs, and jobs. I have the solution, and I'd like your opinion on this. Domestic manufacturing. We've lost it to China. We have a trade imbalance of about 200 to $300 billion a year. Why don't we either tax them at a higher rate or, my suggestion would be, reduce the taxes on anyone who makes something in the United States and the product that's made here has to be made with maybe 70%, 80% American made. I'd like your opinion.

RUSH: I have to find the story. I do not have it at my fingertips. It was a story within the past month on an anniversary of something, I forget which. It might have been in the Wall Street Journal, and the point of the story was that we are manufacturing more stuff today than ever before in this country. (interruption) Was it after the State of the Union? That was just a couple weeks ago. I thought this was a little bit longer ago than that, certainly this year. We are the number one manufacturer in the world. There's been this myth that we've shipped all of our jobs overseas. Yeah, certain kinds of jobs have been shipped overseas. And one of the misnomers with manufacturing jobs lost, take a look, for example, at the Apple iPhone. Now, the Apple iPhone is assembled in China, but all the guts are not made in China. There are parts made in America, parts made in Switzerland, parts made in parts of Europe. They're just all shipped over to Shenzhen at the manufacturing plant and they're assembled there, but the whole phone is not ChiCom. It's just assembled there. But because it comes from there, it is considered a Chinese-made product, when in fact the guts may not be. And that's how you can report accurately that we still are the number one manufacturing country in the world.

So we are nevertheless allowing the Chinese to manipulate us in a lot of ways. I'm not saying the premise of your call is wrong. We start tariffs on Chinese imports, that just never works. It just never works. The market is speaking. The market here is speaking. If we, given current labor rates and everything else, an iPhone totally put together and made in this country would cost about $1800. Well, people aren't gonna pay $1800 for an iPhone, and Apple knows it. But with all the parts made elsewhere, shipped to China and assembled over there, you can get an iPhone for 200 bucks now with Verizon thrown in as a carrier, in addition to AT&T. So I'm against Smoot-Hawley-type tariffs. I think the way you deal with the ChiComs is diplomatically, and it's tough to deal with them diplomatically when they own so much of our debt. I'm gonna tell you something, Robert. The Chinese ran rings around us in that last state visit of Hu Jintao. We sit here, we talk about human rights, we demand human rights, and we exempt them. We talk about carbon emissions and making sure that we penalize ourselves for our technological process, but not them.

Donald Trump has some I think intriguing, intelligent stuff to say about China, but he does business with them at the same time. Trump does a lot of business with the ChiComs. But in his view, Trump does not lose money doing it nor does he get humiliated or embarrassed in the process. But there are a lot of myths about manufacturing in this country and the trade deficit and all this. We're not nearly as absent manufacturing jobs as people think. Now, we might have lost sectors. I'm having a mental block. Textiles, we mighta lost a lot of the textile industry and we probably don't make many sewing machines anymore. But there are other things that have replaced them on the manufacturing scale, and we're not a totally manufacturing-free economy. It's just one of the many myths that are out there. I'm gonna have to find that story. Somebody on my crack research staff -- well, I'll look for it myself. It will take them 'til June to find it, but I'll come up with it here and -- (laughing) -- I'll probably have it in the break when we get back. BREAK TRANSCRIPT

RUSH: And, as I knew would be the case, we have a couple of stories here on the US and manufacturing. "According to the Federal Reserve data, the U.S. produced almost $3 trillion of industrial output in 2008, measured in 2000 dollars (or about $3.7 trillion in 2008 dollars The US manufacturing sector, the manufacturing sector alone is the third largest economy in the world. Just manufacturing. Compared to the GDP of the top five countries -- Japan, China, Germany, France, UK -- USA manufacturing alone is the third highest GDP, just the manufacturing sector. "If the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world's third largest economy.

"It would also be larger than the entire economies of India and Russia combined. As much as we hear about the 'demise of U.S. manufacturing,' and how we are a country that 'doesn't produce anything anymore,' and how we have 'outsourced our production to China,' the U.S. manufacturing sector is alive and well, and the U.S. is still the largest manufacturer in the world." That's Federal Reserve numbers. This is Jeff Jacoby and his column in the Boston Globe on February 6th, three days ago: "There's just one problem with all the gloom and doom about American manufacturing. It's wrong. Americans make more 'stuff' than any other nation on earth, and by a wide margin," damn it! Yeah.

"According to the United Nations' comprehensive database of international economic data, America's manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China's output of $1.48 trillion by nearly 46 percent. China's industries may be booming, but the United States still accounted for 20 percent of the world's manufacturing output in 2009 -- only a hair below its 1990 share of 21 percent. 'The decline, demise, and death of America's manufacturing sector has been greatly exaggerated,' says economist Mark Perry, a visiting scholar at the American Enterprise Institute in Washington." That's not a liberal think tank.

"'America still makes a ton of stuff, and we make more of it now than ever before in history.' In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians -- combined," and as I've always said it's the European Union that's going to hell when it comes to manufacturing. It's the European Union that is in deep, deep trouble, aside from Germany. France, Great Britain, Italy, they're in trouble as a competitive enterprise. "American manufacturing output hits a new high almost every year. US industries are powerhouses of production:

"Measured in constant dollars, America's manufacturing output today is more than double what it was in the early 1970s. So why do so many Americans fear that the Chinese are eating our lunch? Part of the reason is that fewer Americans work in factories. Millions of industrial jobs have vanished in recent decades, and there is no denying" that. "But factory employment has declined because factory productivity has so dramatically skyrocketed," and not everything anymore that's manufactured in America is made in a factory or a plant.

So there.

END TRANSCRIPT


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: apple; jeffjacoby; manufacturing; rushlimbaugh
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To: harpu

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.


41 posted on 02/10/2011 4:47:22 AM PST by Senator John Blutarski (The progress of government: republic, democracy, technocracy, bureaucracy, plutocracy, kleptocracy,)
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To: packrat35

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


42 posted on 02/10/2011 4:53:14 AM PST by 4rcane
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To: iowamark
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

43 posted on 02/10/2011 4:56:51 AM PST by Quick Shot
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To: packrat35
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?

44 posted on 02/10/2011 4:58:28 AM PST by neocon1984
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To: Senator John Blutarski
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.

45 posted on 02/10/2011 4:58:58 AM PST by ClearCase_guy (BO + MB = BOMB -- The One will make sure they get one.)
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To: iowamark
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.

46 posted on 02/10/2011 5:02:17 AM PST by GBA (Not on our watch!)
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To: GBA
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.

47 posted on 02/10/2011 5:12:13 AM PST by ClearCase_guy (BO + MB = BOMB -- The One will make sure they get one.)
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To: iowamark
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.

48 posted on 02/10/2011 5:13:30 AM PST by Huck (one per-center)
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To: mewykwistmas

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?


49 posted on 02/10/2011 5:17:16 AM PST by proxy_user
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To: GadareneDemoniac

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.


50 posted on 02/10/2011 5:20:06 AM PST by proxy_user
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To: GadareneDemoniac
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....

51 posted on 02/10/2011 5:23:07 AM PST by central_va (I won't be reconstructed, and I do not give a damn.)
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To: Little Pharma

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?


52 posted on 02/10/2011 5:25:43 AM PST by Lucius Cornelius Sulla ('“Our own government has become our enemy' - Sheriff Paul Babeu)
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To: Little Pharma

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?


53 posted on 02/10/2011 5:25:43 AM PST by Lucius Cornelius Sulla ('“Our own government has become our enemy' - Sheriff Paul Babeu)
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To: Tempest
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.

54 posted on 02/10/2011 5:25:53 AM PST by LS ("Castles made of sand, fall in the sea . . . eventually." (Hendrix))
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To: ClearCase_guy
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.

55 posted on 02/10/2011 5:26:04 AM PST by central_va (I won't be reconstructed, and I do not give a damn.)
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To: iowamark

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.


56 posted on 02/10/2011 5:47:26 AM PST by edge10 (Obama lied, babies died!)
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To: iowamark

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.


57 posted on 02/10/2011 6:13:10 AM PST by Hot Tabasco (Oh Magoo, you've done it again.....)
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To: Tempest
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.

58 posted on 02/10/2011 6:21:44 AM PST by NonValueAdded (Palin 2012: don't retreat, just restock [chg'd to comply w/ The Civility in Discourse Act of 2011])
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To: pissant
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.

59 posted on 02/10/2011 6:37:01 AM PST by ReleaseTheHounds ("The problem with Socialism is that eventually you run out of other people's money." M. Thatcher)
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To: mewykwistmas
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

60 posted on 02/10/2011 6:47:34 AM PST by Hot Tabasco (Oh Magoo, you've done it again.....)
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