We must re-industrialise our economy
The lesson for the Western political and ruling elites from China’s economic success story is that we have to actively decide what sort of economy and society we want, and promote it with appropriate government policies, just as China has successfully done. Otherwise, left to the free market alone, the deadly combination of ‘ponzi-financialisation’, deindustrialisation and consumerism, comprising the most significant downsides of neoliberal economics, mean that we are precipitating our own decline and facilitating the rise of China at the expense of our economic security and foreign policy.
The ultimate price that we will pay in the West, especially in the U.S. and Australia, for allowing ourselves to become economically weakened is for China to increasingly dominate the Asia-Pacific region, in a foreign policy sense, as a corollary of its economic strength. Numerous authors have been documenting this increasing foreign policy shift, involving both soft and hard power. Joshua Kurlantzick has noted that the rapidly growing economic power of the Chinese economic model has enabled it to flex its foreign policy muscles to the extent that “it may already be the pre-eminent power in parts of Asia and Africa”.
Therefore, there is an imperative to reverse deindustrialisation in the Anglo economies.
One only has to read the item posted on the increasingly popular economic blog, The Economic Collapse, entitled “19 Facts About the Deindustrialisation of America” to get a feel for how the deindustrialisation process wrought by ‘Millennial Capitalism’ is now rapidly accelerating, and to understand why this is exacerbating the ‘break point’ between the mainstream voter and the neoconservative and neoliberal elites. Indeed, these 19 facts about deindustrialisation summarised by The Economic Collapse should be compulsory reading for all members of the elites, so as to put them in touch with the ‘real world of Main Street’ where the mainstream voter lives, works and struggles.
The highlights, set out below, from “the 19 Facts”, are cause for great concern, not only in the U.S., but also in Australia, Canada, the UK and Western Europe, where a similar deindustrialisation phenomenon has been occurring to various degrees since the advent of ‘Millennial Capitalism’ in the 1980s:
• The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed over 500 people when they were still in operation.
• The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.
• As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.
• In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.
• Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.
• In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.
• The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.
• In 2008, 1.2 billion cellphones were sold worldwide. None of them were manufactured inside the United States.
• If the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone. As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.
• Between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased 30 percent to 10.1 million. During that exact same time period, U.S.-based employment at American multinational corporations declined 8 percent to 21.1 million.
• Printed circuit boards are used in tens of thousands of different products. Asia now produces 84 percent of them worldwide.
• The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.
• The U.S. Census Bureau notes that 43.6 million Americans are now living in poverty and that is the highest number of poor Americans in the 51 years that records have been kept.
It is imperative that we reverse the process of deindustrialisation and ‘offshoring’ that has been wrought by neoliberal globalisation. And because it is a phenomenon that began with the United States as the epicentre of the neoliberal ethos, for the rest of the advanced economies, especially the Anglo-economies, it is literally a case of “where goes America, so goes Australia/Canada/the UK”.
[This is an extract from Steve Barber’s The New Pragmatism – the way forward for Anglo economies.]
Steve Barber, based on the Sunshine Coast, has more than 25 years’ experience internationally in law, finance, operational risk management and counterterrorism issues. Until recently he was an active member of the Liberal National Party’s Policy Standing Committee and the Chairman of the LNP’s Federal Trade & Resources Policy Committee. The views expressed here are his own. Steve can be reached by email at steve@nationalone.org
Steve,
Well written piece but you forgot to mention the Lima Declaration. This declaration has decimated Australian manufacturing, both supported by Labor, LNP and Greens.
Both Labor and Liberal Govts. support globalisation, laughable free trade and high immigration numbers – they have sold us out to the lowest bidder.
With Australia’s higher wages compared to Asia, higher taxes, more red tape, less incentives and NO TARIFFS of course we are regressing to the toilet bowl status of Asia/Pacific.
Tariffs are no answer – they do more harm than good. The only way to make Australian industry competitive is to destroy the union culture.
Destroying the union culture will not re-industrialise our nation when taxes are high, no incentives are offered to entice manufacturers and with the added burden of no tariff protection why would a manufacturer return?
It is your opinion that “tariffs are no answer” – typical neo-liberal free trader.
And just how does it help Australia to pay more for goods -clothing, farming, mining equipment, etc – than it has to? Yes, I am a free-trader, because I happen to be evconomically literate. You want to know what happens to protected industries? Have you had a look at the Australian shipping or car-man8facturing industries lately?
Kevin,
The Australian vehicle and shipbuilding industries are not protected with high tariffs. Australia has the lowest tariffs in the Asia-Pacific region that is why we have lost our manufacturing.
Nations like China, India, South Korea and Japan have high tariffs which offer industry protection. These nations also offer incentives and lower taxes to lure manufacturers both local and foreign.
“Free trade”, this globalist concept, has thrown world trade balances upside down and produced massive trade imbalances causing economic insecurity.
Recent “free trade” agreement signed with Thailand under Howard’s governance has again produced only negatives for Australian farmers and manufacturers. There is no such thing as “free trade” as it is still conditional and selective and always benefits the opposition.
Since the “free trade” agreement signed with Thailand the following indsutries have been lost and the price of these goods have increased:
* Blundstone closed down in Hobart, 350 local jobs lost – production moved to Thailand.
* John West Port Lincoln cannery – 300 local jobs lost – production moved to Thailand.
* Dana Industries (car components) SW Sydney – 120 local jobs lost – production moved to Thailand.
* South Pacific Tyres Melbourne – 500 local jobs lost – production moved to Thailand.
Are you able to inform me of the ‘benefits’ when these indsutries have been lost?
Economic rationalist Liberals think that just because you can buy cheap rubbish from China your standard of living has improved. I had to put up with these boring stubborn types at Liberal branch meetings in Sydney. It is one of the reasons I left the Liberal party.
Kevin,
Do you want to eat Chinese apples over Australian apples?
This is just one example of how free trade will continue to wipe out our industries.
It is economically illiterate to support industries in another country over your own for the sake of saving a few dollars.
I dont believe this can be reversed.
The only way is to protect Australia with a sensible programme of Tarriffs
The first thing we have to do is get rid of the rubbish from the conservative parties. Whilst ever we have conservatives agreeing that Climate change is happening, the Labor/Green alliance will remain in power. It is a fact that the Lib/National Party Politicians don’t even bother to acknowledge emails from their supporters, and this is either because they are happy with the status quo, or their office staff seriously need vetting because they control what the politician receives. Until the rubbish is eliminated, all the good ideas will remain just good ideas in outlets such as this well intentioned ideas outlet.
There is much substance to your observations, Molly.
Just over 12 months ago we were threatened with the prospect of Malcolm Turnbull leading the Coalition to oblivion with an ETS scam. Greg Hunt and then Ian Macfarlane were obvious examples of the (apt) Copenhagen Syndrome as they were pathetically held captive by the less -than- able Penny Wong.
It must have been apparent even to those geniuses that the inability of Wong to justify an ETS (first revealed by Sen. Fielding) struck a chord with voters.
Yet, as you say, we still have lazy, poorly read, scientifically illiterate drongos who are ready to mumble on about “global warming”, and thus ensure further time on the Opposition benches.
I’m still waiting for a call back from my local (Liberal) state member regarding a related matter – it’s now well past a week overdue and this fellow has not picked up the phone. Rarely have I ever asked a politician for a minute of their time. But it’s all too hard for him. The preselection process needs a major overhaul to root out the LINO’s and the intellectually less able.
I’m sorry, but I cannot help but smile at a conservative arguing against the neo-liberal economic order, and that we should be instituting controls in order to produce the economy and society we want.
There will be little chance of any re-industrialisation in Australia should the current Labor federal and state governments continue in office.
The prospect of a Carbon Tax raising the price of electricity (and nearly everything else) will ensure little investment in such enterprises.
In South Australia the lunacy is compounded by a premier who is hell-bent on raping the countryside with wind “farms”, thus ensuring the price of electricity will skyrocket in the state.
At the same time, he is calling for young people to remain in SA, presumably to work in no-existent jobs.
Rann has learned nothing from the experiences of Spain ( 18% unemployment, due to industries packing up, not able to afford wind farm electricity ) or California.
(And this is not taking into account the horrific health impacts emerging from the vicinities of new mega-”farms”.)
A prime requisite of a healthy economy with an industrial base is cheap electricity, but the direction Australia is heading with Labor/Greens is nothing but a disgrace.
I think that labor costs are so high in the Anglo-Saxon democracies that they cannot compete with low cost Asian countries. What does Steve want to do reinstate protectionism? The only alternative is to cut wages across the board and I don’t see the trade unions or the Labor Party standing for that. What he says is probably true but quite frankly I can’t see that it’s possible to do anything about it. Reinstating protectionism would go against our agreements with the WTO. Broadly I would agree with the analysis but I don’t see how anyone can do anything about it.
Who cares about the WTO?
The best thing Australia could do is to abandon the UN and throw off the shackles of the WTO. Both organisations have created most of the world’s problems.
The WTO has help create the biggest trade imbalances known to man, this is not good for the world economy.
Rudd once said he wanted to be PM of a country that makes stuff.
While I am no fan of Rudd, he and I both agree that Australia should be a country that makes stuff.
Funnily enough, I cannot remember anything Gillard has said.
Other than she would rather be in a classroom than doing anything with foreign affairs that is.
I have know idea why Gillard wants to be PM of Australia.
Why is she there?
eeek! not know. should be no