March 2008 | Commentary | Checking In

Up and Atom

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Some thought leaders, visionaries, and business gurus claim the United States is transforming from an "industrial" to a "post-industrial" economy.

More guru-speak: "Wealth in the United States will be created more and more by electrons, and less and less by atoms."

In English, that means our information and service businesses will continue to grow (electrons) and manufacturing capacity (atoms) will continue to diminish.

Some welcome this continuing transition. Most seem resigned to it, including one presidential candidate who, while on the stump in a state that lost thousands of manufacturing jobs last year, said: "Some of these jobs are never coming back."

That may be true for some manufacturing jobs. But can a service and/or information industry alone create a healthy economy? Should we acquiesce as manufacturing jobs get swept away in a global tidal wave of unbeatable competition?

I say no. We ought to resist the impulse to minimize the importance of domestic manufacturing. Let's not ignore reality. It is cheaper to move atoms in some countries because of less expensive labor, but how about a little hardscrabble backbone on the issue?

Here are two examples to illustrate.

In the past decade, China added hundreds of billions to its GDP through industry and manufacturing, not information. Like the United States, China has a growing demographic who won't be working in the information industry any time soon. And there are only so many service jobs in China, or in the United States, for that matter.

This phenomenal engine of wealth is being created through manufacturing - China's atomic age, if you will.

A smaller example? India created some excitement recently when a five-year dream was realized and the TATA Nano—a $2,500 car that looks sharp and has an eventual market estimated at one million units in India alone—was introduced.

Consider how buyers in the developed world, brought down a few pegs by the price of gas, might find a low-cost, high-mileage car attractive. You can easily add another one million units for the rest of the developing markets. That's a lot of atoms.

Can we build a car like that here? Not at that price point.

But like China, which not too long ago had a fraction of its current industrial capability and many infrastructure impediments, it shows what you can do when you put your mind to it. Both India and China are building wealth through manufacturing.

Readers of this magazine, who make their living moving products, know all too well that wealth can be created with both electrons and atoms.

A post-industrial age in the United States? Nah. How about an info-industrial age instead?

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