The U.S. is a Rising Star in Manufacturing – But at what Cost?

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The western world is continuously retaking its competitive position in manufacturing, as Mistbreaker earlier reported based on an intriguing study from the Boston Consulting Group. The brightest shining star in this context is the United States, but how come this country so competitive?

Partly it has to do with real skills and wise investments in technology. The U.S. labour productivity has increased with almost 3 % between 2007 and 2012 whereas the productivity of many other countries has gone down, according to the World Economic Forum.

Still, this is only one part of the explanation of the currently successful trajectory of the nation’s performance and competitiveness. One serious advantage in favour of the U.S. when competing in the global market is the availability of cheap natural gas. Fracking plays the pivotal role in this boom and has made the price of natural gas fall to levels of about half of what it is in Europe.

Conservative proponents of the nation’s competitiveness might not be able to distinguish any problems regarding this matter, as long as growth takes place. In the eyes of many, the prosperity of a nation is tied to the country’s ability to generate capital. Money and wealth are undoubtedly important for a prosperous society, but what about the distribution of the economical gains?

This thought leads us to another paramount advantage of the U.S., which is its low minimum wage. The Europeans cannot compete with the low costs of labour and there are two specific possible outcomes regarding this delicate fact. The first is that Europe would be forced to decrease its minimum wages or simply further lose manufacturing shares globally. The other is further increased automation, which seems to be the main agenda of the European Union when it comes to technological investments.

One could thus argue that we would either go towards increased automation, which is the standpoint here at Mistbreaker. Or, on the other hand, Europe could further loosen up trade barriers and stimulate internal markets within the borders of the continent. This might be a good thing considering the damage made to the world caused by globalization, but at the same time it seems highly unlikely and maybe not even viable. The reliance on global markets is a too powerful force.

The high productivity and the low wages in the United States points to one thing; the generated capital does not end up in the places it should. The money is evidentially accumulated at the top of society which contradicts the above mentioned conservative view of monetary gains and global competitiveness being tied to nationwide prosperity.

So, if the low price of fossil fuel, comparably low minimum wages and increased automation are what generates the greatest returns on investment, is it something to strive towards? Probably, since the foundation of capitalism lies in the creation of value. However, the distribution of the generated value is a matter that has to be more frequently discussed. In the case of th U.S., the common people are taking the hit and due to the exploitation of harmful energy sources the environment is taking a serious bashing as well.

If productivity and automation leads to increasing inequalities, workers taking jobs that barely allows them to scrape by and also leads to the creation of a class constituted by insanely wealthy persons we ought to to pause for a second and think. Is this a world when economical growth and happiness really go hand in hand? Seldom before has the statement “who owns the robots rules the world” appeared so substantial.

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