America’s Cycles of Change

Industrial Northeast: Recovery or Collapse?

Wed, 18 November 2015

No region of America has fallen further in the past half century than the Industrial Northeast, memorably dubbed by author Joel Garreau as “The Foundry.”

For 100 years from the 1860s through the 1960s this region, especially the steelmaking zone around Pittsburgh, was known as the Workshop of the World. In the early 21st century, the Economist magazine in Britain formally awarded that great title to the Guangdong region of China.

Why did the Industrial Northeast fall and how can it rise again?

I detail the reasons why the Northeast rose and fell in my 2012 book: That Should Still Be Us: How Thomas Friedman’s Flat World Myths Are Keeping Us Flat on Our Backs. The genius who masterminded the rise of Northeastern Industry was not Andrew Carnegie, the creator of Carnegie Steel, financial magnate J. P.Morgan or any other of the northeastern industrial titans of the 19th century. It was a political genius hiding in plain sight.

Abraham Lincoln in a whirlwind of legislation pushed through by his Republican majority between 1861 and the end of 1864 created the legal conditions that allowed the giant organizing corporations of American industry to come into existence. To this day, Lincoln’s crucial personal in directing this process has been overlooked, even though he never made the slightest secret about his enthusiasm for it.

But Lincoln did far more than that: He signed into law two major tariff laws in 1862 and 1864. These laws protected American-based companies from being swamped by large volumes of cheap imports from other nations, especially from Britain and Germany. They gave American companies a free hand to grow to unprecedented size and take advantage of economies of scale in developing their own domestic markets.

China’s great leaders of the past 34 years have studied the nature of America’s growth in the late 19th century and applied the same principles to make their country the greatest concentration of industry in the world in this 21st century.

Why did American industry collapse over the past 50 years? Why did the Industrial Northeast become a region of festering ghettoes, empty, gutted factory buildings, soaring alcohol abuse and street crime? It was because the great job-making and revenue-generating industries were exposed to unfair foreign competition while other major markets, especially in Northeast Asia, remained closed to comparable American exports.

Yet the fall of the great Northeast Foundry region was never inevitable and even now it can be reversed far more quickly than anyone realizes. The auto industry has recovered to a degree thought unimaginable in the days of financial crisis and collapse in 2008-9 thanks to the fall in the overvalued dollar that began under President George W. Bush and it accelerated under President Barack Obama has brought the beginning of surprising revival to the Northeast. The auto industry has recovered to a degree thought unimaginable in the days of financial crisis and collapse in 2008-2009.

What the Northeast really needs is a degree of maintained government protection through focused special-term financial loans and low but real tariffs to protect key and recovering heavy industries. Both the Republicans and the Democrats are blind to this simple remedy however. Both parties swallow the absurd clean energy fantasies of Thomas Friedman and company that coal, oil and natural gas are not only un-necessary but positively evil.

Yet the Northeast has just discovered in the past decade that it is actually sitting on one of the largest reservoirs of clean, safe reliable and even low carbon footprint energy in the world – the vast gas reserves available in the Marcellus Shale formation that stretches up the entire line of the Appalachian Mountains.

The extraction and processing of this energy holds the key to the industrial revival and prosperity of the Northeast. So it’s no surprise that that the New York Times, the Greens and even major elements of the Democratic Party are dead set against developing it.