Extractive industires generate wealth only when the items extracted are used to build something. Again intellectual property is only worth something when attached to something being built. Any other wealth is based on speculation and still is reflective of the possiblilty of manufacture in the future. Our society is still consuming manufactured goods, they are just imported and we are exporting the jobs and corresponding wealth. It is pretty simple.
That is not true IP can be attached to ideas, the "look and feel" of something entirely subjective or artificial. IP is associated with engineering and scientific principles that have little to do with the Rust Belt For example, is software "built?" I haven't purchased a box of software in perhaps 5-6 years. Whether Oracle, Sun, even Microsoft, I download it. The fiber optic network requires heavy initial investment/build, then is relatively cost-free for its entire useful life (OAM&P is now a fraction of what it used to be, thanks to more sophisticated "smart" networks using techniques like BLSR, VTBM, etc) Or, in my job, at least 85% of my work involves control system and telecommunications software that I just send electronically. What have I "built?" Last time I checked, I don't have an assembly plant in my home office A lot of scientific and engineering jobs are based on purely theoretical ideas, the fruition of which may take decades. A good example of this would be control software that ensures correct synchronization of power grid interties using HVDC. The HVDC power transmission must use solid state Insulated Gate Bipolar Transistors and must perform rectification and inversion. Believe it or not, it's easier to accomplish frequency synchronization using HVDC, but the hardware to accomplish this really became mature only a decade ago. Previously, the hardware was klunky and hard to deal with In the example of HVDC bipole power transmission (Bipole: two wires using + and - to eliminate ground return effects, an important safety issue), you're not really "building" anything dramatically new. The conversion station is a major investment, say a billion, but you can easily double your "real" power without building new pylons or wrangling right-of-way All throughout history, we have had to adjust to new paradigms of employment and production. Consider the Industrial Revolution alone, many craftsmen lost their jobs to the early mass production. The Assembly Line turned its back on small volume, individualy crafted automobiles We can either upgrade our skills - as I have constantly done for 22 years - to adjust to these new paradigms, or we can refuse to do so, attempt to support obsolete paradigms, and fall with them
Just talked to a friend working at a Texas Instrument chip-making plant (one of several) in the area. He said more than half of the production at his particular plant is sold to auto companies - both domestic and foreign. A meltdown in the auto industry would surely cripple their business.
It is a big chink of the employment in every state and some states the numbers are incredible. Michigan is 800,000 affected, ohio 450,000. Those two states would be bankrupt overnight.
Are you saying that if GM goes bankrupt then those two states will also be bankrupt? If not, then what are you saying? What do you mean by a state being bankrupt?
Yes the lack of revenue and subsequent expenses associated with those job losses would certainly bury those two states and probably many others. just think if no cars are manufactured in the US for 6 months, how much less would every states tax revenue be? Again suppliers include, steel, glass, carpeting, plastic, rubber, electronics, etc and think of just the drop in advertising, tax revenue, gas revenue the list goes on and on.
Fear not. The alternatives are worse. If GM goes into bankruptcy we will get a better automotive industry in the end. The sky will not fall, but there will be plenty of pain. Plenty of cars will continue to get manufactured to meet the demand.
No chapter 11 destroys the supply chain, Ford and chrysler declare chapter 11 and then the transplants shut down. Within 6 months the US auto industry is in chapter 7 and effectively dead. The transplans eventually restore some manufacturing capability in the SU using Japanese suppliers, but decide that they will be safer economically if they move the production overseas.
Not true. A lot of the wealth in extraction comes from sources of energy. Jayman already covered intellectual property, so I won't repeat his argument. It is true that manufacturing is important as a form of creating wealth, but your viewpoint is a bit myopic. Tom
Without manufactured goods what is the energy used for? Wood to heat your hut? Same with intellectual property, without a computer or tv etc something to apply it to or with, what is it worth? Not much.
Jayman, to me software is a tangible object which is built somehwere by someone. It does not if you buy the box of Microsoft office or it is downloaded it has been built and is "wealth". How many scientific or engineering jobs would there be without manufacturing, whether yo uare talking about steel and cars or computer software? Not very many. The craftsman analogy is not really appropriate to this discussion, the auto jobs are being lost to other countries for the most part, not being replaced by another or better technology. Thy Prius could maybe fall under that but how about a lexus vs a cadillac? Hardly.
Chicken little story is not going to happen if GM goes bankrupt. Changing subjects: My vote for the new CEO when the creditors take over GM is Maximum Bob. I bet he is a real innovator, much better than Rick.
Please google "Plastech Bankruptcy". The failure of this one supplier almost shut down all the assembly plants in the US. This happened less than a year ago. How quickly we forget, or I suspect didn't know in the first place.
Interesting. I suspect Ford is ready or getting ready for this, with extra cash for its critical suppliers that may need it.
That is why Ford wanted a $12 billion line of credit from the federal government. I doubt they will be able to keep all their suppliers going but I can just about guarantee they are scrambling to dual source components for their best selling models. Even that won't help in both suppliers go under.
Curious, I just re-enrolled in my employee stock purchase plan. It has to do with buying low. Bob Wilson
Today's market if great if you are buying in. Not so great if you already have money in and have watched it drop 36%.
Malorn's argument is a variant of the 'too big to fail' mantra. How did that work out for the USSR ? Or every other centralized economy regime except arguably China ?
