Industrial Towns Make Products that Bring Wealth into a Community

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Miserable cities…ghost towns…angry voters…

Market flash:

The Dow was flat yesterday. Gold rose $2. And Greece said it was making progress towards cutting its deficit.

Yesterday we looked at America’s most miserable cities. Today, let’s take a gander at its new “ghost towns.”

There are many towns and cities that are losing population…losing key industries…and probably on the verge of extinction. USA Today mentioned some of them in a cover story this Tuesday.

Ravenswood, W. Va., for example. It has 4,000 people and one major business. It’s a one-horse town, in other words, and the nag is leaving. The aluminum works are partly shuttered already, says USA Today; the rest is for sale.

What’s going to happen to Ravenswood? It could become a ghost town.

There are already dozens of towns in West Virginia that are inhabited mostly by ghosts. They’re relics of the booms and busts of the past. Mining, logging, railroads – each one created it own towns. Then, the profitable industries of the 19th and 20th century became unprofitable somewhere along the line. People left. Those who remain live among the shades.

The booms and busts of our time are simply claiming more victims. Cleveland is losing population. So is Baltimore. So are dozens of US cities.

“In the America where things are made the recession has a depression,” continues the report. “According to a new Northeastern University study, one in every six blue-collar industrial jobs have disappeared since 2007.”

And one in five adult males of prime working age is out of work. There are fewer and fewer factory towns in the US…and fewer and fewer jobs for people who work in them. And now comes word that auto sales in February fell nearly 4%. And early estimates suggest that the job report coming tomorrow will be depressing.

“Industrial workers are dinosaurs,” says one laid-off worker, now retraining to be a traveling nurse.

Hmmm… Let’s see. How does this work? No one makes anything anymore. We all become service industry workers…looking out for one another. I give you $5 for cutting my lawn. You give me $5 for cutting your hair. Neither of us has a penny more. How then do we afford to buy anything?

“An industrial town makes products that bring wealth into a community; a post-industrial ghost town as a zero-sum economy – people in marginal jobs ‘serving and paying each other,'” says USA Today.

Services don’t make people wealthier. They may make them more comfortable. But real prosperity requires real stuff – food, cars, tables, light bulbs, iPads.

Of course, you could offer services to people who make these things. A small nation, such as Singapore, for example, could earn a living by offering financial services. A Caribbean island could offer vacations. But what can a great nation like the US offer? It can’t get by on services. And it can’t support half its population on welfare, unemployment and food stamps. It needs manufacturing…it needs to make things…and sell them.

Why doesn’t it do that already? How come so many people are out of work? How come men can find jobs?

Ooh la la…too many questions. But when was the last time you heard a mother proudly announce that her son was going into manufacturing? Or that he was learning to be a machinist? When was the last time you saw a major factory under construction? When was the last time you picked up something in a shop, turned it over and found “Made in America” stamped on the underside?

Bill Bonner
for The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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Comments

  1. “Made in America” is becoming extinct faster than even the Tiger.

    dinakarananda
    March 5, 2010
    Reply
  2. Maybe America does not need “manufacturing”? Maybe it needs “better manufacturing”? More efficient, cheaper, smaller manufacturing of better, smarter, more aesthetic stuff, made by fewer people? And the rest can cut lawns and hair for each other?

    Reply
  3. “Made in America is becoming extinct faster than even the Tiger.”

    Only to eventually make way for “Made in the Americas”

    Reply
  4. People are attracted to the best use of their time. If they classify this as wealth generation, then why would you do the same job that a lot of other people can do (thus unbalancing it away from your favor in the supply/demand market).

    Do something no-one else can do, or do something better than anyone else can do. Otherwise you leave yourself in a job which will never pay you well for your time.

    Interesting, in Australia many tradies now earn better money than white collar workers. Fewer people aspire to these jobs, but now there’s not enough of them. This situation will be fixed by an influx of workers from other countries sooner or later, but for now you can make more money pouring concrete than you can designing computer systems.

    Unpopular Truth
    March 9, 2010
    Reply
  5. Agree with most of what you’ve said here, UT.

    We enjoy learning the trades, particularly the outdoor stuff… partially because it’s outdoors. It has also saved us a packet. Maintains fitness, too. Last time we dug up septic wells it cost a fortune to bring an earthmover out here. This time I did it with a shovel.

    “…for now you can make more money pouring concrete than you can designing computer systems…”

    Yes and No. It costs us around $8K to have top quality exposed aggregate driveways, alfresco and pathways poured for each new house. Usually a job like that takes two or three blokes four days… and they’re paying a fair bit for the materials: concrete, mesh, seats, chemicals, etc, etc.

    At the top end of the programming field, there’s a lot more money in IT;
    particularly if you’re really good… . Have to shake my head in disbelief at what each short-term contract is worth…!! :)

    Biker Pete
    March 9, 2010
    Reply
  6. Sorry, but as a white-collar health worker, yeah, tradies get far more than what we do. Until we’re at the top of the game. That’s years and years down the track. To think, I could’ve landed a job at a mine. Grrrrrrrrrrr.

    Reply

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