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Deindustrialization in America: A Legacy of Outsourcing and Free Trade

by Anna

In the early 1960s, Muncie, Indiana, stood as a symbol of prosperity with well-paid manufacturing jobs and a high living standard. However, the 1970s marked a turning point as companies like Borg Warner and Ball Glass began layoffs, contributing to Muncie’s loss of 10,000 factory jobs and a declining population. This trend wasn’t unique to Muncie; various cities across America faced similar challenges due to outsourcing and the acceptance of deindustrialization as an inevitable consequence of free-market capitalism.

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The “ripple effect” of sudden job loss resulted in economic decline, impacting public services, businesses, and communities. The broken window syndrome, where decay begets decay, led to increased crime, family violence, and various social issues. The economic justification provided by economists, suggesting that deindustrialization is a natural transition to a service economy, has been criticized for not delivering the promised benefits to displaced workers.

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Several cities, including Newton, IA; Galesburg, IL; Danville, VA; Dayton, OH; Bruceton, TN; and Youngstown, OH, witnessed the detrimental effects of outsourcing and deindustrialization, leading to job losses, declining populations, and economic deserts. Contrary to economic predictions, the transition did not generate better jobs for those who lost manufacturing jobs, with many forced into lower-paying service jobs. The concept of “disinvestment” allowing for the mutation of assets and individuals has not translated into improved outcomes for affected communities.

The China Shock, resulting from outsourcing to China, further exacerbated job losses in the United States. Analysis shows that since 2001, the U.S. lost 3.4 million manufacturing jobs due to outsourcing to China, affecting 927 cities. The economic impact was not evenly distributed, with one-third of U.S. regions experiencing absolute declines in real per capita income. The China Shock became a means of transferring income from the working class to the affluent.

Deindustrialization has broader social implications, leading to white voter backlash, as indicated by a 2021 report. The social contract of opportunity and security for those who act responsibly is perceived as broken, contributing to feelings of economic distress and a belief in a broader American decline. Displaced workers’ incomes often remain significantly lower even after finding new jobs.

The report emphasizes that deindustrialization threatens dominant group status, prompting some white voters to favor candidates addressing economic distress and defending racial hierarchy. The widening wealth gap and increasing inequality contribute to social unrest and a divided country.

In conclusion, the deindustrialization of America is not merely an economic shift but a result of decisions prioritizing economic profit over the well-being of communities and the country. The one-sided benefits of free trade, flowing to capital while costs are borne by labor, have created a race to the bottom for many working Americans. Multinational corporations and government leaders played a significant role in the deindustrialization process, making decisions that prioritized shareholder value over the interests of communities and workers. Acknowledging this reality is essential to address the social costs and long-term changes in the economy faced by millions of struggling Americans.

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