Michael Collinsadded to his extensive body of work as an American Manufacturing advocate with a fifth book, The Globalizaton Trap: Reclaiming American Prosperity. This book is about “how neoliberalism and globalization were adopted by American Corporations and the U.S. government and how they radically changed the American economy and exploited the working class…globalization and the rise of neoliberalism as a political ideology turned out to be a trap where the average middle-class citizen bore the brunt of the economic changes through job losses, stagnant wages, and not being able to keep up with inflation.”
The preface sates: “From 1940 to 1980 the growth of the middle class increased with productivity growth and all boats rose with the tide. He explains that “Neoliberalism is an ideology that emphasizes globalism, free trade, and letting the markets regulate the economy…The resultant deindustrialization has led to the decline of the middle class, and sacrificing jobs, industries, technologies, suppliers, and communities.”
Chapter One, “The Rise of Neoliberalism,” describes how Milton Friedman and Frederick Hayek developed a new theory called neoliberalism.” Neoliberalism is an ideology that emphasizes globalism, free trade, privatization, and deregulation. Neoliberalism was a 180-degree reversal from Keynesian economics used in the New Deal…” It incorporated Freidman’s dictum “An entity’s greatest responsibility lies in the satisfaction of the shareholders.”
I believe this theory is fallacious because recent data from the U.S. Small Business Administration (SBA), shows that “approximately 98% to 99% of American manufacturing firms are privately owned” and “98.6% are classified as small businesses (fewer than 500 employees),” meaning that less than 2% of companies are benefiting. which Michael calls Multi-National Corporations (MNCs).
Also, “Neoliberalism was the theoretical foundation for radical economic changes and was closely connected to the strategy of outsourcing and globalization.”
He then documents the role Presidents Ronald Reagan, Bill Clinton, George W. Bush, and Barack Obama played in advancing neoliberalism and globalism. He concludes the chapter writing that “The good news is that the era of neoliberalism, free trade, and globalism is coming to an end.”
Chapter Two, “The Middle-Class Decline,” quotes a Pew Research Center analysis of government data, showing that “the middle class, has steadily contracted in the past five decades. The share of adults who live in middle-class households fell from 61 percent in 1971 to 50 percent in 2021.” He attributes the decline to the following major reasons:
- Automation
- Outsourcing
- Job losses in manufacturing (since 1979, 7.5 million jobs were lost due to automation and outsourcing)
- Trade Agreements
- Decline of Unions
- Deregulation of Financial Industry
- Rising prices for essential costs like housing, energy. health care, education, and food
In Chapter 3, “Winners and Losers in the Free Market,” he shows how globalization and free trade has led to: worker insecurity, abandonment of cities and towns in the Heartland, middle class despair, and evidence of the failure of the Service Economy. As a result, he writes “since 1990, job quality as measured by the income earned by workers, has significantly declined. Less hours worked with less pay and little room for growth is becoming the norm.”
In Chapter four, “The Decline of American Manufacturing,” he presents these facts:
- “U.S. manufacturing has fallen from 21 to 25 percent of Gross Domestic Product, in the 1950s to about 10 percent today.”
- “American manufacturers have lost 11 percent of our domestic market since China was given most favored nation status in 2002 [now down to a Domestic Market Share Index of 66.9 percent.”
- “In 1979, manufacturing jobs represented approximately 22% (19.7 million) of the total U.S. nonfarm workforce. By 2025, that figure had fallen to about 8% (12.7 million).”
He discusses why economists don’t think manufacturing is important to the U.S. economy, the damage caused by granting China Most Favored Nation Status (MFN), Free Trade Agreements, and outsourcing. He concludes the chapter with a discussion of Why America must have a strong and growing manufacturing sector, much of the information corroborating information I have included in my three books and hundreds of blog articles. I agree with his declaration, “The decline of manufacturing is the high price we pay for cheap imports.”
Chapter five, “The Disintegration of American Industry” discusses what has happened to the critical sectors of the manufacturing industry that all other manufacturing industries depend on, such as machine shops, tool and die makers, Industrial mold companies, Ferrous, Iron, Steel Foundries, Nonferrous Foundries, Forging and stamping shops, Cutting tool accessories, and the plastic and rubber industries.
Representing manufacturers in these sectors is how I have made a living as a sales representative for over 40 years, so I have personally experienced the decline of these manufacturing industry sectors.
He also documents the decline in other industries, such as automobiles, shipbuilding, semiconductors, magnetic media, communications equipment, paper, textile and apparel, ceramics, pottery, tile, hardware, cutlery and hand tools. I agree with his two major conclusions: “We won’t remain the number one economy and a world power if we allow the continued disintegration of American manufacturing industries and transition to the postindustrial service economy, and we can’t maintain national security and weapon systems if materials like aluminum, steel, and rare earth have shortages and cannot be controlled by the United States.”
In Chapter Six, Michael opines that the policy of Globalization that led to deindustrialization, redistribution of wealth, stagnant wages, the decline of living standards, and insecurity not experienced for generations, resulted in the backlash that resulted in the election of Donald Trump as President in the 2024 election when the middle class voted for their pocketbook.
In conclusion, he recommends, “If we are to have a chance of reducing inequality and reindustrializing the country, the United States needs a more robust industrial policy that protects key industries, manufacturing jobs…with a general goal of increasing manufacturing’s share of GDP to at least 15 percent. Perhaps the best solution is for millions of workers who are struggling financially to vote out their congressional representatives and elect politicians that are more sympathetic to the middle-class problems.”
In Chapter 7, “Protecting our Technologies,” he poses the question “How many technologies and industries are we willing to lose, before we lose our ability to compete using innovation as our primary strategy?” He describes the problem and then examines the pros and cons of outsourcing. He discusses the importance of protecting the Advanced Technology Industries (ATIs), which are at the forefront of economic growth.
Chapter 8, “Critical Minerals and Metals Shortages,” is a well-documented and thorough discussion of this major problem. Two glaring statistics stood out the most:
- “The United States remains fully import-dependent for rare earths and 14 critical minerals and more than 50 percent dependent for another 34.
- The United States currently imports roughly half, or about 47 percent, of the aluminum consumed in the United States.”
Michael provides suggestions to solve these problems that are too complex and numerous to cite. You will have to read them yourself.
The shortages of American-made pharmaceuticals are equally if not more critical than minerals and metals, and this topic is thoroughly discussed in Chapter 9. Two points to ponder are:
- “The United States is dependent on imports for two-thirds of generic medicines, which are 90 percent of all prescriptions.
- In 2002, U.S. manufacturers produced 84 percent of domestically consumed pharmaceuticals. In 2023, the number declined to 37 percent of the domestic market.”
He concludes, “The collapse of U.S. pharmaceutical manufacturing is the result of decades of free trade, increased market penetration due to state-sponsored subsidies and dumping, and the absence of government protection or and industry strategy.” Michael proposes a number of solutions that you need to read for yourself.
Chapter 10 discusses the many other industries and products that are also facing shortages, such as semiconductors, auto parts, rechargeable batteries, aviation components, solar panels, magnets. Michael asserts” Losing control of the supply of many critical products has made us susceptible to price manipulation and economic extortion…we must reclaim supply chains from China and other countries for everything from pharmaceuticals to semiconductors. I don’t think it is possible without some kind of monetary pressure on:
- U.S. companies to reshore products
- Foreign countries to reduce exports to the United States, running surpluses, manipulating currencies and dumping products into the United States below their production costs
- The government to help find new sources of products that can’t be sourced from the United States.”
Chapter 11 discusses the role the overvalued U.S. dollar and finalization of the economy have played in the globalization trap. The concepts of the value of the dollar, currency manipulation, and unfair trade practices by China are too complex to describe in this article. I like his support for a Market Access Charge to balance the value of the dollar and achieve a current account balance within five years, about which I have written articles previously.
Chapter 12, “How Will We Solve the Problems Caused by Free Trade Policies,” Michael writes. “America must abandon free trade and globalism, bring manufacturing back to the United States, reduce our trade deficit, and protect our industries and technologies. We will also have to incentivize U.S. multinationals to stop outsourcing and incentivize both foreign and U.S. companies to establish manufacturing operations within the United States.”
After summarizing the main problems caused by free trade policies, he concludes, “I think it can be done and will require a combination of tariffs, tax credits, quotas, selecting key industries, and adjusting the value of the dollar.”
In Chapter 13, “Productivism – A Plan for American Manufacturing,” he explains that “A new economic policy that favors production and investment is called “productivism.” The term was invented by Dani Rodrik of Harvard…Productivism is a supply side strategy to boost the most productive industries so it is important to select and prioritize the key industries that must be protected. “
He states, “Productivism using tariffs, tax credits, quotas, key industries, technology protection and training will generate economic growth, create jobs, raise household incomes, and with a forecasted one-time increase in consumer prices. But productivism also needs to be part of a federal plan that defines the goals and measurable objectives.”
With regard to tariffs. Michael echoes what I have expressed, “Tariffs are the first step in developing a new industrial policy…If using tariffs to incentivize U.S. corporations to reshore products is to work, the government must convince the corporations that tariffs are permanent and that the government is in it for the long haul.” He reminds us that “In fact, the U.S. tariffs averaged 30 to 40 percent from 1890 to 1945.”
The rest of the chapter discusses the pros and cons of tax credits, tax incentives, quotas, and protecting key industries. Then he asks the question: “Where Will We Find the Workers?He cites that “A recent study by Deloitte and the Manufacturing Institute found that U.S. manufacturing could need as many as 3.8 million new employees by 2033, and nearly 2 million of those jobs could be left unfilled.” The rest of the chapter provides suggestions on how to solve this problem
Chapter 14, “Economic Factors that Must Be Considered to Make the Trump Plan Work,” outlines the following factors and provides suggestions on how to address these factors:
- Decline in federal basic research
- Loss of Technology Dominance
- Capital investment and Stock Buybacks
- Growth of National Debt
- Transshipping to Avoid Tariffs
- Banning Specific Products or Specific Companies
- Artificial Intelligence and Additional Energy
In Chapter 15, “Refloating the Boats – What do we Have to Do to Grow the Middle Class?” Michael summarizes some of the points he wrote about in previous chapters. Then, he posed the question: “is it still possible for the average worker to attain the American Dream and can the decline of the middle class be reversed? He states, “I think it is possible to grow the middle class, increase wages, and improve living standards and income for much of the middle class if the country can commit to production, not consumption.” This book was an easy read and holds your attention right up to the end. I highly recommend this book to everyone who is concerned about the future of the manufacturing industry, the decline of the middle class, and our country’s ability to protect our national security. Every Senator and Congressional Representative needs to read this book. I suggest you buy one book for yourself and one to give to your Representative.
Tags: American manufacturing