The National Association of Manufacturers is trying to pull another fast one.
Consider this presentation in favor of the proposed Korea-U.S. Free Trade Agreement.
Let's take it apart, shall we?
They point out that most of America's job losses are not to nations we have free-trade agreements with. True, but this is just a way of saying we're losing jobs to China, as we don't have an FTA with them. Most of our dozen-or-so FTAs are with tiny countries like Jordan, which has an economy the size of metro Minneapolis.
They point out that the U.S. is still the world's largest manufacturing nation. But this is simply irrelevant and I'm surprised they even put that in. This statistic proves nothing about improvement or decline, about manufacturing employment levels, manufacturing wages, or whether our being biggest is simply the result of being the developed nation with the largest population. What's much more shocking, looking at their chart on p. 5, is that with more than double the population of Japan, we're only about a third bigger than they are in manufacturing, according to that chart.
This presentation is utterly disingenuous on page 12, when it asserts that "these are the trade problems that need to be addressed" and refers to our non-FTA deficit in manufactures (which is mostly China) and our deficit in oil. Why? Because NAM has consistently opposed all the measures that would do anything to solve either. They're just trying to distract people here.
The statistics on page 13 about the number of small and medium-sized companies exporting are totally irrelevant, and again I'm surprised they put them in. The raw number of companies exporting tells us nothing about whether a) these companies have gained more in exports than they've lost to imports in the domestic market, or b) whether half these companies have been driven out of business by imports.
The claim on page 14 that the U.S. suffers a "shortage of skilled workers" is absurd. How many unemployed are there now with degrees in engineering, computers, etc? Plus the word "shortage" is simply not a valid analytical term for a market economy. Any company can always find as many workers as they're willing to pay for, period. Is there a "shortage" of diamonds because I can't buy one for $9.99? "Shortage" is a euphemism for "I want to pay less than what the market price is." These guys just want cheaper labor, that's it.
Now let's delve into a bit of technical detail to expose the sophistry of their chart on page 4:
1) That chart of U.S. manufacturing production is not a chart of manufacturing jobs. So they're basically saying that any decline in manufacturing jobs is due to an increase in manufacturing productivity, which causes fewer workers to be needed per unit of output. But if you look at a chart of manufacturing jobs, there's some damage 1979-2000, but things just fall off a cliff after 2000. There is no way this can be attributed to a sudden surge of productivity, as there simply aren't any manufacturing innovations that suddenly came online in 2000 that weren't available before. We've had productivity growth in manufacturing for 200 years without seeing a sudden drop like that. But we did have China join the WTO and obtain MFN status in 2001 -- which made things much more secure for corporations seeking to move production there.
2) Everything they say is undone by the fine print at the bottom of the slide, anyway. It reads, "In current dollar terms (not adjusted for inflation), manufacturing's share has fallen from 16% in 1990 to 12% -- because inflation is much higher In the services economy than in manufacturing." They're being very slippery here with the term "inflation," because they're not adjusting for inflation in the usual sense of adjusting prices of past years for economy-wide inflation. They're adjusting for the inflation differential between manufacturing and services. And this is, quite arguably, a differential that ought not to be adjusted away at all, because it reflects the fact that there are more real productivity gains over time in manufacturing laptops than there are in providing haircuts, for obvious reasons.
The use of bad arguments to defend a position is a fairly strong telltale that the position cannot be defended with good arguments. This seems to be the case with the Korea FTA. NAM must think the public is fairly dumb to fall for this stuff.
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So, how do states encourage owners of for-profit ventures to reorganize as 'stakeholderships'? Easy. Give them tax breaks! Such as with lower taxes on income, property, and/or unemployment insurance. And if that is not enough, require that companies that do business with the state (e.g. contracts for services, etc.) or receive state assistance in any manner, adopt such legal structures.
Because if fostering the existence of such legal entities contributes to a more stable and healthy economic base for a state, its laws and regulations should reward owners of capital that choose to adopt the restrictions inherent in such a legal entity.
And if capital owners don't want to organize their for-profit ventures in this manner, they should be free to choose to operate as traditional corporations. But the overall cost of this kind of legal entity imposes on the greater good of society should be borne by those who freely choose to operate using them.
And that, folks, might be a way to improve the 'American way'.
http://en.wikipedia.org/wiki/Best_practice
Why do I bring this up? Perhaps it is time to reevaluate whether our American way of legally managing the 'corporation' should change if we really want to develop 'best practices' that support our manufacturing sector best over the long run in our global economy.
And who, meaning what legal jurisdiction, has such 'best practices'? How about the countries that are kicking our butts in manufacturing in our modern global economy. Such as Germany:
http://www.washingtonmonthly.com/hows_europe_doing/archives/individual/2010_11/026625.php
Mind you, I'm a big fan of the notion that "if it ain't broke, don't fix it." But I think the evidence of our economic troubles in the face of a globalized world markets suggests that we need to fix something in our system of government. And perhaps some pioneering American states--because those are the legal jurisdictions in our system of government where the rights of corporations are defined--might want to consider adopting some of the ways a European one does so to provide a legal foundation that seems to support a strong manufacturing sector.
I'm just sayin'.
I agree. Then let's make it cheaper to hire in this country (up to the level of middle class jobs). How so? Check out this blog entry and the comments at NoLabels.org:
http://nolabels.org/blog/bipartisan-corporate-tax-extremism-killing-job-growth/
Manufacturing has decreased from being 35 percent of the GDP to 8 percent . American workers will never get skilled if their are no jobs in manufacturing to learn the necessary skills and technology. Wake up Congress, we need more manufacturing employment opportunities in the USA if we are ever going to catch up to the outsouring mess you allowed to happen because you believed failed economic theories that the USA can flourish in a service economy.
The real statistics is that 30 million former manufacturing workers are now working in jobs of which 50 percent no longer qualifiy to pay federal income taxes and millions more wages are so low they get money back in the form of earned income credits instead of paying taxes. No wonder we have a 14 going on 15 trillion federd deficit.
The Government then placed all the blame on industry - then they made is so expensive to continue to operate in the USA that they just moved their factories out of America. It was the EPA and the Unions that ended the blue collar skilled worker and they were the heart of the much praised American miracle [the largest middle class in the history of man]. It is gone now and who wants to stand up and admit - They were wrong and overreached?
The cost of electrical energy generated in the USA in compliance with US EPA regulations is about ten times the cost of the same amounty (kilowatt) of electrical energy in most Asian countries, and this makes the USA even less competetive in the Market place that is competing for locating new manufacturing jobs that need econmical electricity into the USA, and/or keeping existing US jobs in the USA. The EPA is the main cause of the high electrical costs in the USA.
Existing environmental laws, and the anticipated costs of future environmental legislation that will be "piled onto" our remaining US located industries (that might elect to stay in the USA) are another factor causing the remainder of our US industries and US jobs to relocate to overseas locations. Foreign environmental manufacturing costs are generally known.
I live in Houston and we are afraid that President Obama's proposed "Cap and Trade" will be passed by the US congress, and then our remaining petrochemical industries will relocate to foreign countries, and then they will fire most all of their thousands of Houston employees as they close down their refinery businesses.
I don't want to see free trade be a race to the least environmental laws - because that wouldn't be good for anyone in the long term. If the price of carbon was extended to imported fuel or even the carbon foot print of the imported materials it would not cause more companies to move jobs out because everyone would see the same price for carbon. A market based solution that McCain, Pallin, Huckabee and most of the Repubs used to support.
It only show how little the people in Washington understand our economic situation.
Obama spoke against NAFTA but is doing nothing to stop it and now is bring another freetrade agrement.
They (DC) look at car sales and thinks things are going along just find but they are ignorant or don't care that US auto production is droping very fast and the Mexican auto production is increasing to off set the lack of US production.
GM is spending a 1/2 billion dollars in Mexico on a new plant and VW is spending $600,000,000 on a new plant to build cars for the US market.
After the Korean trade agreement is pasted US auto production will take another hit. and the economy will keep where it is. no where.
US manufacturing posted biggest gain in seven years according to HP but in the passed seven years manufacturing has been dropping so anything is a gain.
The US might look like Egypt in a few years if DC continues to ignore the people in this country.
I remember a guy named Ross Perot who looked like Alfred E Newman from the Mad Magazine comic books and talked through his nose as the only person that objected to NAFTA. He ran as a third party candidate against President Bush 41 and President Bill Clinton,
I think that it was 1991 and he got almost as many votes as either of the major party candidates. He had the right message but he was the wrong messenger. He was not attractive, and I sadly believe that a lot of the American people vote based upon looks more than intelligence or policy.
He had a lot of graphs and charts to indicate his points.
I remember him saying that "NAFTA will suck the remaining jobs out of the USA". He might have been the last chance to preserve US jobs, US industry and the US economy.
I remember presidential candidate McCain stating something to the effect that he was not interested in economics during the first part of the 2008 presidential campaign shortly after he was nominated, so I voted for President Obama, I hold great respected Senator John McCain, but he was no choice for the economy of this country at that time.
If US labor costs are at least four to twenty times the Asian labor costs, Ii US electrical energy geberated in accordance with EPA regulations costs are at least ten times the Asian electrical energy costs, if US environmental compliance costs are at many times greater than the Asian environmental compliance costs, and if other US manufacturing costs that are more expensive that the Asian manufacturing costs, how can the US manufactruing be competitive with Asian manufactruing production costs.
If US government borrowing causes devaluation of the US dollar to 10% of today's buying value, this might cause Businesses to relocate jobs back to the USA, but a $3 loaf of bread would then cost $30.
The main result of devaluing the US dollar will to reduce the buying power of US wages and salaries!
Businesses have invested to construct plants in foreign nations, and they will need a lot of financial incentives to economically justify/cause businesses to return to the USA.
Like you said we assemble with imported parts and what we do make is on imported machines.
The labor costs are what people like to blame but the truth of the mater our electric is to high compared to China, Mexico and India where the government regulates it. Also US product liability insurance is out of control. Many of the imported components are made by companies that do not carry insurance because you can not sue them. And with the claims of the devalued dollar have and impact the US should be a big exported but the dollar is stronger than the tales.
The bset incentive to keep manufacturing in the US is no FREE Trade. with out Free trade Mexico is not so good nor Korea so we need to keep even trade.
And US executives should not be allowed to force their companies in to debt to pay their bonuses, like GM did with Wagner.
And remember what H Ross said "that sucking sound is your jobs"
The freshly printed paper US Treasury Bonds and other paper US government issued currencies that the US government sells to people in industrialized nations in order to get some US dollars that US citizens foreigners to make our consumer items back from these foreigners to pay for US government expenses have no value, except that they are redeemable for title to privately owned businesses, factories, casinos, hotels, farms, land, ports, breweries, refineries, forests, ports, breweries, refineries, and other privately owned assets located in the USA that were created by previous productive US generations instead of Gold from Ft. Knox that essentially no longer exists.
In 1972 the US government declared that the freshly printed paper US dollars and the freshly printed paper US Treasury Bonds that the government prints and sells to pay for government payrolls and other expenses, and etc. are now backed by the "full faith and credit of the USA" (aka Junk Bonds) instead of gold.
The USA is running out of assets that foreigners want to buy with their US dollars that we paid them to make things that we consumed while US citizens did not work!
We are producing more and more actual output, we just take fewer workers to do it thanks to technology and innovation. That's a good thing, not a bad thing.
We care about manufacturing because we know that it is essential for a country to produce most of products and services it consumes. All they care is that American corporations' manufacturing is not shrinking. Where it is produced it makes no difference to them as long as the profit are growing.
I can understand that a corporation could outgrow its original market but what I don't understand what we should tolerate their total disregard for American people. If they wish to act like this, why do we allow them to rule over us? I say screw them - if they wish to leave show them the door, but what we cannot allow is their subversion of our democracy. We cannot allow them to craft our national policies and expect we will get different results from what we had been getting.
The members of that family can then reflect their real wealth and financial security with the net positive accumulation of grain, gold, cattle, jewels, land, buildings, hotels, casinos, factories, commodities and/or other marketable products for reserve use in times of emergency and/or also to raise the standard of living for the members of that family.
This accumulated wealth is then available to be taxed in order to create funds to build sclools, streets, water and sewer systems, repay sovereign national debts, spend for pork barrel projects, green projects, infrastructure projectswars, streets, bridges, highways, welfare, unemployment, school teachers, policemen, fire fighters, and other government provided bureaucratic services.
Division of labor, specialization, and trade are the backbone of producing economic prosperity.
There is not one country in this world that can show that it created a growing economy without protectionism. Industries develop when they are protected from foreign competition. Only when they outgrow their markets do they start believing in the free trade nonsense and from thereon they start declining.
We should not compare our economy to the one of Austria or some other small country from which some influential economists drew their lessons and into which ignorantly bought into. To learn how national economies grow you must learn from Friedrich List and not Adam Smith. And List drew his lessons from early American development. We forgot it all.
At the root of free trade dogma is David Ricardo's concept of comparative advantage. The only problem is that Ricardo would have never considered a world in which capital and productive capacity moves from one country to another with such ease as it does today.
Because our economy is defined with our national boundaries unified by a common currency. If you are a buggy maker in Pennsylvania and your job is lost due to manufacturing of cars, you always have a chance to go to Michigan and join auto industry. That is in difference when your job is lost to offshoring to China or India. You couldn't possibly go there in search for your own job or some other job opportunity. This is why economies are national in character despite the fact that corporations would like you to believe otherwise. Global economy is a meaningless abstraction to most people on this earth. The fact that global economy is growing does not necessarily mean you will benefit, but if your national economy is growing there is a very good chance you will benefit.
Look at any graph of American manufacturing output, and you will see a steady upward slope, interrupted only by recessions.
That we do this with fewer workers in the manufacturing sector is a GOOD thing. Fewer people working in dirty, dangerous, mind-numbing, physically exhausting jobs, and instead working in well air conditioned offices and stores is a GOOD thing, if the few left working in factories are producing enough of the goods for everyone else.
Its like the improvement in agriculture. Hardly anyone works on a farm anymore, but those left doing that work have it easier, and are feeding us all better and better with much less work, and less land area devoted to farming. This is a GOOD THING.
Nevertheless, the root problem here is that there are folks who think that, somehow, America is insanely special ... that, even though it is a massive nation "from sea to shining sea," it does not have to produce for itself because "the almighty American Dollar is good everywhere and always will be," and because "everything else in the entire world's economy is second-fiddle to U.S."
Clue ya.
It's not.
And the faster the United States of America gets over its "prodigal son trip" and starts once again to be the powerhouse nation that it WAS for most of its young life, the better off its 311 million citizens will be ... and the better off its genuine trading-partners also will be, as they once again beat a path to the USA's door.
You don't get that by lying to everyone about everything. You don't get that by proposing purely-exploitative "trade relationships" and calling them "free." Believe it or not, every one of the people you are talking to, are sentient human beings who actually don't miss much.
A steady stream of US dollars and title to US located assets are flowing from US consumers to US retail businesses and then to foreign manufacturers in the industrialized foreign nations has been created by our US FREE TRADE Legislation!
By the way, I've been quietly blaming Clinton all of these years for being the wuz who sold us out to China -- thanks for pointing out that it took 2000/2001 WTO actions to clinch the deal. There may have been something to be said initially about trade with communists, but the level of pain endured to enable them to flourish and acquire virtually all of the skill and technology and decent jobs that we have to offer has become one of my life's greatest mysteries.
Will President Obama's proposed South Korea Free Trade Agreement (SKFTA) treaty further cause the relocation of more existing US jobs to South Korea? I guess another few more million unemployed US citizens will not matter to President Obama!
Where were the Union Labor Leaders that should have objected to NAFTA? They say that they objected, but I do not remember them objecting, so maybe this is why Bill Clinton enacted NAFTA.
Why don't the US Labor Unions object to President Obama's SKFTA?
We see unions supporting things they never would have in the past and we see them supporting things that drive wages down but membership numbers and dues up. They are in it for the money.
I've been in three major unions over the last 30+ years and I'm on negotiating committees and have been shop steward for a lot of that time. I just recently got a notice on my first pension that they are reducing the amount everyone gets who retires early by about half. I was promised that amount since I left them over 15 years ago and planned on getting it. In the meantime the union board trustees who oversee the investment firm are living large.
We need strict controls over abuses by union heads and also mandate an easy method for membership to take control away from leadership that abuses their power. Until we do this, the union leadership is too often in bed with the businesses and forget who they represent.