Following is the talk I gave to the Take Back the American Dream conference panel that I moderated, Making It In America: Reviving and Strengthening U.S. Manufacturing. Also on the panel were Rep. John Garamendi, (D-CA); Yvette Pena Lopes, Director of Legislation and Intergovernmental Affairs at Blue Green Alliance and Scott Boos, deputy director of the Alliance for American Manufacturing.
You have undoubtedly heard the numbers, almost all of them bad.
We have a trade deficit of more than $550 billion dollars a year. This is actually an improvement from before the financial collapse, but only because people's buying power remains down.
On this chart, that first line down is $100 billion. Each line down is another $100 billion. Each year. This is real money that bleeds out of our economy.
If we were engaged in actual "trade" the money would be coming back as fast as it is leaving -- that is what the word "trade" means. And that would be a win-win for all trade partners. But it has not worked out that way. Imports stay ahead of exports.
Our manufacturing sector has been bleeding out of our country along with the money.
The lure of low prices, fueled by currency manipulation and subsidies, combined with the ability to treat workers in ways they cannot be treated here where people have a say, has led businesses to close factories here and open them over there. Eventually, entire industries vanish.
This problem of the loss of manufacturing -- and its jobs and factories and industries -- has been building for decades but in the Bush years it reached a crescendo. We lost 54,000-plus factories, and 1/3 of all of our manufacturing jobs.
Our country has allowed key industries, key supply chains and key national skills to erode or vanish. And along with those we allowed communities and entire regions to decline. And worse than just decline -- how many of you have seen Detroit with your own eyes?
We have lost hard-won capacity that will take enormous investment to get back. We lost a large part of our ability to make a living in this world. And now we are feeling the consequences of these losses.
This is because manufacturing is different.
Manufacturing doesn't exist in isolation; it requires a manufacturing ecosystem, or commons, to properly function. This is where manufacturers, suppliers, designers, innovators, educators and all the other manufacturers, suppliers, designers, innovators and educators all complement each other, creating a synergistic "cluster" effect.
This is why they say that a manufacturing job supports so many other jobs. Manufacturing in particular supports communities surrounding the factories. This is why closing a factory loses so many jobs and affects entire communities. This is why so many of our country's once-strong manufacturing areas now look the way they do.
I would like to present an overview of the key policies ideas for reviving American manufacturing.
First, of course, is the trade problem. We have to find ways to BALANCE trade.
This starts with CURRENCY. China manipulates its currency, keeping it low so the price of things made there stays a lot lower than the price of things made elsewhere. So out of the gate they start with this competitive advantage.
The administration has been unable to make a formal currency manipulation declaration. The Senate has passed legislation to address currency manipulation but it is stuck in the House, with over 60 Republican co-sponsors who won't sign a discharge petition, and a presidential candidate who says he will address the problem on his first day in office -- but won't ask his party to address it today.
Next, a national economic / industrial policy. Other countries see themselves as COUNTRIES, and have national policies. We do not. So we send our companies into the world alone to fight against countries. We need to say that WE as a country will work to put the components in place to secure a share of key industries like green manufacturing so that we can continue to make a living as a country.
We need to fix tax policy to promote manufacturing. We should eliminate tax incentives that encourage U.S. companies to ship jobs overseas and end the system of tax deferral that allows American multinational firms to keep profits offshore.
And finally, Buy American! Trade rules allow us to specify that our tax dollars be used to buy American, and it's just a no-brainer to strengthen this. If other countries reciprocate, fine -- but they don't!
One last point. To kick-start this effort, we need to invest in rebuilding and modernizing our infrastructure. In the plenary with Paul Krugman he pointed out that this really would be a free lunch. He said that we would not be diverting anyone from other jobs because we have millions of construction workers looking for jobs. We have construction equipment sitting idle. And we can finance the necessary projects at the lowest cost in history. And, of course, all of this work is work that needs to be done eventually, so we should do it right now.
And we should require that all of it be done under Buy American procurement policies!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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The above is an excellent summary of a very important process which the political class do not understand.
MITI understood it.
http://en.wikipedia.org/wiki/Ministry_of_International_Trade_and_Industry
it needs to be presented for what it is, the measure of wealth, assets, technology and jobs leaving the country
depending on whose analysis you use, each billion dollars of trade defict equal 6000 to as much as 20,000 jobs lost. you want to put people back to work?
eliminate the trade deficit
Instead of Russian and Communist Chinese Armies conquering the USA, Russian and Communist Chinese individuals and/or businesses are using the US Dollars, that we paid them for making the consumer products that we imported from them and consumed, to purchase title to (corporations that own) privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other privately owned NATIONAL WEALTH and other assets located in the USA that were created by previous US generations prior to de-industrialization overseas instead of redeeming the US Dollars and the freshly printed paper US Treasury Bonds that they earned by making and selling things to US consumers.
These purchases are made instead of redeeming these freshly printed paper US Treasury Bonds (and electronic US Dollar credits) with gold from Ft. Knox. When people from the recently industrialized nations own most all of the assets in the USA, these foreigners will be the only source of jobs for US citizens.
The US Government should stop creating new legislation that ECONOMICALLY REQUIRES that US businesses relocate their manufacturing operations with their wealth creating abilities and those associated US jobs to foreign countries.
The US Government should repeal all of the other laws that they previously created that caused and ECONOMICALLY REQUIRED that US businesses with their wealth creating abilities and their US jobs to relocate to foreign nations.
The US Government should stop creating new legislation that ECONOMICALLY REQUIRES that US businesses relocate their manufacturing operations with their wealth creating abilities and those associated US jobs to foreign countries.
The US Government should repeal all of the other laws that they previously created that caused and ECONOMICALLY REQUIRED that US businesses with their wealth creating abilities and their US jobs to relocate to foreign nations.
Profitable private sector businesses, industrious individual businessmen, and corporations are and always have been the MAIN (maybe the only) sources of non-government JOBS for US citizens that create real national wealth for the USA that can make a net increase of NATIONAL WEALTH for the USA that will be available for being confiscated as taxes to pay for government activities.
President Clinton created NAFTA, GATT, WTO, MFN trade with China, Financial Services Modernization Act of 1999, and H-1b visas.
George W. Bush created 14 additional FREE TRADE AGREEMENTS (with Jordan, Morocco, and other young democracies of Central America).
President Obama created new FREE TRADE AGREEMENTS with Vietnam, Brunei, Singapore, Malaysia, New Zealand, Australia, Chile and Peru and other Asian and South American nations.
We must pass new laws to outlaw unions representing employees that are working for tax supported organizations.
Public Service Unions representing the Government Employee's have an unfair advantage when they are negotiating wage and benefit contracts with the same elected politicians that the same unions helped to elect with campaign contributions from union member’s dues!
The Government Employee's Unions negotiate with the same elected politicians that they financially contributed money (union dues) to in the elections for the union member's requests to have the politician vote to take more money from the taxpayers and then give that tax money to the Government Employees!
If the elected politicians do not give the Government Employees as much tax money as their unions ask for, then the Government Employee's Unions will donate union money to other politicians in the next elections who will be more sympathetic to the union compensation demands.
The politician is not forfeiting any of the politician’s money to pay for increased pay and benefits, the politician is giving away the taxpayer's money to help him collect political contributions for his personal political re-election expenses from the Government Employee's Unions.
Private Sector union and non-union employees negotiate with business owners to get more of the business owner's money into the employee’s pockets, and this is OK by me.
The financial and business problems in local governments are a result of continued conflicts of interest associated with the incestuous relationship between the politicians running the local
governments and the unions which has been going on for many years.
This incestuous relationship between the Government Politicians/Bureaucrats running the various local governments and the Government Employee Unions which have been going on for many years.
The US congress previously spent $26B US government borrowed funds to temporarily continue bureaucratic jobs for locally tax supported for police, teachers, firefighters, social services, welfare, environmental, and other bureaucratic jobs as jobs stimulus spending that local and state governments normally pay for with their local taxes.
The rest of the nation that does pay local and state taxes that are high enough to pay for their own bureaucratic payrolls are being asked to pay for the costs of retaining the bureaucratic union jobs that some local and state governments cannot afford without raising their own local taxes.
THIS IS JUST NOT FAIR.
These bureaucratic payrolls jobs generally do not produce any of the food, shelter, and clothing required to sustain life, create wealth for the nation, and/or create any wealth that might reduce the US Foreign Trade Deficit.
You could produce all the wooden toys and high tech in the world over here, unless you solve the country's crude oil addiction, nothing will change about the trade deficit.
and the real numbers are more like a 1/3 oil imports, 1/3 goods from china, 1/3 goods from everywhere else
defeatism does nothing to solve the trade deficit
in both cases the trade deficit can be reduced if not eliminated, but to not act on china and others unfair trade is foolish
A strong case could be made in the name of National security to have 10% of anything sold in the U.S. be made, drilled, mined, or grown in the U.S.
The reasoning is simple. In times of crisis it's 1000 times easier to go from 10% to 100% of a nations needs than to start from 0%!
The brain trust is there the infrastructure is there.
An example: Our soldiers camouflage uniforms use the pattern to blend into the background these same uniforms require a dye that have special IR characteristics that is no longer manufactured in the U.S. we get most of these dyes from China none of these dyes are manufactured in the Western Hemisphere! Most other dyes subjected to IR light tend to glow in the dark.
Say for what ever reason in a time of crisis China no longer wants to sell these special dyes to the U.S.; Do we send our Soldiers and Marines to fight in glow in the dark uniforms?
Any Republican or Democrat that fights the 10% minimum rule should be painted as soft on National Defense!