Technology, Industry, and the Economy

I'm sure people are going to start giving me flak, the more they start reading my blog. After all, I bring up lots of problems, but never really have a good solution for them. I just have a lot of time to wonder, but not a lot of time to think.

I was wondering today whether industry has gotten too efficient to be sufficient. All the talk about just-in-time inventories, out-sourcing, mechanization makes me wonder what the people who are removed from the picture are going to do? Maybe I'm old-fashioned, but the flow of money starts when someone produces a physical good for someone else's consumption. From there, money exchanges hands when the person who consumes the good needs advice about said good, or the producer of said good needs opinions on how to improve it. I think I understand what it means to be a service-based economy, but what good is a service based economy without a manufacturing base? To say nothing of the fact that we've decided to start out-sourcing our service jobs to India.

Essentially what is happening is our ever "improving" manufacturing processes are reducing the number of man-hours (and in turn, people) required to convert raw materials into a consumable product. As a result, we're effectively reducing our workforce, which in turn increases unemployment. Unemployment is fun; it leaves more time to do the things that you really enjoy...until you run out of money.

As a capitalist society, we love to see cheap stuff. The less that we pay for stuff, the more money we have for more stuff. The more stuff we have, the cooler we are...at least that's what we're told. Unfortunately, I would argue that there becomes a point where things are too cheap. Have you ever stopped to wonder how its cheaper to manufacture something in China, put it on a boat, ship it 7000 miles across the Pacific Ocean, put it on a truck, drive it all around the country and sell it than it is to make it in the US, put it on a truck and drive it all around the country and sell it? Have you every thought about it? The money that companies save on not using domestic labor STILL offsets the cost of shipping their product as far as most Americans drive in 6 months. Another perspective I found (I looked all over for cargo ship fuel consumption and didn't find a whole lot) stated that for a typical 28 day round trip across the Pacific ocean, the fuel bill alone is $3.3 million dollars for a ship, not including the cost of maintence and crewing the vessel.

I also understand economy of scale, so you divide that $3.3 million dollars out over 33 million pairs of Nike sneakers, you're only adding 10 cents to the cost of manufacturing per pair of shoes. Still $3.3 million dollars is not chump change.

I think somewhere I got waylaid from the intent of this post. My overriding point is that the responsible way to get out of our current recession (without sounding like an Isolationist) is to be willing to pay a higher price for our products in return for some of them being manufactured in the United States. Maybe we should consider some less efficient production strategies, such as reducing the amount of automation to keep folks employed.

Its a good thing that I'm not a business person...I'd be a failure for sure. Speaking of which, sometime I want to write a book or a blog about lousy business plans that actually worked. There have to be a few counter-intuitive companies out there making a name for themselves.