United States Of Common Sense

running Out of MOney

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Pouring water through a sieve

Did you ever try to fill up a sieve with water?

Probably not. You probably understood without the necessity to experiment that such an attempt would be an exercise in futility. You can't fill up a sieve. The water drains out as quickly as it is poured in.

Assuming you do, in fact, understand that basic principle, then you apparently understand more about economics than do most of our politicians and so-called experts. They continue to focus on stimulating the growth of our economy through massive government spending, despite the fact that the money being injected into the economy is "running out" of it and into the economies of other nations almost as fast as it is "poured" in. We may be creating jobs, but those jobs are in China and other overseas locations, not here in the United States.

Since the passage of the 2009 stimulus bill, the government has handed out $2.1 billion in grants to solar, wind and geothermal companies. Seventy-nine percent of that money has gone to foreign firms.

That's correct. Seventy-nine percent of the money our government has doled out to renewable energy firms as part of the stimulus plan has been given to companies that are not even based in the United States. This is the same stimulus plan, which we are told everyday was designed to put people back to work and lower unemployment here in the United States.

The largest single grant under this renewable energy program was given to an Australian firm that built a wind farm in Texas. All of the wind turbines used in that project were manufactured in Japan by Mitsubishi. To date, of the 1800 plus wind turbines that have actually been erected in wind farms receiving federal stimulus money, roughly 1200 have been built abroad.

The Meadows Lake Wind Farm in Indiana is a classic example of how our money is creating jobs abroad, not here in the United States. All of the major components used in construction of that facility have come from abroad, in this case from Denmark and from Vietnam. The federal government handed $113 million dollars in stimulus money to the company that owns Meadows Lake, Horizon-EDPR. It's based in Portugal.

In fact, not only is this "stimulus" money not creating jobs in the United States, we are actually continuing to lose jobs in the renewable energy sector at the same time these massive sums are being distributed.

Recently, the Danish company, Vestas, issued an announcement that it would be halting production at its wind turbine plant in Colorado. It also advised that it would be slowing production at two other facilities in the United States.

Gamesha, a Spanish manufacturer of wind turbines, also recently disclosed that it would be laying off half of the remaining workers at its factory in Pennsylvania. Both GE Solar and Evergreen Solar have closed their operations in the United States and are relocating to China.

In Frederick, Maryland BP Solar, a fixture there for many years, announced about a week ago that it would be shutting down its manufacturing facility and moving to China. "We remain absolutely committed to solar," said BP's chief executive, but "we are moving to where we can manufacture cheaply." At least 320 people in the Frederick area will lose their jobs as a result of this move alone.

People say we do not have an industrial policy. That is not entirely true. Since World War Two we have followed a policy, which has promoted domestic consumption at the expense of exports and industrial growth. Since the 1990′s we have added to this policy a focus on the growth of the service industry and "white collar" jobs at the expense of manufacturing and production.

Meanwhile our foreign competitors, particularly the Chinese, have pushed aggressive policies aimed at increasing exports and protecting their domestic industries from competition. We hear a lot of talk these days about Chinese currency manipulation, which keeps their products cheaper than they would otherwise be. The truth is that the Chinese employ a whole variety of techniques to stack the economic deck to their advantage. They subsidize key industries; they steal the intellectual property of American firms; they suppress the labor rights of their workers, and they condone environmental destruction on an almost unprecedented scale. No matter how efficient, there is no way that an American firm, functioning in accordance with our workplace, environmental and health regulations is going to be able to compete against these advantages.

In short, we have created an environment in which manufacturing is discouraged in this country and in which every incentive favors the movement of production facilities abroad. Until we change this situation and put in place an industrial policy designed to promote a renaissance in American manufacturing, we are going to continue to lose jobs and watch companies move abroad.

We can keep pouring if we want. In the end, the economy is still a sieve.

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Updated Jan 2, 2019 12:29 PM EST | More details


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