Winners make a habit of manufacturing their own positive expectations in advance of the event.
Every so often, countries like people behave idiotically. It’s just part of the human condition.
I regard the mania for outsourcing manufacturing which gripped American corporations from the 1980s until recently, as a perfect example of that kind of mass idiocy. I guess we should give thanks that its consequences weren’t worse.
We could have opted for Fascism like Germany did in the 30s or completely lost it like the Cambodians did when they allowed the Kmer Rouge to take over and engage in genocide. Still, for all that, the horrendous consequences were bad enough and will be with us for decades.
Literally, tens of thousands of U.S. factories were closed, millions of Americans lost their jobs, thousands of communities were devastated—and, perhaps, worst of all, we exported expertise on a massive scale—so actually trained and entrenched our competition. If idiocy is the right word to describe this corporate behavior—and I am far from sure it is strong enough—then you can make a good case that it was greed-driven, short-sighted, treasonous, corporate, idiocy.
One of the core negative side effects of outsourcing manufacturing on this massive scale is that you lose a significant amount of other capabilities including the necessary expertise to increase productivity, and to innovate. In effect, by securing short-term gains—which may well be less than your expectations and have a tendency to erode—you have mortgaged your company’s future.
One consequence of being unable to secure productivity gains is for overall productivity growth to drop—which has happened—and an incentive for management to endeavor to increase profits by squeezing pay, cutting investment, and to engaging in financial manipulation (such as stock buybacks). These activities help to explain the current lack of demand, poor growth rate, higher than desirable real unemployment rate—and general fragility of the economy despite considerable competitive advantage and stimulus in areas such as energy costs. There is no mystery about our current economic plight. We have inflicted the damage upon ourselves.
FACTORY MAN is the awesome story of one factory owner, John Bassett III who decided to stand and fight in the U.S.—and who succeeded in defiance of conventional wisdom and overwhelming odds.
This is what Slate said about the book.
In her excellent new book Factory Man: How One Furniture Maker Battled Offshoring, Stayed Local—and Helped Save an American Town, award-winning journalist Beth Macy tells the story of John Bassett III, a third-generation factory owner and descendant of Virginia’s Bassett Furniture family, which once ran the world’s largest wood furniture manufacturing company before cheap Chinese imports put an end to all that. A rare success story, Bassett took on the Chinese by filing the world’s largest anti-dumping petition—and winning in 2005. Bassett is now the chairman of Vaughan-Bassett Furniture Co., which employs some 700 people and has sales of more than $90 million. Here at the Eye, Macy shares an adapted excerpt from the book that explains how the Chinese began to decimate the U.S. furniture-making industry beginning in the 1980s—and how Americans helped them do it.