Wednesday, April 6, 2011

Core Manufacturing

The late great industrial engineer Seymour Melman was a renowned critic of the military industrial complex. He was concerned about the massive amounts of resources devoted to manufacturing military equipment. He was also concerned about the intellectual/technical manpower required to maintain this system. Melman argued that continued government devotion to the military industrial complex essentially crowded out non-military manufacturing and therefore did not increase U.S.productive capacity. He waged his war against the misallocation behemoth for decades from the era of the international gold standard until his death in 2004.

In 1992 Melman wrote a a booklet titled Rebuilding America: A New Economic Plan for the 1990's. It was written in the aftermath of the 1990-1991 recession but still has great relevance to today's current economic situation. The main points of the publication were that the U.S. faced three problems 1) an antiquated/decaying infrastructure (this was 1992!) 2) diminished ability to produce the means of production and 3) an army of unemployed that was being neglected in favor of spending on the military industrial complex. It is easy to confirm that the U.S. is still suffering under points 1) and 3). The U.S. has a composite infrastructure grade of D and unemployment is at 8.8%. Point 2) is interesting because it has received virtually no attention and it has direct bearing upon the ability to address our antiquated/decaying infrastructure problem. Point 2) is alarming when one takes into account that global oil production has likely peaked.

What did Melman mean by "produce the means of production"? Simply put: the fundamental equipment required to participate in industrial manufacturing. Want to manufacture wind turbines and electric rail? First one needs equipment such as machine tools and ball and roller bearings. From a national security standpoint, perhaps it is unwise to depend on imports for such fundamental equipment? To illustrate the decline in the manufacturing of fundamental equipment, I've created a sequel to a data chart that Seymour Melman called "The Road to Underdevelopment". Please click on the chart to expand it.


Alan Avans said...

Interestingly enough we are the world's largest exporter of the means of production. We've got one heck of a machine tools industry for example.

Tom Hickey said...

Am I missing something?

U.S. Machine Tool Industry Is On The Brink: How Does An Industry Survive Without Any Orders?

The Decline of the U.S. Machine-Tool Industry and Prospects for Its Sustainable Recovery