I love pop culture. I especially love when a pithy little phrase takes hold and slowly but surely works its way into our national psyche; a phase like “Show me the money”, “Make my day” or “Where’s the beef?”
One such phrase is “I’m not a doctor, but I play one on TV”, which sounds like it could be a punchline for a joke, but actually has its roots in a series of old TV ads for Vicks Formula 44 cough syrup.
I offer you that absolutely useless bit of information as a way of teeing up this gentle caveat: “I am not an economist, but I play one all day long”.
I don’t know about you, but everywhere I turn these days I hear yet another opinion about why we can’t seem to shake this “Great Recession” that came knocking on our door a few years back. Even as we watch individual segments of the economy recover, and read numbers that otherwise scream “recovery,” the collective impact still feels somehow — I don’t know — empty.
As I’ve detailed any number of times over the past few months, companies — particularly manufacturers — have grown more profitable these past few years, not by adding jobs or adding people, but by expanding their markets, embracing technology, and most important, by becoming more efficient and getting greater production out of their existing resources.
But that’s only part of the reason we’ve not been able to shake our recession hangover.
The bigger reason — and frankly, the biggest reason — is that for the past 30 years we have gone about the business of transforming our economy from one based on production to one based to an alarming degree on spending. And one relying heavily on debt.
But now those chickens have come home to roost, and we’ve see that rabid consumer spending is an unsustainable dynamic — especially as hundreds of individual national economies continue to morph into one giant global economy.
The American consumer’s willingness to buy things, and dig himself deeper and deeper into debt, has reached its breaking point; as has his ability to fuel not just his country’s economy, but the economies of Europe, Asia and South America.
For decades, countries like Germany, Japan and, in particular, China, simply had to build pipelines into our wallets, purses, and in particular, our lines of credit, then stand back and turn on the spigot. But no longer.
These days, Americans are spent. Literally.
They’re tapped. And what’s more, they’ve started doing something that, collectively, they’ve not done since the early days of World War II: they’re saving.
So what does this mean? And what place do such tiny kernels of economic insight have in a blog about manufacturing?
This: that this country’s economy can no longer rely so heavily on the spending of its citizens. Because not only is that absurd level of personal debt heading toward extinction, but the downward pressure on wages in this country has pretty much dictated that that kind of conspicuous consumption will become — perhaps for generations, if not longer — impossible to attain.
What’s more, as a country we have to spend the next decade dedicating ourselves to returning to our economic roots. We have to once again become a manufacturing superpower by embracing innovation, creativity and computer technology, and by weaning our economy off its insidious addiction to consumer spending and its wicked stepsister, debt.
Like our parents and grandparents, we need to create an economy that relies less on what we buy and more what we produce and export. And there’s no better time to start than right now.
Why? Because take a look across the Pacific. The largest middle class the world will ever see is currently being developed in China. And the second biggest one is taking shape in India. So why shouldn’t those all those potential Chinese and Indian consumers buy American, just like we’ve urged consumers in this country to do?
I don’t know about you — after all, I’m just an amateur economist with a laptop here — but I have to believe the economy of the United States needs to rededicate itself to not only manufacturing, but exporting to markets far and wide, the highest quality (and most reasonably priced) products possible.
What’s more, if we are going to re-invent ourselves as a global manufacturing power, and our ultimate goal is to once again start exporting massive quantities of quality American-made products, the amateur economist in me tells me the two largest middle classes in the history of mankind just might just be a good place to start.
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