Made in America

There are many people that will say it is important to buy American Made products, but not many people can explain why it is important. At BarrelBuddy, we not only think it is important, but we know it is CRITICAL to the survival of our country and to the welfare of every American.

Because of this belief, we want to provide you with the economic reasons that explain the critical nature of our current situation in America, which you will find below.

Many of our competitors in the Gun Cleaning market do not make their products in the U.S.A. After reading below, we hope you agree that it is not only important, but critical, and we ask you to help us in supporting America by supporting BarrelBuddy through the purchase of our fine products. We can’t do it alone, but we commit to being American made as long as our customers make it viable. Let’s do it together!

May God still bless America.

American Made: Why it’s Critical

Productivity offshore does not produce rising incomes in the US. We don’t get the benefits of the productivity, we get the debt, trade deficit, reduced wages, and unemployment.

The chart below summarizes the situation created by offshoring American jobs. The essay below it provides a more detailed explanation.

Offshoring

As the modern world progressed, the world became smaller through the increase of travel and advances in technology. American predominance in various areas shrank as other countries began to close the gap through greater availability to technology and education. As these once “closed” countries and economies began to open up, this caused “socialist India and communist China to join the winning side and to open their economies and underutilized labor forces to Western capital and technology.”[1]

As these markets opened, American corporations began to exploit the availability of cheap offshore labor and lax regulations, moving large manufacturing operations overseas. Dr. Paul Craig Roberts, former Assistant Secretary of the US Treasury for the Reagan administration and noted economist writes:

“American corporations began offshoring the production of goods and services for their domestic markets. Americans ceased to be employed in the manufacture of goods they consume as corporate executives maximized shareholder earnings and their performance bonuses by substituting cheaper foreign labor for American labor. Many American professional occupations, such as software engineering and Information Technology, also declined as corporations moved this work abroad and brought in foreigners at lower remuneration for many of the jobs that remained domestically. Design and research jobs followed manufacturing abroad, and employment in middle class professional occupations ceased to grow. By taking the lead in offshoring production for domestic markets, US corporations force the same practice in Europe. The demise of First World employment and of Third World agricultural communities, which are supplanted by large scale monoculture, is known as Globalism.”[2]

Without offshoring, American citizens would benefit from the rise in consumer demand and production, but with jobs offshored, the benefits of the business cycle did not flow back into the US economy. The profits remained offshore and flowed back to the US in the form of corporate bonuses and shareholder dividends. Roberts writes:

“For most Americans income has stagnated and declined for the past two decades… The distribution of income worsened dramatically with the mega-rich capturing the gains, while the middle class ladders of upward mobility were dismantled. University graduates unable to find employment returned to live with their parents.”[3]

Because of the decline in good jobs available without a college education, jobs that could sustain an average American family, unemployment and underemployment rose, creating a drop in income. This drop in income of course, reduces the amount of discretionary income and thus reduces consumer demand in the economy. To address this situation, the Federal Reserve intervened, as Roberts notes, causing all sorts of destruction:

“The Federal Reserve expand[ed] credit in order to keep consumer demand growing. The growth of consumer debt was substituted for the missing growth in consumer income. The Federal Reserve’s policy of extremely low interest rates fueled a real estate boom. Housing prices rose dramatically, permitting homeowners to monetize the rising equity in their homes by refinancing their mortgages.

Consumers kept the economy alive by assuming larger mortgages and spending the equity in their homes and by accumulating large credit card balances. The explosion of debt was securitized, given fraudulent investment grade ratings, and sold to unsuspecting investors at home and abroad.”[4]

Essentially, the economy was being propped up by debt, known as leverage. We all understand the devastation debt can do to us personally, and our failure to pay those debts will land us in jail or bankruptcy, but not so with the bankers and the government. “The expansion of leverage as a means of boosting apparent economic growth dates back to the 1980’s. The decisions that have led to the economic state we find ourselves in are both intentional and pervasive; by expanding leverage in the economy, we create the appearance of wealth and growth, but not actual wealth and growth… The use of debt is thus justified only to bridge a short-term gap in funding that you are certain will be more than made up for tomorrow – and never for a recurring expense that you cannot pay for in perpetuity out of your income.”[5]

Due to financial deregulation and the failure of government officials to address new financial instruments (derivatives) being created by the large financial institutions, the nation’s largest banks and insurance companies over-leveraged themselves to unbelievable levels, some reaching debt to reserve levels well over 30-to-1.

“Since there is literally no economist in the world that knows exactly how the derivative money flows or how the system works, while derivatives are traded in microseconds by computers, we really don’t know what will trigger the crash, or when it will happen, but considering the global financial crisis this system is in for tough times, that will be catastrophic for the world financial system since the 9 largest banks… hold a total of $228.72 trillion in derivatives – approximately 3 times the entire world economy. No government in the world has money for this bailout.”[6]

What ensued was the largest bailout in the history of the world. The government told the American people that these institutions and several large corporations were “too big to fail” and that if the taxpayers didn’t bail them out we would be facing national economic ruin. Our capitalistic system has been “deformed” slowly but surely over the last century into something that resembles fascism, what we can call “crony capitalism.” David Stockman, ex-budget director under Reagan, states:

“So the triumph of crony capitalism was only confirmed by the bailout spasms of 2008… in the intervening decades, a leviathan was arising through a process of economic governance that was halting, piecemeal, and more often than not driven by fleeting emergencies that were of no lasting moment.

But the common thread was the proposition that modern industrial capitalism was unstable and prone to chronic cyclical fluctuations and shortfalls that could be ameliorated by the interventions and corrective actions of the state, and most especially its central banking branch. That was upside down. The far greater imperfections and threat to the people’s welfare were embedded in the state itself, and in its vulnerability to capture by special interests – the vast expanse of K Street lobbies and campaign-money-dispensing PACs. Trying to improve capitalism, modern economic policy has thus fatally overloaded the state with missions and mandates far beyond its capacity to fulfill. The result is crony-capitalism – a freakish deformation that fatally corrupts free markets and democracy.”[7]

But the underlying cause of all of this, besides the repeal of the regulations of Glass–Steagall, was the offshoring of US jobs. “The fact that millions of jobs have been moved offshore is the reason why the most expansionary monetary and fiscal policies in US history have had no success in reducing the unemployment rate.”[8]

There are two additional aspects to all of this that have also hindered and prevented a correction in economic policy that would set us on a path to righting these wrongs. The first is a failure by economists to understand what “free trade” really means (it is not compatible with offshoring), and the acceptance and rise of Globalism. We will not address these topics here due to their complexity, but they play major roles in altering how capitalism works, and should work, in the US and abroad. We conclude with Roberts:

“Profits no longer are a measure of social welfare when they are obtained by creating unemployment and declining living standards in the home country… jobs offshoring or globalism and financial deregulation wrecked the US economy, producing high rates of unemployment, poverty and a distribution of income and wealth extremely skewed towards a tiny minority at the top. These severe problems cannot be corrected within a system of globalism.”[9]

We hope this short essay will encourage you to support not only BarrelBuddy, but other companies that produce their products in the US, and to spread the word about the criticality of the situation. Thank you for taking the time to read this. We encourage you to see the following resources for further study.


[1] Roberts, Paul Craig, The Failure of Laissez Faire Capitalism, p. 31

[2] Ibid, p. 31

[3] Ibid, p. 31

[4] Ibid, p. 32

[5] Denninger, Karl, Leverage – How Cheap Money will Destroy the World, p. 78-79

[6] For a stunning visual representation of this and other economic concepts, see http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

[7] Stockman, David A., The Great Deformation, The Corruption of Capitalism in America, p. 52

[8] Roberts, Paul Craig, The Failure of Laissez Faire Capitalism, p. 33

[9] Ibid, p. 34