Can anyone (or anything) be directly blamed for the deindustrialization of what’s today known as the Rust Belt, as well as the offshoring of industry mainly to China?

38 comments

  3. There are volumes of books on this subject. This isn’t a 3 paragraph summary answer question.

  4. Globalization, consumers, businesses, politicians, unions workers, non-union workers… no one escapes some degree of culpability.

  5. Really complex, multiple people and factors. Combination of events and actions that created the conditions.

  6. It was mostly a question of economics. Starting in 1948, auto manufacturers realized it was more expensive, and therefore less competitive, to centralize their entire operation in Detroit. So they started opening plants in other parts of the country.

    Then automation and the first robots came along and caused a further loss of jobs.

    And then in the ’80s, we got complacent and Japan and Germany started making superior cars, and that was really the death blow.

  7. Globalization made it easier for businesses to move operations to countries with lower labor costs. That’s the big reason. There are a ton of other factors involved, though.

    You even see this happening in China recently. Their labor costs have been rising which has been incentivizing manufacturers to move out of China to (mostly) southeast Asian countries.

  8. It’s a lot of little things. The big one is labor prices. The rust belt became the sunbelt before it became the pacific rim.

    *should note, the US is still a strong manufacturer. It just has become more automated and has coincided with a demographic shift to warmer states.

  9. I don’t blame anyone. Its natural progression. As economies develop, they become knowledge/ information economies and that is where real innovation is. Manufacturing is not innovative and can be better served by less skilled foreign workers who cost a lot less.

  10. Garry, it’s all Garry’s fault.

    Mixture of complacent companies, inflexible unions leading to higher labor costs,
    automization , globalization increased competition, richer societies wanting more services compared to goods etc.

  13. Free market dogmatists.

    China, Japan, South Korea and all other Asian tigers and miracle economies got to where they are by industrial policies. Share of workers in % of most heavy industry and lower skilled industries were going to decline if we wanted to be competitive. But the problem with the US is that Federal government didn’t intervene enough in most critical higher skilled industries as we moved up the value chain / economic complexity. We went with the cheapest quick term gain and listened to guys from WSJ columns who worked for think tanks and corporations who short term interests were on the line. Now it’s an economic security liability when it comes to mass defense production if we ever need to.

    Take Japan for example, their government agency MITI basically gave out low interest subsidized loans to steel and car manufacturers to build new factories ever 5-10 years so they could build the new ones with tech and industry changes to get better efficiency and less prone to accidents or production jams, while tearing down the old ones after they finished.

    Luckily there’s a shift in mentality among both parties and we’re slowly shifting away from it.

  16. It’s a lot of things, from manufacturing changes, to some bad decisions by unions, to bad decisions by cities, to societal changes, and on and on

  17. One of the funny things a lot of people miss when talking about the economic shift that deindustrialized the “rust belt” while off-shoring manufacturing jobs: the fact that the United States basically moved up the value chain to the areas which capture the most wealth.

    That is, when a lot of wealth was captured by making things, we made things.

    But now, most of the wealth is captured by designing things and developing the software that runs on those things. Making things doesn’t make a lot of money.

    And guess what? We off-shored the things that don’t make a lot of money while doing the things (design and software development) which captures most of the wealth.

    It’s why we don’t make things–yet somehow make most of the money from those things that get made.

    (Like the iPhone, for example–assembling the iPhone only captures about $2 of wealth. Even accounting for the components in the iPhone, the actual hardware cost of the iPhone is perhaps under $100 for a $1,000 device. Which is why there are so many knock-offs: the hardware is easy.

    The software, however, is hard–and it’s why we have so many $100k+ jobs in the United States writing that software.)

    —-

    That’s how a country with 4% of the world’s population manages to capture almost 25% of the world’s productive wealth generation.

  18. In a word, capitalism. Companies will always seek to maximize profit, including sending manufacturing jobs to places with cheaper labor; the well-being of their workers, or even their own long-term profitability, be damned.

  19. It’ was the rise of globalization, China as a manufacturing giant, etc. companies could produce goods more cheaply in China, Taiwan, Mexico, etc. by paying a tiny fraction of the labor costs vs. using union labor in the US.

    Why pay Somebody in Akron $25/hr. plus health insurance and pension to make toaster ovens when somebody in China will do it for $25/day, no other benefits, and your factory doesn’t have to abide by safety and environmental regulations? Even factoring in the additional logistics to ship goods from China, it’s still cheaper.

    And even for manufacturing that has remained — the US is still the world’s largest manufacturer — technology has reduce the manpower necessary. An auto plant that may have needed 5000 workers to make 100k vehicles now only needs 1200 as robots and automation on the line have taken over.

  20. If I was forced to pin down one thing, it is whichever law that says a publicly traded company MUST do what’s in the best interest of their shareholders. If the word were stakeholders or they were allowed to have a core ethos that validated using more expensive labor on the principal that ‘an American company should pay workers actually in the U.S.’ instead of ‘whatever costs the least’. But it is not a simple answer. That is a cause, not the cause.

  21. One man – Malcolm Purcell McLean. Invented the shipping container and thus massive global trade. Prior to him, everything had to be loaded onto ships in ways that account for their shape, making them much harder to transport across great distances. Once things were able to be transported cheaply, it didn’t matter where it was made, so you might as well go with the lowest cost labor.

  22. No there were multiple factors.

    * Globalization and increase costs of manufacturing in the US
    * Automation
    * States and Local governments failing to invest in knowledge based industries until it was too late. Cities like Chicago, Columbus and Indianapolis had other economic sectors to fall back on.

    Also, coming from Buffalo, in a way, 50 years of decline has been a blessing.

    Air & water quality has improved by a lot. Buildings are no longer covered in soot. Seriously fuck pollution.

    50 years of decline has also made Buffalo incredibly affordable while the rest of the country is seeing sky high prices. Plus we have plenty of room to grown.

    Meanwhile, the economy has recovered and diversified and we got to keep many of our world class cultural assets to boot.

  23. American industry got regulated because entitled consumers wanted guarantees that they wouldn’t be sold “dangerous,” products and “quality standards,” and the uppity workers unionized because they “wanted to live past 30,” and “didn’t want to fall into giant vats of molten steel.” This made the cost of American manufacturing higher. Globalization meant that companies could manufacture in developing nations that didn’t have those pesky “workers rights,” or “health and safety standards,” which meant more profits.

  24. Companies exploited the cheapest labor sources around the globe because it was cheaper than automating (or paying a fair wage). But well paid manufacturing jobs were disappearing one way or another.

  26. Powerful and sometimes corrupt unions keeping wages high and set benefits for workers and globalization lowering the price of imports. This either forced companies under when they had to compete with foreign industry and unions who wouldn’t compromise or incentivized them to export jobs to countries where production was cheaper.

  27. The industrial revolution to me is just like a story i know called the puppy who lost his way. The world was changing, and the puppy was getting bigger…So you see, the puppy was like industry, in that they were both lost in the woods and nobody, especially the little boy, “society”, knew where to find them. Except that the puppy was a dog, but the industry my friends, that was a revolution.

  29. As many have noted, it’s complex, but I’ll just say this:

    I grew up the heart of the Rust Belt. When NAFTA was being passed, I heard a lot of people freaking out, and I thought they were way overreacting.

    I no longer think that – though NAFTA is realistically small potatoes compared to China joining the WHO.

    Now, in the long run I still think China joining the WHO made sense. But I do think it’s fair to say the national political discussion has to a large extent overlooked the cost of globalization to the Rust Belt and its workers, and “deaths of despair” are the result.

  30. Anybody who isn’t mentioning government regulation is completely missing the point.

    Capitalism will always seek the greatest profit (in this case via outsourcing manufacturing); this is neither good nor evil, it is simply the way the system works. If there are other priorities to be sought (like maintaining an industrial base), government regulation is the only effective way to incentivize these other goals.

  32. The United States also put into law environmental standards which some caused some companies to move to countries where law were less stringent. Having to clean up their toxic waste cut into profits.

  33. I lived in the rust belt. The jobs moved to non union states in the south first.

  34. No one thing. It’s as long list.

    The US dollar’s status as the de facto global reserve currency has big macroeconomic consequences, one of which is a gradual gutting of domestic manufacturing. The same thing happened to the British and the Dutch in previous centuries when their money was the de facto global reserve currency.

    Also, regulation and unionization making domestic products more expensive.

    Also, global transportation getting good enough in the 20th century to allow easy access to foreign markets and foreign labor.

    Also, US businesses moving up the value chain to higher-margin activities while offshoring the low-margin manufacturing work.

    And many other things, to be sure.

  35. It’s a natural byproduct of globalization. The pattern doesn’t really fit any politician or political movement. It’s just a thing that happened. Probably the biggest factor was the invention of standardized shipping containers which improved international trade but that feels inevitable that that would happen at some point and really just fueled the larger globalization of the economy.

  36. Walmart, the 401K, and globalization.

    I will write more later, but it is beyond Walmart’s prices. It was their labor relations, their sourcing, their property tax payments, and more. It all was passed on to all they deal with, and because no other retailer could compete with them if they didn’t follow Walmart’s lead, they would falter. Retailers, builders, suppliers, etc all do less with less…

  37. Neo-Liberal Capitalism.

    Specifically that of Reagan and Clinton, more so Reagan as it was his idea in the first place to sell almost the entirety of the US’ manufacturing base to China. (Under the guise that if China became economically powerful they’d depose the CCP. We see how that ended up)

  38. Yes, Breton Woods. After WW2, the US created the Breton Woods arrangement. It was a bribe from the US to buy allies against the Soviets. The US offered full military protection, global protection for ocean shipping and absurdly favorable trade deals to it’s allies in exchange for promises to fight the Soviets with it.

    This allowed other nations to industrialize and compete (and often out-compete because they didn’t have to pay for a military or offer similar trade deals) with American manufacturing.

    I grew up in the rust belt and the last 50 years have been horrify to watch. The suffering and despair of the American working class has been very real. Those people bore the full costs of the rest of the world’s rise. They, understandably, feel very betrayed by their own government.

    The Breton Woods arrangement has been, largely, running on momentum for the past 30 years and to help the US fight terrorism and secure oil supplies. The terrorism threat is over and the US now produces more fuel than it needs. Our allies have also been pretty unfriendly at times during the last 30 years. The US has always been self sufficient in just about everything but oil. It’s just a strange gift of geography. It has never needed global trade much and cost of the arrangement for the US has been rising every decade.

    This means the reasons and good will for the arrangement are now gone. The US is pulling back manufacturing to it’s shores at a blistering pace now and it has mostly stopped it’s military protection arrangements. Our foreign troop deployments haven’t been this low since 1910. This has been a slow drift over the last 30 years but it accelerated vastly under both Trump and Biden. The favorable trade deals with the US are now gone for most countries. We have few trade deals now ; Mexico, Canada, Japan, South Korea, Singapore and one with Britain is expected soon.

    The reason Ukraine is happening now is because Putin sees that the US won’t do anything serious about it and Ukraine is just the beginning. Once the world sees this, all the regional conflicts that have been suppressed by US military threats for the last 80 years will boil up. The oceans will stop being safe for global trade. Nations will scramble to secure their own resources and access to foreign markets, often by force. We are entering the Neo-colonial, Neo-mercantile age.

    If you live in a nation that is highly dependent on either imports or exports to sustain it’s economy, you are about to become very poor, especially if your military is weak. If you have resources that an regional power needs, you are at risk of becoming a citizen of someone else’s colony.

    Combine all this with the demographic collapse of the developed world and most nations are in for a very bad time. We had a pretty good run of it, though, didn’t we? 80 years of peace and prosperity is pretty good, historically.

    Why is the US doing this? One, because nations always act in their own self interests but also, it happens to be the kinder option for everyone else in the world. The domestic events of the past 5 years have scared the shit out of the US political class. Antifa, Q anon, BLM, the riots, Trump and Jan 6th are not normal behavior the US population. They are the behaviors of a people who are becoming deranged under the strains of their lives and becoming dangerous to their own leadership. Trump was a stroke of luck for us in that he looked and sounded like a fascist but her wasn’t one, at least not a capable one. He signaled that a real appetite for fascism had grown in the US and this is truly terrifying. There’s no reason to expect that the next Trump won’t be a true and competent fascist. Add Jan 6th into the mix and you see a real fear rising that the US could fall from within and turn fully fascist, if the lives of it’s working class is not improved very quickly. (Side note: No developed nation has ever turned communist. They always turn fascist, when the turn authoritarian, because of the investment of a large middle class in the capitalist economic system.)

    The realities of a fully fascist US are almost beyond imagining for everyone on the globe. There would be no way to stop what it would do, short of a nuclear holocaust. With it’s vast wealth, resources, advanced tech, large population and a military that is already more powerful as the rest of the world’s militaries combined, it would blow through every other nation on each like a bullet through tissue paper and turn the world into a nightmare fever dream. It would be the world of alternate history in which the Nazi’s won the war. The whole world would be it’s concentration camp. Far better that is turns inward to heal than this.

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