A Nation of Makers

At the heart of the economic component in our current crisis is this salient fact.

We are no longer a nation of makers. (A version of this iconic Norman Rockwell image is painted on the side of my car mechanic’s workshop in Atlanta.)

In this last generation we have transformed ourselves from a nation of makers into a nation of takers. Most jobs don’t really involve the making of anything. They involve either the recycling of money or the spending of it.

I’m proud to say that my lovely bride isn’t part of this. One point of pride in her computer programming job has always been that the transaction processing programs she writes make money each time they run. (Another curiosity — she’s been at one employer for a quarter century.)

My son, on the other hand, wants to be a taker. A lawyer. Usually a prosecutor. Sometimes a trade negotiator. My problem with the law is that it doesn’t make anything. It refines rules which take from one and give to the other. The plaintiff gets the defendant’s money, or the state takes the defendant’s liberty. Essential to security, but it doesn’t add to GDP.

While the U.S. is still the world’s manufacturing leader (believe it or not) our share of the world’s value added through manufacturing has been declining throughout this decade. Changing this last fact is the key to a lasting economic turnaround.

What makes for efficient manufacturing? Labor, raw materials,
energy, and infrastructure. To stay competitive we’ve been cutting our
labor costs, both by importing workers and keeping down unions, but
that’s a race to the bottom and hurts quality. Raw materials are bought
on the market, and prices are similar for everyone.

Energy and infrastructure are the variables within our control. You
change the first by truly fighting the War Against Oil, using as little
energy as possible for each unit of production, and reducing the use of
hydrocarbons in the production process.

Infrastructure means the
Internet, as well as transport. We can dramatically improve both.

The key to improving our Internet infrastructure is competition.
Break up the Bell monopolies and you change incentives. Right now all
the incentives in the Internet space are to reduce supplies and keep
prices high — that’s how monopolies maximize profits. We need
incentives to increase supplies and keep prices low. I can’t explain
the need for Internet anti-trust any more simply than that.

The key to improving our transport infrastructure lies in reducing
subsidies. Right now we subsidize roads, and truck transport. Some 90%
of our goods are moved on roads. Economically, this is stupid. Rail is
far more energy-efficient, but it can’t compete with the subsidies we
give truckers and trucking.

Truckers will object to this, but they’ve been victims for decades. Policymakers have known about the efficiency of rail and so have big businesses. That’s why they’ve been turning
truckers from employees to contractors — they’ve been pushing the risk
of the necessary market correction as far from themselves as possible.
And it’s worked. Now every move to cut the subsidies we give trucking
is met by armies of independent truckers protesting. (That’s where the button above came from.)

The war metaphor is the key to solving this problem. Only a war
metaphor will get us the support needed to buy-out the truckers and
transform our transport infrastructure for maximum efficiency.

Efficiency is the key word here.

I don’t think a politician telling Americans they can compete in the
world economy is going to get any mileage from it. But a politician
telling Americans the truth about how we can compete will.