In Response To The First Presidential Debate: The Silicon Valley Buzz On Manufacturing

Both Donald Trump and Hillary Clinton spent time discussing the loss of American manufacturing jobs in last night's presidential debate. In a recent trip to the San Francisco Bay area, I met with some Silicon Valley professionals. There seems to be a group consensus regarding manufacturing challenges.

Though we can bring manufacturing jobs back to America, it's not as easy as we may think. There are many factors involved. Of course, one problem is that high taxes are driving manufacturing out of America. Certainly, all the regulations and restrictions are another problem. In addition, it's well known that wages in this country are so high that we can't compete with foreign companies. But there are a few other challenges that are not quite as well known.

The Silicon Valley 'think tanks' are predominantly composed of Chinese and Indians. Evidently, it's a common joke among the Silicon Valley crowd that each 'think tank' has a token white guy on the team. The buzz seems to attribute this to the fact that the Chinese and Indians are more committed to excelling in the engineering and science fields. Their educational systems encourage and support them from a very early age. In America, the education system has fallen behind.

On the other hand, current immigration laws are undermining America's ability, not only to recruit, but also to hold onto highly skilled people. I've heard that in some South American countries the government offers to pay large sums of money to well-educated, skilled people to move to that country. In the United States, foreigners who graduate from Harvard, M.I.T., etc. often can't even get visas to stay in this country. They are forced to return home.

Another manufacturing challenge is the simple fact that we, in America, don't have all the materials needed for manufacturing. The rare metal rights have already been bought up by the Chinese throughout the world and even in our own country.

According to the Silicon Valley buzz, corporations in America are becoming overburdened with top-heavy bureaucracy. The scientists, engineers, and manufacturing staff find it difficult to do what they know has to be done because of the bureaucratic hierarchy lording over them. For that reason, many of the skilled staff are leaving large corporations and joining smaller businesses.

An additional problem is that, in America, we tend to resent the wealthy. Employees of large corporations are not as grateful for having a job as they are resentful toward the powers that be. The employees in many foreign countries, in contrast, honor, and are grateful to, the employers for providing them with a job.

A number of years ago, a panel of business 'experts' on television was discussing the impact of rising oil prices. One individual was not concerned, saying, "This economy is so big and so powerful, it can absorb almost anything." Not a single person objected. Right then, I knew we had a problem. The entire economic equilibrium adjusts around the price of energy. A big fluctuation in that price sends shock waves of chaos throughout the economy. Prices of everything go up with the price of oil. It costs more money to deliver a loaf of bread to the grocery store. This puts a squeeze on consumers. More recently, the high price of oil suddenly and substantially dropped. This puts another kind of squeeze on the economy. The bank loans to the fracking companies can no longer be repaid. An economy geared around a $100 barrel of oil is suddenly plunged into chaos. The wild swings we see in our economy make it very difficult to invest in anything, including new manufacturing facilities.

Some like to think the solution to all of this is to have everyone buy American, and punish companies that try to leave this country in order to avoid all of our manufacturing pitfalls. I consider these approaches to be un-American and also unrealistic. If we want people to buy American, we need to make American products competitive. If we want companies to stay in America, we need to make that financially attractive. After all, companies have an obligation to their investors to maximize profits. That's called free enterprise, which is the very foundation of what made America great.

All of these manufacturing challenges can be overcome. It's really not that hard. But what we have to do first is take a sobering, wise, and intelligent look at the situation. Only then can we deal with it. Only then can we effectively bring manufacturing back into this country, providing good jobs and economic stability to our nation.