U.S. factories out-produce Chinese manufacturers by more than 40%

Surprising statistic. My impression gathered from the media is that manufacturing is long gone. But America is still number one.

Yet America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations.

The story of American factories essentially boils down to this: They’ve managed to make more goods with fewer workers.

The United States has lost nearly 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. U.S. manufacturers have placed near the top of world rankings in productivity gains over the past three decades.

That higher productivity has meant a leaner manufacturing force that’s capitalized on efficiency.

China is using its political power to enhance its manufacturing, offering tax free zones, only allowing companies to enter their markets if they build in China, and bending or breaking the rules whenever possible. And yet, the United States still wins the contest.

The United States will be the number one economy in the world for the next fifty years. That is my belief.

I find America’s largest competitors to be a pretty sorry lot.

China is a totalitarian state. In terms of quick economic growth, they have great advantages over more democratic societies. They can do what the Chinese are doing. Let me make a brief list for you – subsidize any critical industry to make sure foreigners cannot make inroads in that area; require foreigners to “partnership” with locals for admittance to the economy; use the resources of the state, particularly the intelligence sources and the military to enhance competitive advantage; act ruthlessly against parts of the nation or its population or its minority groups while favoring others; and manipulate economic statistics to paint a rosy, optimistic picture of progress. They might even say something like, “We will bury you.” Perhaps not.

China is a Communist state. It seems at times, that this part of the equation simply doesn’t figure in economic and political discussions. What about the words, Communist State, do American and multinational corporations not get? There were 12 Communist nations in 1989. Now there are five. Does history favor the Communist system?

Will China be the world’s greatest economic power? No. Their economic statistics may one day say so, but reality will still be reality.

If we believe in the idea that capitalism is the most efficient and productive form of economy, how does China even figure in that? Look at the rules and regulations for business in China. Is that the free market?

In Communist China, the law is a creature of the state. In the United States business law is extremely stable and predictable. Is this a predictable safe business environment?

Let me predict what is going to happen to these foreign investments in China.

They will end badly. They will end whenever the Chinese see a profit in doing so. They will end whenever China has an international dispute with a country whose citizens are involved in that investment. And they will end whenever corrupt Chinese officials decide it is profitable and they have a good chance of safety.

China will not be the next great power on earth. What they will become is in many ways is not clear but the one thing we can be sure of is that a Communist dictatorships will not end well.

James Pilant