Tradable goods essential to well being

Filed under: Opinion |

Before Adam Smith, Plato wrote that man is not self-sufficient and that people have different aptitudes, key reasons for working together and the basis for wealth-creation. He also wrote that “it is … impossible to found a state in a place where it will not need imports … And if our agent goes empty-handed, and takes with him nothing … he will return empty-handed.”

In other words, having tradable goods is essential to community well-being.

Ten years ago, the Pikes Peak Region enjoyed a healthy balance in its local economy, with 17 percent of its economic activity engaged in manufacturing, primarily for export, and about the same in the government sector. Today, that manufacturing base has dwindled to 5 percent and the government sector now approaches 40 percent.

Should our military presence shrink, this community will lose a critical macro-economic buffer. We’ve been fortunate thus far, but we’re no longer diversified and have lost the real value-adding economic base here.

Our situation is not much different from the predicament faced by the rest of the nation, where goods production has slipped below 10 percent of the economy from 25 percent in the 1970s. Consequently, American trade relationships are precariously unbalanced.

Good-paying, middle-class producer job loss is the root of economic problems in the city, county, state and the nation. These jobs have been in or related to goods production, providing health benefits and a chance at a pension, the ability to buy a car, support a mortgage and put children through college. There will be no enduring recovery without restoring our production base.

History shows that if Americans can agree on objectives, acting freely we mobilize to achieve almost anything. To paraphrase Winston Churchill, however, “You can count on the Americans to do the right thing — after they’ve tried everything else.” We need to agree on an objective for economic development. If we can, the steps we need to take will be clear.

We need to restore our goods production base to 15 percent of the economy, not merely for the sake of ability to generate income and retire debt, but to sustain the ability to innovate. It is not possible to innovate without process knowledge.

We often hear that we’ve lost our manufacturing base because labor costs are lower elsewhere — but not in Germany or Japan. At the same time, American workers are generally equipped to be more productive. Labor costs are a non-factor in high technology or where capital intensity is high. Intel didn’t move to China rather than reinvest in Colorado Springs due to labor costs; that plant was moved to take advantage of billion-dollar subsidies and deliberate government policies aimed at providing an artificial competitive advantage. The team here was recognized as stellar. The corporate fathers had an offer that they could not refuse.

The legislative tools are in place, if we have the courage to use them.

Dave Anderson is a principal at Multi-Duti Manufacturing, a Colorado Springs pump manufacturer, and member of the Coalition for a Prosperous America, a nonpartisan group dedicated to trade reforms.