Introduction: The Tearing Apart of Two Americas
If you were to look down at the United States today from an altitude of 30,000 feet, you would see two parallel worlds that are distinctly different.
One is Lower Manhattan and Sand Hill Road in Silicon Valley, where gold glitters and the air is filled with the scent of champagne and algorithms. Here, capital moves at the speed of light. Every new high in the S&P 500 implies the creation of hundreds of billions of dollars in book wealth. For the elite on Wall Street, America has never been stronger, and the dollar has never been more dominant.
The other is the rusting factories of Youngstown, Ohio, or the abandoned blocks of Detroit, where weeds grow wild and communities are swallowed by opioids and despair. For the blue-collar workers here, the American Dream shattered thirty years ago with the relocation of factories.
Mainstream American narratives often blame this tear on "globalization" or the "rise of China." However, this is merely the surface. If we peel back the fog of geopolitics and delve into the texture of the American economy, we discover a crueler truth: the decline of American manufacturing was not a homicide, but a death caused by a systemic autoimmune disease known as "excessive financialization."
The strength of America (the financial industry) is systematically destroying the foundation of America (manufacturing) from within. This is not merely an adjustment of industrial structure; this is a cancerous mutation in the late stages of an empire.
Layer 1: The Betrayal of Capital—The American "Dutch Disease"
There is a famous concept in economics called "Dutch Disease": when a country becomes overly dependent on a highly profitable resource (like oil), the exorbitant returns in that sector suck the capital and labor out of all other sectors, causing the originally healthy manufacturing industry to wither.
For the United States, this profitable resource is not oil, but the "Dollar" itself, and the massive financial derivative system built around it.
1. The Deadly Scissors Gap The data does not lie. In the post-WWII golden age, manufacturing accounted for as much as 28% of US GDP, while the finance, insurance, and real estate sectors accounted for only about 10%. That was the era when General Motors was an American totem, building not just cars, but a massive middle class.
However, by 2023, these two curves completed a deadly intersection:
- Manufacturing value added as a share of GDP has fallen to around 11%.
- The share of finance and its derivatives has soared to over 21%.
Even more shocking is the distribution of profits. Before the 1970s, the financial industry accounted for only 10%-15% of total US corporate profits, faithfully playing the role of "economic blood vessels" delivering blood to the real economy. But entering the 21st century, the financial industry has taken 30% or even 40% of all corporate profits.
When an industry responsible for "intermediation" takes the largest slice of the economic pie, the blood of the real economy is drained due to the profit-seeking nature of capital. This is not service; this is parasitism.
2. The Brain Drain The crowding-out effect of financialization is reflected not only in capital but, more critically, in talent—this is the most fundamental strike against manufacturing.
If you walked into MIT or Stanford in the 1960s, the dreams of top physics and engineering graduates were to build rockets at NASA, develop transistors at Bell Labs, or design engines at Ford. That was the age of glory for engineers.
But today, if you visit recruitment fairs at Ivy League schools, you will find the brightest math geniuses and physics PhDs lining up to join Goldman Sachs, JPMorgan, or hedge funds. Why? Because the starting salary Wall Street offers junior quantitative analysts is more than three times that of a senior engineer at General Electric or Boeing.
This is a national tragedy: its most brilliant minds are no longer thinking about how to make energy cleaner or transportation more efficient, but how to write higher-frequency trading algorithms to harvest global gains in microsecond fluctuations.
When a country's intellectual resources flock to the game of "money begetting money," who is left to polish the screws? Who is responsible for optimizing the assembly line? This talent fault line has deprived American manufacturing of its primary motive for innovation, which explains why the US now struggles even to repair a bridge or build a transformer.
Layer 2: Micro-level Suicide—Boeing and the Poison of "Shareholder Primacy"
If resource misallocation at the macro level is "homicide," then the decline of American manufacturing giants at the micro level is a long, drawn-out "suicide." The weapon used in this suicide is called "Shareholder Primacy."
Under the gaze of Wall Street, CEOs of US public companies no longer make "manufacturing the best product" their top priority. Their core KPI has become a simple number: Earnings Per Share (EPS). To drive this number up in the short term, the fastest method is not the grueling work of R&D, but—stock buybacks.
1. The $43 Billion Incineration There is no case more painful than Boeing. Once, Boeing was the crown jewel of human industrial civilization, its engineering culture commanding global awe. But over the past two decades, Boeing was thoroughly "snatched" by financial capital.
The data reveals the crime: Between 2013 and 2019, prior to the 737 MAX crisis, Boeing spent an astounding $43 billion on repurchasing its own stock.
What does this money mean? Developing a brand-new narrow-body airliner (like the model that should have replaced the 737) costs about $15 billion to $20 billion. The money Boeing burned could have designed two brand-new aircraft, solidifying its dominance for the next 50 years.
But Boeing didn't do that. To please Wall Street and allow executives to cash out their options, they chose the cheapest "patchwork" solution—force-fitting new engines onto a 50-year-old airframe, creating the deadly 737 MAX, and using software to cover up physical design flaws.
2. The Metastasis of Financial Cancer Cells Boeing is not an isolated case; it is a microcosm of American manufacturing. General Electric, Intel, IBM... these former tech giants have all fallen into the same trap:
- Cutting R&D and CapEx: Because these investments are seen as "costs" on financial statements, dragging down current profits.
- Debt-Financed Buybacks: Even borrowing money to buy back stock to artificially inflate share prices.
- Executive Cash-outs: CEOs walking away with tens of millions of dollars.
- Industrial Hollowing: Ten years later, when competitors (like Airbus or TSMC) produce more advanced products, these US giants realize they have nothing left but a pretty stock chart.
American manufacturing was not defeated; it was eaten hollow by Wall Street's short-term greed.
Layer 3: The Dollar’s Curse—The Deadlock of the Triffin Dilemma
If we dig a layer deeper, we find an even more desperate logic: the decline of US manufacturing is the price the US must pay to maintain "Financial Hegemony."
This is a variant of what economics calls the "Triffin Dilemma." Simply put, the US cannot hold two crowns simultaneously: the issuer of the world currency and the ruler of the world's factories.
1. A Strong Dollar is Poison for Manufacturing Wall Street's prosperity is built on the credit of the dollar. To keep global capital continuously buying US Treasuries and stocks—flowing back to the US through financial accounts—the dollar must remain strong and stable.
But for factory owners in Ohio, a strong dollar is fatal.
- When the dollar appreciates, American-made excavators, machine tools, and cars become extremely expensive on the international market, losing all competitiveness.
- Simultaneously, foreign goods become extremely cheap, instantly flooding the US domestic market.
2. The Necessary Trade Deficit To maintain its status as a financial empire, the US must export dollars (provide liquidity) to the world. How does it export them? Only by purchasing goods from other countries—that is, maintaining a long-term trade deficit.
This forms a perfect, dead-end loop:
- The US exports dollars to the world, buying cheap goods (manufacturing outflow).
- Surplus countries (like China, Japan, Germany) receive dollars.
- Surplus countries invest dollars back into US financial markets (buying Treasuries, stocks).
- Wall Street gets cheap capital, asset prices skyrocket, and the financial industry booms.
- The dollar gets stronger, and manufacturing dies faster.
This is an irreconcilable class conflict: The interests of Wall Street (asset prices, strong dollar) are diametrically opposed to the interests of the Rust Belt (export competitiveness, weak dollar).
As long as the US wants to harvest global "seigniorage," it must endure industrial hollowing out. This is a mathematical certainty. You cannot be the world's factory if you want to be the world's bank.
Layer 4: Trump’s Futility—Why Reshoring is Sisyphus’ Boulder
Faced with the decay of manufacturing, Trump proposed a seemingly simple and crude antidote: Tariffs. His logic: simply impose high tariffs on foreign goods, and capital will be forced to return to the US to build factories to avoid the tax.
But this is an extremely naive linear thinking. It attempts to use political will to fight the laws of physics. Like Sisyphus pushing the boulder uphill in Greek mythology, Trump's efforts are doomed to futility because he faces two insurmountable structural chasms.
1. The Desertification of the Ecosystem Modern manufacturing is not an island; it is a complex ecosystem. When you see an iPhone or a Tesla, you only see the final assembly. But behind the assembly plant, there needs to be thousands of suppliers within a few hundred miles capable of rapid response: from precision molds and special screws to injection molded parts and flexible circuit boards.
This massive "foundation" has completely desertified in the US. Over the past thirty years, in the pursuit of extreme cost efficiency, these supply chain links—often called the "dirty work"—have all moved to East Asia.
Today, even if Trump forces a company to move its assembly line back to the US, that company will despair to find that it cannot buy a single industrial screw meeting tolerance requirements in the US, or the price is ten times that of China's, with a delivery time of months.
The result is that US factories have to import all components from Asia and then perform expensive assembly domestically. Tariffs, rather than protecting manufacturing, drive up the import costs of components, making the final American-made product ridiculously expensive and totally uncompetitive. You can build a factory building in a few months, but you cannot rebuild an ecosystem in ten years.
2. Cultural Fault Lines and the Talent Black Hole Harder to rebuild than the supply chain is the people. TSMC's dilemma in building a factory in Arizona is the best textbook example. As the king of global chip manufacturing, TSMC encountered unprecedented acclimation issues in the US: it could not find qualified engineers and technicians.
This is not a question of American intelligence; it is a question of cultural choice spanning generations. In the US, "working in a factory" has long been defined by social culture as a choice for losers. Middle-class children are educated to go to Wall Street, to Silicon Valley, to write code, to do financial analysis.
Even if young people were willing to do it, the US lacks a comprehensive vocational technical education system like Germany's. When the financial industry sucks away all social status and high salary expectations like a black hole, how can you expect young people to learn how to operate CNC machine tools? Without first-class industrial workers, there is no first-class manufacturing. This chasm cannot be filled by a few tweets or executive orders.
Conclusion: The Twilight of the Empire
History always rhymes. The Spanish Empire of the 16th century, relying on gold and silver plundered from the Americas (the "financial capital" of that time), once dominated the globe. But this easily obtained wealth led the Spaniards to abandon domestic handicrafts and agriculture because "buying" was much easier than "making." When the gold and silver ran out, Spain was left as nothing but an empty shell.
In the late 19th century British Empire, the City of London still controlled global capital flows, but Manchester's factories were gradually losing to the emerging nations of the time—the United States and Germany. Britain chose finance, and thus chose to decline in elegance.
Today, it is America's turn to face this historical crossroads. Or rather, the choice was already made decades ago.
When the US decided to weaponize the dollar, when Boeing decided to buy back stock instead of developing planes, and when the best minds chose Goldman Sachs over General Electric, the ending was already written.
Wall Street's candlestick charts may continue to hit new highs, creating even more staggering book wealth. But that is merely the terminal lucidity of the late empire. In a country that no longer produces physical things, the louder the clamor of financial prosperity, the colder the tombstone of the real economy becomes.
Manufacturing reshoring is destined to be a shore that can never be reached. America remains powerful, but the America that created value with its hands is gone forever.