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Tuesday, October 9, 2012

The Economist Carries A Story On North Carolina This Week, And One Paragraph Makes Two Extremely Important Points Beautifully.

Here is the paragraph.

"In 1977 those three industries—tobacco, textiles and furniture—produced around 22% of the state’s GDP; in 2005 their share was just 7%. Higher-tech manufacturing sectors such as computer-hardware manufacturing and biotech have emerged in the past couple of decades, but these industries tend to need more skilled workers—and fewer of them—than the traditional manufacturing sectors they are replacing. And indeed the state’s unemployment rate remains stubbornly high: in August 2012 it was 9.7%, well above the national average of 8.1%."

First Point:  Three low tech industries were replaced by high tech manufacturing.  This is a perfect example of "Creative Destruction", low technology jobs are replaced by higher technology as resources are shifted to higher value work.  Those low tech jobs went to other countries where exactly the same products could be made at a much lower cost.  So for politicians to stand around whining about out sourcing jobs makes exactly as much sense as King Knute commanding the tide to stop coming in and going out.

Also, notice that the whining politicians never mention that the television set on your wall would cost thousands of dollar more if it were made here.

Second Point:  The key to mastering Creative Destruction is EDUCATION!!  And what have we been cutting funding for as fast as politicians can talk?

So if you want a mental picture of Washington these days, do this:  Picture a middle aged white guy in a suit with his pants rolled up over his knees, standing in the tide line of some American ocean, shouting at the tide to roll back, and all the while eating his only seed corn. 

There are times when I truly am frightened about the future for our children.  Neither Obama or Romney seem to have the faintest idea how our economy really works!! 

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