Monday, March 22, 2010

National Health Insurance: What the Real Price Might Be

Back in the 1980s, the writer worked on documentation for a bank issuing extensive credits for building manufacturing plants in Mexico, the so-called maquiladora plants along the southern side of the Rio Grande. All of these plants were American standard manufacturers, from General Motors to General Electric. A shocking realization as the writer worked on these was that the labor requirements for the new plants was a) very light, and b) very low-skilled. The companies weren't exploiting workers with the same qualifications as those in the U.S.. They only needed labor that's cheap in any country. In the case of the maquiladora plants, local teenaged girls were sufficiently skilled to run whole factories. The real reason for the move was revealed in these requirements.

The manufacturers had tried to modernize their plants in the U.S.. Between regulatory complications, union resistance, and management's lack of interest in changing the way companies did business, the modernization was executed outside of the United States, and not just in Mexico. What the modernization entailed was the next stage in the automation of work. A bad economy at home, the stagflation of the 70s and early 80s, and dramatically increasing overseas competition, put enormous downward pressure on costs. Automating factory procedures is a straightforward means of reducing costs. Americans working in any capacity in those companies didn't want that done. It was an understandable reaction. Retraining for another profession is not easy at any age. Those who were smart enough to do so went through a difficult period of transition. Those who didn't, however, went to work at low level jobs in food and other service industries.

We're at the next stage of automation now, which has been proceeding for about a decade. This stage, which involves the entire production process, won't require relocation. Motivated by a dramatic increase in the cost of labor, driven by socialist programs like national health insurance, enormously increased regulation, and the threat of the federal government stepping in to save constituents among workers toiling for companies faring poorly in today's "stimulus" economy, far-sighted company management has begun automating manufacturing altogether. It's possible; it's already being done in many American industries. Now, thanks to a vast new entitlement passed with no regard for the bill's ultimate consequences on the labor market, it will be done much faster, perhaps too fast for many to make that difficult transition. And it won't be so much at the factory floor level, but in middle management and the professions.

And then there's DIY manufacturing. Predicated on inexpensive CAD (computer aided design), fast prototyping priced for individuals instead of companies, Worldwide Web communications, and the fulfillment of theoretical possibilities in information theory, DIY allows a manufacturer to design, generate specifications, organize sourcing of parts (parts in any industry are increasingly commodities that can be made anywhere), and manage manufacturing virtually from great distances. The designers, engineers, parts sources, and manufacturers can be anywhere. As reported in February's issue of Wired, Chinese manufacturers, with the downturn there, and with the latest and most flexible consumer products factories in the world, are taking tens of thousands of overseas orders, not to buy existing Chinese products, but to act as the manufacturer of wholly new designs from anyone in the world who wants to exploit the capacity.

In such changes, national welfare programs designed without the legislature's knowledge, or interest, in what's going on may end up causing the general sacrifice of their own workforces on the altar of progressivism. This is not a popular topic of conversation in the EU, nor will it be here in the very near future.



Anonymous said...

See a classic Scientific America n from 1984 on "The Mechanization of Work." Then note the trend in manufacturing described as "deskilling," which closely parallels the decline of standards in public education in the US.

Jonquil of Canada

Wonker, aka TerryP said...

Good observation, dude. BTW, the US, public school wise anyway, no longer educates students. Students are indoctrinated into the ways of socialism and otherwise, not taught much of anything. Small wonder it's easier and easier to pull the wool over the collective eyes of the electorate. Hopefully, a few brain cells will open up in November, 2010. The situation on the ground should be becoming painfully obvious, even to the biggest dunderhead.