China and Germany are clear winners in the Great Recession: In China suppressed wages are increasing for millions of industrial workers and the country’s stimulus -- effectively the world's largest -- has funded bullet trains, airports and wind turbines. Thanks to its favorable trade balance (exports remain high), Germany's finances are the strongest in Europe, which is why German monetary guarantees have been key to the future of both Greece and the euro.
These two countries do not have much in common; Germany has a mature economy and is a stultifyingly stable democracy. China has a rising economy and remains disturbingly authoritarian. What sets them apart from the world's other major powers, purely and simply, is manufacturing. Their predominantly industrial economies meet their own needs and those of other nations, and have made them flourish while others flounder. In 1960 the same could be said of the United States when manufacturing accounted for a quarter of our gross domestic product and employed 26 percent of the labor force. Today, manufacturing has shriveled to 11 percent of GDP and employs a kindred percentage of the workforce.
Until 2001, the United States exported more advanced technology than it imported, but since then the United States has been running annual high-tech deficits that reached $61 billion in 2008. Worse yet, as we lose manufacturing, which employed 63 percent of our scientists and engineers in 2007, we lose many of our most valuable professionals. Last year, reported Business Week, the number of employed scientists and engineers fell 6.3 percent while overall employment fell 4.1 percent.
Many Americans believe we're losing manufacturing because we can't compete against cheap Chinese labor. But Germany has remained a manufacturing giant notwithstanding the rise of East Asia, making high-end products with a workforce that is more unionized and better paid than ours. German exports came to $1.1 trillion in 2009 -- roughly $125 billion more than we exported, though there are just 82 million Germans to our 310 million Americans. Germany's yearly trade balance went from a deficit of $6 billion in 1998 to a surplus of $267 billion in 2008 -- the same year the United States ran a trade deficit of $569 billion. Over those same 10 years, Germany's annual growth rate per capita exceeded ours.
Read the entire article, "In recession battle, Germany and China are winners", by Harold Meyerson at The Washington Post online (July 1, 2010)
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/30/AR2010063004199.html
This article, along with many other articles, suggest an increase in manufacturing would add much needed diversity and balance to the US and its regional economies. What is not needed is manufacturing for manufacturing sake. Yes, China and Germany have manufacturing as a common element in their economic resilience, yet there are distinct differences in what the two countries produce and how much it costs to generate those products. China tends to mass produce items of moderate quality at lower labor costs, while Germany produces items of higher quality at higher labor costs. What are the implications for Northeast Florida? The region needs to move quickly in adding industries that produce things others want or need. The items need to be of a type or quality level that has appeal even if the items cost more. In other words, the region needs to be strategic in the types of industries promotes or facilitates.
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