The Future of The U.S. Economy

On Friday President Obama announced the appointment of GE CEO Jeff Immelt to head the new Council on Jobs and Competitiveness. In my opinion this is a good sign for the future of the U.S. economy if for no other reason than the fact that GE sits in one of the only sectors in our economy where the rules of supply chain management have not forced the off-shoring of American manufacturing jobs, Defense.

I have spent a considerable amount of time as of late racking my brain to try to come up with a scenario where any form of government action, whether it be further deregulation and tax cuts favored by the right or some type of protectionist position coupled with strong regulation favored by the left, might have an effect on Corporate desires to find the cheapest labor on the planet. This poses a fundamental problem with any political or government solution because the number one goal of a corporation is to increase value for the share holder by any means necessary. Whether you realize it or not, the majority of U.S. corporations (and I say that loosely because I really mean corporations that began their days in the United States but almost entirely operate today as multinational entities tied to no nation) at some point in their life-cycle are faced with the option of drastically cutting their fixed costs by moving their manufacturing operations out of the U.S. to places where those costs are drastically lower.

In mulling this thing over the only two sectors that I could come up with where we have not ceded our labor force to some cheaper nation are agriculture and Defense. Both of these industries remain tightly restricted by the U.S. government and for good reason while every other sector has been given free reign to do whatever is necessary to control cost. As a result, industries that we used to consider vital to our national interests such as the auto industry or even new green technologies like solar panel manufacturing have been forced to off-shore manufacturing operations in order to compete globally.

In an article in the Washington Post discussing the appointment of Mr. Immelt we get a glimpse into the thought process of a man whose business has been fundamentally protected from the results of conservative free market ideology, and it is likely not a message that my friends on the right will like but one that I can’t agree more with.

“The assumption by many that the United States could transition from a technology-based, export-oriented economic powerhouse to a services-led, consumption-based economy without any serious loss of jobs, prosperity or prestige was fundamentally wrong,” he wrote.

Mr. Immelt can say something like this because his business, at least the Defense portion, enjoyed at least a bit of healthy protectionism. If we are to begin the slow and painful transition back to a technology-based, export-oriented economy the first step must be to look at each sector of the U.S. economy and begin to classify certain areas as vital to our national interests. It is only by doing this that we could take the steps necessary to reshape those sectors in a way that would make them viable without having to look to places like China, Mexico and India for cheap labor.

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