Measuring Economic Strength
Re: "First Up -- Sweating the Big Stuff -- and It's All Big Stuff" (June 2009)
I read your comments pertaining to the generation of wealth from manufacturing. I agree with you.
A nation may have a glut of labor, but have no capital for investment in plant and equipment. For this reason, many nations remain very poor.
In India, some banks have loaned $50 to women to purchase a sewing machine. From profits on sales of dresses to friends and neighbors, a woman is able to increase the standard of living of her family and in some cases has used the profits to buy a second sewing machine and hire an operator. This is a very basic and good example of what the combination of capital and labor can accomplish toward increasing the value of raw goods and labor into a higher-valued manufactured item.
In order to be a perpetual-motion machine, the output value of horsepower must be larger than the input power. The output value of manufactured products can be much higher than the input cost of raw materials and labor. This manufacturing process duplicates the perpetual-motion
Gross national product (GNP) is a means of measuring productivity of a state or nation, but this measurement is a mixed bag of many economic activities including manufacturing. At present, manufacturing may provide only 12% of the GNP of the U.S. Payment of the huge U.S. federal debt, estimated as high as $200,000 per citizen by a Chicago writer, will require a huge manufacturing base.
The use of a gross manufactured product (GMP) index can be an excellent measure of a country's economic strength. The loss of manufacturing jobs overseas will lower the U.S. GMP. It would be interesting to see how the GMP has changed over the past five years on a quarterly basis. Keep in mind that the manufacturing process works as the perpetual-motion concept -- greater value out than value in. The result: wealth for labor and capital and taxation funding for governments.
Salaries for politicians, government workers, teachers and doctors are paid from the profits of manufacturing through taxation. Creation of manufacturing jobs has a far greater positive impact on the economy than new non-manufacturing jobs paid from government taxation. Manufacturers pay, from their profits, a major cost of governments.
Gerhardt Van Drie, R.C.E., MPA
El Segundo, Calif.
Missing the Boat
Why was money given to institutions that are failures? So they can pay off their mistakes? The money should have been given to the institutions that have been successful, letting them invest it.
The problem with Fannie Mae, Freddie Mac, some of the banks and Wall Street is the lack of jobs -- good jobs. We have lost more than half of the high-paying manufacturing jobs in this country. How does anyone expect the non-working public to pay their mortgages? If they still had those jobs, would we be in the mess we're in?
An appliance manufacturer and its employees in the U.S. pay over 50% in taxes to put a toaster out the door. The same manufacturer pays the same taxes on the raw materials and components that go into the product. The manufacturer has to pay taxes on its inventory, which also requires extensive labor to take. The manufacturers of imported toasters pays nothing,
and in many cases are subsidized by their government.
U.S. manufacturers are handcuffed by regulations imposed by the federal, state and local governments. Yet the imported goods are unchecked. They are free to use unsafe labor practices, use child labor and pollute our land, oceans and air. We all live in the same world. Why should imports not be subject to the same regulations?
We should remove all taxes on
manufacturing jobs and adjust the salaries accordingly. The result would be the cost of goods manufactured in the U.S. would be cut in half. Jobs would return and exports of our goods would increase dramatically.
The lost revenue would be made up through the spending created by millions of new jobs. If we do nothing, the tax revenue from the remaining manufacturing jobs will be lost anyway.
I think they missed the boat. We need positive, lasting change, not a temporary bailout.
Robert J. Zelinski, P.E.
Richfield Engineering & Design Inc.