Roger Milliken

Textile Hall of Fame Acceptance Speech September 10, 2001

To anyone who has visited the home of the industrial revolution, which started with textile manufacturing in the environs of Manchester and Bradford, England, the achievements of the U.S. textile industry in Lawrence and Lowell at their prime were nothing short of miraculous in leading our country’s economic development.

When I first visited Lowell and saw the magnificently engineered waterpower projects that ran the mills, I was overwhelmed by the technology. It is indeed fitting that our national textile museum should be located where we celebrate today.

Thank you, Ed Stevens, for your passion to preserve our history. The accomplishments of the Stevens’ family rank at the summit of that history.

Thanks to Thomas Edison’s invention of the electric light, our industry learned in World War I that textile machinery could run at night as well as during 12-hour daytime-only shifts.

At the end of that war, we found ourselves with 18 million spindles in place north of the Mason-Dixon line and 18 million spindles south of the Mason-Dixon line, all of which could be run around the clock. Our production capacity had been doubled!

Seventy years later, 1990, after a long period of fair competition, we found ourselves with 18-million modernized, surviving spindles in the South and 800,000 in the North, producing more products and higher quality than the 36-million spindles after World War I.

Today we are told that during that period the U.S. went from an agrarian economy to an industrial economy, and that we are now similarly transitioning to an information-based economy.

As I see it, the main thing wrong with that comparison is that in the first transition -- our country did not lose either the farms or the products of those farms. In fact, agricultural production increased as new technologies were introduced. Today, our country continues to produce a surplus of agricultural goods.

During the current transition, the U.S. is losing both its manufacturing plants and the products manufactured in them, as well as the jobs they provide -- thus putting at risk our leadership position as the strongest manufacturing economy in the world.

Our founding fathers, specifically Alexander Hamilton, understood the importance of manufacturing. The second act of the 1st Congress imposed tariffs on manufactured goods from abroad. This encouraged our new nation, and its people, to develop our own manufacturing base rather than merely exporting low-value raw materials to our former colonial masters and importing back from them the high value-added finished goods.

Our U.S. textile industry, which this Hall of Fame celebrates, has played a vital role in the industrial growth of our nation. Our industry alone has provided stability to hundreds of communities and livelihoods for millions of workers and their families. Today, because of massive investment in new plants and new equipment, we remain the most efficient textile industry in the world-unit of output per unit of labor input.

Now as our country stands alone as the world’s last remaining super power, we in textiles and almost all of U.S. manufacturing find ourselves at risk of losing what our forefathers fought so hard to create. This is neither necessary nor wise!

At the end of World War II, with much of the world in ruins, “Made in the U.S.A.” accounted for over half the world’s industrial production. Certainly this was a unique moment in our history. However, at the current rate, we may end this decade with as few as seven economically viable manufacturing industries remaining in America.

A recent survey of manufacturing revealed that 36 of our 44 existing manufacturing industries had an adverse balance of trade and had cut substantial numbers of jobs this year. The hemorrhage continues.

All U.S. manufacturing employment is shrinking at a pace, which will eliminate 1,000,000 high-paying, middle-class jobs this year alone. This is four times what we lost in the year 2000. Actual employment levels in our vitally important manufacturing sector have already fallen to levels last seen in 1963.

We are in an era of so-called “globalization” and everyone talks about the “new economy.” We have been lured into thinking that the negative aspect of these trends are both unstoppable and inexorable.

Isn't it our leaders’ responsibility to ensure that this country and its people survive this period strong and prosperous?

A fatal flaw of the current idea of “globalization” is the lack of recognition that subsidized global production creates a strong incentive to create overproduction that outstrips global demand.

A further flaw is the lack of recognition that in emerging economies the people and manufacturing production workers are not paid enough to buy what they make. Instead, the fruits of their labor are subsidized and shipped to the United States, which serves as the market of first and last resort.

In the process, our standard of living is undermined and both political and economic instability is increased.

Economic stability is an over-riding responsibility of a sound government! Mounting consumer debt helped fuel the boom of the 1990s. Despite strong productivity growth, the 80 percent of our country’s wage earners and their families who work for others have not seen an increase in their real income over the past twenty years.

As increase in purchasing power stagnated because of the massive shift of good, well-paying jobs to low-cost emerging economies, we continued our growth of consumer spending, but we did it on credit. Consequently, the American consumers have been spending more than their earnings at the expense of savings. The result is that we are consuming a billion dollars more in manufactured goods each day than we produce.

These facts are a prescription for social, political, and economic unrest.

Our manufacturing base is being eroded as dollars are diverted from wealth creation to wealth consumption. If economic history has any lesson for us, it is that a nation's well-being is determined by what it produces, not by how much it consumes.

While technologies always present new opportunities and challenges, globalism is not a new idea. It was born around the time of Columbus, and most of world politics has been about how to control it ever since. Past and present administrations in Washington seem to think “globalization” is something new for which the lessons of history are irrelevant.

George Santayana is quoted as saying -- “Those who can’t remember the past are condemned to repeat it.”

A Spanish leader in 1675 bragged about Spain's trade deficit, asserting, “all the world’s manufacturing serves her and she serves nobody.” However, when its gold and silver ran out, Spain found that its industrial development had withered; it had only debts to show for its orgy of manufactured imports and consumption. That Spanish empire collapsed and those countries that had expanded their manufacturing capabilities by selling to Spain were the new world powers.

Thus it also was with the later demise of the Dutch empire and subsequently the great British Empire “upon which the sun never set.”

Beguiled by the siren songs of banking, insurance, shipping, and services, they ultimately surrendered their world pre-eminence as nations. The Spanish, Dutch, and British had all neglected their nations’ manufacturing bases.

Could this happen to the U.S.A.? Or more to the point, is it happening?

I believe the process is already under way, and if we continue sacrificing our manufacturing base on the altar of free and unfettered trade, we will go the way of others.

I believe it is happening because our leaders in Washington remain unconcerned about our near three trillion dollars of accumulated debt flowing from the dramatic growth of our adverse balance of trade. In the span of the last dozen years, we have gone from being the world’s largest creditor nation to being its largest debtor nation. And, no end and no limits are in sight.

This adverse balance of trade, of which textiles is a significant part, has grown to over one billion dollars a day (four hundred and fifty billion dollars last year).

Lester Thurow, of MIT fame, in his book, The Future of Capitalism (1996) said -- “If there is one rule of international economics, it is that no country can run a large trade deficit forever. Trade deficits need to be financed, and it is simply impossible to borrow enough to keep up with the compound interest. Yet all the world trade, especially that on the Pacific Rim, depends upon most of this world being able to run trade surpluses with the United States that will allow them to pay for their trade deficits with Japan. When the lending to America stops, and it will stop, what happens to current world trade flows?”

I believe that in a world where the American standard of living, as well as power, is being daily challenged, our political leaders in Washington must defend the economic base upon which Americans depend for their security and their livelihoods.

Our leaders cannot expect to keep the public trust if they abdicate their responsibilities to the electorate by making decisions to placate bankers and Wall Street-pressured corporate managers who exhibit diminishing national concerns.

Everyone forgets that when Adam Smith called his seminal work on economics “The Wealth of Nations,” he was arguing against the notion that trade was the source of national wealth when, to the contrary, he was arguing that domestic manufacturing was the true source of national wealth.

In his hierarchy of economic activity, agriculture came first because of the need to feed the people; a strong domestic manufacturing base was second as the core of national growth; trade was rated third in importance, and was to be used only to acquire resources or luxuries not available at home.

Smith understood that those nations who focus on trade to the neglect of domestic manufacturing industry may be enriching themselves, but may also be doing the country great harm.

The beginning of wisdom on trade, and indeed all economic policy, is to understand that the purposes of a national economy are to enrich all its people, to strengthen its families, its communities, and thereby stabilize society. The economy should serve us, not the other way around.

My friend, the late Sir James Goldsmith, understood this imperative. He also understood that the U.S. economy – and the world economy itself – couldn’t be returned to a sustainable course unless we redress the recent massive global imbalances between consumption and growing overproduction. He recognized that only one basic approach to globalization could accomplish this goal.

He proposed that the United States make clear to its trading partners, and its own multinational companies, that if their products are to be sold in the United States, they must be made substantially in the United States.

As Sir James argued, America should use its matchless market power to ensure that foreign and American corporations become good corporate citizens of the United States. They should bring us their capital and their technologies and invest in the U.S.A. This would require them to hire workers in the U.S., pay American wages, pay U.S. taxes, preserve the environment, ensure human rights, and compete on the level playing field that does exist among the fifty States.

They should be reminded that since the American market is by far the most important in the world, entry is not a right, but a privilege. In other words, there should be a price and a reward for doing business in the United States – making meaningful, long-term contributions to America’s continued security and prosperity, and preserving the global environment.

Only then can we make sure we are engaging our people in a race to the top, in living standards; economic stability; quality of life; and personal security – not in a bankrupting race to the bottom.

Only then can we bring to a halt our perilous journey of accumulating further explosive growth of our existing $3 trillion trade debt that already exceeds in size anything ever experienced in the history of the world.