by Jeffrey Snider of Alhambra Partners in SEEKING ALPHA, entitled FACTORIES OR MONEY
At the peak in 2000, calendar year factory orders were $4.16 trillion. Three years into supposed recovery, factory orders in 2004 were still less than $4 trillion. It wasn't until the sharp rise in 2005 that the factory sector finally appeared to put what was really a mild recession behind. But manufacturing in the US wasn't ever the same.
While the US economy was ostensibly in recovery in 2002, 2003 and 2004, it was mostly if not all from the "demand" side of the equation. It was during those years where the largest exodus of manufacturing jobs in history was witnessed. Whether or not you believe Ross Perot was correct in his "giant sucking sound" prophecy, there is no doubt that there was some good correlation between the loss of those jobs during those years and what to many was not a recovery; and even in economics, there was a great deal of agreement that economic function during that time was highly unusual.
That is what led policymakers toward embracing the lunacy of the housing bubble in its final stage. In one sense, the one led to the other, or at least allowed it to happen. By that I mean the huge buildup in debt was that "demand" side that essentially paid, at the margins, for those goods to be produced overseas. It was the substitution of finance for income; mortgage and consumer debt for the labor lost in manufacturing jobs and production.
This is where the "free trade" mantra espoused by economists loses, completely discredited. If there was an organic trend of efficient resource calculation that led low skill jobs elsewhere to be replaced by better jobs here, then the Ricardian equivalence holds. But that isn't what happened. Those jobs left, and not just the immediate jobs that already existed but in addition all future growth in jobs and investment that were, again, replaced by mostly finance. In this case, as all others, that means the eurodollar.
Globalization is the eurodollar, or at least was. Without its ability to stream channels of funds, denominated in dollars ("global savings glut"), from all over the world to these various far-flung locales, the cheap labor would have remained idle in all those places. You can have an ocean of potential unskilled labor, but without the monetary/financial backing and capabilities it will remain idle. You have to finance construction of new facilities, move logistical capabilities, engage in sufficient graft, and then obtain raw material and other components on global markets. All that takes enormous amounts of fluid, fungible "dollars."
...In all the economic history of the world but especially the United States, economists don't say why Americans picked the 2000s with which to make a clean break from the whole consistent past where labor flexibility was one of the true economic strengths of this nation. Even in the industrialization of the late 19th and early 20th centuries, workers displaced from agricultural pursuits by capital efficiency (and productive deflation) were faced with some "skills mismatch" as they shifted by the millions anyway to industrial work.
What is lacking is not labor flexibility, but rather labor opportunity. There is, in the 21st century, no place for workers to go...
The rising rejection of globalization is the inevitable end of an unstable arrangement. Nothing will work for long that requires so much steady and massive growth, particularly monetary in form. Thus, as factory orders decrease for a second year in a row in the US, that signals this time not just lack of traditional recovery like it did in the middle 2000s, but economic pain the whole world round. In 2017, "dollars" are increasingly difficult to come by, and so there aren't manufacturing jobs anywhere.