UpFront: Manufacturing Creates Wealth

By Brian J. Hogan
Editor 

The financial crisis that has roiled the world since last autumn began as a crisis in the banking community. And the world press now states that trillions of dollars of wealth has been destroyed worldwide, when what has actually happened is that lots of folks have chosen, figuratively speaking, to stuff money into the mattress, rather than invest with banks or in financial instruments.

There are stimulus packages and government programs aplenty in place to end this crisis, and the US Federal Reserve has pushed lots of money out into the banking industry.

In all the fuss, we should attempt to remember that there are three fundamental ways to create wealth: agriculture, mining, and manufacturing. Think about it. Bankers, lawyers, doctors, barbers, landscapers—they all provide services. Those services are valuable, but they don't, in themselves, create wealth. Financial instruments and financial dealings don't create wealth—they may package wealth, shift it around, and enable investment in wealth-creating enterprises, but they don't directly create wealth.   

Economic health must begin with consideration of the fundamental engines of wealth creation. In the particular case of manufacturing, the road to health begins with acknowledgement of the importance of this area of the economy, where lower-cost inputs are acted upon to make higher-value products available to society.

Productive labor, productive economic activity, must be recognized as important and valuable. Rather than insisting that the way to prosperity lies in awarding degrees in sociology, literature, drama, political science, and other soft fields, the governing class must acknowledge that hard skills are more valuable than others. Technicians, machine operators, machinists, and manufacturing engineers generate wealth for all the world to share. Can the same be said of government bureaucrats at any level?

If we are really serious about wealth generation, we need to change attitudes among the political class. Too many of those people have not worked in any area outside politics since the days when they were making a bit of money by mowing the neighbors' lawns. They have got to understand that wealth creation is driven by hard skills and the manufacture of real products. Belief inspires behavior. As nations and people believe, as nations and people define themselves, so they behave. If the US sees itself as a nation with great manufacturing companies, a great agricultural system, and a vibrant extractive industry, the resources needed to ensure that those fields are successful, and remain successful, will be provided to our wealth-creating industries. If the US sees itself as primarily a producer of television shows, pop music, and financial instruments, that's where our investment will go, and we will be in very deep trouble.

This article was first published in the April 2009 edition of Manufacturing Engineering magazine.