Can the Lightbringer Bring Back Manufacturing Jobs?
As he campaigns for reelection, President Obama has embraced soaring political rhetoric, pledging to harness the ingenuity of America "to bring manufacturing back." In beat-up factory towns across the land, he has promoted a vision to rebuild manufacturing after decades of shuttered plants and vanishing middle class jobs.
Only some manufacturing, though. Nobody's yet called for reindustrializing the nation.
Obama had witnessed the devastation of lost factory jobs from his earliest days as a community activist in Chicago and felt in his gut that there must be some way to help, but the president, a policy wonk and onetime professor, also wanted to know what the research showed.
Aside from letting free enterprise flourish, of course.
"There's a narrative that countries have to make things to be successful," Obama said to his economic advisers. "What's the evidence?"
The U.S.A. Germany. Japan. Korea. Taiwan. Britain in its heyday.
His economists, top academics from schools like Harvard and MIT,
There's his first mistake...
replied that there wasn't much evidence. In fact, they argued, manufacturing represented relatively few jobs in the nation's economy.
The locomotive takes up relatively little space on the train.
And governments had terrible records of investing in specific industries, anyway.
Except for Green Jobs, of course. Oh, and those where folks gave him a lot of money.
Seems they started from the premise that the government would be doing the investing.
Today, Obama has settled that conflict in favor of manufacturing, a decision explained by politics, economics and the president's trust in his own instincts.
He's infallible, y'know.
Now Obama is a man on a mission, pursuing major tax breaks for manufacturers, loans to help sell manufactured goods overseas, tougher trade enforcement to protect U.S. industries from foreign competition, investments in clean energy, high-tech manufacturing clusters and a range of other policies.
How about just getting out of the way?
Naw. That'd never work.
Obama has rallied in part because of pressure from his own party to find good-paying jobs for millions of factory workers, who sense that their economic future is slipping, or has slipped, away.
Factory workers, or union dues-paying members?
One and the same to a Democrat...
One of the problems built in: it's hard to start a manufacturing enterprise from scratch if y'gotta pay union wages and benefits. And indulge union working conditions.
Global, decades-long forces haven take a massive toll on American manufacturing, and there are few signs they will abate. And the nation's strained finances -- and paralyzed politics - limit what government can do to help.
Wasted the first trillion-dollar stimulus?
Not entirely, someone got rich...
The purpose of political office is to let contracts.
But there's a deeper problem here. Manufacturing started to die when people started complaining about the "soullessness" of working on assembly lines, referring to factories as "sweat shops," and saying flat out that they didn't want their kids to grow up working in factories. If you raise your kids to think in terms of being too good to work in a factory when they grow up they're not even going to think of getting a job there, even if they don't go to college. The dearth of applicants drives up wages, along with the unions.
The solution, as I've mentioned before, is automation. There are fewer people available to work the jobs, therefore y'gotta cut the number of people needed for the jobs. The way to outproduce the Chinese and whoever else is to pay really good wages to far fewer people while producing quantitatively and qualitatively more.
We have the technology, as the teevee show said back in the days when we didn't really have it. But we've got to start at very basic levels, like the Japanese did post-WWII. If you go to Home Depot and buy a box of screws you'll likely find "Made in China" on the box. Buy a box of knobs and it'll be "Made in China."Go elsewhere and buy cheap furniture and it'll be made in the same place. Buy tee shirts and they'll likely be made in the same place. Yet even a dumbass like me, no engineer, can think of how to automate the production of each. I could even program it and roughly design the specialized machinery.
The president's embrace of manufacturing comes during a campaign in which his rival, former Massachusetts governor Mitt Romney, has also pledged to rebuild the sector. Obama's strategists see political gain in the relentless focus on manufacturing, drawing a contrast with Romney's background as someone who financially invested in industrial companies but never ran one, and his criticism of the auto bailout.
And of course the Dems can point to Obama's deep experience in running a business...
Romney and Republicans
and Rantburgers say there is already an example of Obama's manufacturing policy at work -- the "green jobs" program that benefited political donors and lobbyists, such as the backers of the failed solar energy company Solyndra.
To name only one. I trust Mitt has the complete list?
Manufacturing, long a source of high wage jobs, has been shrinking as a portion of the economy for 45 years, from representing more than a quarter of economic activity to just 12 percent today, a decline that helps explain the nation's anxiety about the future of the middle class.
In other countries the "middle class" is shopkeepers and merchants. It has been the singular accomplishment of the U.S. that the "middle class" includes people working in manufacturing jobs. Where I grew up quarry workers were home owners, and it was a youth's ambition to get a job with Hershey Chocolate.
The slide is the result of many factors, including dwindling union membership and automated factory technology, but largely reflects the rise of low-wage jobs overseas.
Unions fought against automation from the first because it meant there would be fewer jobs. The result was to kill industries, the net result being no jobs. Brilliant.
In the past decade, fueled in large part by open trade with China, factories have shed millions of jobs.
Before there was open trade with China there was open trade with the Japanese, which was what happened to Admiral and Emerson and RCA and Sylvania. There was open trade with Malaysia, which was what happened to the North Carolina furniture industry.
The policies of presidents of both parties have over the years been shaped by the widely held view among economists that manufacturing's decline -- like agriculture before it -- was inevitable and even beneficial for American consumers, who snapped up inexpensive products made overseas.
So 80% of citizens save money, and the other 20% look for the good old days.
Low prices are beneficial for consumers, which is where the "Buy American" thing falls down. Prices being equal they'll buy "Made in U.S.A." If Chinese is more affordable they'll buy that. If U.S.A. prices are lower they won't even think about Chinese unless Grampaw was born in Olde Chunking.
As someone who began his career organizing jobless factory workers, Obama came to office with a view that more should be done to protect these
buggywhip factories communities, but he wasn't sure exactly what was possible. "I cannot wish away the sometimes competing demands of economic security and competitiveness," he wrote as a senator.
So instead he appointed a czar...
One wonders whatcha organize jobless factory workers to do. And how long do you remain a "jobless factory worker" before finding something else to do.
Faced with an economic crisis, he deployed federal stimulus money to jolt a domestic clean energy industry to life.
A domestic clean energy industry that's been eating public money since 1973 without burping up anything of general use. Last year Gloria and I were groaning and uttering bad words with $300-400 a month summer electric bills. I looked into installing solar to cut the cost. The conversion cost was prohibitive and the technology Rube Goldbergian. Instead, the old heat pump cooperatively went up, we got a new one, and our bills are 20 percent of what they were -- the product of incremental improvements in existing technology.
And months later, Obama pumped tens of billions of dollars into General Motors and Chrysler to save them.
Not to mention GMAC, the UAW, and indulgent union pension plans.
And just look at how well GM is doing today...
It was the second time Chrysler's been saved. No one mentioned breaking the car companies up, either. Jeep could do pretty well on its own, I think. Probably Plymouth could, too.
Prestowitz recalled telling Obama, "one of the problems is we're losing jobs we're good at." That caught Obama's attention. Prestowitz described how Intel was on the verge of opening its first high-tech semiconductor fabrication plant in China. Intel wasn't looking for cheap labor, he said, but was pressured by Chinese leaders, who tended to offer free land, low taxes and other incentives.
Incentives? Not more regulation and higher taxes? What are they thinking? Free enterprise?
So they didn't exactly go to school on the Chinese, did they. Where's Tom Friedman when you need him?
"What do you think we should do?" Obama asked. "We need to match the incentives and the urgency," Prestowitz said.
So we need more regulations, right?
"How much did they contribute?"
After the meeting drifted to other speakers and topics, Obama brought it back with a staccato of questions: "Why can't we make batteries in America? Why can't we make fast trains? Why we can't make windmills?"
We can't make batteries in America because of all the dangerous materials that go into them. Old fashioned lead-acid batteries are chock full of lead and sulfuric acid. Better that nameless Asians should run the risk of working with them. More modern batteries, with things like lithium in them are even worse. All those elements ending in "um" are potential nuclear explosives.
The reason we can't make fast trains is that we can't make even the relatively slow trains that people rode in the heady days of my youth. If we can't make the relatively simple price competitive we can't make the complex price competitive.
The same applies to the windmills. The thrifty Dutch have had them for years and years, and Don Quixote would occasionally tilt at them. If they're not price competitive with natural gas or oil-fired power plants they're not worth building. New technology isn't necessarily better than old technology.
Prestowitz recalled being struck by the fierceness of the president's questions but also wondering why more was not being done to answer them. As an outsider, his guess was that Obama's economic advisers hadn't made it a priority.
Who's gonna tell him it's the EPA, IRS, and government strangling jobs? Not me, man! But maybe Mittens could.
A year ago, Obama and Bloom sat in the presidential limo winding south toward a manufacturing event in Alexandria. On that ride, Obama made clear that he wanted an ambitious manufacturing strategy. He "wanted this change in administration focus to be real," Bloom said.
And thus was reborn the idea of "industrial policy."
In the limo, Obama looked at Bloom and asked, "Why is Germany so successful at running a high-wage manufacturing sector?"
This from the smartest man in the whole wide world?
The country's culture, Bloom responded. It has a long tradition of job training programs integrated into the fabric of German society. And the country's banks have made a top priority of financing manufacturers.
And beer. German workers drink beer.
"Why can't we do this?" the president demanded.
Bloom said there are things the United States could do: subsidize research and development, build stronger relationships between universities and companies, better enforce trade laws. The president could use the bully pulpit more, too.
And regulations. Don't forget regulations. And no more power plants, just solar power.
There's nothing in there about making manufacturing easier. I knew several men who got off the boat from Italy, worked in what are today considered menial factory jobs, saved their money, bought houses, and started small "sweat shop" manufacturing operations. (They really were sweatshops. This was back in the days before widespread use of air conditioning.) My mother occasionally worked in two of them. I drove by one of them a few weeks ago and it's still in operation, probably run by a grandson. I'll bet it could have turned out an order for USA Olympics uniforms, too.
"I bet on American manufacturing," the president said in Cedar Rapids, Iowa, on Tuesday.
Yeah. He's on a roll.
"What's happening in the auto industry can happen in other industries, and I'm running to make sure it does. I want high-tech manufacturing to take root in places like Cedar Rapids and Newton and Des Moines."
High tech industries require heavy capital investment. Low-tech industries are the base on which other industries are built.
And not just in those places, according to his stump speeches. Obama has said manufacturing can come charging back across Ohio -- in Youngstown, Cleveland and Columbus. There's great promise, too, in Pittsburgh, Detroit and Baltimore. And across this land, from Richmond and Charlotte to Chicago and Denver -- all places where he's said manufacturing should see a renaissance.
Change! Not the old change. New change. Good change! But keep the old unions and work rules, of course. And change some regulations, then add some new ones. More government oversight!
All the places he cited are places he needs to have vote for him in November. After that it won't matter...
Youngstown and Pittsburgh were steel cities. The unions killed steel with demands for high wages, unsustainable benefits, and intricate work rules at the same time other places were making steel with none of the above and dumping it at below production prices.
Detroit used to be Motor City before it became a center of municipal corruption and the UAW began killing off U.S. car companies while Japan and Korea and Germany out-qualitied and under-priced them.
Cleveland used to be touted as the "best location in the nation" until Dennis Kucinich drove it into the first municipal bankruptcy since the Great Depression. I understand it's recovered and that it's not a bad place to do business now, though not a manufacturing powerhouse.
Richmond was the home of the Tredegar Iron Works, but that was 150 years ago. It had the first electric streetcar system in the country, but that's long gone. And it used to be the home of "America's Black Wall Street." But all that was years ago. Today it's still the capital of Virginia and I believe it's fairly prosperous.
I'm not too sure why Columbus is on that list. In 2009, BusinessWeek named Columbus as the best place in the country to raise a family. Forbes Magazine in 2008 ranked it as the no. 1 up-and-coming tech city in the nation, and the city was ranked a top ten city by Relocate America in 2010. Maybe it's died in the past two years.
Baltimore's a port city, but the U.S. shipping industry's been killed off by the usual suspects and by Congressional regulation. We still get lots of ships, but the stevedores are all gone, replaced by cranes and containerized shipping. Young Baltimoreans don't go to sea anymore -- the crews are Filipinos, Indians, and other adventurous races. But we have Johns Hopkins Medical Center and Zurich Insurance and a variety of other companies, though we don't manufacture much of anything anymore. The Inner Harbor no longer has shiploads of bananas and bales of cotton and tobacco unloaded. It's full of restaurants and trendy shoppes. The city's infamous Block, which used to be full of strip clubs and other seedy dives designed to separate sailors from their money, has shrunk and morphed into overpriced joints that are just as seedy but not nearly as much fun. We have the the usual controversies about city taxes and regulations running business out of town, but the city's actually not in bad shape.
Posted by: Bobby