Sifting through all of the economic news it’s rare to find analysis focusing on the fundamentals. Two such tidbits were found on the American Economic Alert’s website and dealt with manufacturing, globalization and free-trade. The tie-in of free-trade to real estate and housing will, hopefully, be made clear.
Alan Tonelson’s article on export-led growth being at the core of our current economic meltdown (http://www.americaneconomicalert.org/view_art.asp?Prod_ID=3068&x=medium&fontsize=large) points out the logic of American manufacturers once again focusing on the domestic market as their best hope for growth and viability. Current trade policies favor other nations exporting to us in exchange for limited opportunity for U.S. manufacturers to export to them. This has been going on quite some time but has taken on gross proportions of unequal trade for the past 15 plus years or so.
Turning away from the financial and economic havoc these trade imbalances have wrecked on the American economy, let’s look at another victim: American urban culture and viability.
Cities and towns that were once thriving because of having manufacturing driving their economic engines are now, to varying degrees, rusting, and rotting shells of their former selves. Their remaining populations are often struggling within a third world- like existence. The global economy, like a gigolo lover, has promised a lot - but delivered nothing.
So, how does this tie in to real estate and housing?
President-elect Obama has long touted populist and working-man rhetoric. Now, it seems he may be in a position to actually make good on those promises (http://www.americaneconomicalert.org/news_item.asp?nid=3501886). If Obama and a recently elected and decidedly more fair-trading, pro-manufacturing Congress (read: renegotiating NAFTA, et al,) can make good on even some of their promises, look for the beginning of an industrial resurgence here at home. If that happens, cities may yet again be sources of jobs, culture and desirable, affordable housing. Economics, like politics, is, after all, local.
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Bill,
Excellent point. I think the other big lesson is that cities and states for that matter need to attract diversified industries.
Cities like Detroit and Vegas for example have all their eggs in one basket. When the auto industry is in flux so goes Detroit. When tourism is down, so goes Vegas.
We are fortunate here in the North East as we have a diverse group of businesses.
Again, excellent read!
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