The Great Recession isn't over

The Dow-Jones average is teetering below 9500, and job creation is not keeping up with jobs lost. Economists and pundits are raising the specter of a "double-dip recession." Little in economic statistics or anecdotal evidence gives much hope that the economic good times are returning.

An article in the March Atlantic examines the truly frightening prospects of the long-term impacts of this Great Recession — perpetually high unemployment, whole neighborhoods turning into unoccupied slums, a weakening of marriage because of occupational uncertainties. Such a catastrophic scenario might not unroll, but it could, and there may be little the government or anyone else can do about it. The Federal Reserve can't lower interest rates to stimulate the economy because rates are already near zero. Congress' ability to "prime the pump" appears ineffective, given the lack of success of last year's $700 billion stimulus and the soaring federal debt.

There are many causes for this recession, including over-speculation in complicated new investments, an overheated housing market and a feeling of insecurity among consumers. Perhaps the most fundamental cause, however, has been brewing for decades — the loss of American manufacturing. Since the 1980s or earlier, we've been deluding ourselves into thinking that in the "new economy," we could sustain our standard of living by selling each other fancy financial investments, lawn services, hamburgers and concert tickets. A sound economy is built on creating something, not on swapping services. The American economy might not see the "good times" again until it begins making things that the public wants to buy, whether it's cars, televisions, hammers or widgets. America needs a tax policy that encourages manufacturing in America by American workers.

America needs to be into manufacturing

Executives from the Big Three Detroit automakers, plus the head of the United Autoworkers, were back before Congress Thursday to ask for billions of dollars in taxpayer money. They say that without billions in taxpayer funding, they will go belly up, with residual effects that will be felt throughout the economy.

No doubt, bankruptcy by Ford, GM or Chrysler would do further harm to the staggering economy. The question before Congress is what would be worse — pouring taxpayers' hard-earned dollars into a poorly managed, uncompetitive industry or allowing bankruptcy to take its toll, whatever the damage.

Congress should look at more than just the auto industry. Almost all manufacturing in the United States has suffered in the global economy. The steel industry, the textile industry, the furniture industry — all have dwindled to nearly nothing because of global competition and detrimental federal policies. Rather than just bail out Detroit, Congress should consider how the United States can restore its manufacturing base.

Some have worried about the impact of losing the automakers on national security. In World War II, all the automakers churned out jeeps, tanks, trucks and so forth for the war effort. Could the United States face a similar threat without the heavy industry that dominated U.S. jobs in the 1930s, 40s and 50s? America has given up on manufacturing and has tried to gain prosperity through creative financing, which is what sparked the current economic crisis. To be truly successful, the United States needs to make things, not just finance them. Perhaps the United States can't compete in highly labor-intensive industries, but it should be able to compete in manufacturing things that utilize robotics and other labor-saving devices. The Obama administration should create policies, including tax policies, that reward domestic manufacturing of a wide variety of goods.

Cars can be manufactured successfully in this country. Just ask Toyota, Nissan, Honda and Hyundai.