subject: The Main Driving Force Behind The Turnaround In Manufacturing Is The Weakness Of The Dollar [print this page] The economic recovery America is witnessing today is primarily due to improvement in the industrial heartland. The unemployment in Michigan has gone down from 14.1% in 2009 to 10.3% today. American as well as overseas companies are setting up industrial units in USA.
Economist Paul Krugman however opines that it is does not mean everything is hunky dory. The gains in jobs have been modest and the new manufacturing units are not offering satisfactory salaries, wages or benefits. The revival in the industrial segment is not that strong that it will not be necessary to go ahead with health reforms or do away with the urgency of setting up a strong social net of safety.
But something is better than nothing. If the right wingers had their way even this much would not have been seen.
The main driving force behind the turnaround in manufacturing is the weakness of the dollar it has dropped against the currencies of other nations. This has given manufacturing based in America a cost-advantage. Thus it seems that the weak dollar is exactly what the manufacturing segment required.
Despite this the Federal Reserve is being put under severe pressure from the right wingers to strengthen the dollar and not weaken. Couple of months previously the chairperson of the House Budget Committee Paul Ryan chastised Ben Bernanke for not tightening the monetary policy. Ryan said, There is nothing more insidious that a country can do to its citizens than debase its currency. If Bernanke had succumbed to that sort of pressure the manufacturing segment would have continued to relentlessly slide down.
If President Obama had not stepped in to rescue the automobile industry it would have been disastrous; the companies would have been liquidated and all the factories shut down. This would have negatively impacted on the rest of the auto segment in the country together with the suppliers of essential components. At stake were jobs running into millions. Obama went ahead with the plans despite rightist opposition. One congressman from the Republican camp referred to the auto rescue operations as war on capitalism. Another of his peers said that when the administration gets embroiled in a firm the disaster that follows is predictable. But the end results are negating these doomsday forecasts.
Thus the bottom line is that Americans are once more back to its old trait of manufacturing. This is largely because Obama and his government ignored negative illogical advice from the rightists.
