“Labor – rather than the nation’s quantity of gold and sliver – is the cause of increase in national wealth.”

“Labor – rather than the nation’s quantity of gold and sliver – is the cause of increase in national wealth.” This phrase was postulated almost 300 years ago by an odd-looking Scot named Adam Smith, the father of political economy. Smith, along with David Ricardo and a few others, taught us that labor combined with production are the basis of creation of the real wealth of a nation.

Recently Smith’s writings came back to me as I was waiting in my dentist’s office scanning an issue of a certain auto magazine. The article that caught my eye was about the best new cars in America today. A table of the best car brands was a true shock. Out of 30 brands listed, only five were brands from U.S. auto makers.

Yes, our automakers are in a terrible shape, but I believe that we are facing another more serious challenge. It is not the threat of global terrorism, or the rise of fundamentalism, or Roe vs. Wade, or anything else the media would like us to believe. The name of our challenge is the decline of American industry through the loss of manufacturing and production to overseas suppliers, which is leading to an increasing reliance on a service economy to be the engine of growth of the United States.

Just like Adam Smith, I believe that the production of goods is a key element of the economy of any nation and no economy can survive without it in the long run. Production is the only activity that actually generates surplus (therefore value) which can be shared and distributed to others. You may argue that our agriculture is highly productive and a leader in the world, but we can not survive economically as an agricultural society. Just ask Paris Hilton how she enjoyed life on the farm.

We are a global economy and we do want to help people around the world and lift them out of poverty, but we need to think strategically as to our own economic future. Our policy makers need to focus on major restructuring of our economic and fiscal policies to support growth of the U.S. manufacturing industry. Recent economic indicators (unemployment, loss of manufacturing orders) are absolutely frightening and we must act to restore our global leadership in manufacturing and production. Let’s hope that the new stimulus bill supports this position.

Submitted by ASO member: Frank J. Safertal