This fall I was invited to cover the the Keep It Made In America Tour put on by the Alliance for American Manufacturing. I spent a week driving around Michigan, Ohio, Pennsylvania and West Virginia, ejoying the fall colors and visiting small towns all along the way.
I live in Silicon Valley where in spite of the high unemployment -- still 10.6% -- it's still pretty nice here, so the extent and especially breadth of the decline of so many cities and towns was a shock. Everywhere you go you see America's infrastructure crumbling! Of course I know this has been going on, but when you actually come from somewhere that is still pretty nice and see it firsthand - and everywhere - you really see it.
As I drove around these states I saw pretty much the same thing in town after town. As you approach the town on the highway the first thing you encounter is what I will call the vulture circle that surrounds it. This is the circle of Wall Street-owned chains emulating the Wal-Mart model of sucking cash out of the area and sending it away to the wealthy elites who own ... almost everything now. These are the national chains that are all the same in every town, all selling the same stuff, all made in China, all putting the local small businesses out of business.
As you drive into town the next thing you encounter is the circle of home equity extraction, with newer houses that have taken on big first and second Wall Street mortgages. These houses mostly look OK -- except the foreclosures with the brown lawns and grass growing in the cracks in the driveway. This area has car dealers and strip malls that used to sell expensive cars or nice goods. These dealers and stores feasted on those "take money out of your house" refinancings or second mortgages. Now they have nail and hair salons or are just "for lease."
As you get closer to the center of town you come to the areas of older houses, more of them boarded up than you want to see, with old, boarded-up stores on a few of the corners of the larger streets. Where there are still-occupied houses they have bars on the windows.
Finally you come to the old, crumbling downtown where there are many empty storefronts, some boarded, the lost dreams of the local small business-owners. Here and there you see, between the vacant lots, a few government buildings.
And then somewhere is what they always call "the old plant." This is one or more closed-up, fenced-off, rusting old factories or mills. They are fenced off, with lots of broken windows, and maybe part of a building is falling down. This is where the people used to work but the jobs moved to Mexico or China.
Much of the country is like this now. So many of the older small towns, crumbling, the money sucked out by the Wall Street elite. The factories sold off, closed. The people can't make a living, the towns can't make a living, the country can't make a living, the Wall Street elite making a killing.
You can see the process starting here in Silicon Valley, too. As you drive around this area you see that one of every four or five office or light-industrial buildings has an "Available" sign. The region has the same number of manufacturing jobs as it had when the "tech revolution" began. The rest have moved to China. We don't make cell phones here. We don't make flat-screen TVs here. We don't make computers here. We certainly don't make iPads here -- even though Jobs is his name!
Even exclusive Palo Alto has empty storefronts on the main drag. (You know the economy is bad when the rug stores on University Avenue are actually going out of business!) It is even happening here. It will get worse.
In July Intel's retired CEO and Chairman Andy Grove wrote an important opinion piece,
How to Make an American Job Before It's Too Late, in which he warned,
Clearly, the great Silicon Valley innovation machine hasn't been creating many jobs of late -- unless you are counting Asia, where American technology companies have been adding jobs like mad for years.
[. . .] As time passed, wages and health-care costs rose in the U.S., and China opened up. American companies discovered they could have their manufacturing and even their engineering done cheaper overseas. When they did so, margins improved. Management was happy, and so were stockholders. Growth continued, even more profitably. But the job machine began sputtering.
Please take the time to read Grove's entire piece.
The storm that created the rust belt is heading our way, and we need to pay attention. What will it take for American companies to create American jobs rather than jobs outside America?