Factory Man by Beth Macy is well worth the read. It lays out the history of the furniture industry in America and how it has been effected by globalization.
It is focused on the Virginia part of the industry, so some parts of the industry are perhaps underserved as to how they have coped with the reality that is China.
Those who know me personally know that I am a strong believer in globalization and the need to compete in it. But this book lays out that it is expensive to compete, there are various strategies in which to compete, there are losers in the process, and China does not always compete fairly as measured by international rules for Fair Trade. I was unaware of how the latter occurred, but the book explains that exports can be at cost and the Chinese government will send a check to the company for having exports giving them a profit. And the pricing could even be below cost because the government check will provide a profit. Combine that with low Chinese wages in 2002 (they have been rising), low standards for worker safety, and low standards for environmental protection and you have a significant pricing advantage.
What I didn't understand, since my wife liked to buy expensive high end furniture that was not made in China, was how widespread Chinese furniture has made inroads into the U.S. market as younger people only care about cost and don't mind throwing the furniture away when it breaks down.
This expanding of the "I Don't Care About Quality" population has had one effect that has stunned me. While I was happy buying older wood furniture in my early working career, young folks today prefer new and cheap, and the secondary market for older wood furniture has collapsed because of the inexpensiveness of new furniture. I always thought quality furniture would maintain a certain value and I was wrong about that.
While I wrote this to hopefully promote purchases of this well written and documented book, I also want to use some facts in it to debunk any idea that trickle down economics works when globalization and technology are running amok reducing costs of manufacturing and reducing the size of the labor force required for that production. This creative destruction is both a strength of the capitalist economy but not everyone participates in it equally.
"Between 2001 and 2012, 63,300 American factories closed their doors and five million American Factory jobs went away......During that same time period, the number of people receiving food stamps tripled." I know many conservative bloggers think many of those receiving food stamps are somehow unworthy, but they are desperate people and many of them have gone on social security disability out of desperation. They were not well educated to begin with and they already live/worked in a right to work state, so you cannot blame unions.
While hopefully, some of those people retrained and redeployed themselves successfully, I have no doubt that in small town America, many are working in retail and other low wage/low benefit work. If there is any one reason for the anger in America at the politicians and the 1% who live large from the benefits of globalization (and even those of us who fell out the 1% but have wealth), I believe it is the carving up of hope for a continuation of solid middle class life in small town America. Real people, who don't have either the smarts or the desire to move to the global economy, are stuck, know they are stuck, and are unhappy about being stuck. And they know just enough to blame globalization.
Yes, the goods from China are cheap, but 5 mm people can not afford to buy them and they are angry.
And my point about tax cuts, is it hasn't generated well paying jobs for many of those 5 mm people and it didn't generate the tax revenues needed to pay for the War on Terror. If we had had a balanced budget in 2005 - 2007, we would be in a much better place today. When the economy booms, you should have a budget surplus and it is the government's responsibility to do so. That way when you are in recession, you can run a deficit with a clean conscience.
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