THE THINGS WE MAKE, MAKE US

Every once in a while advertisers get it right.  They not only make a pitch for their product, but create a spot that moves you.  A once great American car company is out with a new commercial for their 2011 model and it epitomizes what is going on in the U.S. economy today.  It goes like this (full video is attached below):

“The things that make us Americans are the things we make.  This has always been a nation of builders.  Of craftsman.  Men and women for whom straight stitches and clean welds were matters of personal pride.  They made the skyscrapers and the cotton gins.  The colt revolvers and the jeep 4X4’s.  These things make us who we are.

As a people we do well when we make good things and not so well when we don’t. The good news is this can be put right. We just have to do it.  And so we did.  This, our newest son, was imagined, drawn, carved,  stamped, hewn and forged here in America.  It is well made and it is designed to work.  This was once a country where people made things.    Beautiful things.  And so it is again.”

You don’t have to be an American to love this commercial (though any Johnny Cash fan is upset by its brevity).  You don’t even have to like the car.  But the message is one that should ring particularly true at this time in history.  This country has become a place that consumes more than it produces.  We have lost sight of what it means to make great things.  We cherish the things we acquire more than the things we produce.   And in this race to acquire the biggest McMansion or the newest Apple product we have taken on a gross amount of debt.  Our complacency combined with a great deal of fiscal incompetence has resulted in a private sector that is grossly indebted and now suffering the consequences.  These problems are exacerbated by a public sector which rewards the losers and punishes the prudent.

I firmly believe the current economic downturn is the market reminding us of what we once were.  We were once a nation of builders.  We were once a nation of producers.  We have become a nation of consumers.  And in doing so we have consumed ourselves.  The “greatest generation” did not become great on their own.  They became great because their parents raised them to be great.  And their parents raised them to be great because they lived through one of the most trying periods in the history of man.  They were a generation who fought in a world war only to be rewarded with a great depression followed by another world war.  They were a generation of hardened men and women.  With resolve of the likes that has not been seen since.  And their offspring are a reflection of that.

They say pride cometh before the fall.  Well the fall hath come, but we have not learned our lessons.  While consumers continue to struggle and pay down debts we bailout a financial sector which makes (almost) nothing and takes much (our brightest minds and our pocketbooks).  The government uses its fiscal and monetary tools to bailout the losers and punish the prudent.  We provide homebuyers tax credits and “cash for clunkers” so the private sector can become further indebted.  We promote loser capitalism and crony capitalism.  Such things do not instill hardwork in our citizenry and certainly do not promote increased output.

It’s time that we get back to being a country of people that make things.  And not one that shuffles money from one pocket to the next in the effort to make the next great financial innovation.  We are not a nation by the banks and for the banks.  We are not just a nation that just consumes things.  We are a nation of builders.  People that make things.   Great things.   Let’s hope this message does not fall on deaf ears as this crisis looks more and more like a wasted one….

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Marty

    Wow, this would be a great campaign speech! Are you secretly planning a run for public office? :)

  • buckstar

    It will take a huge currency devaluation and decrease in quality of life before US workers can compete with asia/india. The pay for an MS degree engineer in China is something like 10k, and the government does everything it can to attract employers, whereas in the US the laws are setup to penalize companies.

    When everyone was afraid that Japan was going to crush the US economically, they forgot that there’s only 130m people there, so their salaries caught up to the US rather than the other way around.

    Now that with india/china there are 2.5billion! people entering the global workforce the US salaries will have a hard time staying 10x higher, to say the least.

  • MarkS

    Is it ironic that the song in the background is “God’s gonna cut you down”?

  • MarkS

    Well we have lived beyond our means for too long. We have a government that spends money on projects with 0% ROI. The gap between USA and China will continue to thin.

  • Tom from Michigan

    Thanks for simplifying what sometimes gets lost in all the detail. A message every reader can understand and relate to. In the end, it’s always simple.

  • boatman

    your essay simply “it” in a nutshell, TPC…spot on the real deal…highlights the big problem with THIS recession-109 months of inventory in our biggest remaining manufacturing business-housing…..

    girlfriend’s on her third jeep, the last one, i have mandated,…. quirky engine systems designs…….rides like a rock with alot of sway-rocking,uncomfortable seats……bulletproof trannies tho……

    gimme my chevies…..i put 320k on a s-10 blazer in the 80’s…..some girl round the corner still driving it….with synthetic oil and a little 2-cycle oil put in w/gas (400:1) only abuse or wrecks can kill most modern vehicles.

    that’s why i call them “(ab)used car lots”

  • B Ferro

    Great post, great post.

  • F. Beard

    Work harder and smarter you debt-slaves and mind your morals too! Do as we say and not as we do. While we loot you with counterfeit money (otherwise know as credit) we expect you to be honest and hardworking. After all, the system won’t work unless there are victims and that means you.

    The US experienced its greatest economic growth between the end of Lincoln’s War and the Federal Reserve Act in 1913. If we want to get back to a sound economy then let’s abolish the government backed banking cartel first. But before that the debt slaves should be freed by the same means by which they was enslaved, legal tender fiat.

    I wonder what’s next on the public morals front, a new Catholic Legion of Decency? Really folks, hypocrisy is not pretty. All the talk of austerity and work ethic is so the bankers can be repaid their credit-from-thin air which caused our problems in the first place.

    Oh and how about debtor’s prisons to solve those problems?
    http://www.nakedcapitalism.com/2010/06/jail-for-unpaid-debt-a-reality-in-six-states-strategic-default-pushback-watch.html

    All this would be funny if the consequences were not so serious.

  • jt26

    Also, over the last 20 years, continuously declining global ranking in math skills. Ironically, the very best, went on to Wall Street (as you said), who later exploited the very worst (subprime borrowers, with option ARM, neg amort, requiring PhD math skills to comprehend).

  • mediaguy

    You cite a thoughtful well-produced ad here and the hyper-consumption/indebtedness that overhang the nation and economy. Curious as to your thoughts on how this impacts advertising as we knew it???

  • kayman

    Great speech (post) but aren’t you overlooking something. Debt is itself a “creation” (product) of the financial industry. and all the derivatives that go with it. I think we are just moving further up the chain than the rest of the world but we are just at a for in the road, or the first real correction.

  • Michael Peroy

    We shouldn’t define ourselves by the things we make anymore than we shoudl define ourselves by the things we own.

  • http://www.pragcap.com TPC

    Really?

  • In Banking

    Unfortunately, the car makers seem to have done no better than the Financial Industry. GM has been hemorrhaging money for years (mainly due to massive pension benefits from decades ago) and Chrysler is not much better. Not to mention that the mantra of foreign cars lasting longer and being more reliable seems to have taken hold (this is no longer the case these days).

    We need a new industry. Cars and homes are 20th century industries. We need to move on to power generation, battery technology, low power electronics, higher speed processors, etc etc. It seems obvious which way the world is going – so why isn’t the strongest superpower able to keep up??

  • domingo

    TPC is right.All the world is applying a perverse monetary system that put the economic power in the goverment hands.The goverment (treasury+central bank) is not budget restricted and can expand its liabilities (money + debt) without any limit.Sadly,if we give the goverment the power to stole the present and future private wealth trough monetary expansion,be a politician and control it has more economic sense that to make things and create wealth.

  • http://www.pragcap.com TPC

    For everyone’s sake – let’s hope not.

  • scharfy

    We do make things. Alot of things. We just consume much more.

    Lets list a couple of American Companies that have changed/are changing the World.

    Microsoft, Apple, Amazon, Goodyear, Boeing, Dupont, Dell, FedEx, Intel, Alcoa, Sears, Kodak, IBM, J&J, GE, McDonalds America Online, AT&T, Verizon, Nike, Google, Wal-Mart, Walgreens, Whirlpool, Kraft, Tyson Foods, Whole Foods, Amgen, ExxonMobil, Costco, Target.

    The list goes on.

    The innovation of these companies, and their impact on the world, though partially fueled by debt, IS REAL. You might not want a 1/4 pounder with cheese, but they can get you one anywhere in the world for .99 cents. IT’S VERY REAL.

    FedEx is a logistical work of art. Ship something anywhere in world overnight for a reasonable price? Are you kidding me?

    You cannot destroy the Google search algorithm, or the design and ingenuity if the ipod. The speed and power of Intel microprocessors is here to stay. Nobody gets energy from point to point on time and on schedule like XOM. Amazon is a modern marvel. Walmart’s structure and culture of cost cutting keeps families afloat throughout the land. I’ll stop.

    We are the worlds number one exporter. We just import more. Yes, it must be remedied. But the progress is not “fake” or “ponzi scheme”. It cannot be destroyed.

    So, while the the credit bubble will have its costs, and we DID build 25 years with of homes that are gonna have a hard time getting paid for. But in spite of that, there are real economic drivers here – “Goods and services” in America.

    Enough about China. They largely ASSEMBLE other countries things cheaply with slaves. The per Capita income there is 1/4 that of Mexico. Of course the Gap must close. But it is very wide. Lets see them identify, design, build, and sell a product here in the US. Go buy an laptop/tv from a chinese company and see if you ever do it again.

    I’ll take my chances on the US economy. For all the Booms/bust and tomfoolery in the dollar/banks, we have still the best game running in my view. And for a Nation of 300 million, we do Ok.

    And yes that is a great Jeep ad. It’s soft protectionism. I love it.

    1860 America is dead
    1907 America is dead
    1932 America is dead
    1941 America is dead
    1981 America is dead
    2008 America is dead

    Keep fading the US.

  • F. Beard

    “We need a new industry. Cars and homes are 20th century industries. We need to move on to power generation, battery technology, low power electronics, higher speed processors, etc etc. It seems obvious which way the world is going – so why isn’t the strongest superpower able to keep up??” IB

    Because government backed fractional reserve banking is socially corrosive. Just compare the US before and after the Fed. Also, if you wish to attract real capital into the US (talent, skills, work ethic, etc) then allows genuine capitalism. It’s that simple.

  • http://www.pragcap.com TPC

    I’m not saying the US is dead. But that we’ve gotten a bit off track. Of course we make great things still. We just happen to love consuming them a bit more. The private sector debt is really the crux of this whole downturn in the US.

    I would never fade the USA over the long-term. But until we see a readjustment between private sector production and consumption it’s very hard to be long-term bullish.

  • scharfy

    “But until we see a readjustment between private sector production and consumption it’s very hard to be long-term bullish.”

    True. True.

    I just remember my father buying silver in 1981( didn’t work out), Hostages in Iran, no food on the table, nuclear war imminent, inflation on high, and out of work. The world actually was ending. And it didn’t

    (channeling Jeff Goldblum from Jurassic Park) “Life finds a way.”

    You run a great site, sorry for the rant. :)

  • Michael Peroy

    Yes, really.

  • Jack

    TPC-

    It may strike some people as being too socialist, but there are many successful exporter nations (Taiwan, Singapore, Korea, China, Germany, etc) where the government is very involved in the private sector, funding and subsidizing key export technologies and companies through the whole product life cycle from basic research through commercialization and export. The US is too wedded to the idea of being a service economy and no such industrial policy exists here. Granted, the govt does fund a lot of critical basic research but it leaves the private sector alone to commercialize and monetize the basic technology. The problem is that US companies are competing unfairly against foreign firms that get this direct govt assistance and very often, our economic rivals overseas are beating us with the very technology that was created here (ie solar cell technology and advanced battery technology comes immediately to mind).

    Having said that, Do you think the US needs to have industrial policy here where the govt is supporting and actively assisting critical export technologies and companies? Although industrial policy goes against the spirit of free market capitalism, I would much rather see US exporters get free money, subsidies, and assistance than the financial sector.

  • http://www.pragcap.com TPC

    Well, I can’t speak for everyone, but I hope I will be remembered for the things I produce and not the things I have consumed.

  • http://www.pragcap.com TPC

    One of my favorite movie lines of all time. It’s so true. And it’s one of the main reasons why being a permabear is a recipe for disaster.

  • http://www.pragcap.com TPC

    Jack, it’s an interesting thought. It ties into much of what I discuss in regards to how the monetary system works. When you learn how reserve accounting actually works you realize that some level of govt intervention is not only necessary, but can be quite good. I’m being broad here and cherry picking, but the interstate highway system, railroads and US military are huge projects that come to mind when I think of superb INVESTMENTS in the country. Of course, there is a fine line here. Someone above mentioned how the USA invests in a great deal of projects with 0% ROI. Cash for clunkers is a great example of such spending. It’s counterproductive from a social perspective.

    So yes, I do think the US govt needs to do more to invest in sectors of the economy that can provide a real long-term benefit to the countries long-term output. That does not mean I want govt running the economy. Not even close.

    China is a really interesting case study here. They essentially subsidize many of their most productive sectors. It’s an interesting combo of govt working with the private sector. There is this supposedly ENORMOUS divide between what the US govt does and what the Chinese govt does in terms of intervening in the economy. I am not so sure the divide is that great.

    I don’t think govt should try to run the economy, but govt can and does provide funding for private sector projects that are enormously beneficial. Our history confirms this. All govt spending is not bad. That is a fact in my opinion. I am a free market guy, but I also recognize that some level of govt spending is not bad. Therefore, why would we not leverage this tool to help the private sector grow?

  • F. Beard

    “All govt spending is not bad. That is a fact in my opinion. I am a free market guy, but I also recognize that some level of govt spending is not bad. Therefore, why would we not leverage this tool to help the private sector grow?” TPC

    First, if we did not have such an elastic money supply, government spending would not be so essential as it is now. But yes, since government spending is necessary it might as well do some good. Nuclear power would be good; upgrading Internet bandwidth would be good too. Oops! Once one gets the pork wagon rolling it is hard to stop it! I was about to suggest the government give me a few billion to run a proto-type alternative money scheme.

  • Michael Peroy

    Well, I can’t speak for everyone, but I hope I will be remembered for the character of my person and not the things I have produced or consumed -which are two-sides of the same materialism coin. America’s legacy should be the leadership of its character, not a marginally better SUV.

  • prescient11

    Agreed 100%, what a wonderful commercial.

  • TPC

    In the words of the great Stephen Hawking: “Work gives you meaning and purpose and life is empty without it.” The product of your work is a reflection of who you are.

    I am not advocating a world of worker drones.

  • Michael Peroy

    As one of the greatest minds ever known, his contribution is the betterment of society through scientific advancement –that is his reflection though work, he never made a marginally better product.
    If we are what we make, let it be how Mr. Hawkins does it (or how we did it during the Space Race), not an SUV.

  • P Kavanagh

    How ironic that the ad emphasizes how American the new Jeep is when the engineering was done by Mercedes (the Jeep is based on the M class) and the company is owned by Fiat

  • ron

    ” It seems obvious which way the world is going – so why isn’t the strongest superpower able to keep up?? ” . . . because it is only obvious to a small percentage of actual voters out of apx 150 million eligible voters . The majority of voters always seem to elect a fix ( ie. government / politicians ) for a past problem instead of present or future problems . The system does not and perhaps cannot guarantee that most voters will understand what must be done politically – because the political government has ultimate control and responsibility for the economy including the matter of excessive private debt .

  • http://www.pragcap.com TPC

    There is no indignity in making cars. Not everyone is born with a Hawking mind. Some people invent cars (Henry Ford). Others just weld them. I have equal respect for both.

    My bigger point is that we should produce more than we consume. Ie, we should admire the things we produce more than we admire the things we consume. It’s a general point and certainly not applicable to everyone, but in general I think it’s a good message.

    Some people clearly disagree :-)

  • Anonymous

    I never said (or alluded to saying) that there is any indignity in welding cars. Nor is there any indignity in making plastic trinkets and electronics in China.

    My general point is that we should define ourselves by innovative products (not marginally better ones) or if we can’t do that, we should define ourselves by intangible qualities like strength of character.

    And there is no need to produce more than we consume, there is only a need to produce better products, (i.e. quality versus quantity).

  • F. Beard

    “Life finds a way.”

    It sure does. Bacteria, for instance, have evolved to breakdown PCBs and oil.

    But humans are different. If we get conceited or complacent then we risk God’s wrath. There will be an End one day, you can count on it. In fact, when the world ceases to count on it will be when it occurs, IMO.

  • Larry

    For all those who are “down” on USA, try to move to those countries to see if you like it better. The grass is always greener on the other side. There are about 500 mil+ Chinese or Indians would want to move to the country overnight if they are allowed to.

  • Jack

    Nice thoughts, TPC. BTW, I haven’t posted in a while but read your site a lot while overseas in Iraq. After doing patrols all day, I really looked forward to coming back to base and reading TPC at the internet cafe. Thanks for helping me get through my year in Iraq.

  • TPC

    No, thank you Jack.

  • F. Beard

    “Also, the sine qua non of adulthood is the delay of gratification.

    We could use a dose of that methinks (grin).

    I lot can be said for living the Spartan life!” Iluvatar

    Why? Just because the money supply has shrunk? The factories still stand (yes, in China but no matter), the crops have not been destroyed and no plague has swept the land. Yet we must endure austerity that the counterfeiting cartel be paid?! I say nay! What say ye?

    If the Spartan life is so good then let the bankers endure it in real terms while a debtor and saver bailout fixes them in nominal terms.

  • BGray

    TPC,
    Politics is probably not your cup of tea but it’s exactly people like you that should be running the country. When intelligent and responsible men/women like you don’t step up we end up with the incompetent candidates who run with their egos.

  • F. Beard

    “And that is hard to do when the citizenry is awash in socialistic programs.” Iluvatar

    Et tu, Iluvatar?

    Fascism, the government backed banking cartel, led to socialism in the US. Check your history; the Great Depression preceded the New Deal in the US. Without the banking cartel, there would have been little need for socialism in the US. And now we’ll starve the poor so the rich can get richer?

  • TPCFAN

    WOW!!! FROM NOW ON THAT’S THE KIND OF STUFF I WANT TO READ MORE OF HERE(NOT THAT I DON’T APPRECIATE THE OTHER POSTS’)!!! DAMN THIS IS A VERY GOOD POST!! OUR KIDS ARE GOING TO SUFFER SEVERLY DUE TO THE ATTITUDES OF THE GENERATION THAT LOVES TO BUY ON CREDIT!!! WE NEED TO GET THIS MESSAGE IN OUR HEADS!!!

    I’D BET MONEY THAT THOSE AGAINST THIS MESSAGE ARE THE ONES WHO DON’T WANT TO ADMIT THEY HAVE A PROBLEM WITH LIVING BEYOND THEIR MEANS!!

  • quark

    Excellent opinion and spot on. With all the push for free trade and fund managers squeezing every dime of performance from corporate leaders too eager to redeploy assets around the globe in search of the least common denominator in wages we have lost our way. Investors and corporate leaders have lost sight on who purchases their products and services and that is the citizens in this country. In an insatiable appetite for returns and profits corporate leaders and investors have lost focus on building capital for future employment of goods and citizens. We may suffer a depression for it.

  • anon

    Smart Advt agency + Private Equity Firm + Fiat = Needs to generate some sales, to generate ROE = use the patriotic message. Always works.

    But will not change the country’s prospects. We are in decline. Other countries are better managed, smarter and work harder.

  • http://www.bondsquawk.com Rom Badilla

    TPC, well said!!!

  • TPCFOROFFICE

    I GAVE U 1 STAR BECAUSE I AGREE WITH THE 1st comment. (U SHOULD RUN FOR OFFICE)

    Sincerely,

    OUR PUBLIC LEADERSHIP NEEDS IMPROVEMENT!

    THANKS FOR THE BLOG IT IS VERY HELPFUL TO ME, FRIENDS, AND FAMILY!!

    U DESERVE TPC.COM

  • http://thecynicaleconomist.com The Cynical Economist

    Man! If it had not happened to me before, I would say you are stealing from my blog!

    Check this out http://thecynicaleconomist.com/?p=14919

    But in two occasions (at least I am aware of just two) I had posted blog post on my blog, that later I found were posted a day or two before mine post somewhere else and that have discussed same topics and reached similar conclusions. (once with the Big picture and second time with Rolfe Winkler blog)

    LOL

  • Michael Covel

    Majority of American public too far gone. iPads and housewives reality shows still rule their field of vision.

  • The Rage

    Bubbles are a part of capitalism and will ALWAYS exist. The problem was the amount of capital flowing through the system with the end of the cold war, was immense.

  • The Rage

    To add on, my grandfather told me the New Deal programs were like being freed from concentration camps. By 1929 this was a poor country. By 1946, a whole middle class had developed.

    FDR took the plutocracy back snd shook them down even if he was a slime ridden scumbag himself, he knew this country was close to death. Your whine about “socialistic” program is a farce. The plutocracy is the real threat.

    I call it “soft-bolshevism”. Destroy the national government and dissolve the United States slowly over time into corporate slave states. Flipside to Marxism’s top-down style.

  • http://www.pragcap.com TPC

    Cynical indeed!

    I wish I had time to read all the good blogs out there and steal their content! Just kidding of course. If I were going to “steal” content I’d at least cite it.

  • http://www.pragcap.com TPC

    But Michael,

    You can watch real housewives on our iPad while paying your credit card bill as you drive your leased car back to the house you mortgaged your life with. How can you not love that product?

  • F. Beard

    I agree about the gold standard but I think banking is the root cause of socialism. Most people just want to work, save and leave something to their kids. That’s it. Instead they get the boom-bust cycle that throws them out of work and inflation. Also automation, which is a most excellent thing, causes them to lose their jobs yet without compensation to them. The company owners benefit but not the workers.

    It’s a very complicated problem yet with a simple solution; liberty in money creation, usage and acceptance. If we had that then corporations would have to share wealth rather than loot it via inflating a government enforced monopoly money supply.

    Sorry about the “et tu”, Illuvatar. Socialism is bad, true, but one can easily argue that it is a necessary counter to the fascist money and banking system we have today. And remember, fascism exists to enable a few to get wealthy and powerful at the expense of the many while socialism is mostly about allowing many to survive the depredations of the fascists.

  • F. Beard

    “My last try…” Iluvatar

    No, keep trying bud. Hopefully I am not too stubborn to learn. I come here to learn as well as advocate.

  • F. Beard

    “We are in decline. Other countries are better managed, smarter and work harder.” anon

    I agree. But why? Does prosperity necessarily lead to decadence and decline? I say no. I say that if we will only do capitalism right then we will outcompete the world again.

  • F. Beard

    “Bubbles are a part of capitalism and will ALWAYS exist” The Rage

    No, you are just wrong, IMO. Bubbles require credit from thin-air. Get it? Bubbles are blown with thin air.

    But maybe you’re right. Let’s have liberty in money creation, usage and acceptance and see, shall we?

    I really hate to see true capitalism maligned. I think you mistake pseudo-capitalism for the real thing.