Forty-year mortgages; even fifty-year mortgages? Just as we moved from one income-earner per family to two-income earners, now we have shifted once again: we may be moving from the home being the retirement nest egg to the home no longer being the retirement nest egg.
In fact, there will be no nest egg at all.
As we have clutched the American dream ever tighter, we seem to be drifting further and further from it.
And what is the root cause? Jobs, jobs, jobs. Trade, trade, trade. Once a good factory job brought a good income, a home, and prospects for a decent retirement.
What we are watching is the rapid crumbling of the credit edifice, that edifice we built as we ignored the rising trade deficit, as we watched the manufacturing sector move offshore to cheap labor in third world countries, as we substituted debt for production, financial wizardry for honest labor.
We were told to welcome the cheaper goods as we bought some of them with credit cards.
I have had a number of battles with those that thought the loss of manufacturing was due primarily to technology.
I would like to take up that cudgel once more, for the last time, asking a very simple question: Should not superior U.S. technology have led to a trade surplus?
After all, as long as a country can efficiently produce, it makes no difference how many workers it takes. Our trade surplus should have soared.
As long ago as 2003, the New York Times ran a piece that said:
More than half of the manufactured goods that Americans buy are made abroad, up from 31 percent in 1987. If we continue on our path of ceasing to make merchandise that others want to buy from us, the danger is that these imports will be unaffordable for our descendants.
The proportion of the work force employed in manufacturing has fallen to 11 percent from 30 percent in the mid-1960’s. Two of the 19 percentage points disappeared in just the last 28 months. On another level, manufacturing’s share of real gross domestic product — representing all the goods and services produced in the United States — has edged down, even including in the count the output of foreign manufacturers operating here. The share of real G.D.P. has dropped to between 16 and 17 percent, from 18 to 19 percent in the 1950’s.
The above remarks were made in 2003. Many of us said then that the party would end when the consumer had spent his last dollar, figuratively speaking.
Well, the party is over.
Obama is correct when he says that the upward climb will be long and hard. He apparently wants to create “green collar jobs,” a wise choice. It is the next revolution.
I just hope that, unlike what we did with Apple and Intel, we do not allow these new companies to seek cheaper employment elsewhere. We better begin to look at our trade policies, otherwise we will return to the same sinking boat.