I was at dinner with my father and a number of other folks his age recently when the topic of first cars came up[1. For those of you who are wondering, my father’s first car was a Nash Rambler.]. One thing that struck me in the conversation was the array of brands that came up. There used to be a lot of companies making cars in the United States. Over time, they faded out, one by one. Some just went out of business, others were consolidated, and a very small number of auto manufacturers rose to supremacy.
According to economic theorists, this is actually pretty normal. Nascent industries tend to have large numbers of companies that narrow over time. As the industry reaches the mid-stages of its life, only a few companies survive. New companies can’t enter the market because the barriers to participation are so high and older companies merge and are bought up as they fail to keep pace with the industry leaders. Eventually, the industry will go into its sunset years and the big companies themselves will fail as a new industry rises to replace it.
You can see the same process in other industries, a response to shifting modes of doing business and new inventions to solve common and sometimes very old problems. Once there was a market for high quality typewriters. Then there was one for computers, and companies involved in manufacturing and repairing typewriters had to reinvent themselves or go dark because no one needed their services anymore. And so forth. Change is eternal. Etc.
Natural or not, I’m not the only one who has noticed that the United States has gone from being a manufacturing powerhouse to being the seat of the financial industry. We went from making things to pushing money around and somehow making money off of that. And then we had a financial crisis. And there seems to be a bit of a disconnect when it comes to exploring the origins of that crisis and the things that might have fed into it; people seem reluctant to talk about the fact that it was preceded by a huge gap between rich and poor, the largest ever in the US history, and that much of that gap was driven by the financial industry. That the process of becoming ‘too big to fail’ was actually what ruined us.
Jobs used to be available in this country for people who could make things or participate in selling those things or servicing those things. Those jobs are dwindling. Not because they’re being ‘taken’ or ‘outsourced,’ much though people like to claim. Because those jobs have been slowly eliminated, because the United States doesn’t make things anymore, not really. Engineering expertise when it comes to designing things that are functional is shrinking away because there’s no call for it. Most companies making goods in the United States are producing high-end products with a very specific purpose; their own workers might not be able to afford them.
As we know, I have a deep loathing for the financial industry and all it stands for. I find financial speculation boggling and deeply offensive. But it speaks to something deeper in this culture, that we went from being a country that makes things, that was known for engineering skill, that produced products people wanted to buy and hold in their hands, to a country that is dominated by fantasies. Futures contracts. Currency speculation. A bevy of derivative products that change hands so quickly that the hard copy records of ownership get lost.
People say that the financial industry ‘makes things’ in the sense of financial products, but these things are not tangible. We do not hold them in their hands, we do not drive them, we do not use them to clean our houses. And these products benefit only a very small percentage of people in the population. Financial speculators make up a relatively low percentage of the population, while the financial industry makes up a huge chunk of our economy. It comes as no surprise that income distribution has become so skewed when you have five percent of the population working in the financial industry, and the financial industry itself making up around 25% of the economy[2. Exact estimates vary, especially when you add the notoriously secretive insurance industry]. Class inequality was pretty much inevitable in those circumstances, as was inability to find work for a lot of people.
We used to make things in this country. Sometimes I wonder if we will ever get back to that, or if we have gone too far the other way. The golden age of manufacturing, with all its attendant problems; high risk working conditions, long hours, pollution, seems unlikely to return. The unions, built in an era when we made things and the people who made them were ready to fight for their rights, are weaker than they’ve ever been and there’s even a tide of anti-union sentiment in this country. Ideals built on the wages of manufacturing labour, like being able to buy a house in a reasonable neighbourhood, cannot keep pace with the inflation created by the financial industry, where houses have gone from being places to live to chess pieces to be moved on a board at will to satisfy the needs of financiers.
The only products we seem to export these days are risky financial investments, bombs, and American Exceptionalism.