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Posted by quincy0191 Promoted 453 days 8 hours ago 2648 views
Business / Jobs Economy
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The title here is slightly misleading; U.S. Steel isn’t the major culprit here, it’s just a great example of what yet another problem is.
Back in 1991, U.S. Steel, the world’s first billion-dollar corporation, formerly the largest steel producer in the world, and a huge contributor to the American economy, welfare, and GDP, decided that they were done with steel. After ninety years in the business, and still one of the largest steel producers in the world, they sold off all their steel assets, changed their name to USX, and became a financial company.
U.S. Steel was not alone in this. The second half of the 20th century has seen American industry drop like a rock. We are all aware of this, of course, as many people bitch daily about having all our products made in China. Yet somehow, our nation’s GDP keeps rising, and pretty quickly at that.
The problem here is that as companies that once actually MADE something sell off their actually MAKING something assets to venture into the more lucrative world of finance, the national economy becomes really, really unstable. During a depression, everyone is hit hard; the companies, the people, the government. But when your economy is based on the trading of stocks, bonds, and futures, instead of actually MAKING something, depressions will fuck you. Really hard.
So as the American economy began to ditch that whole actually MAKING something and start making money through the financial sector, everything shot up. Making money this way is much easier, you see, and far more profitable. You need fewer people to do it, you don’t have to update your factories, you don’t have to ship anything anywhere, and you don’t have to worry about consumer demand and brand image because what you’re doing is, in its most basic form, trading the theoretical idea of making something.
Of course, at some point someone is going to realize that you’re not actually making anything, and prices begin to go up because there are fewer supplies, overhead increases, and that is passed on to the consumer. Then the consumer has to wait another year to buy a new car, and profits go down, so those now-financial companies pull all of their money out of a corporation and everything goes south really quickly for pretty much everyone except the CEOs, who’ve already collected their bonus checks.
Investment-based economies get absolutely torched in recessions because they don’t have anything tangible to sell. If you’re making SOMETHING, ANYTHING, during a depression, you’ll still go down the shitter, just less quickly. If companies stop making things, however, there’s nothing for people to buy and it’s harder to climb out. You need a $750 billion bailout to kickstart the economy again, but of course you don’t give it to the companies who are actually MAKING something, no, you give it to those dumbass investment firms because you’re a stupid government that doesn’t know what the fuck’s up.
This is why the bailout isn’t doing anything, while the automaker’s bailout is a good idea. Because they’re actually MAKING something. They’re hiring people to work in their factory (well, not hiring, but there are people there is the point), and they’re turning out something that’s tangible and even useful, that they can sell so they make some money.
To sum up: Companies, figure your shit out like U.S. Steel (they went back to making steel in 2005) and let’s try to actually MAKE something so that we don’t have a completely theoretical economy. Trading stocks is a fine way to make money, but if too many people do it and stop MAKING things, you get another ingredient for a recession just like what we’ve got now. Stable economies (like, say, China) are built on industry, not finance.
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