Closing factories is nothing to be proud of

closed factory

Business gurus say that the US and Europe should let their factories go and embrace the high-tech economy. But that's a losing strategy today and a dangerous path for an economy after peak oil. Photo: sludgegulper via Flickr.

Seth Godin is the one business guru I follow. Since I run several websites, I find his insights on working as a wired freelancer in the Internet economy useful. And unlike most of his peers, Godin doesn’t just talk about how to make money and get more customers. He also shows an environmental conscience.

For example, he’s a firm believer in climate science and has chided deniers for their dishonesty. And when Fukushima hit, Godin put out an arrestingly simple infographic showing how coal is deadlier than nuclear power — not to minimize the accident but to remind us, in the middle of a dramatic crisis, that coal is a slow, silent killer on a genocidal scale.

So when he writes, I read, especially when he covers politics and the economy. And this week he came out with a post on unemployment filled with sharp insights about today’s wired economy but also with a common and dangerous assumption that manufacturing is passé that I want to pick a bone with.

A recession for factories but a boom for laptops

In “The forever recession (and the coming revolution),” Godin starts with refreshingly honest bad news: “I fear that this recession is here forever.”

He even fingers the real culprit — that big companies have been shipping factories and jobs off to China for years. “There’s a race to the bottom, one where communities fight to suspend labor and environmental rules in order to become the world’s cheapest supplier. The problem with the race to the bottom is that you might win…”

Of course, this has been good news for factory owners but bad news for workers. So what does Godin say workers can do?

To start with, an unemployed person should forget about getting another full time factory or office job, since jobs are becoming a thing of the past. Instead, she should get a laptop and start her own micro-business.

Freelancing can liberate you from drudgery on the factory floor or in a cubicle, writes Godin, but he also sees that striking out on your own is scary.

When everyone has a laptop and connection to the world, then everyone owns a factory. Instead of coming together physically, we have the ability to come together virtually, to earn attention, to connect labor and resources, to deliver value.

Stressful? Of course it is. No one is trained in how to do this, in how to initiate, to visualize, to solve interesting problems and then deliver. Some see the new work as a hodgepodge of little projects, a pale imitation of a “real” job. Others realize that this is a platform for a kind of art, a far more level playing field in which owning a factory isn’t a birthright for a tiny minority but something that hundreds of millions of people have the chance to do.

I’m your perfect model, but…

For me, as a wired freelancer jugging multiple part-time, contract gigs at the same time, this resonates. And even as I work to prepare for a post-peak world where old timey skills may be more useful than knowing how to poke a keyboard, to make a living today I try, every day and in my own way, to become the highly-sought, trusted consultant that Godin celebrates in his book Linchpin: Are You Irreplaceable?

Let’s just say it’s a lot of work and, once in a while, a lot of fun. The stress of having to manage clients and constantly hustle for new ones is real. Yet, so are the pleasures of being my own boss and doing work I care about.

So why am I not as quick as Godin to embrace the brave new world beyond jobs and beyond industry?

The information economy seems to have a few major drawbacks:

  • Joe the Plumber won’t become Joe the CSS Coder. So far, I’m at least keeping my head above water as a web-based freelancer because I learned online publishing skills at a former job. But many others, who have worked full-time jobs for two or three decades, particularly in factories, don’t have the skills, patience or energy to adapt to the Internet economy, with its relentless pace and constant need to teach yourself new tricks.
  • Free WiFi forever? Maybe not. With peak oil here and energy costs set to start a bumpy but relentless rise, the Internet economy may start to falter. When rising transport costs start to reverse globalization, as economist Jeff Rubin has explained, there will be no more cheap laptops, iPads and iPhones coming to us from Asia. And even the Internet itself could be threatened if the cost of servers, routers and other equipment (not to mention electricity) gets too expensive to keep the net always on.
  • If we use stuff, we need to make stuff too. Both business gurus and environmentalists urge developed nations to “de-materialize” their economies, to switch from building cars to crunching data. But unless you stop driving cars, wearing clothes and eating food, then de-materializing can be just another word for outsourcing the making of your stuff to somebody else. Of course, that costs jobs. But it also leaves a country in a dependent, vulnerable position, in a de-globalizing economy after peak oil.

Distance will cost money again

“It was the inefficiency caused by geography that permitted local workers to earn a better wage, and it was the inefficiency of imperfect communication that allowed companies to charge higher prices,” writes Godin, explaining why the good ol’ days where countries made their own stuff inevitably had to come to an end.

In today’s world of cheap transportation, it’s easy to forget that through most of human history, geography wasn’t “inefficiency.” It was destiny.

Today, the arrival of peak oil makes what continent you live on important again. People in developed countries will be left with a much smaller world where they’ll have to make most of what they need at home.

Once the price of oil rises sufficiently high — and don’t let today’s low crude prices fool you, with peak oil here and demand from China and India continuing to rise, oil could reach $150 or $200 at some point soon — then it won’t be affordable for businesses to make underpants, frying pans and laptops in Shenzen and ship them back to San Francisco, Sheffield or Cherbourg for sale. At that point, if we don’t have enough factories to make our own stuff in our own countries, then consumers will just have to do without.

As to “de-materializing” the economies of the US and the EU, slipping an iPhone into every pocket hasn’t stopped us from putting ever more cars on the road and buying ever more refrigerators to put in our ever-bigger houses. It took the recession to do that. But still, our economies are more material than ever. If anything, creating more information just allows us to buy more more stuff more easily.

So, we should not applaud the closing of factories in Michigan or Manchester as part of some grand evolutionary plan taking us to a higher economy beyond mass and volume. Instead, we should mourn the loss of our industrial base.

Godin says it was inevitable that our factories began closing. Whether we like it or not, “gears are going to be shifted regardless….Job creation is a false idol.”

But I’m not so sure. To me, such resignation sounds like what Wendell Berry has called “the territory of despair, where it is assumed that what is objectionable is ‘inevitable’ and so again the essential work is neglected. How can we have something better if we do not imagine it?”

History shows that our un-development was caused by governments, in thrall to neoclassical economists, dropping trade barriers and allowing domestic manufacturing to move abroad.

Protectionism — not the Anti-Christ

Is more “free trade” the solution, as most politicians still seem to think?

Hardly. That’s what got us into this mess in the first place. Sending more real jobs overseas and trying to replace them with half- or quarter-time wired freelancing gigs is a recipe for disappointment and penury.

Instead, Europe and North America should be trying to rebuild our manufacturing base. Re-opening factories here would create good jobs right now that would put unemployed people back to work. And when peak oil really hits, we’ll desperately need those factories on our own soil to make things we can no longer afford to import.

Doing this would take a reversal of a half century of disastrous trade policy. Is it heresy to suggest repealing NAFTA, the WTO and all the other unfair free trade agreements that have created today’s race to the bottom?

It could happen. Last year, there was an effort in the US Congress to repeal NAFTA. Significant opposition has already arisen to President Obama’s push for an Asian version of NAFTA, the Trans Pacific Partnership. And in Europe, unions have led a successful effort to slow a free trade agreement with Colombia.

Ian Fletcher, author of Free Trade Doesn’t Work: What Should Replace It and Why, argues convincingly that even in today’s globalized economy, an extreme neoliberal approach to trade is disastrous, noting that it’s caused the United States to lose industries from compact fluorescent lighting to TVs and handheld devices like mobile phones to lithium polymer and NiMH batteries.

Can a developed nation hang onto key industries in the face of cheap-labor foreign competition? Sure. Neither Japan nor Germany, nor their imitators from Taiwan to Switzerland, have suffered our chronic de-industrialization. Our unemployment rate right now is 9.2 percent; Germany’s is 6.1 and Japan’s is 4.7. General Motors went bankrupt, not Toyota or Mercedes.

Even in today’s economy ruled by globalization, protecting domestic industry can preserve jobs. Just think how much more important it will be to have factories making stuff and jobs at home after peak oil strands most container ships in their ports.

Made in the USA. Made in Canada. Made in the UK. These are the labels of a resilient future.

– Erik Curren, Transition Voice

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Comments

  1. Auntiegrav says

    I picked up some books at an auction recently, and among them was a pamphlet called “The Search for Economic Security”. Published in 1967 by the ‘educational division’ of ‘The Institute of Life Insurance’, it is a relatively unbiased account of how Americans have progressed from getting their security via a gun over the fireplace to modern systems of government and private insurance.
    The personal accounts of laborers and towns over the years of boom and bust cycles illustrate how we have evolved along with the economics of the nation and world.

    Everything being talked about and bandied back and forth in public and on the internet blogs is covered quite well in this 60 page pamphlet.

    Apparently, when we went off the gold standard in the ’70s and money was no longer anything real, people lost their sense of being responsible for what they did with it.

    • says

      The pamphlet sounds interesting. Is it available anywhere online? And I agree about reliable money increasingly degenerating into funny money. That gives some of us anxiety — is our savings safe? will there even be an economy for our kids to rely on in the future? — while giving others of us the permission to loot and pillage the whole thing, since it’s all just a big abstraction anyway.

      • Auntiegrav says

        I haven’t been able to find it online yet. No lccc number to go by, no copyright date. Just the collaborators who wrote it and a lot of reference material listed in the back.
        When I find out more, I will post a note to you.

    • says

      That’s what Jeff Rubin says, too…that since “distance costs money” those jobs will come back somewhat due to cost issues. Kudos to the businesses taking the lead and positioning themselves now. And thanks for the blog tip. I write a women’s peak oil blog too. I hope you’ll check it out: http://lindsayslist.org/

      Best,

      Lindsay

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