USA Today: States that "make things" are economic losers.

USA today reports on how individual states have fared on a relative basis as the economy has been winding down.  Their conclusion: states that make things are the big losers.  After reading that I was almost left speechless.  Manufacturing is now an economic sin according to whatever completely incompetent moron wrote that "piece".  I guess if we all stop manufacturing stuff then we will all win, huh?

Well, here's the real truth of it: labor is the source of all future value and manufacturing is the quintessential expression of labor.  Manufacturing is not for losers, it's essential for a consumption based life as we know it.  No amount of misinterpretation of the data by economic children will ever change that fact. 

Saying that Michigan is a loser state because it had manufacturing is like saying that capitalism failed.  What a crock!  We haven't had honest capitalism in the US since well before Nixon.  The so called military industrial complex that Ike carefully warned us to be diligent and educated about in his retirement speech is the basis of a good old boy system that is not real capitalism but rather crony capitalism.  Likewise, Michigan manufacturing wasn't true, free market manufacturing.  It was debt financed Ponzi manufacturing which could only happen in an economy which is infested with the plague of fiat currency and fractional reserve lending.  Period.  No way could the Detroit boom/bust have occured under a system of honest money and honest credit. 

Detriot didn't fail because it didn't have good cars, it failed because the debt related with the purchase of the manufacturing facilities along with the Ponzi obligations / Wimpy Promises to the union good old boy network took it down.  Toyota will suffer the same fate in time.  It makes fine cars but it has $155 bn in debt and only $43 bn in cash.  Its world class manufacturing was financed.  In addition, its employees have the unrealistic expectation of lifetime employment.  How different is it really from the Detroit 3?  Nobody is saying this today but I think the odds are very high that Toyota will eventually collapse under its own weight as it continues to bleed cash over the next decade. At some point the Japanese government will no longer be able to give it loans under the table and then it will most likely default and collapse.

Of course boom and bust is what you have to do in a fractional reserve banking society if you ever want to be competitive.  How can an honest investor who first earns and saves before investing compete in any way against someone who is allowed to borrow obscene amounts of money in order to go into business?  You either play the game or you are irrelevant from the start.  As Chuck Prince put it, you have to dance while the music is playing.  This is how the fractional reserve banking system (and the fiat currency monetary base) not only allows but encourages stupidly risky behavior from its participants.

Michigan was the American version of Germany and France (even if those two countries have not yet "gone Michigan").  Michigan's automotive-centric businesses took on lots of leverage in order to create manufacturing capacity not for the purpose of honest trade but rather for the purpose of trying to use debt in order to make a profit.  Building debt based manufacturing capacity is what killed them, not the simple fact that they were manufacturers.  We need to be very careful what we listen to from main stream media pundits like USA Today because their stupid conclusions can lead people down the wrong path.  Real manufacturing is based on the spending of SAVINGS.  Real manufacturers create capacity whose goal is to enhance the lives of those who work hard enough to earn what they acquire.  This is a far cry from the scam of leveraged debt based manufacturing which chases only profit with no thought to the consumption requirements of the marketplace and with no Austrian feedback loop to keep capacity in check.