Q&A of the Day – Will corona help Florida’s economy long term?
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Today’s entry: If we learn anything from this epidemic it is that we can't trust others, especially our enemies, when it comes to our well being and survival. We cannot allow this madness to continue where 80% of our drugs and medicines come from China and India (mostly China), as well as parts and materials we need for our military, and communications products that we rely on to function as a society. The only vital item we do not outsource anymore is energy, thanks to fracking and oil exploration here in the good old USA.
We need to start making products here in the United States, even if it costs more for the consumers. Better to have it and pay more than relying on others who may not be in a position to fulfill our needs, either willingly or unwillingly.
Bottom Line: Your line of thinking is one that’s shared by Senator Rick Scott and it’s something I’ve considered and discussed a bit as well. The example of American energy independence is an excellent one because it’s a road map for the view of the possible. In the 1970’s the U.S. imported an average of 82% of its energy making us extremely vulnerable to countries well outside of our control. Most notably OPEC. That began the multi-decade trek towards greater domestic energy production. By the mid-2000's we were still importing over 60% of our energy and that once again showed up when geopolitical issues with OPEC and Venezuela coincided with the financial crisis in 2008 leading to record high gas prices in the United States. That kicked off the final catalyst towards energy independence. Not only is the United States the largest producer of energy in the world now, having passed Saudi Arabia and Russia – we're a net exporter of energy. When it comes to manufacturing, we’re likely looking at a different version of a similar thing.
President Trump has staked much of his presidency on addressing the US trade deficit, including obviously with our biggest trade partner, China. We’ve seen some progress as more American manufactures have taken advantage of more favorable regulations and incentives to open facilities in the United States. The record high trade deficit prior to Trump was $762 billion. In 2019, it was down to $600 billion. But that still shows that we’re more reliant on goods from outside the US than what’s produced here and of course China’s our biggest trading partner. The similarities are numerous to energy. Will the coronavirus be the catalyst for manufacturing independence, like $4+ gas prices were in 2008 for energy? There’s at least a good chance that’s the case.
Last year the United States topped China for the top spot in overall manufactured goods. 18.2% of manufactured goods in the world were made here compared to 17.6% in China. President Trump’s trade war with China caused dips in manufacturing at times in the states last year, due to lower demand by China specifically, however it had a much bigger impact on them than us. This is why China came around on the phase 1 trade deal and that was before the impact of corona. So yes, the US is well positioned to take the next step towards becoming a net exporter of goods. And no state is better positioned than ours.
A decade ago, Florida wasn’t even a top twenty state for manufacturing. Today we’re 7th. 12,000 companies now manufacture goods in our state employing a record 331,000 people. No state has grown manufacturing faster than ours over the past ten years. With that type of trend line and the potential corona catalyst for additional manufacturing the case could be made that like energy, we’ll become a net exporter of manufactured goods as well – with Florida leading the way. If there is one positive above all others that could come out of the virus – this would be it. As Rick Scott would say – let's get to work.