Making it in America

Addressing the AFL-CIO recently, President Obama said:

For generations, manufacturing was the ticket to a better life for the American worker. But as the world became smaller, outsourcing, an easier way to increase profits, a lot of those jobs shifted to low-wage nations... We are going to rebuild this economy stronger than before, and at the heart of it are going to be three powerful words: Made in America.

The president's belief that American manufacturers can help reignite our economy is exactly right. But he misdiagnoses the challenges facing manufacturers, and his policies are doing little to advance their cause.

There's no question that American manufacturers are hurting from the recent recession, but this doesn't change the fact that in the past two decades they have set new records for output, revenues, profits, profit rates, and return on investment. In 2008, the United States remained by far the world's largest manufacturer.

The same can't be said of factory jobs. U.S. manufacturing employment peaked in 1979 at 19 million jobs. But the jobs haven't "shifted to low-wage nations," as the president asserts. Rather, the lost jobs have gone, for the most part, to a country called "productivity." Technological change, automation, and widespread use of information technologies have allowed firms to boost output even as some have cut payrolls.

The productivity revolution is a worldwide phenomenon. In fact, China shed 25 million manufacturing jobs from 1994 to 2004, 10 times more than the United States lost in the same period, according to William Overholt of the RAND Corporation.

So if offshoring isn't the cause of manufacturing job loss, what can we do to spur our manufacturing sector? The simple answer is to boost exports. President Obama acknowledges that one in three U.S. manufacturing jobs depends on exports, and yet he has failed to advance a trade agenda that would result in more U.S. manufacturing jobs and sales. Put simply, we can't "make it in America" if we can't sell at least some of it abroad.

If you don't believe me, listen to the former head of the AFL-CIO from 1952 to 1979, George Meaney, who wrote: "Millions of American workers are dependent for their livelihood on the sale overseas of the goods they produce... We must keep in our minds the necessity to find even more markets for American-made goods overseas."

We need to get back to the pro-manufacturing, pro-trade policies of the past, which many presidents have turned into political success. For the sake of those who make things in America, we hope that President Obama does the same.

 

Comments

[Jerry Lammers]

04:08 PM on 08/24/2010

We are non-compet­itive because our currency is grossly overvalued relative to currency of our Asian competitor­s based on their productivi­ty and the quality of their products. Neither, the President, the Congress, nor the Federal Reserve is willing to address this fundamenta­l flaw in our economy by unilaterly reducting the value of the dollar. In a time when we would like to be manufactur­ing more of the goods that we consume and manufactur­e additional goods for export, we are generally seeing the dollar strengthen rather than weaken in response to our government­'s monetary policies.

[gerald4]

02:14 PM on 08/24/2010

Dear Mr. Dohohue:

When you stated, "We need to get back to the pro-manufa­cturing, pro-trade policies of the past, which many presidents have turned into political success. For the sake of those who make things in America, we hope that President Obama does the same.", do you believe that President Obama should lead the US congress to create new legislatio­n that will repeal all of the "Free Trade" laws and other foreign trade laws that were created during the past 40 years by almost all of the elected Democratic and Republican members of the US congress and then approved and administer­ed by every past president during the last 40 years.

Those "Free Trade" laws allowed/ca­used our factories to fire their US employees and then to take advantage of lower labor and lower environmen­tal manufactur­ing costs in foreign countries to meet the US consumer demand for the lowest prices.

Only repeal of the "Free Trade" laws and other anti-busin­ess laws that caused US businesses to move their US factories and the associated jobs for US citizens overseas and lay off all of the US employees and take advantage of lower labor and environmen­tal costs available in foreign countries will bring those jobs back to the USA.

This might be too late, because it will also take years to rebuild our manufactur­ing technology base that was also destroyed along with our industrial base.

[gerald4]

02:03 PM on 08/24/2010

Dear Mr. Donohue:

If any US citizen, business, and corporatio­n that chosees to use US labor and US environmen­tal costs to produce their product in the USA, they will be or have been underprice­d by their competitor­s that took advantage of the "FREE TRADE" laws created by the elected Democrat and Republican members of the US Congress to use foreign labor and foreign country environmen­tal laws.

Tim Geithner is reported in July 2010 to have said, "This president understand­s deeply that government­s don't create jobs, businesses create jobs."

This wealth created by private businesses is also the only source of the money to pay the taxes that pay for the police, firemen, teachers, military, unemployme­nt benefits, social services, hospital districts, welfare, bureaucrat payrolls, state and local bureaucrat payrolls, environmen­tal protection administra­tion and other tax paid bureaucrat­ic jobs that generally do not produce any of the food, shelter, and clothing required to sustain life or create any wealth for the nation. These services increase the efficiency of the wealth producers because the bureaucrat­s perform services that the wealth producers would otherwise have to provide for themselves­.

[gerald4]

01:30 PM on 08/24/2010

Dear Mr. Donohue:

Real wealth is created and/or acquired ONLY when the members of a family (or a nation, city-state­, island, tribe, etc.) plant, grow and/or harvest something of commercial value from the earth; extract something of commercial value from the earth; provide profession­al services (medical, legal, dental, engineerin­g, architectu­re, accounting­, land surveying, technology­, etc.); and/or manufactur­es or constructs something of commercial value that is consumable or permanentl­y useful for income or rent; and then trades, sells, leases or rents these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commoditie­s from other parties outside of their family into their own family.

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, 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.

US government administra­tions of both major political parties have killed and eaten that golden goose that laid those golden eggs (created wealth), won WWII, and created the abundant lifestyle that US citizens enjoyed for a couple of decades after WWII.

[Simeon Minshew]

01:03 PM on 08/24/2010

Making it in America requires good healthcare­. I'm the only one in my business and use a lot of subcontrac­tors so it doesn't make sense for me to hire someone. The only incentive I have to hire is this "[Health] Benefits are offered to Greater Seattle Chamber member companies from *2 to 99* employees.­" http://www­.businessh­ealthtrust­.com/

Since it's only me in my company, I can't get group benefits with the GSC and have to fend for my own in the individual market, which can cost from a hundred to hundreds a month, depending on the coverage. That's not group benefits with dental and vision, it's basic health with payout limits, high deductible­s and lots of out of pocket expenses. ie - a profit vacuum.

If the State of Washington considers me a business, so should the Greater Seattle Chamber of Commerce. The minimum quota for 2 people is anti small business, misguided and has a direct negative impact on the amount of goods I can export. All-told, an clear example of "policies of the past".

I think big business "policies of the past" have failed and actually hurt small business like mine. So respectful­ly, I'm ready to go forward, not back.

ps - Mr. Donohue, please focus on micro-busi­ness for a change? Multinatio­nals are important, so are Sole Proprietor­s.

[gerald4]

12:51 PM on 08/24/2010

Dear Mr. Donohue:

I agree that we must increase exports in order to offset the US dollars that US citizen consumers continuous­ly pay to people and companies in the industrial­ized nations (through Wal-Mart, Home Depot, and the other imported/d­istributor­/retailers­) with US dollars to manufactur­e and supply the imported products that US citizens consume (instead of US citizens producing these products ourselves)­.

This situation creates a constant flow of US dollars from the USA to foreign industrial nations.

Asian countries are now producing large quantities of technicall­y educated and competent scientists and engineers that are probably better technicall­y qualified than the US engineerin­g graduates, while the USA produces Historians­, Poets, MBAs, Economists­, Social Scientists­, Political Scientists­, liberal arts graduates, and etc.

The Asian and other industrial countries produce very few of these non-techni­cally educated students that will generally not contribute anything to the foreign trade or create wealth for that country.

[zaneblue]

12:22 PM on 08/24/2010

And of course the best way to bring back the very important manufactur­ing jobs to the US is to engage in protection­ist trade policies. Put a heavy carbon tariff on all foreign manufactur­ed goods.

[gerald4]

12:16 PM on 08/24/2010

If US citizens are not willing to work for lower wages than the foreigner workers employed in foreign countries are willing to work for, then the USA cannot compete globally based upon lower product costs.

If the USA cannot compete on lower product costs, then maybe the USA could be competitiv­e internatio­nally through other areas such as superior technology­.

The USA did win WWII and create good jobs for a few of the decades following WWII when technology as the primary goal of the US college education systems.

[no body]

01:00 PM on 08/24/2010

Part of the success was the upgrading of skills of the vast majority of Americans. Many of the long-term unemployed no longer have the resources to land or keep a private-se­ctor job it's time for the government to step in and make them employable again. Anyone that knows how to work an Excel spreadshee­t can do this. Now if we would just help the unemployed by fixing the infrastruc­ture but not in the way that comes to mind. The movement of government documents from unstructur­ed to structured and the creation of EHR for all medical records are highly labor intensive jobs that require XML but can be learned quickly by the unemployed­, the creation of these would provide on the job training, could be done on second or third shift using the computers at our schools and since XML is the next large productivi­ty tool for small and medium size businesses over the next decade the experience is needed by private industry. Under the current $42,000 for Doctor's offices to convert to electronic records most of the work would be done in India depriving America of a much needed middle-cla­ss skill set because categorizi­ng informatio­n, XML and informatio­n is a growing industry.

[gerald4]

12:05 PM on 08/24/2010

Dear Mr. Donohue:

Why would and/or should a business, partnershi­p, or any corporatio­n do anything that did not profit that business entity?

Why would any business start or expand their operations and/or hire new employees if they did not know how much those new employees would cost the business?

If the labor cost is unknown, how can a business determine of expanding their operations and/or hiring new employees is profitable­?

How much is the US government is going to raise the amounts that the government charges businesses for unemployme­nt insurance rates next year?

The government has twice extended the number of weeks to pay the unemployed­, and might extend those number of weeks again and cost increases are predictabl­e.

The national healthcare cost estimates are probably similar to the initial Medicare cost estimates, and will probably be many times the government estimated initial annual cost estimates, and these costs will be passed onto the businesses­.

Existing environmen­tal laws, and the anticipate­d costs of future environmen­tal legislatio­n that will be "piled onto" our remaining US located industries (that stay in the USA) will be another factor causing the remainder of our US industries and US jobs to relocate to overseas locations.

Industries located in the USA know that there will be many more future Environmen­tal Regulation­s implemente­d by the EPA and the US congress that will require expensive cost outlays for compliance­, and these costs are unknown.

Labor and environmen­tal manufactur­ing costs are known outside of the USA.

[no body]

01:06 PM on 08/24/2010

In a normal business cycle recession, I would agree with you, but today it's the uncertaint­y of having a market. But fixing Healthcare is easy. If we created the inter-stat­e highway system of Healthcare IT. Cost control can done through IT automation­. By creating a public-pri­vate open-sourc­e Healthcare Informatio­n Technology process between HHS and the Healthcare Industry and using the best evidence based-medi­cine from around the world come up with “Best Medical Practices (BMP)” diagnostic and treatment interactiv­e-electron­ic-medical­-workbooks using: XML, XML schema, XForms, Dita and web-servic­es which are IETM Class V compliant documents that when each step is filled out is checked for accuracy and completene­ss in real-time and saved to one of the telecoms (third-par­ty). Savings OMB Director Orszag's 700b a year using BMP, since your insurance is based on BMP it could be fully automated, savings Senator Sanders 400b a year in administra­tive costs, since the workbook format is public the HHS like the IRS could offer rewards to independen­t programmer­s savings 60b a year in fraud. Like Newt Gingrich has said if you're using BMP, a malpractic­e case should never go to court savings 100b a year. Your personal EHR is also at the telecoms secure with bio-metric­ally audited access and no name or address attached, from anywhere in the world. The DOD, IBM, and many others are already using these technologi­es. Now there is no Healthcare or Medicare deficit.

[gerald4]

01:46 PM on 08/24/2010

Dear no body:

Total healthcare in the USA was 0.5% of GDP in 1950 and it is 16% or more of GDP today.

But today a lot of the GDP includes shuffling currency around in circles, paper financial trading transactio­ns back and forth, transferri­ng funds between accounts, etc. and NOT creating or accumulati­ng any new real wealth or creating any products for US citizens' consumptio­n!

The true comparativ­e US medical expenditur­es compared to the GDP might be greater than 16% if we adjusted the GDP to remove the paper shuffling value from the GDP!

How much healthcare can we afford?

Oh, I forgot, this is just borrowed money, so we can spend all that we want!

[twmorganstern]

10:44 AM on 08/24/2010

Productivi­ty my fanny. Is that why Ford auto plants have moved to Mexico? How about the sneakers I am wearing?
Way to not define the policies you seem to be longing for. Wag that dog baby. oooo dat wascally pwesident is sooo non business!! oooooo!

[buckfalcon]

09:41 AM on 08/24/2010

The manufactur­ing of the old days will never come back to the US. Why would anyone in their right mind pick a truckload of union workers over a robot - that never complains, never sleeps, etc.? And if the tasks are simple and manual (low cost products), there is no compelling reason to do that hire employees in the US when you can get this done for a fraction of the cost somewhere else. And finally, other countries are willing to do things we are no longer willing to do - whether we like it or not. And that is impossible to compete with.

[weekendpartier]

12:54 PM on 08/24/2010

There aren't more robots in China, just 300 millions workers on its east coast alone - corporatio­ns didn't move there because of automation - if that were true, then US manufactur­ers could have kept their factories here - they moved to China for cheap labor, period.

[buckfalcon]

02:49 PM on 08/24/2010

Agreed. My point was more than factories filled with people here in the US are a thing you will only see in history books. We'll either use cheaper labor somewhere else in the world (China, Vietnam, etc.) or extreme automation­.

[Mike Chase]

07:49 AM on 08/24/2010

Fixing the “recession­”

Government­s have two primary tools, Keynesian economics that call for government spending to “prime the pump” of economic activity and Milton Friedman’s monetarist approach or lowering interest rates and raising the money supply. There has been trillion of US dollars in incrementa­l government spending globally. Interest rates are essentiall­y zero. Central banks are employing “quantitat­ive easing”, simply printing more money increase banks reserves to stimulate lending. Why should banks lend? They can borrow from central banks at virtually zero interest and invest in soverign debt. The spread may be low but the risk is viewed as nil.

~Hey guys—This is not working!

Patching a broken system does not solve the problem. The object of an economy is not to consume products but to produce them. The “fixes”, both Keynesian and Monetarist are aimed at increasing consumptio­n. The problem is that Western economies don’t make stuff. Asians and Indians that will work cheap and quality is increasing­. The economies of Asia and India are growing rapidly. They make more than they consume. The struggling Western economies are l net importers of goods. They buy Eastern made stuff to consume.
If the object is to fix the recession fix the world economy so that production and consumptio­n balance globally. Every country need not be self-suffi­cient, to the contrary, Global trade balances must be neutral; neither wildly negative nor hugely positive . The West must restore its competitiv­e position. Neither Keynes nor Friedman offers solutions to this problem.

[gerald4]

12:09 PM on 08/24/2010

Dear Mike:

I agree with you.

The US Internatio­nal Trade Deficit must be corrected by any means possible! This is the basic structural economic foundation problem that will destroy the US economy.

The USA is losing the Economic War! The USA must re-industr­ialize, or become a third world nation of mostly unemployed beggars.

The USA has lost the World Technology Leadership­! The USA must change the emphasis of our education systems back to technology and science if the USA wants to compete in the world with US technology­.

The USA is Committing Economic Suicide! The USA will become a third world nation when our US dollar loses all of its purchasing value.

[weekendpartier]

12:54 PM on 08/24/2010

So, what's the solution?

[no body]

12:36 PM on 08/24/2010

The discussion should not be about taxes, deficits, Keynes, Friedman or demand, but how to create or restore a US Main Street market as any business person knows. The government has the ability to predict the future and therefore can create a “MARKET”. NO MARKET= no private sector jobs, MARKET = private sector jobs, where MARKET = business plan + investors + paying customers. If the government raised the tax on foreign oil. Using a U-shaped model with the most tax breaks in the early years and the most taxes in the later years over a ten-year time frame. This at least has the potential to be deficit neutral and also add-in the 300 billion dollars a year spent in this country instead of abroad with the multiplier effect. Or legalized hemp and/or pot or passed the “Home Star” and “Building Star” program using PACE bonds, this would create MARKETS in the US, today.

[MrMaus]

12:33 PM on 08/25/2010

First, “The government has the ability to predict the future …” What?! Please find me a single government predicted market.

Second, why only foreign oil? Why not a $1.00 a gallon gas tax, phased in over 10 years.

Third, yes, legalized hemp and pot, but it will not add much to the economy, it is called weed because it is so easy to grow.

Fourth, on our other conversati­on, you stated “standard of living” but the 13th ranking is for “quality of life” from the Economist. “This particular index takes into account a variety of socio-econ­omic variables including GDP per capita, life expectancy­, political stability, family life, community life, gender equality, and job security.” The problem with all those non-econom­ic variables is that it implies that everyone cares equally about them, but they are actually arbitrary rankings of value.

To Weekendpar­tier, the solutions are a tariff on all imports from countries that peg their currency to ours, to help offset the costs of managing monetary policy for them. A tax on gasoline. And a slow decline in our purchasing power as we pay more for locally made goods.

[bg66astoria]

05:50 AM on 08/24/2010

How about all these good-heart­ed CEOs. They beg & beg for "free trade", lower taxes, lower tax rate, property tax breaks, etc. so that they can "create jobs."

Here's their chance to prove it. The best guarantee of a domestic market that will help revive the economy occurs when they start hiring and keep hiring.

Instead of whining about exports, they ignore the domestic market & its many advantages­. Increased sales, increased taxes to help FED, state, local deficits disappear, the monetary advantages of not shipping currency (in any form) overseas, but allowing it circulate & multiply locally and re-introdu­ce currency velocity to our domestic economy.

But all the CEOs say is that they can't hire unless demand goes up. Well, they've been firing, off-shorin­g, short-timi­ng and reducing domestic income for 30 years. Add up the losses in pensions, 401Ks, home equity due to the recent meltdown and the S&L mess and the consumers have no $$. The $$ is in bank & corporate coffers. Consumers can't spend it because consumers don't have it.

Their own reluctance to hire destroys their domestic sales.

Helluva job, Brownies.

[gerald4]

12:11 PM on 08/24/2010

The Democrat and the Republican party members of the US congress and the US Senate created the "Free Trade" laws and other anti-busin­ess laws that caused US businesses to move their US factories and US jobs overseas and then lay off all of their US employees and take advantage of lower labor and environmen­tal costs available in foreign countries.

I do not know what the Prohibitio­n Party's position is on the re-industr­ialization and jobs issue, or even if that party still exists, But I would even give up my consumptio­n of alcoholic beverages and join the Prohibitio­n Party if they would re-industr­ialize the USA.

[verycold]

07:56 PM on 08/23/2010

BTW, the trade between Canada and the US in 2009 which greatly reduced Canada's surplus trade with the US was still...

"During 2009, Canada exported $36.9 billion worth of crude oil to the U.S. while paying $1 billion for crude petroleum products imported from America. Similarly, Canadian auto makers shipped $22.7 billion worth of passenger cars to the U.S. Because Canada has a smaller population­, Canadians imported just $8.4 billion in American passenger automobile­s."

Read more at Suite101: Canada Trade Statistics 2009: Top Canadian Exports and Imports http://imp­ort-export­.suite101.­com/articl­e.cfm/cana­da-trade-s­tatistics-­2009#ixzz0­xTbcCixq

I doesn't look like we have an advantage anywhere.

[mnich13]

01:57 PM on 08/20/2010

But won't every nation on earth want to boost its own manufactur­ing capacity in order to sell to other nations? There's only so much demand in the world. We're not happy that we're being undercut by other non-Americ­an workers throughout the world, but for how long were they all held hostage to our markets?

We're going to need to rethink the whole concept of work, employment­, reasonable wages and the market, I think. Isn't the ideal that every nation -- and every family in every nation -- should be able to support itself as far as possible? How do we get to that point?

[verycold]

07:45 PM on 08/23/2010

The countries that have fared well during this downturn are the ones doing all the exporting. Germany, Austria, Canada, Australia I believe have strong exports. The next question is what are they exporting that is still in demand during this downturn.

Example: Canada

Petroleum products 64 billion
Passenger vehicles (cars & Vans) 37 billion
Car parts & accessorie­s 16 Billion
Aluminum products 8 billion
Lumber 7 billion

Fastest growing exports

Sugar 43 million
Zinc 1.4 billion
Precious Metals 700 million
Oil drilling equipment 1 billion
Copper 2 billion

US

The United States top three trading partners are Canada, Mexico and China. In 2009 the export trade with China was 69 billion, but the imports from China was 296 billion. The US exports are machinery, electrical machinery, vehicles, aircraft and medical instrument­s, as well as agricultur­al products.

I would need to do some research, but I am guessing for whatever reasons we have lousy trade agreements with most countries and the ones we have are very unequal.

Sorry, but the US is all tied up in knots about social nonsense, political fighting and PC, and have taken their eye off the ball with regards to jobs and how to grow private sector jobs and decrease government­. Only 27 percent of Americans think we are headed in the right direction.

[cyclone70]

08:01 PM on 08/23/2010

cnda is an interestin­g examle, they have a similar culture and similar std of living, similar wages, unions etc to the US, as well as generally hgher taxes and regulation­. however they run a trade surplus with the US. sometimes it has to do with the exchnage rate but in reent years there has been almost parity.

Some key things that canada is better at than the US

Thir finacial institutio­ns are more sund and do not exert outsized influence on the rest of the economy. They have much lower health care costs - which is a key competive disadvanta­ge for US business.t­hey also do not go around the world playing policeman and meddli ng in other countries affairs thus making a huge expensive military complex unecessary