Americas
Manufacturing renaissance in the US signals change of global production patterns
Despite the high levels of unemployment in the US the demand for skilled workers is rising since almost two years. After almost two decades of outsourcing mainly to China the work force had changed dramatically. More than 40% of the former jobs in production were lost or transferred to other sectors.
But new research by The Boston Consulting Group (BCG) suggests that production of transportation goods such as vehicles and auto parts, electrical equipment including household appliances, and furniture will return to the US. This return of manufacturing is already starting to accelerate, and could create two to three million jobs, BCG predicts.
Beside rising political risks wages in China are rising, becoming less competitive on a global scale. With rising transportation costs and the vastly increased efficiency in US plants the ground layer for a mass migration of manufacturing back to US shores has become already visible. When higher U.S. productivity, the actual labor content of a product, shipping, and other factors are taken into account, the cost advantage of making many goods in China that are bound for sale in the U.S. will be marginal.
Shrinking wage gaps add to this trend. But there may not be enough skilled workers to fill all the job openings created by this new migration. Even now, in the midst of a very sluggish economy, some companies are struggling to find enough people to support their production lines. Some companies are unable to expand production due to shortages of skilled workers.
A looming labor shortage may seem paradoxical at a time of high unemployment. That’s because manufacturers rely on technology-intensive production, making it more urgent to train and retrain current and prospective workers to make the transition.
Another issue of the industrial rebuilt is the energy consumption. Both factors are interlinked. US president Obama addressed both issues in his last weekly address.
Criticism is mounting regarding political and media response to protests in the US
Harsh and partly brutal reaction of the police against the ‘occupy wall street’ protests in the US have led to growing solidarity and participation of Americans that did not benefit from any of the recent growth periods in the country including the majority od the miffle class. The mutation of trade methotologies and into pure game tools disconnected to social wealth creation and the ‘real econonomy’ have also mobilized formerly influential politicians such as Eliot Spitzer. The interview, recorded 22 hours before alongside with new reports about police brutality highlights the multidemensional challenges connected to to the growing movement.
Dollar rally a short term phenomenon
Commodity prices declined after remarks of Ben Bernanke suggested last week that the quantitative easing policies might have come to an end. Even the gold price was down and the Euro lost significantly. But these reactions were not only related to a less loose Dollar but also to a significant supply of strategic oil reserves and the crisis in Greece.
Commodity prices won’t be down in mid term and never in long term. It is almost for certain that the US debt limit will be extended shortly before the deadline at August 2nd probably in the last hours of the night before. But extending the debt limit is hardly different to a QE 3 program in its economic effects. The substance of the US economy will go on to depend from stimulating money, in this case state expenses based on new debts. The further devaluation of the related currencies is a logic and almost inevitable consequence. This is why commodities might have their next substantial rally after August 2nd at latest. With Europe at the crossroads and the US lingering in expectation of false unpredictability while China started to export inflation there is no other way. Commodities will prevail.
American Dream revisited: How a viral video creates hope in America
This is a story that was broadcasted all over the world in the recent days: former radio presenter Ted Williams who had become homeless after alcohol and drug problems over the recent years was filmed by a video amateur named “ritchey” who put the file on youtube. So, Ted Williams, the “golden voice”, became a media star within 48 hours and was pushed out of poverty overnight …
To think that this story wouldn’t tell something about the current economic crisis in the West and its mounting social costs would be a big mistake. This unusual new star, Ted Williams, was born by millions of internet users and obviously not by any professional media management. The interest of these millions of users in his case, their understanding of his talent and his situation, shows how vibrant the American culture still is and how deeply rooted their myths obviously are – in the social system as well as in the hearts of most Americans who know that the American Dream always worked only “with a little help from my friends”. Here this friend was “ritchey” who isn’t rich, but who uploaded what he found important. It was a small step for him, but a big step for Ted Williams – and for the American model of individual freedom as well as the American model of community spirit.
Both is heavily related to the quest of volatility.
This relation is defined by the effects of a rapidly increasing social and income volatility in the Western world as well as by emotional volatility associated with the huge social challenge that bankrupt America is facing and that debt burdened Europe just only has started to realize.
The story of Ted Williams is his own story on the one hand and that of millions of Americans on the other hand that were ready to listen. And a couple of companies were ready to help. It is the story of the impoverishing middle class in America that expressed their own fears by showing affection and a big heart to someone who was already hard hit – and to send a message as well: if we start to help ourselves we can overcome the worst because we are strong. This is America.
In Europe a much more class defined society with upper social circles mostly ruled by prejudice and resentment towards the poor (especially in Germany) seems to go the opposite way. Social classes are tightening their boundaries, exclusion of the poor from any promising job market and a lack of accessibility included. Maybe the story of Ted Williams could have happened in England, but not in continental Europe.
The tightening European class system may be one of the main reasons why Europe (as well as other regions burdened by exclusive traditions) probably will need much longer time to orientate and adjust to the new global economic situation than the US.
Accepting social as well as emotional volatility in times of crisis and ensuring access for all is for sure an essential part of the cure to overcome these difficult times. Ted Williams has shown that excellently.
Middle class is struggling to keep predominant economic role in the US
In their fact based book “Winner-take-all-politics” published in September 2010 at Simon & Schuster the two political scientists Jacob S. Hacker and Paul Pierson describe the decline of the middle class’ participation in the economic success since the 70′s in the US. While in the late 70′s for example the share of the super-rich 0,1% of the population in the national economy had been only 2,7 %, the percentage is now almost 13%. The book also deals with the lobby power of this small elitist group that provides more than 3 Billlion USD annually for lobbying. The book is based on an outstanding scientific research base and works with verifying and very detailled analysis.
The middle class has been the main economic loser group for the last 30 years according to the authors of the book
The book’s broader perception especially in Europe shows how awareness regarding the political background and the potentially steered impacts of economic shifts are gaining more interest among those who are most affected: the middle class. (Amazon: http://www.amazon.com/Winner-Take-All-Politics-Washington-Richer-Turned/dp/1416588698)
“The underlying argument is straightforward. The sources of American economic inequality are largely political – the result of deliberate political decisions to shape markets in ways that benefit the already-privileged at the expense of a more-or-less unaware public. The authors weave a historical narrative (…) What is new is both the specific evidence that the authors use, and their conscious and deliberate effort to reframe what is important about American politics.” (Henry J. Farrell)