Sunday, December 16, 2012

What happened to USA economic muscle?

It was destroyed by financial vandals who have NO concept of the extent of their destruction.  Why do I say this?  Because as far as I am concerned, the most interesting factoid of the 2012 USA election was the genuine astonishment by the establishment press that Romney should be facing serious opposition because of his role at Bain Capital.  For them, Bain might be a tad tacky and nouveau riche, but it is hardly the stuff of Bastille storming.

Unfortunately for those of the receiving end, Bain and operations like them ruined their lives and their rage could last 50 years.  In the following essay, Fraser mentions the problems of Youngstown Ohio.  I remember when they shut down Youngstown Sheet and Tube in 1977-79.  I was watching a television documentary about retraining of "rust-belt" workers for the "new economy."  There was a scene where some very young functionary was explaining to a man who had helped create seamless tubing that he was now classified as "unskilled" for the purposes of government statistics.

Making steel is so insanely difficult, the few in history who could do it were world-famous back when steel was made by hand in small batches—witness the reputation of Damascus Steel.  In Japan where steel is a very big deal, the guys who can still do it the old way are designated as "living national treasures."  Not surprisingly, forming a seamless tube of steel is especially difficult—mostly because doing anything sophisticated with any material so hot is extremely dangerous.  Doing this was many things—unskilled was most certainly not one of them.

It was that evening I decided to make it part of my mission in life to explain the importance of those Producers who run the real economy.  Because anyone who can classify as "unskilled" a person who can make seamless tubing from steel is dangerously ignorant.  If someone actually believes making steel is an unskilled task, that person is extremely unlikely to have any comprehension of what it will take to build the sustainable society.

The following excerpt is about 20% of the whole article.  I encourage everyone to read the whole thing.

The Hollowing Out of America


Steve Fraser is a historian, writer, and editor-at-large for New Labor Forum, co-founder of the American Empire Project, and TomDispatch regular. He is, most recently, the author of Wall Street: America’s Dream Palace. He teaches at Columbia University. Cross-posted from TomDispatch.

Debtpocalypse” looms. Depending on who wins out in Washington, we’re told, we will either free-fall over the fiscal cliff or take a terrifying slide to the pit at the bottom. Grim as these scenarios might seem, there is something confected about the mise-en-scène, like an un-fun Playland. After all, there is no fiscal cliff, or at least there was none -- until the two parties built it.

And yet the pit exists. It goes by the name of “austerity.” However, it didn’t just appear in time for the last election season or the lame-duck session of Congress to follow. It was dug more than a generation ago, and has been getting wider and deeper ever since. Millions of people have long made it their home. “Debtpocalypse” is merely the latest installment in a tragic, forty-year-old story of the dispossession of American working people.

Think of it as the archeology of decline, or a tale of two worlds. As a long generation of austerity politics hollowed out the heartland, the quants and traders and financial wizards of Wall Street gobbled up ever more of the nation's resources. It was another Great Migration -- instead of people, though, trillions of dollars were being sucked out of industrial America and turned into “financial instruments” and new, exotic forms of wealth. If blue-collar Americans were the particular victims here, then high finance is what consumed them. Now, it promises to consume the rest of us.

Scenes from the Museum

In the mid-1970s, Hugh Carey, then governor of New York, was already noting the hollowing out of his part of America. New York City, after all, was threatening to go bankrupt. Plenty of other cities and states across what was then known as the “Frost Belt” were in similar shape. Yankeedom, in Carey’s words, was turning into “a great national museum” where tourists could visit “the great railroad stations where the trains used to run.”

As it happened, the tourists weren’t interested. Abandoned railroad stations might be fetching in an eerie sort of way, but the rest of the museum was filled with artifacts of recent ruination that were too depressing to be entertaining. True, a century earlier, during the first Gilded Age, the upper crust used to amuse itself by taking guided tours of the urban demi-monde, thrilling to sites of exotic depravity or ethnic strangeness. They traipsed around “rag-pickers alley” on New York’s Lower East Side or the opium dens of Chinatown, or ghoulishly watched poor children salivate over toys in store window displays they could never hope to touch.

Times have changed. The preference now is to entirely remove the unsightly. Nonetheless, the national museum of industrial homicide has, city by city, decade by decade, grown more grotesque.

Camden, New Jersey, for example, had long been a robust, diversified small industrial city. By the early 1970s, however, its reform mayor Angelo Errichetti was describing it this way: “It looked like the Vietcong had bombed us to get even. The pride of Camden... was now a rat-infested skeleton of yesterday, a visible obscenity of urban decay. The years of neglect, slumlord exploitation, tenant abuse, government bungling, indecisive and short-sighted policy had transformed the city’s housing, business, and industrial stock into a ravaged, rat-infested cancer on a sick, old industrial city.”

That was forty years ago and yet, today, news stories are still being written about Camden’s never-ending decline into some bottomless abyss. Consider that a measure of how long it takes to shut down a way of life.

Once upon a time, Youngstown, Ohio, was a typical smokestack city, part of the steel belt running through Pennsylvania and Ohio. As with Camden, things there started turning south in the 1970s. From 1977 to 1987, the city lost 50,000 jobs in steel and related industries. By the late 1980s, the years of Ronald Reagan’s presidency when it was “morning again in America,” it was midnight in Youngstown: foreclosures, an epidemic of business bankruptcies, and everywhere collapsing community institutions including churches, unions, families, and the municipal government itself.

Burglaries, robberies, and assaults doubled after the steel plants closed. In two years, child abuse rose by 21 percent, suicides by 70 percent. One-eighth of Mahoning County went on welfare. Streets were filled with dead storefronts and the detritus of abandoned homes: scrap metal and wood shingles, shattered glass, stripped-away home siding, canning jars, and rusted swing sets. Each week, 1,500 people visited the Salvation Army’s soup line.

The Wall Street Journal called Youngstown “a necropolis,” noting miles of “silent, empty steel mills” and a pervasive sense of fear and loss. Bruce Springsteen would soon memorialize that loss in “The Ghost of Tom Joad.”

If you were unfortunate enough to live in the small industrial city of Mansfield, Ohio, for the last forty years, you would have witnessed in microcosm the dystopia of destruction unfolding in similar places everywhere. For a century, workshops there had made a kaleidoscope of goods: stoves, tires, steel, machinery, refrigerators, and cars. Then Mansfield’s rust belt started narrowing as one plant after another went shut down: Dominion Electric in 1971, Mansfield Tire and Rubber in 1978, Hoover Plastics in 1980, National Seating in 1985, Tappan Stoves in 1986, a Westinghouse plant and Ohio Brass in 1990, Wickes Lumber in 1997, Crane Plumbing in 2003, Neer Manufacturing in 2007, and Smurfit-Stone Container in 2009. In 2010, General Motors closed its largest, most modern U.S. stamping factory, and thanks to the Great Recession, Con-way Freight, Value City, and Card Camera also shut down.

“Good times” or bad, it didn’t matter. Mansfield shrank relentlessly, becoming the urban equivalent of skin and bones. Its poverty rate is now at 28 percent, its median income $11,000 below the national average of $41,994. What manufacturing remains is non-union and $10 an hour is considered a good wage.

Midway through this industrial auto-da-fé, a journalist watching the Campbell Works of Youngstown Sheet and Tube go dark, mused that “the dead steel mills stand as pathetic mausoleums to the decline of American industrial might that was once the envy of the world.” This dismal record is particularly impressive because it encompasses the “boom times” presided over by Presidents Reagan and Clinton. more

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