I read in the June 1, 2018 Editorial of the Chicago Tribune, a piece entitled: “The ‘Illinois Exodus’, Black Comedy or Disaster movie?” The editors of the ChiTrib make it clear that the Ilinois exodus is the latter..an unmitigated disaster. Illinois is in fiscal crisis mode. Why? The state has a whopping $130 billion dollar unfunded pension liability, a backlog of $7 billion in outstanding current debt, and the worst credit rating of any state in the Union. It’s fixed costs (pensions, current bills) takes up more than a third of its tax income....even after a massive 32% rise in taxes last year. That and the fact that the legislation can not come up with a meaningful budget—- makes it a fiscal basket case. The residents know it and are leaving the state in droves. When they leave they take their skills, purchasing power and taxable income with them—-exacerbating the fiscal problem in Springfield. Last year, the fourth in a row, Illinois lost 34,000 residents—-again. Illinois is not alone in this category of fiscal basket case— or is it the fault of the hardworking decent folks of that lovely state. They are all the victims of the hollowing out of America’s heartland’s jobs and sending those jobs to China and Mexico. We can see this same story replaying in one way or another in all of our heartland states—Ohio, Minnesota, Wisconsin, Michigan, Missouri, Indiana, and elsewhere.
Globalization touted by our leadership in Washington for the last decades clearly favors only the super wealthy and an elite cadre of global entrepreneurs. According to Investors Business Daily (1-27-17) “Million of Lost American Jobs Show High Cost of Unfettered Free Trade”: Between 1999 and 2011 more than 500,000 manufacturing jobs were lost as our national industries picked up lock, stock and barrel and moved their manufacturing to China and Mexico and elsewhere. (Where they often had to partner with Chinese companies in order to do business). Other US businesses and industries which supplied raw materials or parts to these outsourcing companies lost jobs too. And when these companies took off for foreign shores—these enterprises were casualties too—eliminating another 400,000 jobs. Well over a million manufacturing jobs were lost during that period.
Workers lost their well-paying jobs to China and Mexico and the states like Illinois—lost tax payers and revenue. The reason these states can at present not fund their pension liability or pay bills for their essential operations—are these disastrous job losses. These states have become part of the now all to common, “rust belts” and “depressed areas” that are spreading like a cancer across our nation. The exodus of thousands upon thousands of formerly taxpaying residents from Illinois is only a symptom of the failed, and disastrous—nation destroying—free trade policies decided in Washington DC to favor a small group of elite wealthy business class citizens.
It is widely report somewhere that these “out-sourcing companies” save enormously on wages when they move their manufacturing operations to the Far East or to Mexico. They pay those foreign workers only a fraction of what American workers earn—the equivalent of $3 dollars an hour—versus perhaps $10-20 dollars per hour. But where does that extra profit accruing to these policies go? Not into the community, the state or the nation which spawned and nurtured that company as it grew and prospered—using its educated workers, its infrastructure and the skills of its native residents. The massive savings in costs of production of outsourcing is not returned to the community—it goes into the pockets of a few stockholders, top-management and chief executives. This economic situation only exacerbate another related US problem—that of unequal wealth distribution. Funds (money, wealth) has concentrated in the hands of fewer and fewer people in the USA in part due to globalization. . (The USA is the richest nation and has the most unequal wealth distribution. ) Wealth (and income) inequality in the USA is not good for the economy! ( USA: top 1% own 40% of wealth, rest of us —99% share the 60% left over). It means that those multitudes of workers who actually spend their incomes on food, clothing, appliances, transportation, etc. etc. (and in that way support other businesses and industries) have less and less in their hands to spend while more and more of those funds are sequestered from the general economy in the pockets of super wealthy cadre who are few and spend little in ways that stimulate the economy.
Another problem generated by the decline in manufacturing sector in the US is that of the decline in innovation and development. Patents for new products and processes have declined in the USA. We were once the world’s greatest innovators. Those new ideas were once generated in the US workplace often by the men and women who operated machines or managed workers. It is in an active workplace—where breakthrough processes, new ideas and new product ideas are generated—where innovations are developed. In the USA we have moved virtually all those operations overseas—separating creative workers from the managers and designers by in some cases thousands of miles. This does not encourage innovation and new development and in fact stifles such growth and the growth in productivity which is associated with it.
The loss of industry in our heartlands —like in Illinois—means loss of income, loss of tax base loss of vitality of our industries, and less new development and innovation as well as lowered productivity. . The globalists claimed that “some workers will have to suffer” but they claimed “overall we are better off with a global economy”. Well their predictions have been proved to be totally false. We are all suffering and the suffering is spreading. The effects of our failed global economy policies have now moved on from the individual workers to their exodus from states where those workers once worked, to the financial collapse of those states in our heartland. What is next?
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