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This is the story of the de-industrialization of America, written by a Business professor with a background in steel company management who grew up in the city of Pittsburgh and loved its manufacturing environment. The book is based on the facts and aims to avoid any partisan political viewpoint which is not as difficult as it may seem, since both U.S. political parties support free trade economics. The story does not single out the union, the workers, management, politicians, or American voters and consumers, since there is plenty of blame to share. Even the economic policy of the country since 1945, which clearly must carry a large portion of the blame, was accepted for all the right reasons. Free trade was to promote world peace and democracy. No one foresaw the ancillary effects of the 1970s on the United States. Yet this approach has brought destruction upon our cities, workers, managers, and country. The author identifies neither villains nor conspiracies, at least not of the 'black helicopter' type, but finds that our misguided polices have been for altruistic goals most of the time. If there is a viewpoint, it is one of a love for American manufacturing and those once-robust cities such as Detroit, Toledo, Pittsburgh, Akron, and so many others, that drove forward the American economy.
- Sales Rank: #1143620 in Books
- Published on: 2014-02-27
- Original language: English
- Dimensions: 9.00" h x .54" w x 6.00" l,
- Binding: Perfect Paperback
- 216 pages
About the Author
Dr. Skrabec moved from a successful career in industrial management (at LSE/LTV Steel, Jessop Steel and National Steel) to serving as an Associate Professor of Business at the University of Findlay, OH, since 1998. Skrabec has published over fifty articles on history, industrial history and business, and five books on business, industry and management.
For twenty years Prof. Quentin Skrabec has been researching the history of America’s industrialization and the key figures who moved the process forward. Working from a home base in the industrial heartland of Northern Ohio and Western Pennsylvania, he set out to create a literary pantheon of great Americans who contributed to this country’s industrial rise. Dr. Skrabec has published a series of biographies at Algora, followed by this broader study of the policies that have dealt such a blow to American industry in general.
In his Preface, he says,"In the 1980s I would experience firsthand one of the nation s largest steel mergers, and a few years later one of its largest bankruptcies. As the manufacturing base collapsed in America, I left industry to obtain a PhD in manufacturing. Initially, I hoped to help drive a manufacturing revolution with such programs as Lean Manufacturing, Six Sigma, and ISO 9000. This type of program, while extremely helpful to industry, was unable to overcome the political and economic infrastructure in America today. We have a policy of de-industrialization, although no one refers to it that way. Instead we are told of a post-industrial strategy where information will be the source of jobs. Still, I believed manufacturing could be saved..."
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Passionate, detailed account of the decline and fall of American heavy industries and Midwestern cities.
By Gateur2
After the end of World War II, the United States was the world’s leading military and economic power. America’s Manufacturing Belt, spread along the Midwest from Pittsburgh to Chicago, contained many of the nation’s (and the world’s) large and prosperous cities, headquarters of major corporations, and most of the heavy industrial facilities which embodied the nation’s economic power.
Three decades later, the Manufacturing Belt began transforming into the Rust Belt; de-industrialization began hollowing out the steel, glass, rubber, and automobile industries. America’s previous experience with de-industrialization had consisted of the migration of the textile and garment industries from lower New England and Greater New York City to the southern states, which had begun in the 1930s. After the war, however, the Southern textile industry, along with apparel, furniture and other light manufacturing moved overseas, particularly to Asia. They were followed in the 1970s and afterwards by the heavy industries which had given Pittsburg, Akron, Flint, Detroit and other Midwestern cities prosperity, industrial pollution, and numerous well-paying working class jobs.
Barry Bluestone and other scholars began examining this process of regional deindustrialization in the 1980s, and were later superseded by writers of more specialized studies focusing upon the decline of particular industries. They found a variety of causes, usually a combination of: inept and complacent management, greedy and complacent labor unions, short-sighted and complacent politicians, cheap (primarily Asian) imports, under- (or over-) valued American and/or foreign currencies, as well as capitalism and the “Neo-Liberal Consensus” trumpeted by Ronald Reagan, Margaret Thatcher, and (less often mentioned in the same sentence) Deng Xiaoping.
Simultaneously, economists and other scholars published a larger number of books and articles about globalization and/or the evolution of the United States into a “post-industrial” economy. These barely noted -- and downplayed – the simultaneous deindustrialization of American industries and the transformation of the previously-prosperous Manufacturing Belt into the impoverished Rust Belt. Most of these writers categorized it as an unpleasant, but inevitable, byproduct of economic evolution – a relatively small price for Americans to pay for postwar global peace and prosperity, and more than offset by the prosperity at Silicon Valley and the Sun Belt cities and suburbs.
Since the 1980s, the pace and price of deindustrialization have grown exponentially. Cities like Flint and Detroit have lost not only industrial facilities and associated jobs, but also most of their tax base, and much of their middle and working class population. Detroit is an economic basket case, and other Midwestern industrial urban heavyweights are approaching bankruptcy. Some blocks consist entirely of abandoned buildings, reverting back to pre-urban vegetation; while certain neighborhoods are run by gangs and avoided by the police. According to the author: “The devastation of our historic cities is unbelievable to those who have not experienced it firsthand. The average American who thinks open air gunfire throughout the night is something from Hollywood has never stayed in a rust belt city…” An increasing number of writers are questioning whether the “post-industrial” prosperity of Silicon Valley, the Sun Belt, and the rise of elite “global cities” (e.g., New York, Miami and Los Angeles) has been worth the cost of the fall of the Manufacturing Belt.
The author answers with a resounding “No!” In addition, he argues that the decline and fall of the Manufacturing Belt was not only a horrible tragedy, but one that was avoidable. It was the result of postwar, bi-partisan abandonment of a long-standing national policy which encouraged American industrialization. A national policy of using tariffs to promote industrialization had been proposed by Alexander Hamilton and implemented under Henry Clay’s “American System,” only to be dismantled by Andrew Jackson; but later revived by Abraham Lincoln and subsequent presidents from 1870 to 1920. Unlike most historians, and virtually all liberals, Skrabec gives pride of place to William McKinley, whose presidency covered the period in which America replaced Britain as the world’s leading industrial and economic power.
With the benefit of protective tariffs supported by McKinley and the nation’s industrialists (although not its big NYC-based bankers), the heavy industries of the American Midwest (steel, glass, rubber, and then automobiles) turned its cities into urban versions of Eden. Rich capitalists, middle class professionals and workers lived happy, prosperous lives, nurtured and supported by an inter-related framework of factory, family, community, and church. Poor immigrants would start as factory workers, but their children could aspire to the middle class; just as a lucky few of the middle class could become actually rich. The prevailing smell of sulfur and constant showering of coal ash were mere inconveniences, regarded as a sign of continuing prosperity by all (except for unmentioned sufferers of asthma and other lung diseases, who either moved elsewhere or died an early death).
Skrabec asserts that the serpent responsible for the destruction of this Eden was the Mont Pelerin Society, a group of economists who first assembled at a Swiss resort in 1947. Prompted by Austrian expatriate Frederic Hayek, they discussed and propagated ideas for fostering “harmonious international economic relations.” The resulting apple was a policy of international “free trade,” whereby America and other nations would abandon policies of high tariffs and other forms of protectionism, autarky and trade wars, which inevitably led to depressions and actual wars. Two Americans initially attended, one of which was Milton Friedman, who later became an influential policy advisor and Nobel Prize winner. Almost immediately (for reasons left unclear by the author), the Mont Pelerin ideas were accepted by the majority of politicians of both American political parties. The economic advisors to Presidents of both parties were also adherents of the Mont Pelerin policies. “Free trade” became a dominant, and virtually unchallengeable, component of American foreign policy.
Unfortunately for well-paid American workers (as well as their managers and employers), international “free trade” also gave American consumers greater opportunity to purchase cheaper goods made by poorly-paid foreign workers. The postwar years also saw the cost of international transport continually decline -- largely, but not entirely, due to decreasing costs of maritime transport. A growing number and variety of foreign goods (manufactured by foreign workers paid only a pittance) became available to American consumers at lower costs than domestically produced goods. Economics trumped patriotism: an ever-increasing number of American consumers (as well as firms purchasing industrial sub-components) voted with their wallets; an ever-increasing number of American firms went out of business; and, an ever-increasing number of previously well-paid American workers became unemployed, or, at best, migrated to lesser-paying jobs. In addition, an ever-increasing number of Asian entrepreneurs and corporate officers obtained an ever-increasing amount of American wealth, which may (or may not) have partly “trickled down” to their employees.
This postwar “international distribution of wealth,” however, was not merely the result of international wage differentials. The Mont Pelerin policies were not being implemented on a level playing field.
According to the author (and a substantial, but not unanimous, body of scholars) many or most (depending upon the particular author) foreign (especially Asian) manufacturers also greatly benefitted from hidden and not-so-hidden subsidies and/or other trade barriers. In other words, while America dismantled its tariff barriers and opened its postwar markets to imports, Japan and other Asian nations covertly instituted their own version of Henry Clay’s “American System,” using non-tariff barriers and monetary policies to prevent an influx of imports into their own economies.
Furthermore, the American government adopted a Cold War policy of encouraging Third World, especially Asian, industrialization as a means of countering the appeal of international communism. To this end, the American government facilitated and subsidized an unimpeded flow of advanced technological knowledge and infrastructure from America to a re-industrializing Japan, as well as South Korea and Taiwan. A growing number of transnational corporations simultaneously facilitated technology transfer, particularly to Hong Kong and Singapore. Soon the “miracle” of a rapidly re-industrialized Japan was simulated by the matching miracles of the rapidly industrializing Four Tigers, and then other Asian nations.
American textile and garment industries were the first to feel the impact foreign competition, initially from Japan and then the Four Tigers and other foreign competitors. After the oil shocks of the 1970s, the recession of the early 1980s began wiping out American manufacturers of steel, glass, tires, and automobiles. Management and labor both discovered to their surprise that, unlike other economic downturns, which were cyclical, the downturn of the later 1900s would be permanent. Reorganizations, cost-cutting, corporate consolidations, emulation of Japanese management techniques, joint-efforts with Japanese firms, and all other remedies proved helpless. An apparently unstoppable wave of de-industrialization and plant closings swept across the Midwest, from Bethlehem and Pittsburgh to Detroit, Flint and South Chicago.
Skrabec had a front row seat to view the de-industrialization of the American steel industry. His father and grandfather had worked in the industry, and Skrabec was a middle manager at several steel companies. His decades of industry employment included work managing quality control in a short-lived joint venture between LTV Steel and Sumitomo Metal Industries, which manufactured galvanized steel for the auto industry. Although the venture was supposed to give American manufacturers access to Japan’s superior galvanization technology in exchange for Japanese access to new American markets, Skrabec discovered that: “…Sumitomo engineers were more interested in supplying Toyota’s American operations than General Motors or Ford. The Japanese allowed poor quality to ship to General Motors, while demanding perfection on Toyota product…” For Skrabec, “…it became clear that the ‘Japanese Revolution’ was part myth and part the result of targeted levels of inspection. [Japanese engineers] seemed ignorant of the statistical techniques that were claimed to be the root of their success. It left American middle managers disorientated after they had been trained in the superiority of Japanese statistical control, team management and worker involvement…”
Skrabec’s experiences in the joint venture may have been the turning point on his Road to Damascus, leading him to examine and eventually reject the previously unquestioned Mont Pelerin ideas about international free trade. He later left (what remained of) the steel industry, and joined academia. He is currently an Associate Professor of Business at Findlay University, and a prolific economic historian. His many works include histories of the initial rise and later postwar decline and fall of America’s hard industries: steel, glass, rubber, and automobiles. His detailed knowledge of the technology and management of the American steel industry is unmatched by any other historian, and has provided him with a firm background for analyzing the fall of other American heavy industries. He has also drawn upon the numerous studies by other authors who detail the decline of other specific American heavy industries.
Skrabec’s work on the decline and fall of American heavy industries, and the related fortunes of Midwestern cities, is a worthwhile read, full of important insights. As far as I know, he is the first historian other scholar to recognize the specific geographical east-to-west wave of industrial/urban decline which transformed the Manufacturing Belt into the Rust Belt. Analysts of the earlier deindustrialization of the American textile and garment industries, and later the Rustbelt-Sunbelt transformations, have noted north-to-south intra-national movements, but, so far, no one has recognized any corresponding east-west movement. This insight of geographical movement might also prove useful to historians and other analysts of the later de-industrialization of the American aerospace, semi-conductor and computer industries.
The author errs, however, when he makes the Mont Pelerin Society the primary mover of the postwar shift in the American political consensus to abandon protective tariffs and adopt international free trade. The Society’s views of international trade had already been adopted and strongly pushed for more than a decade earlier by the administration of Franklin D. Roosevelt, especially by his long-termed Secretary of State Cordell Hull. Also, automobile magnate Paul Hoffman (who headed the Marshall Plan) and other influential Republican business leaders had become internationalist free traders during the war or shortly after the end of the war, before Mont Pelerin was founded, and without having any connection with Hayek and his fellow economists. Mont Pelerin was important, but it is better used in the role of metaphor, than villain.
The book would also be improved by more information about and analysis of events leading to the Society’s creation, as well as how and why its views managed to become practically unquestioned dogma for American politicians, economists, and the general public during the postwar decades. The bibliography contains no mention of Mirowski and Plehwe’s, The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective (2009), Hartwell’s, A History of the Mont Pelerin Society (1995), Harvey’s, A Brief History of Neoliberalism (2007), or related studies.
In addition, the author should have cited recent works by other writers which parallel his recommendations for the replacement, or strong re-adjustment, of the present Neoliberal system of international free trade. These include, Clyde Prestowitz, The Betrayal of American Prosperity: Free Market Delusions, America's Decline, and How We Must Compete in the Post-Dollar Era (201l), and Trading Places: How We Are Giving Our Future to Japan and How to Reclaim It (1993); and, Eamonn Fingleton, In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, is the Key to Future Prosperity (1999), and, Unsustainable: How Economic Dogma is Destroying American Prosperity (2003).
Finally, the book should have had better editing. It contains numerous typos and redundancies. The word “iconic” is used at least a dozen times more than necessary. The bottom line of page 137 of the paperback edition contains the editorial comment: “[please delete, or combine with earlier OPEC discussion]”.
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