economy
February 19, 2026
Prof. Schlevogt's Compass No. 42: America's Hidden Ledger of Decline
Seven million jobs lost, manufacturing's share halved – America's Dutch disease in numbers, the cost of flying too high.
TL;DR
- The US dollar's reserve-currency status underwrites low-cost borrowing and persistent deficits, leading to a structurally overvalued currency.
- This overvaluation causes a 'Dutch disease,' eroding the US industrial core and masking systemic imbalances.
- Manufacturing employment has fallen by 7 million jobs (36%) since its 1979 peak, and its share of GDP has decreased from 22% to 9.5%.
- Despite a doubling of real manufacturing output since 1979, this is due to increased capital intensity, global fragmentation, and foreign sourcing, not a deepening industrial base.
- The decline in domestic supplier networks, weakened industrial ecosystems, and migration of strategic capabilities offshore contribute to structural hollowing-out.
- The phenomenon is likened to Icarus flying too close to the sun, with unchecked ascent and neglected limits leading to potential undoing.
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