The average American has benefited greatly from a strong manufacturing environment over the last century and the US standard of living has been greatly enhanced over the last couple decades by low cost goods, especially those produced with much cheaper foreign labor.  However, as will be explained below, the issue is much more complicated and the demise of American manufacturing will be a major long-term detriment to the future  standard of living in the US.

• Manufacturing Losses.  The loss of manufacturing in the US is general knowledge.  Those that support manufacturing chasing low labor costs around the world would argue that the American economy is becoming more of a "knowledge" economy.  This loss has accounted for millions lost American jobs paying substantially more than the average US wage.  At first, several years ago, I kind of agreed with this theory but lately I'm having second thoughts.

• Engineering Losses. As manufacturing is shipped overseas, so is engineering.  First the engineering required at the manufacturing plant and second, the engineering required in the ivory tower.  On-site manufacturing went first and now American company subsidiaries overseas and independent contractors are doing an increasing amount of the non-factory engineering especially in the Far East.  I just read about the $5 billion expansion of the Panama Canal.   I didn't see a single major American engineering company involved in the project.  Didn't American engineering firms originally build that canal!

• Design Losses.  Some would ague that the design of the products would remain in the US.  That was true for several decades but as more and more high tech engineering has been transferred to the Far East, so has design. Apple's Mac computer is a great computer but Acer of Taiwan sells a lot more computers. The Apple I-Phone is a great cellular phone but HTC of Korea sells a lot more advanced cell phones. Just imagine all of the high paying design jobs that are being lost and will never return.

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• Market Losses.  Some believe that the US is the center of technology and automotive market demand and therefore can dictate the future of these industries.  As above, this has also been true for decades, but as the economies of faster growing, increasingly affluent countries in the Far East come out of recession, more a more products will be designed, engineered, and manufactured in and for those markets.  In reality, those persons manufacturing, engineering, and designing the products of the future will be more able to afford those products.

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• Economic Losses.  Finally, all of the above causes of job loss will contribute to higher unemployment and the need for the Federal Government to continue to increase entitlements including unemployment, food stamps, education, and job retraining assistance which will continue to increase the US federal debt.  Yes, I think that cutting spending is the secret to success but this isn't going to happen no matter how much you wish it would happen.  Sorry, but look at history.  In the past, many recessions were resolved with an improving economy but it may not happen for a long time.  The only solution is to increase taxes and this will further handicap the economy.  Of course, raising corporate and personal income taxes will have a devastating effect of the economy.

To add insult to injury, much of the legal immigration and undocumented immigration today is for US manufacturing jobs that no long exist and may never return after the current recession.  California seems to be more affected by the loss of manufacturing than the rest of the US and all that it entails. Gee, look at the current high employment rate. 

You might as well stop believing that California will once again become a manufacturing powerbase.  If we get a handle on our water shortage and encourage the planting of lower water consumption, higher value crops, we stand a chance in the world agriculture economy.  With our wonderful weather, we are becoming a great state in which to retire, especially if you can afford it.  Of course, with the lost of manufacturing, there will be ample cheap labor to cut our lawns and clean our houses.  That's a kind of manufacturing, isn't it!