President Trump has called the COVID 19 Pandemic a “war”. If this is a war, we are in trouble.
The COVID 19 Pandemic has exposed the weak underbelly of the largest economy in the world.
The United States of America – in 2020 – lacks the sourcing strategies and supply chain, the manufacturing and distribution capability to sustain itself during the early stages of a widespread emergency.
The nation whose industrial output won a world war and then rebuilt the post-war world cannot produce the basic medical supplies its hospitals and public health systems require to meet the current challenge.
Emergency managers cannot domestically source sufficient personal protective equipment to secure health care and other essential workers from becoming infected, themselves. Nor procure the testing supplies needed to run diagnostic tests to determine who is COVID positive.
70% of the USA economy is consumer spending but, faced with a widespread emergency, our store shelves are bare. Basic commodities such as flour, yeast, eggs, and household cleaning products are absent from store shelves. Toilet paper and paper towels are the currency of neighborhood barter groups.
The global supply chain USA national policy has supported as an alternative to domestic self-sufficiency is now revealed to be more myth than material.
American Vulnerability is Not New
Nor is this the first time in this century an emergency has exposed the soft underbelly of the world’s remaining superpower.
In 2002 and 2003 when, in the wake of the 9/11 attack on the World Trade Center, American military deployed a small force to Afghanistan and a large force to Iraq — the United States of America lacked the capacity to smelt the heavy metal required to “up armor” our HUMVEES. We had to rebuild that capability while we fought those wars – undoubtedly costing American military lives.
In 2009 and 2010 the USA, faced a smaller but similar corona virus health care crisis — N1H1 epidemic – with eerily similar shortages of medical personal protective equipment (PPE)
Impurities in imported active ingredients in our medicines have caused shortages of Over-the-Counter (OTC) medications from Tylenol to Zantac as well as a variety of prescription medications including antibiotics and high blood pressure treatments.
MADE IN AMERICA is More Important Than Ever
American manufacturing deficits in times of crises illustrate a deeper problem, one that originates in our short term thinking.
For a bit of immediate (quarter over quarter) gain on corporate bottom lines, American business too often surrenders our innovative and entrepreneurial advantages to close the global output gap with China –
America has the capability to make the products it consumes. But — except at moments of crisis — we lack the collective will to make it in America.
This time, it must be different. It is vital to our national security that American manufacturers can rapidly meet the challenge of supplying the whole of the nation in an emergency.
Not even be much of a stretch to achieve an American manufacturing renaissance – there are embers burning right now.
The USA produces 18% of total global manufacturing output today. Putting us right behind China — producing 20% of global output.
That measly 2% difference in global output is where the threat to our national security begins.
China — on the record with a plan to dominate global manufacturing in 2025 – while US politicians too often downplay our important role in global manufacturing – seeking, instead, to tout the “knowledge economy”.
Dear poll-tested politician – it turns out that making things is at least as important as thinking about (the theory of) making things.
This once in a century pandemic must be the moment when the United States of America stops thinking only about bits and bytes technologic innovation.
The solution begins with our own consumption-based economy.
Consumers Define the Frontline in Restoring National Security
Expanding – the tentative renaissance of American manufacturing depends entirely on the willingness of American consumers to look for the Made-in-America label on the products they buy.
In some cases, Made-in-America may cost a little more. American workers are paid more than off-shore workers. A fact reflected in wholesale and retail pricing.
To be a secure nation, we must stop believing that it is possible to have cheap consumer goods and high domestic wages. There is a middle ground – and our national security depends on finding it.
Only 10.5% of the USA labor force is employed in the manufacturing sector — roughly 33 million workers. By comparison China employs roughly 247 million workers (16.5% of their population) to produce only 2% more of the world’s total manufacturing output. American workers are paid more because they produce more – per manhour of labor.
The aggressive adoption of robotics and other technology driven productivity tools has given American workers a several fold productivity advantage.
That significant productivity advantage is the key to turning American manufacturing from a defensive crouch to an aggressive competitive posture.
The American economy is based 70% on consumption. That means the more Americans buy Made-in-America, the lower the cost per unit to produce – closing the retail pricing gap. The smaller the retail pricing gap, the larger the share of the global consumer market is available to American manufacturers.
Constructive government regulation and tax policy can also be determinative here.
For example, infrastructure projects paid for by American tax and fee payers should require the use of American made materials. such as steel. This would result in increased domestic steel production.
The more steel the USA produces, the lower the cost per ton – lowering the cost of everything from automobiles to high quality cooking pots.
More Manufacturing Means More GDP Growth
While our politicians are dismissive of the value of a skilled manufacturing labor force (as distinct from the total work force) – the reality is our national security depends as much – probably more – on an adequate supply of tool and die makers – than it does on our military, itself.
Tool and makers make the tools that produce the planes and bullets and Humvees on which our military depend and there is a critical shortage of those skills in this country. Tool and Die journeymen wages average more than the median income for a family of four in the USA – about $60,000/year.
Compare that to $36,000 a year in an Amazon Distribution Center.
Higher manufacturing wages, in turn, create a greater demand for services – from restaurants to hair stylists to retail clerks.
The more demand for goods and services, the faster money changes hands within the USA’s economy, the faster our Gross Domestic Product (GDP) increases.
The lower the ratio of national debt to GDP – the more secure and sustainable our financial system is. The stronger our financial system – the easier it is to defend the dollar as the global reserve currency.
Sustainability and National Security Go Hand in Hand
This pandemic reminds us — while we live in the age of globalism – the safety and security of the American people remains our first national priority.
In mere weeks, the pandemic has shown us – in stark relief – just how vulnerable are both our national security and our national economy.
We are bombarded with frequent public service messages and brand advertising that reminds us “we are in this together”. We are. Undeniably.
No expression of solidarity is more important at this moment that merging our passionate consumerism with security and sustainability by supporting America’s productive capability.
We cannot squander this opportunity to employ our technical and entrepreneurial advantages: first to free ourselves from any dependency on Chinese manufacturing prowess; second; to close the global manufacturing output gap with China.
A vibrant, technically agile manufacturing sector will not only guarantee our national security but, also, bring us closer to 4 percent year over year GDP growth needed to sustain our social safety net into the 22nd century.
We owe ourselves and our children nothing less.
It all begins with the American consumer demanding “Made-in-America”.
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