Barack Obama knows the story of American manufacturing firsthand. He cut his political teeth as a community organizer on the South Side of Chicago in the shadow of shuttered steel mills, working to salvage hopes and dreams that had been crushed by the weight of layoffs and economic decline. As President, he can authoritatively recall America's industrial heritage and decline, but more importantly, President Obama can lead the nation to a renaissance in American manufacturing.
Manufacturing has boosted the American economy, jobs, and wages for generations dating back to World War II. Recently, it has fallen on very hard times. Nearly one in four manufacturing jobs has vanished since 2000, and 40,000 factories have closed since 1998. Last year, manufacturing accounted for nearly a third of all lost jobs in the U.S., while factory ordered plummeted to record lows.
The health of manufacturing is important even for those who do not hold factory jobs. That is because manufacturing jobs pay better wages than other forms of employment -- twenty percent above the U.S. average. Manufacturing jobs also have a stronger multiplier effect -- supporting as many as five other jobs -- thus contributing disproportionately to the economy. Manufacturers are large local taxpayers, supporting vital public services and schools in communities across the nation. American manufactured products tend to have a much smaller pollution footprint than Chinese products, and we are already deploying new technologies to compete in the clean energy economy of tomorrow. Finally, our national security depends on a strong defense industrial base to supply our troops and protect our interests.
If the creative destruction of capitalism and the arc of history were responsible for American manufacturing's steep decline, there would be a legitimate debate about whether or not it is worth saving. But public policies have contributed tremendously to the predicament we now face; smarter public policies can get us on the path to recovery.
Wall Street's woes and the collapse of the housing bubble are bear some responsibility for manufacturing's current condition. Credit markets and consumer demand have dried up, idling factories all over the nation. A substantial, strategic, and sustained economic stimulus package is needed for the overall health of the economy, as well as to boost manufacturing.
The stimulus should focus on investments in infrastructure such as mass transit, a smart energy grid, roads and bridges, which not only provide the greatest return on investment for American taxpayers by generating more jobs and economic growth than any type of tax cut, but will also make us more competitive in the long run. A sizable stimulus that includes a $148 billion annual new infrastructure investment can create up to 2.6 million jobs, including more than 252,000 in manufacturing. But manufacturing job gains are reduced by one-third unless all infrastructure materials are sourced domestically.
Dramatically reducing America's trade deficit -- which stood at a record $700 billion in 2007 -- will also boost manufacturing. American workers and companies often face global competition subsidized by governments, as well as violations of intellectual property, disregard of reasonable labor laws, and non-enforcement of environmental regulations. Governments such as China's artificially lower the value of their currencies to gain a trade advantage. Simply enforcing domestic and international trade laws designed to ensure a level playing field, while ending subsidies and currency misalignment will boost our exports, reduce our trade deficit, and create jobs.
If President Obama delivers on a manufacturing agenda, every American will benefit. He will also offer a new generation of Americans the same opportunity as their parents and grandparents had: to achieve the American Dream and join the ranks of the middle class.
"if we only we threw more gasoline on the fire brush...."
The hard truth is, we had a system that worked for most people 30 years ago (Keynes=jobs. growth) and, instead of publicly discussing the merits of neo-classic/Free Market economics (that failed miserably 4 times in 120 years), the powers-that-lie chose to sneak it in to policy. Milton Friedman was never debated, just idolized.
The only sustainable economies are built from the ground up, but don't let history and reason cloud your love for all things "Supply Side"
Supply-side? Please. The greatest impetus to investment is low interest rates and an expected ROI. That doesnt happen without wages and savings. and with supply-side, how do you have capital formation without savings? The US has had no savings for years.
The problem with supply-side theory is that ideologues cling to it in all stages of the business cycle. In a state of over-capacity as we are now you cant create incentives to invest in more. Or supply side tax cuts when when everyone is posting losses from operations.
We couldn't build these items on our own, so we bought them. However, we can cook, so we seldom go out to eat. We can wash clothes, so we almost never go to the dry cleaners. I do get my haircut and colored, but if my vision was better, I'd be doing it myself. Services? Who cannot provide most of their own services, in an economic pinch? But manufactured goods, such as refrigerators, washers, and cars - now those are things we should have refused to allow to be sold in this country unless they were made in this country.
Now the high earner gets to keep about 50% of the last dollar earned.
Think about it: if you only got to keep 10% of the last dollar, wouldn't you be less inclined to exploit your workers, send jobs overseas to make bigger profits, and perform unethical and immoral maneuvers to maximize your earnings?
I say bring back graduated tax so very high earners have no incentive to screw the rest of us because they'll have to give up 90% of their unethical gains to taxes !!!!
Currency manipilation is a problem. the recycling of the dollar/yuan drives market rates down and contributed to the housing bubble. But with all the stimulus and debt we will be taking on we could probably use a cheap source of capital.
Hopefully when all this is over and we start out of this recession/depression we will realize that we need savings. 10% would be nice. you cant lend what you dont save. and reliance on foreign investment is foolish.
He went on to explain that at that time average compensation for a factory shop floor worker, this includes wages, vacation, insurance, bonuses ect., in a US plant was about $12 an hour, in Mexico it was $4 an hour and in China it was $0.25 and hour. Things have gone up a bit in China but not that much. This is how they can afford to have 4 or 5 weeks of finished goods inventory in transit.
We also have a lot of Indian IT contractors. I know they work quite a bit cheaper off shore but when they are hear they are not a whole lot cheaper and especially what they are paying the placement agency but there are no benefits and no long term promises. But there is a language barrier; Indian English and American English are different languages. And when they first come over hear they really do not understand American Business. Both improve somewhat over time. And if the company saves $1 an hour that works out to big money(for the big dogs).
On another topic:
Nationalize BofA. Why?
1) Force the other banks to get with the program and let the CEOs know that it is NOT business as usual anymore and if they want to survive, they better forget about 'entitlement'.
2) We as taxpayers need some way to get our money back - why not take over this bank?
3) The name is fitting with a national bank already, we'll save millions by not having to change the name.
Anyway, I am with ya on the need to bring back manufacturing. It would reduce our trade deficit. Dr. Peter Morici, of the Univ. of Maryland, says by half if we do what he suggests, such as the bringing back of skilled manufacturing jobs. This would increase domestic income taxes reducing the national debt and budget deficit, by reducing government support for laid off workers. The rich have learned that without a viable and healthy middle class working and able to save money, there is no economy. Workers need to have an income that allows them to buy what they produce.
The 30 year Ponzi Scheme created by our government encouraged the outsourcing of jobs and manufacturing, which brought down the economy, stole personal wealth from the middle class and transferred that wealth and more to the ultra-rich class.
http://eye-on-washington.blogspot.com
So called "free trade" isn't free for American taxpayers who lose their jobs to third world sweatshops.
We should have a Secretary of Industrial Policy that coodinates all these efforts - I´m surprised that this position does not exist by now - should be one of the priorities of the Obama team.