LIVING FOR CHANGE
Why Return To Local Economies?
By Grace Lee Boggs
Michigan Citizen, Feb 21, 2010
“Income is simply compensation for work. If you wash my car for $10 and I mow your lawn for $10, we have a GDP of $20 and it looks like we both have income and economic activity. But no Wealth has been created, just Income.
“On the other hand, if I build your car, I’m creating something of value. And if you turn my lawn into a small farm that produces food, you’re creating something of value. We have created Wealth.
“A stick has no commercial value, but if you add labor to it by carving it into an axe handle, you have created Wealth. Similarly, metals in the ground have no commercial value, but when you add labor to them by extracting, refining, and forming them into products, you create Wealth. Even turning seeds and dirt and cows into hamburgers creates Wealth.
“This is the ‘Wealth of Nations’ that titled Adam Smith’s famous 1776 book.
“On the other hand, when a trader at Goldman Sachs makes a profit trading stocks or currencies, no Wealth is created. In fact, when that trader takes millions in commissions, pay, and bonuses, he’s actually depleting the Wealth of the nation (particularly to the extent that he moves his money offshore to save or invest).
“In the late 1940s and early 1950s manufacturing accounted for a high of 28 percent of our total gross domestic product (and much of the rest of the economy like agriculture that, in a classical sense is ‘manufacturing’ wasn’t even included in those numbers); when Reagan came into office it was at a strong 20 percent. Today it’s about ten percent of our GDP.
“This means we’re creating less Wealth here, because we’re not making much anymore. (And the biggest growth in American manufacturing has been in the military, where goods made are destroyed when they explode over foreign cities, causing even more of our Wealth to vanish.)
“The globalism of the past 30 years has shipped manufacturing (the creation of Wealth) from developed nations to developing nations. Transnational corporations love this, because in countries with lower labor costs and few environmental and safety regulations, it’s more profitable to manufacture products. They then sell those products in the ‘mature’ countries, and people burn through the Wealth they’d accumulated in the earlier manufacturing days (home equity, principally, along with savings and lines of credit) to buy these foreign-manufactured goods.
“At first, it looks like a good deal to consumers in developed nations. Goods are cheaper! But as the creation of real Wealth is reduced and the residue of the old Wealth is spent, the developed nations become progressively poorer. At the same time, the ‘developing’ nations become Wealthier — because those are the places that are producing real Wealth.
“So long as globalism continues apace, the transnational corporations and their CEOs will continue to become fabulously Wealthy; they also acquire the political power that comes with control of economies.
“So they tell us that instead of putting back into place tariffs, domestic content laws, and other ‘protectionist’ policies that built America…until they were dismantled by Reagan/Bush/Clinton/Bush, we should instead simply ‘accept the reality’ that we’re ’living beyond our means’ and we have to ‘cut back our wages and social programs.’
“In other words, they get richer, our nations become poorer, and national sovereignty is reduced.
“Nations — and in large countries like the USA, even states — must again rebuild their manufacturing base and become locally self-sufficient, so their own consumers are buying products manufactured by their own workers.
“But won’t that make Wal-Mart’s stuff more expensive?
“Yes. But most Americans would gladly pay 10 percent more for the goods in their stores if their paychecks were 20 percent higher. And manufacturing paychecks have always been higher, because manufacturing is where ‘True Wealth’ is generated (thus the basis for most union movements).
“The transnational corporations benefiting from globalization also own our media. So the word globalization is rarely heard in reports on economic crises.
“But globalization is the villain here, and one that needs to be brought under control quickly if we don’t want to see virtually the nations of the world end up subservient to corporate control.”