"Mr. Blair, we still make things." That's what German Chancellor Angela Merkel said when Tony Blair, then British prime minister, asked her how Germany was managing to pull out record trade surpluses.
"We still make things:" it was a quip the U.S. would do well to heed as our manufacturing base disappears. Try finding a piece of clothing made in America. And whatever your views on nuclear power, it's alarming that by now only a Japanese company can make the steel forgings used for nuclear reactor vessels (that from Nuclear Regulatory Commission chair Dale Klein in a speech this spring).
The recent financial troubles of the Talbot's clothing chain, which has a store in Northampton, highlight another level of this issue. Talbot's announcement that two of its banks were cutting off lines of credit opened a window into the financing of some businesses that sell large volumes of imported goods (in 2007, 78 percent of clothing under the Talbot's brand and 87 percent of Talbot's J. Jill line were imported, much of it from China).
Lines of credit from Bank of America and from the Hong Kong and Shanghai Banking Corporation (HSBC) had kept Talbot's inventory flowing. Now those lines are drying up and Japanese money is moving in to shore up Talbot's operations. What this shows is that when we buy clothing in stores where hardly an American-made garment is to be found, it may be not just a few dollars on each suit that go out of the country, but large streams of interest on loans, the usufruct of the company's outsourced financing.
Xenophobia is not the point here, but there is a point: where and what we buy has a lot to do with our own and our neighbors' economic welfare. Not so long ago American workers were paid enough to buy high-quality U.S.-made goods, they bought them, and the loop created prosperity. Now that circulatory system is hemorraging. Financial services and high tech enterprises do not an economy make, and even those are increasingly finding homes abroad.
