George Rebane

Yesterday’s demise of GM bodes ill for low end manufacturing workers, and the service industries that have supported them.  Stratfor’s ‘The Significance of GM’s Bankruptcy’ is illuminating in the statistics it presents.  It turns out that total US employment by carmakers is now about a million workers.  And its parts industry has employed just under 800,000 additional people in manufacturing.  That industry also estimates that each of these jobs gives rise to 4.7 more jobs in “everything from catering to regional banks”.

But in terms of the US economy, putting all of that together accounted for only 5.54% of total US industrial production.  So cutbacks here don’t have the hyperventilating effect that you hear on the MSM.  We are still the big industrial producer of the world with an output greater than Japan (number two) and China combined.  However, the remaining production is in high-end products like computers, telecommunications, specialized production machinery, aviation, instrumentation, … .  Making cars is now a strictly commodity enterprise that is overwhelmingly dominated by things high tech, like robotics.

So here we are witnessing more ‘creative destruction’ of companies and jobs that provide little added value to an advanced economy like ours.  Such creative destruction has been going on for decades without much notice by the rank and file, because the requirements for getting a newly created job were pretty much the same as for the one you lost.  Those days are over.

And this phenomenon is not just happening in the manufacturing arena.  At the agricultural end we are beginning to see smart machines displacing humans in task both mundane and sophisticated. (‘Robot farmhands prepare to invade the countryside’)  The unskilled and undereducated worker is being pushed back on all fronts at an ever increasing pace.

These under-employed represent a permanent constituency of our country’s redistribution politics.  The Democrats have this figured out, and welcome these events for the simple reason that they generate reliable voters who readily believe every unsustainable promise that is made to them.  The Republicans don’t have a clue, and base their hopes for retaking Washington on Team Obama making an utter mess of it.  If the Dems just make a half-way mess, then the GOP might as well sell their elephants to the nearest circus (and also join it).

I have tried to point this out to RR readers and local Republicans ( ‘Republicans Need a New Strategy (edited)’).  It’s not clear that the Republicans are yet ready for such a message.  Their focus still seems to be on tea parties and hopes for a nationwide tax revolt.  As important as that is to nail the conservative base, it won’t deliver the votes needed to make a difference.  And one reason is because more than half of those eligible to vote don’t pay income taxes.  They vote for the party/candidate that promises them yet another free ice cream cone.

So we all go merrily sailing toward the cataracts that herald the approaching waterfall, not listening to the roar of roiling waters which sound a lot like the cheers of approval that continues to hail Team Obama.  We still fool ourselves that all these jobs will return once the economy recovers, all we need to do is keep faith in hopeful change.  Even hereabouts among our locals there is a coalition that continues its moonlight rituals that remind us of the post-war Cargo Cults in the highlands of New Guinea.  These folks hope for manufacturing jobs to again descend from the sky, comfortably settle in among our pine trees, and deliver the goodies like in the old days.