There’s a good primer on the Dow-Jones Industrial Average at Marketwatch, occasioned by the announcement that General Electric would be dropped from the index as of June 26. GE was the sole remaining of the original Dow companies and its ouster is an indication of the continuing decline in importance of heavy manufacturing in the U. S. economy. The only manufacturing companies left in the Dow 30 will be Caterpillar, United Technologies, and, arguably, Boeing.
I don’t believe that the United States can maintain a vibrant economy on the basis of finance and pharmaceuticals, both heavily subsidized sectors, but that’s the direction in which we’re heading and the departure of GE from the Dow is another milestone along that road.
The list of manufacturing companies missed 3M.
I don’t want to overstate the case, but I was at a presentation that explained data centers are really the factories of the digital world — their output is data. The investment needed to create and maintain a state of the art data center rivals factories in other industries. Think about the implications as cloud services become central to Microsoft’s future.
Arguably Amazon was a better fit then Walgreens since it is the leader in cloud services and ecommerce, has 500000 employees, and top 15 worldwide for revenue, but I guess the Dow panel had problems with the high stock price and how that affects the avg, desire to not oversaturate the index with big tech, and its lack of extreme profitability.
Does 3M do heavy manufacturing these days or light manufacturing?
Whatever role tech plays in the stock markets, it’s actually a pretty small proportion of the total economy and only a relatively small fraction of Americans can ever be productive working in it.
More importantly, the loss of manufacturing means the loss of high paying jobs with high payroll taxes and high profit companies with their high taxes. We’ve not only lost jobs, we’ve sabotaged the ability of the economy to generate taxes needed to support government programs. It is no mistake that our annual deficit is larger than the defense budget, nor that in a few years the annual interest payment on the accumulated debt will be the largest item in the federal budget, larger than Social Security.
The transfer of our manufacturing base overseas also means that today we are in the same position v.v. China as Japan was to us in 1940. How did that work out for the Japanese. They started out with the largest, best equipped military in the Pacific, rolled over all the Western powers, and ended up with burnt out cities. What would our west coast look like after a war with China, even a limited conventional one.
which makes the Social Security system less sustainable.