THE BLOG
04/02/2012 09:10 am ET Updated Jun 02, 2012

Manufacturing Is Different

"Do Manufacturers Need Special Treatment," was the headline of a commentary by Christina D. Romer, who chaired President Obama's Council of Economic Advisors, in the New York Times earlier this year. An economist, Romer made it clear she regarded manufacturing as just another sector of the economy. "American consumers value health care and haircuts as much as washing machines and hair dryers," she wrote. "And our earnings from exporting architectural plans for a building in Shanghai are as real as those from exporting cars to Canada."

That myopic view is all too common among economists. I surmise this is what comes from getting lost in data on spreadsheets, and losing contact with the real world. But I too am an economist and I am here to testify that Romer's interpretation of the data simply does not reflect reality. Manufacturing is different from other sectors in three key ways:

First, manufacturing is where real wealth is created. Manufacturers take raw materials from the earth, apply copious amounts of energy, mix in creative human genius, and voila, out comes the myriad of wonderful products and technologies that enhance human life.

Second, manufacturing has an extraordinary "spillover effect" supporting more peripheral jobs than any other sector. This is why the states compete so vigorously to attract new manufacturing plants.

And third, manufacturing is where technology is put into practice through innovation. A brilliant idea and $5 will get you a cup of coffee at Starbucks. It is the manufacturing shop floor where the potential of creative ideas is proved or disproved. Manufacturing accounts for 70 percent of private sector R&D and 90 percent of patents.

For more than a decade we have stood by while foreign competitors employing predatory trade practices have absconded with major portions of our manufacturing base. The persistent weakness in our economy today, and especially the stubbornly high unemployment, is the result. The time has come to recognize this challenge and rise to meet it.

There is a reason our competitors are so committed to manufacturing -- they recognize that manufacturing is the foundation of a modern nation's economy. "The world power that loses its manufacturing base," said Akio Morita, founder of Sony, "will cease to be a world power."

The good news is that Romer has returned to academia. President Obama and his Assistant for Economic Policy Gene Sperling are highlighting the importance of manufacturing to the country, as is the presumptive Republican nominee Mitt Romney. According to political consultant Mark Mellman, there is overwhelming public support for a national manufacturing strategy focused on bringing jobs back from overseas, retraining U.S. workers, and enforcing fair trade rules. The American people fully understand the importance of manufacturing to the country, even if many economists do not. Change is coming.

Jerry Jasinowski, an economist and author, serve d as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.