There is a very basic rule governing economic activity which is that all other things being equal, the activity will be done as efficiently as possible.
Its just common sense that the ones who can produce things cheaper will do better than their competitors. Now, when what is now referred to as the rust belt became prosperous it had many economic advantages, cheap immigrant labor, cheap transportation, abundant resources to utilize for production and easy access to a growing market as America expanded. So we saw the rise of American manufacturing which surpassed what was being done in Europe to enable a period of American dominance.
As the labor component got more expensive and some trade barriers were removed we saw the economic activity relocate to more efficient areas, both inside and outside the country. This is exacerbated by the fact that in addition automation further reduced the number of jobs needed so those two factors resulted in significantly reduced opportunities in this area.
This is all part of a natural cycle which repeats throughout history. Reversing it or even slowing it requires an inefficient use of resources that hurts many more economically than the few it helps. For many years we saw labor rules on railroads keep that industry from competing for passenger traffic in this country.
What has to happen is that the economic climate becomes favorable to a new or old industry that will capitalize on the new conditions in the area. This of course can be any number of things, innovation is not something that can be easily predicted, and it may be that the standard of living in those areas has to be rebuilt from a lower base.
However, fighting the natural selection process of economics is not a good economic strategy.
Preparing for the future is.
No comments:
Post a Comment