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[Welcome Richard McCormack, Scott Paul, and Clyde Prestowitz, Hosted by Marcy - bev] 
Since last November, I have unexpectedly found myself blogging the auto crisis and bailout. Between my five years consulting internationally for an automotive company and living in Michigan, I seemed to have the ability to explain the larger causes of the crisis that were largely missed elsewhere in the blogosphere and much of the traditional media. Yet while I could explain how America’s expensive health care and China’s burgeoning auto industry played a role in the crisis, I always felt like I didn’t really have the details to describe precisely how our own economic policies have led to the gutting of our manufacturing industries and the auto crisis.
Manufacturing A Better Future for America provides those details.
The book consists of a series of papers, largely by academics, covering all aspects of the plight of American manufacturing: an overview, a history of US trade policy, a description of how our trading partners cheat, a consideration of what happens when R&D investment moves overseas, a description of deindustrialization on the local and national level, and so on.
The book is thick with data capturing the plight of American manufacturing. This passage, for example, uses shipping container volume to show that the US exports little else tangible besides waste paper, while importing huge amounts of consumer goods.
The largest U.S. exporter via ocean container was not even an American company, but Chinese: American Chung Nam, which exported 211,300 containers of waste paper to its Chinese sister company, Nine Dragons Paper Industries.
Weyerhauser was America’s second largest exporting company via ocean container in 2007, shipping 165,800 containers filled with paper. Most all of this paper is remanufactured into cardboard to pack valuable manufactured goods for shipment back to the United States. Like the millions of products headed to American shroes, it is cheaper to manufacture cardboard in China than in the United States.
Only one of the top 20 U.S. exporters via ocean container–Procter & Gamble–could be considered a U.S.-based product manufacturer.
Few of America’s top corporate giants were shipping manufactured goods via containers to overseas markets. General Electric was ranked only in the 23rd position in 2007 among American exporters shipping 41,200 containers. But GE imported three times that amount–112,900 containers–and was ranked in 11th place among importers.
Caterpillar, which is one of America’s most successful international companies, was in 27th place among exporters (shipping 37,300 containers) behind 12 wastepaper exporters, according to [the Port Import Export Reporting Service]. General Motors ranked in 68th place, selling little overseas from its U.S. factories: and Deere & Co. ranked in 77th place. The only other U.S. manufacturing company on the container-exporting list was Whirlpool, which ranked 83rd.
Imports into the United States via container ships are another matter. The largest importer in 2007 was Wal-Mart. The world’s largest company (with sales in 2007 of $374.5 billion), imported 720,000 containers of products from overseas markets, followed by Target (435,000 containers), Home Depot (365,300 containers) and Sears, which owns K-Mart (at 248,600). The combined imports of these four retail companies (1,768,900 containers) equaled the exports of containers for the top 21 U.S. exporting companies, again, the majority of which sold paper.
It’s easy to attribute this imbalance to labor cost. But that tells a small part of the story:
The least of American companies’ worries is competing with low-wage labor. The labor cost in a coil of steel produced in the United States is less than the freight cost of a steel coil imported from China, according to Nucor CEO Dan DiMarco. Foreign producers receive subsidies, tax abatements, free buildings, free energy. They do not pay taxes. They don’t have to pay Social Security, workman’s comp, disability, or health care. They don’t have to match a 401(k) contribution. They are able to avoid more than 100 years of government regulations put on American businesses. OSHA does not exist in most developing nations. They use electricity that would never be allowed to be generated in the United States due to lack of pollution controls. The U.S. Environmental Protection Agency employs 17,000 workers. China’s State Environmental Protection Administration employs only 300.
Perhaps more important than graphically describing what we all know–that we don’t "make" much anymore as a country–the book also describes the risks of this reality, as we increasingly lose our leadership position in technology, even high-skilled jobs are shipped overseas, and we can’t even sustain our defense industries with our own manufacturing base.
In other words,Manufacturing a Better Future provides a wonky, very current (it was written after last year’s Wall Street crisis) assessment of the current troubles with American manufacturing.
The book, though, is part of a larger effort on the part of the Alliance for American Manufacturing (a partnership between some US manufacturers and the Steelworkers) to do something about it. AAM has, in turn, partnered with the progressive group Campaign for America’s Future, to start Making it in America, which aims to spur a real public debate about the future of American manufacturing and, with it, our entire economy (I will be doing some blogging on this project). As such, the book aspires to support a much larger conversation.
That said, there are parts of the book that make for tough slogging. For those unfamiliar with the existing manufacturing supply chain (from my auto blogging, I realize that includes a lot of people in the blogosphere and policy world), that chapter relies on a lot of jargon; and I made mr. emptywheel, who is a mechanical engineer, walk me through some details of the defense industrial base chapter. And there are some related issues that get little or no notice: aside from a discussion of energy generally and the role of petroleum in our trade deficit with Mexico and Canada, there’s no discussion of the role of petroleum in our larger balance of trade. There’s no discussion of how our choice to extend empire-like dominance over much of the world dictated our domestic manufacturing choices and our larger trade policies. And there’s little discussion of how a similar lag in broadband and other telecom investment contributes to making us uncompetitive globally.
But since the book is intended to be part of larger conversation, I’m sure those things can and will be included in that conversation. So let’s welcome Richard McCormack, editor of Manufacturing a Better Future; Robert Borosage, co-director of Campaign for America’s Future; and Scott Paul, Executive Director of the Alliance for American Manufacturing, to our conversation.
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Richard, Scott, and Clyde, Welcome to the Lake.
Marcy, Thank you for Hosting today’s Book Salon.
Thanks for hosting us.
hi this is clyde
Thanks for having me. I look forward to questions. I would say to start, that without a manufacturing enterprise in America, it will be very difficult to create the 20 million new jobs the country needs in order to reach full employment.
– Richard McCormack
Welcome all!
I’m hosting from Netroots Nation. Scott is still at NN, but Bob went back to DC, i think.
Richard
I’m curious how much scholars in this field are ALSO talking about the consumption side of this? It seems like if we could make products more transparent, it’d be easier to get people to understand our dependency on other countries.
Welcome Richard, Robert, Scott and Marcy. My interest is how the US can recreate the infrastructure necessary to re-industrialize the country? It’s all well and good to say we need to do that – but it’s sort of difficult to make something that requires machines and equipment that are no longer made in the US, skills sets that stopped being developed 10 years ago, and will be in direct competition with government-owned companies in a country which owns the biggest chunk of US debt and has an industrial national policy, something we can’t even seem to start to think about.
Most scholars are only looking at CONSUMPTION. — Look at all the discussion this past week about retail sales. The idea is if we buy more, the economy will improve. But that model no longer works.
As far as transparency, there isn’t any, save for the “Made in China” label on virtually everything we buy.
Toby
I totally don’t have the answer for you (though I suspect others will). But the problem is so complex. One thing I’m convinced of, after the various auto bailout related programs, is Congress does not do well with such complex issues. Not least bc it’s hard to get peopel to make the effort BOTH to push a good policy AND to understand the complexity.
Toby,
You hit it right on the head.
The United States is losing the KNOWLEDGE that is required to make products. Can we manufacture blenders, TVs, shoes, cell phones — you name it — in the United States any more?
This is a huge concern — huge. But our government doesn’t care. They’ve been taken over by “free trade” zealots, and their zealotry has put the country in a ditch.
this is an excellent point. but the problem can be attacked in several ways. One is by attracting foreign investment to the U.S. from those industries so that they will transfer technology back. We also need to see a dollar devaluation and we will need serious industrial pollicies of our own. but Japan, Korea, China and others all mnaaged to catch up iwth us, so we should be able to catch up with them.
Oh, I understand that. But it seems like there’d be some tolerance for a BuyLocal push (akin to the local food movement), but it’s so hard for consumers to learn what they’re really buying.
It’s a good question. It will take a large public investment to get us started. Access to capital for small and mid sized manufacturers is key. Creating a market for clean energy manufacturing. Returning to skills and training (great discussion of this in the book itself), and a massive shift in trade policy are some of the essential ingredients of this.
I’d like to ask all three of you if there’s still time to save the U.S. manufacturing base, and what we can do?
Good afternoon all!
I have not had an opportunity to read this but I do have a question.
How do the folks that look purely at the consumption of goods and not at the manufacturing think folks will have the money to buy ANY products if the only jobs are minimum wage service jobs without any benefits?
I really appreciated the training chapter (I used to work in training in a number of industries). But I’m wondering about the low rates of engineering students. Are the numbers still as low as they used to be? Are our great universities still educating the rest of teh world’s engineers but not our own?
Also, just a note for other readers: There was a horrible description in the globalization of R&D chapter on how our own universities are doing entire degrees overseas.
Welcome, gentlemen! This will be an interesting forum, thanks, Marcy.
There are solutions, however. We can create the infrastructure that is needed to produce the next generation of products in this country. The world needs to move to the next era of industrialization — one that is not so environmentally destructive. The country can do this by putting as much policy emphasis on investment in American production and American JOBS as it does on investment in consumption and outsourcing. All sorts of issues must be addressed, but once you decide that you are going to be a nation of producers, then that will completely change the policy orientation of Washington.
Marcy – we’ve got to start someplace and I think that has to be a decision at the national level that the US has to have an industrial policy — and we can’t look at the Chinese or the Indians and say, “copy THAT” – we have to be in front of that. Once that decision has been made – it will force people to think about the implications of it in terms of schooling, job training, infrastructure, energy and so on.
In principle yes. We need to have a weaker dollar, we need to match the tax holidays and investment incentives of other countries that target our industries for offshoring. We need to create industry/labor/government coordinatoin and evaluate carefully industry by industyr why we are not competitive and correct the flaws. We need to reduce corporate taxes to world levels and we need in some industries to reform our labor management practices. We need a much higher savings and investment rate and need to achieve that by reversing the incentivees in oiur economy for consumption and the depressants for saving.
how do you all understand the role of the “strong dollar” as affecting the competitiveness of manufacturing (and manufacturing jobs) in the usa?
There’s still time. But not much. I have two great fears right now. First, that policymakers and the public will forget about the underlying structural problems with our economy as long as the Dow keeps rising and other economic indicators get stronger. Second, that we’ll try to grow a clean energy manufacturing base with the same trade policy in effect. It will be a disaster. As far as what people can do…for one thing, sign up with us at AAM (www.americanmanufacturing.org) to keep informed. Second, start educating friends and neighbors about the importance of manufacturing. Third, join us in calling on this Administration to dramatically reorient our trade policy, especially as it relates to China.
Richard, could some of our Military-Industrial Complex be retooled for a greener product?
it prices our export too high and our imports too low. It also allows us to be fiscally irresponsible because a strong dollar makes borrowing easy.
There is time to save the manufacturing base, but not much and, in fact, it might be too late — but you can’t lose hope!
What to do?
Rescind all of the tax cuts that go into consumers’ pockets aimed at having them spend more money. Consumers spending more money will only help China’s economy.
Reorient the entire federal tax system toward investment in factories that employ Americans.
Also, start putting in place REAL incentives for American companies to invest in the America.
In other words, the U.S. government should MATCH any incentive given to an American company to locate offshore.
There are many more…
Richard – Marcy will recognize this tale – but here goes: in our area, we used to (and it was not all that long ago, actually) make a LOT of shoes. Endicott Johnson Shoes were not GREAT shoes (the company also made firefighter and hazmat boots, etc.), but there was a huge pool of people from Eastern Europe who made shoes – at THAT level of technology. if you transferred those people in their heyday to a Chinese shoe factory today, I’m sure they would not recognize the process. If we want to make shoes, we need to make the decision that we are going to make them OUR way – because we CAN’T compete with the Chinese or anyone else – their systems are basically founded on cheap or prison labor.
Exactly! Manufacturing puts the real “P” in GDP. Consumption (especially when about 60 percent of all consumer purchases of goods are of imports) is a very mixed bag.
Marcy – we won’t even discuss the fact that the US taxpayer is paying for, through the National Science Foundation, advanced R and D at Universities which is being transferred overseas by the commercial companies that are licensing them. Or the fact that when companies sell units that they are no longer interested in doing business in (such as IBM’s sale of their PC unit to the Chinese), our technology is ending up in potentially hostile hands.
Not entirely. they do have cheap labor, but I have spent time in Chinese shoe factories and they have the latest up to date technology. the factories are actually run by Taiwanese companiese that are subcontractors of Nike. So the technology is really American and Taiwanese. We won’t replace chinese shoes in the U.s. market. But there is no reason why we can’t make all the semiconductors, for example, in the U.,S.
The strong dollar is a disaster for manufacturing. Couple that with China’s currency misalignment, and it gives Chinese products about a 30% artificial price advantage. So even though U.S. manufacturing and workers are far more efficient, it’s virtually impossible to compete.
Our military industrial complex has fallen asleep. They have forgotten the number one rule of all time concerning military might: without industry, you cannot maintain an army.
It is unbelievable to me that the U.S. military failed to learn the lesson of the Soviet Empire, which collapsed not because it couldn’t make a transcontinental thermonuclear warhead, but because it couldn’t make a loaf of bread.
The U.S. can make a stealth bomber, but it can’t make a pair of shoes.
The U.S. military has to put “economic” security on the top of its list of priorities — which means green technologies. Has the military invested in batteries, for instance? NO.
The U.S. military has swallowed the ideological poison that it can buy anything it wants from whoever has it, and it does not matter one hoot if it’s not made in the United States. They have stated this clearly many times over the past two decades.
Richard – I ‘did time’ in the economic development field and I can tell you that I find it perfectly horrific that you have US taxpayer dollars ending up in foreign companies’ pockets through incentives such as those provided by the states of Alabama, Georgia and Mississippi. THAT system is extremely bad.
Here’s that passage I was talking about:
We have to keep in mind though, that German manufacturers also suffer from a strong euro, yet they compete well in international markets including China because they make stuff others can’t make or they make it better. They also have a very supportive government/labor environment.
ahem – we won’t discuss the fact that US manufacturing must try to compete on a playing field weighed down by workers compensation, health insurance costs, liability insurance costs and so on … and the Chinese…do not.
richard, could please explain why you think this? i’m all for supporting manufacturing here, but for other reason than full employment as i think the problem is mostly political and not economic (with some exceptions, for example energy)
and also, what do you think of full employment proposals such as, for example, the one by l. randall wray: How to Implement True, Full Employment
which begins:
Marcy–thanks for the review of the book at the top. The book is indeed current but as you point out, we only begin to scratch the surface. We will be offering ideas and thoughts on many of the other questions you raised.
that is true, but again I have to point to the Germans and the Finns and the Swedes who have more welfare costs than we do, but compete nicely in manufacutring.
In the manufacturing panel that Scott and Bob and I did earlier in the week a number of people were talking tech and I made just that point (as you can imagine)–that computers, too, are manufacturing,but we’re losing that too.
I would say this about making shoes, or anything else, for that matter:
The product might be “low tech,” such as shoes, though with modern design and materials, that is debatable.
But the process for making those shoes is INCREDIBLY high tech. The automation, the robotics, the skill sets of design for manufacturability, the need for Autocad and advanced assembly software, relational databases, quality systems such as ISO 9000 or lean, is just absolutely the highest of high tech.
But the United States does not invest in manufacturing R&D. Not a dime. Wonder why manufacturing is suffering?
Clyde…exactly right. Exchange rates are only one piece of the puzzle.
Didn’t mean to be picky with the comments about what wasn’t in there–I’m just thinking of the different ways to approach this project!
thats because your magazine has not been preaching about this enough. Clyde
thanks.
could you please clarify what you mean by “fiscally irresponsible” please? you aren’t referring to the federal deficit, are you?
Toby: you are right. If you add up the lax regulation, subsidies, export tax rebates in China, etc., the playing field looks even more dramatically uneven.
Richard,
Can you talk about what your experience has been trying to describe how R&D is a key part of manufacturing. I ran into a lot of people who complained that the US auto companies don’t innovate, but I think a lot of people don’t know where it happens in the supply chain.
So what narrative works for you when you try to educate people about this?
Agreed…and I thought what you said was spot on.
How funny…
Oh, Clyde – I agree completely — our local shoe workers couldn’t do step one if they went to one of today’s Chinese factories. But one question is this: do we just say, “well, we can’t compete with the Chinese on price and shoes MUST be cheap, so we won’t make shoes…or clothing…or toys…or …”? is this what we do? Don’t US consumers (and anyone else in the world) deserve products that are not painted with lead paint, are not filled with melamine poisoning, are not made with workers who are basically locked in at night? It’s all well and good to try to take the position that ‘we’ll just make the high tech stuff” – but the Chinese are fighting at every level.
Partly. We can get away with a federal deficit, household deficit, and trade deficit because we print the dollar. Other countries can’t run the kinds of deficits we do because they have to earn dollars in order to buy things like oil, soybeans, etc in the international market place. But as long as the rest of the world will take dollars and dollar denominated securities, we don’t have to responsible. A strong dollar just makes it easier for us to borrow and postpone the day of reckoning.
Sure, consumers deserve safe and quality products. but we ahve to be realistic about where we try to compete. Remember that China is not the only low cost labor guy out there. Indonesia produces shoes too and they’re not full of melamine and we aren’t going to be able to compete with Indonesia. But you had a good point about the machinery. We should forget about trying to make shoes except at the specialty high end.But we should be making the machinery. Clyde
I think the outsourcing of high skilled jobs–programmer and engineering jobs–will change the politics of this pretty dramatically.
Richard – I am thinking that part of the problem – and it is a huge issue – is that for the past 20-30 years, manufacturing in this country has been painted with this evil brush – and part of it is the whole ‘that’s blue collar/union work’ thing. I think the Chinese have made the decision that building manufacturing is not only an economic issue for them (because to keep the peace, they need full employment) — it is also a patriotic issue with them. Can you imagine if there were a PR campaign here in the US with buzzwords such as “Build a brighter future for the United States! Become an engineer!” When you have the Chinese manning (and womanning, I am sure) whole units of the People’s Liberation Army with computer hackers, you can be sure that one of the messages being put out to young people in China is that they can crush the enemies of the state through high tech education.
Scott
I had a few people ask after the steel tour the other day where the ladle was made. I assume it was made right in Pittsburgh. But who is making that kind of machinery now?
I’m not sure. Politics is really dominated by money these days and the big global companies that are doing the offshoring are also pouring money into lobbying in
Washington., the engineers adn programmers aren’t politically savy or organized. Clyde
Research for the sake of research is fine — great — knowledge generation is important.
But at some point there has to be “development” — which entails engineering, which entails the vision of turning ideas into reality. That reality is the creation of a product that can be used to solve a problem.
The United States relied on the military to do that — GPS, Internet, microelectronics, etc., all came out of this notion of creating a product to solve a problem.
Finally — there’s a lot to say about this — the country has stopped investing in the physical sciences: physics, engineering, chemistry, mathematics, computer systems, etc.
It focused most of its R&D resources over the past 20 years on the biological sciences, which are completely dependent on the physical sciences for their breakthroughs.
Not many breakthroughs lately.
This is a good point..most office parks are just as at risk as industrial parks. And who benefits? Wall Street. We’re really the only industrialized nation in the world that has what Harold Meyerson has called an “anti-industrial” policy.
No, the Brits are ahead of us in that respect and also the Aussies. but the anti-industrial policy thing is definitely an anglo thing. Clyde
ANd of course the biological sciences gives you products that rely on IP to sell internationally.
At some point, I believe India and China and Brazil will just stop enforcing IP altogether.
I’ll find out for sure where the equipment was made at the U.S. Steel plant we visited, but less and less of the industrial equipment like machine tools, robotics, molds, etc., are made in the U.S. There’s an excellent (though wonky) treatment of this in both the Webber and Bourne chapters of the book. These are strategic industries, and they have been decimated.
Good point–hadn’t thought of that.
One of my big beefs (and this comes from my time in eco-dev) is that US kids and their parents are NOT being exposed to the possibilities of what technical education can do for them. In Rochester, NY at that time, there was a program to get middle school kids into factories and machine shops where they could talk to the actual tool and die folks. They emphasized that there were companies locally who would pay a kid $35,000 a year to start after coming out of the voc tech program – and would pay for a two-year tech degree at the local community college..if only the kids would go into the programs. Parents are under the mistaken impression that a) the way to make money for a kid is to go to college – and that any degree will do, and b)that any kid with two brain cells to rub together goes to college, and c)that anything other than a desk job is somehow humiliating.
it all started with Adam Smith. the rest of the world didn’t adopt his free market economics, but all the anglos did.
Yeah, I’d love to see a version of the Webber chapter that was less wonky. Because THAT’s the story that ought to get even the militarist Republicans’ attention.
Yes, this is really important. The Dean of Santa Clara College recently told me that enrollment in engineering is dropping like a stone because the kids don’t see engineers anymore and don’t think there will be engineering jobs.
Speaking as a Michigander whose husband took a buyout, I think they’re right.
There are too many things I don’t understand in life, and one of them is why the U.S. is in bed with a communist, totalitarian dictatorship that has a horrible human rights record, keeps Tibet in a nightmare, hires 50,000 or more people to scrub the Internet every night, and has only 300 people working in its Environmental Protection Agency.
All so we can buy our Christmas ornaments at K-Mart for $4.95.
I don’t get it frankly.
The best place on the Web for information on conditions in China is the United States – China Economic and Security Review Commission. It is worth the many hours of incredible reading.
Toby: the perception of manufacturing, the shift of the U.S. educational system to a testing-based exercise that excludes vocational education, and quite honestly, the fact that there are now far fewer manufacturing facilities out there have poisoned the environment for anyone thinking of manufacturing as a career, whether as an engineer or a highly-skilled production worker. At AAM, we are doing some outreach like this, but we have a loooong way to go.
i agree re federal deficit (in fact, i think we MUST run a federal deficit), but household debt is a very different matter. large levels of private sector debt (both household and firms) make for a fragile economy very susceptible to shock. see current financial crisis.
so long as the other countries have a non convertible currency and floating exchange rates, i don’t see why they can’t run federal budget deficits. do you disagree?
Vampire Capitalism
I don’t know if you have ever gone to the Washtech.org site, but there are a series of interviews with the ‘best and the brightest’ high school students in Washington State about their career plans. For most of these kids – who ordinarily would have been a shoo-in for engineering or computer programming and design – because they have seen adults in their family or adult friends lose their jobs or have their jobs outsourced to India, etc. by companies such as Microsoft, they basically had given up on their interest – why invest in that degree if they were only going to lose their jobs later. And why invest at that level, if ultimately the jobs were going to go to foreign nationals who’d been brought in to train in the US on H1B visas to take the technology and knowledge BACK? US engineers and computer designers and programmers were at the top of the industrial heap – in my area, these folks made enough money (and our living costs were low enough) that we had the highest percentage of non-working housewives in the US between 1960-1980. Kids aspired to that. Until US kids (and their parents) see US employers showing some loyalty to US workers, it is going to be very difficult to get the really bright kids back into the classroom to devote themselves to this.
Amazingly, Republican voters overwhelmingly agree with our position on this. But the party is so controlled by Wall Street and a blinding philosophy that it refuses to even think about changes in trade policy or something like an “industrial policy.”
Here’s the opening paragraph of that Webber chapter that Scott and I were talking about:
The chapter is wonky bc the industries described–things like foundries and forging and stamping and industrial mold manufacturing–are ones that most Americans aren’t familiar with (it’s the one I had my mech eng hubby translate for me).
But the moral of the story is that our failing manufacturing base is going to start affecting our military dominance.
I think those countries have already stopped enforcing IP rights, if they ever have.
China is a communist country — there is no tradition of personal property protection. There is not a robust court system that will protect patents. Whatever you own, the state owns. Most every product is now in a digital format. Any product that is designed has all of the tolerances, materials and manufacturing directions embedded in the software that created it. All a Chinese manufacturing subcontractor has to do is hit the “forward” button on their computer and your product will soon be made by a state-funded enterprise. They might even beat you to the market with your own product.
Two points. Of course a lot of debt can make your economy fragile. We have just seen that in the recent crisis. But if you have savings, you can finance the debt yourself. Japan’s govt. debt is 200 percent of GDP compared to the U.S. at about 50 percent right now. But Japan has such a high savihgs rate that it funds all its own debt, while we have such a low savings rate that we borrow from China. Chinna would not lend to Japan, because the yen is not the world’s reserve currency. but it will lend to us because the dollar is.
Second point is that other governments can and do run budget deficits. but they don’t run big trade and current account deficits because as I said, they would have to borrow to finance that and countries typically dont’ lend to non dollar borrowers. the euro has become important in reent years, but nothing like the dollar.
I’ve never heard of the site before. (Here’s a link.)
Can you tell us the backstory to it? How long has it existed? Who demanded it?
You guys have all talked about a strong dollar– and the problems that causes for U.S. manufacturing. But why is the dollar so “strong?” Who set its exchange rate so high– how does that happen?
yes, it’s a sad development, but the problem is more difficdult than the loyalty of the corporate management. take a guy like Andy Grove. He’s totally patriotic American. but he agonizes because he is putting in a new fab at $4 billion. the Chinese govt.is offering him half of that. If he takes that offer, he will be a lot more profitable than if he turns it down. If his competitors take that offer and he doesn’t, he’s at a terrile disadvantage. It would be nice if the U.S. would match the Chinese offer, but we have no programs like that at the federal level. So what would you do if you were Andy? Clyde
Our family owns a small custom rubber molding company, in business 37 years. We’ve watched, over the last 20 years or so as our business has slowly sailed overseas. Everyone wants parts at a price point at which we can’t compete. It’s not, as some would have us believe, that California’s regulations are too onerous; we simply don’t have the resources they have in China.
Do you think Buy American regulations, or even a grassroots movement, would turn things around?
The mindset of the current crop of
sociopathsleading CEO’s is worrisome. Who in DC (or elsewhere) is the strongest voice for the change we need to restore our manufacturing base? Bernie Sanders is a strong voice but (gasp) he’s an honest-to-goodness socialist, so he won’t be taken seriously by the Serious People who drive our national conversations.I’ve enjoyed dipping into the book. It’s weedy in places but provides excellent facts and fodder for persuasion.
(My computer keeps crashing, may not be able to get back)
the value of the dollar is determined by pure demand and supply on the international currency exchanges. the U.S. govt. does not intervene, but rather allows the dollar to float completely. In times of stress such as the last year, investors get scared and flock to the dollar because they think it is a safe haven currency. So they buy a lot. That pushes the value up. also, countries like China, Japan, Korea, Singapore, etc. intervene to buy dollars and sell their own currencies in order to raise the value of the dollar. This is a way to make their exports less expensive in dollar terms and thus to promote ex[ports while inhibiting imports. Clyde
The key point from the wonky chapter in the book about the defense industrial base is this:
The systems integrators are no longer involved in innovation. They rely on companies in their supply chain to lead in innovation. Those smaller innovative companies rely on firms that know how to manipulate metals, advanced materials, printed circuit boards and semiconductor chips. Those companies are disappearing. The health of the defense industrial base should not be viewed through the prism of the big systems integrators — Lockheed Martin, GD, Boeing. Innovation starts from the bottom up, not from the top down. And the bottom of the U.S. innovation enterprise is sick.
What would I do if I were Andy Grove? I’d ask my employees, top to bottom, how do we beat the Chinese? Andy Grove is a very brilliant guy and I’m sure that he hires the best of the best. I am sure that they can together develop a system to harness all the brainpower they have to come up with an environment, procedures, and energy to run faster than the Chinese. And frankly, every employer in the US needs to take the same position — we’re fighting for our lives here, people.
We, as a country, are supposedly on a “war footing”. There has been, although perhaps waning now, hyper-nationalism since 9/11. If those conditions do not foster an awareness of the lack of manufacturing in the US, what will?
This is a part of the story that often gets missed. It’s easy to demonize the execs (and they definitely deserve it on some levels). But they really are faced with horrible choices.
Buy America policies: essential. We have some, but they are weak compared to our competitors. (You may have heard Canada and China complaining about Buy America, but the fact is, they have buy local policies that are in some cases much stronger than ours.) Some UMass-Amherst professors estimate that you create 33% more manufacturing jobs through federal infrastructure spending if you have a Buy America policy attached to it.
On the voices, there are some very, very good ones. Sen. Sherrod Brown from Ohio is probably the most outspoken. But also count in Sen. Debbie Stabenow of Michigan.
Well, I can tell you that i am on Intel’s Advisory Board and Andy has called all the guys in and they have done everything they know how to do, but there is still that $2 billion offer from China. it’s not that the Chinese will build a better chip or overtake Intel in technology anytime soon. It is that Andy has competitors in the U.S., Japan, Europe and elsewhere and if they take the Chinese money, he’s at a disadvantage. You can’t beat that with better technology or better process, because no matter what your process, an extra $2 billion will put you far ahead.
Thanks–that’s a valuable summary of the issue.
Like I said above, when I was covering the auto bailouts I got in some fights with people like Larry Lessig who said Apple should just take over GM bc then GM would innovate like Apple.
Not only was he–and a lot of others in the technie blogsphere–completely ignorant that the innovation is in the supply chain, but (as I keep pointing out), if the auto industry could have the error rate that Apple and Microsoft have when they first release their products (and/or a way to fix problems as simple as sending out a patch), then it’d be easy to put out a new model every few months.
I think Brown is much better at describing manufacturing issues. (FWIW)
To what extent has the burden of healthcare cost in the US contributed to the decline of large manufacturing?
The striking thing is that U.S. manufacturing has suffered its greatest historical collapse since 9/11. 30 percent of manufacturing employment vanished. Nearly 50,000 factories shut down. The main culprit: the entrance of China into the world trading system, getting greater access to the U.S. market. The other culprit: Wall Street Democrats and Republicans who are too eager to offshore our work. I think this bubble collapse is the wake up call that we need, as well. We face a jobless recovery without manufacturing. And, top that off with piles of military equipment that can’t be repaired because some of the parts makers have moved offshore, and you really have all the evidence you need to persuade those who have ignored the problem.
Seems to me the US has always had an industrial policy; it just wasn’t called that. We build transcontinental railroads, gave them free land, opened the west, and so on. We built land grant colleges, A&M. We invest in cancer research and space travel.
How would you describe today’s “industrial policy.” What does it favor? Where is it taking us?
substantially in the steel and auto industries and to some extent in all. but the problem in steel and autos was also tied to the industry/union structure that became terriby uncompetitive.
If the exchange rates were workiing correctly, the health care, etc. should not be a major issue. but the exchange rates are rigged.
If it hasn’t been mentioned before, something that has been discussed at Naked Capitalism is that the profit increases from moving to China often aren’t that great. There can also be quality control problems as all the stories about contaminated products from pet food to heparin to lead in children’s toys as well. Like so much, there has been something of a herd instinct at work for outsourcing even when it isn’t particularly justified. Now with the recession/depression some companies are talking about repatriating jobs to this country, not many but it could be a start.
Up until a few weeks ago our industrial policy was called the F-22.
Healthcare costs: huge, unsustainable burden for manufacturers, especially since nearly all of their overseas competitors don’t bear the direct costs of providing benefits.
One CEO we have worked with, financier Wilbur Ross, has called for a national health care system.
The U.S.-China Economic and Security Review Commission is the ONLY organization in D.C. that has seriously studied the implications of China’s economic and military rise on U.S. society. It is a place where EVERY American concerned about the future of the country should spend some time. Look at their reports — especially the recent one from Charles McMillion. They will blow your mind.
It is a bipartisan commission, half Ds and half Rs. All of them have concluded about the same thing: the U.S. is asleep.
Read their annual reports.
Read through the transcripts on such things as the Chinese aquaculture industry.
Read about China’s environmental situation.
Read about China’s military buildup.
USCC was created by Sen. Byrd in 2000.
It is the best resource in the world for information about China, and yet nobody knows of it.
Typical of America — We rely on the talking heads to tell us what to think.
Americans need to start reading transcripts of testimony, the actual text of bills — such as the Health Care Bill, or the Stimulus Bill, and then form their own opinions, and not rely on hotheads to tell us what we think we should think.
Yes, Sen. Brown is the best, and he’s held hearings on manufacturing policy in his Banking subcommittee.
I’ll return to my original point: The decision must be made AT THE TOP(and definitely sold better than healthcare reform is being sold)that as a country, it is in our national and security interests to be in the business of making stuff right here, with US companies, on US soil. Everything else will need to flow from that – until that decision is made and accepted, we’re just fiddling around at the edges, whining. And if we don’t have the political will to make that decision, and the will to back it up, then we may as well save ourselves a whole lot of effort and unhappiness and lay down and allow the US to become a third rate debtor country that has to buy everything from someplace else.
yes, you are correct. From 1791 until 1945 we had a hell of an industrial policy and we caught up with and beat the hell out of the Brits and the Germans and the Japanese.
Since then we’ve had a de facto industrial policy that i would call a kind of anti-industrial policy. So, for example, we subsidize agriculture. That’s an industrial policy. We don’t call it that, but it is. We subsidize housing throught the mortgage industry tax write off. That’s a whale of an industrial policy, but we call it making housing affordable for the middle class. While we subsidize these things, we cut R&D spending in manufacturing, refuse to deal with the dollar problem, engage in offset deals that transfer our technology to places lke Japan if they buy our fighters because we want their air force to be compatible with ours and so forth. Any industrial country has to make decisions that will constitute a de facto industrial policy. But what we don’t have is a policy witn any rime or reason or any comprehensive thinking. It’s all done spasmodically in a highly political environment. Clyde
Also here are some job figures that I like to bring up in conversations like this one:
Manufacturing is a subset of goods producing jobs. So we have lost some 30.7% of our manufacturing jobs since January 2001 when Bush came into offie and 23.3% of goods producing ones. The figure for this last is smaller than for manufacturing because there were some job increases in oil, mining, and related support industries.
I agree with Richard on the USCC. We have a lot of China info and reports on our website including state-by-state data, but USCC is an amazing and neglected source of info.
Sorry to say, but Intel is building a $4 billion – $6 billion semiconductor fabrication plant (fab) in China.
Only 2 percent of new fabs were being built in the U.S. last year.
U.S. output of the highest quality chips accounts for less than 15 percent of total world production.
Three years ago, there were 28 fabs either under construction or being planned for China, compared to two in the United States.
Yes,I agree with that. I actually think Obama has those instincts. But Summers and Geithner definitely do not.
Hugh – one of our local high tech companies, Universal Instruments, has now moved all of its production – they make high performance electronic assembly automation equipment BACK to the US.
I’d call it anti-industrial. But, we clearly pick winners and losers, just the wrong ones. We pick the financial services industry, fossil fuels, and multinationals that outsource for favorable tax treatment. We need to pick the right winners: manufacturing, workers, and clean energy, for a start.
Yes, and I was thinking about policy of facilitating the movement of capital, which means it would move out, not in.
any response to my question @36?
why should full employment depend on manufacturing?
(again, i think we need manufacturing, but not to achieve full employment).
Go to the Milken Institute,
http://www.milkeninstitute.org/
Take a look at their report on manufacturing jobs in California entitled:
Manufacturing 2.0: A More Prosperous California
Without manufacturing jobs, California went bust. Nobody makes the connection. It’s all “we’re a knowledge economy. We’re a service economy.”
Without manufacturing, there is nothing to service. There is no knowledge other than how to design a twitter site.
No, you are right. Manufacturing can’t give you full employment, but you can’t have high paid employment without it.
Hugh: I hope to see an “onshoring” trend but it’s still overhyped. The Fed Reserve Bank of Philly surveyed firms about their offshoring/onshoring plans, and while most firms have no plans either way, 11 percent planned to do more offshoring and only 6 percent contemplated onshoring.
Your point, though, is an excellent one. Bargain hunters may benefit from Chinese goods, with the caveat that they may be unsafe. Ultimately, it’s better to buy a $100 pair of shoes that last 10 years than a $30 pair of shoes that wear out in a year.
Thanks Scott; and to Clyde and Richard as well. I very much appreciate your time here, it is a worthy subject and effort.
I don’t know if this is a question or statement, but I am perplexed how the country is supposed to engender a sustained recovery economically without the jobs created and supported by large manufacturing. I think Dakine above touched on this, but why is the jobs aspect such an ignored factor in the economic recovery discussion? Politicians mention the problem with a “jobless recovery” but never manage to mention diddly squat about how to remedy that, especially with regeneration of the manufacturing sector.
This makes it sound somewhat ad hoc, as though no one has thought it through, and stuff just happens. An alternative view is that there is a well thought-out policy that benefits the movement of capital and the people who earn huge sums from moving money — but at the expense of effectively moving jobs and production facilities off shore. Isn’t this a deliberate policy, not just an unexpected result? We need to see what’s driving this, and who benefits and how they act to perpetuate it, and make that better understood, which I see as the primary benefit of the book.
Clyde – any measurements on the decline of the US middle class vis a vis the decline in manufacturing jobs?
Thanks for including the stats. Manufacturing employment started its current dip in 1998, in the Clinton era, and I will be the first to admit that his trade policies were lousy for keeping jobs here.
Re the Intel deal, have Intel repatriate its profits to be taxed at American rates and have any foreign subsidies taxed as income.
I should point out that China is really hurting in the current downturn. It has been madly and wastefully been trying to re-inflate causing a stock bubble. It has overinvested in supply and has a vast overhang in excess production capacity. Its economics numbers 8% growth blah, blah, blah is all fiction. So it is and remains highly dependent on what we do, despite its large investments in US debt.
No, I have been involved in this stuff for thirty years and the problems I have seen have not been so much mal intent as no intent.
I think this is coming. Summers thinks if he just stimulates that jobs will appear. but I doubt that. One reason is that much of the stimulus is going to Japan and China to buy their cars, etc. So I htink we will have a jobless recovery and Obama will have to start asking just exactly what is it that our people are going to do.
I think it’s an essential ingredient for full employment, primarily because it offers a far superior multiplier effect than other sectors. You have any easier time getting to full employment with manufacturing than you do without it, and you can begin to balance the current account deficit in the process.
ok. i do think we need manufacturing (just like to we need agriculture) — we need to make stuff to use and to eat. but full employment policy needs to go beyond that.
WE had a conversation the other day about who the villain needs to be here. Someone said Immelt. I said Summers.
Spot on. If we want to accomplish “rebalancing” consumption and production, as Obama says he wants to do, it cannot be accomplished without more manufacturing. There is more of a buzz now than there has been for a couple of decades about the potential for manufacturing, but the policy debate among the mainstream is still pretty stale and unsatisfying.
have you by any chance consulted with james galbraith on jobs and industrial policy?
definitely Summers
Yes, Jamie and i speak and meet regularly.
Please, can we have both?
What are you greedy?
i vote for larry summers too. and neoliberalism in general.
That was my point in the post about the need to include a discussion about our empire. Because that’s why our elite finds this sustainable and/or desirable.
In response to question 36,
Reviving U.S. manufacturing will not lead to full employment, but it could!
One manufacturing job creates many others outside of manufacturing, such as janitors, software programmers, equipment suppliers, maintenance engineers, waitress and checkout clerks, you name it. One manufacturing job also pays local taxes, so that there is a librarian or a schoolteacher for your kid. Maybe even a golf coach (like me)!
But more important, there is NO WAY for the country to pay off its mounting debts by selling dental hygiene services to the French, Germans, Italians, Koreans or the Chinese.
We have HUGE debts and they are growing, and we have to pay them off. If we don’t make things the rest of the world will buy, we will go bankrupt. In fact, we might already be bankrupt — the Stimulus and TARP are stopgaps, they are buying us time. Time to start making things. But our politicians are hesitating; being persuaded by the ideological foes of free trade to wait. Things will go back to the way they were.
Those are the same people who put us in this mess and they should be told to exit center stage.
Those who are economic nationalists need to control the debate. Those concerned about jobs and our debt now must take the risks that are needed to put America back on track.
I would agree about Clinton and trade but Clinton was able to create nearly 23 million jobs in 8 years and even had a modest increase of a few hundred thousand in manufacturing.
I am a strong supporter of a re-industrialization policy. I think we should be concentrating on a sustainable post-oil post-carbon base. Short term stimulus sure build a few more roads but long term we should be thinking mass transit, high speed rail, high speed internet, conservation refits, smart community planning, universal healthcare, improved education. We should be thinking green and we should be placing quality over cheap and more.
To paraphrase Rahm, never let a good crisis go to waste.
I hope you’re right, because that would mean the problem is easier to solve. My fear is that the moment you try to implement an explicit, pro-production/manufacturing industrial policy, the interests that stand to lose will pay the political organizers to destroy the effort, all in the name of keeping government out of our “private” economy.
Bush had a jobless recovery. Obama is looking at a job-loss one, if there even is one.
good!!!
we need more fed deficit spending (i completely disagree with you about fed budget and borrowing from china — but it was reading galbraith and other heterodox economists that convinced me i had it all wrong). so long as you are consulting with galbraith, i’m reassured.
Reading through the discussion, it seems the bottom line proposed is some kind of protectionism, along with a devaluation of currency (which will make foreign imports more expensive), lower corporate tax rates (which will starve the government even more, and shift tax burden to the average American), and greater control over work rules, i.e., though no one dare say it here, reduce union control even more.
I don’t think at this point in world history that shifting modes into upping U.S. competitiveness at the expense of other nations is going to produce a world that we are going to like. Competition over markets has been and is the engine for trade wars, and ultimately shooting wars.
U.S. politics has for so long seen armed conflict as related to neo-colonial wars, or proxy wars, most people have forgotten what happens when major industrial nations struggle over economic survival, one at the others expense: you get world wars.
No one will say it here, but the logic of the international dilemma calls for some kind of socialist, internationalist perspective. The capitalist system is unable to produce a stable world system. The U.S. has already moved very far down the road of being a militarist nation, and to keep that externally driven foreign policy sealed off from fundamental criticism, it has been necessary to become less and less democratic at home, less protective of civil rights and liberties.
Throwing millions of foreign workers out of work so that American workers can get jobs may sound good if you are an unemployed American worker, but the destabilization of the world, with each country in total competition against each other (the old “war of all against all”) leads, again, to trade cartels (which is what NAFTA was partly about), and ultimately to spheres of influence, and then wars over access to materials and markets.
Clausewitz famously said, “War is the continuation of politics by other means.” You cannot discuss the economic problems without understanding their impact on world affairs, and the national and economic policies of other states. We must nderstand that losers may not be happy with loss, and the proclivities of humanity, with thousands of years of human history as a database, demonstrate that armed conflict is a “solution” all too often imposed. When we put nuclear weapons into the mix, protectionism becomes a path down which we could end up with nuclear war. If you think differently, then you are a utopian, not I with my internationalism and belief that we must transition from capitalism as a primary mode of economy to socialism.
The recent economic crisis, which we are still in, shows that purely financial solutions cannot finesse economic, much less political realities. While I find the discussion here fascinating, the inability to see this as a world-wide crisis, and not simply a national problem, is very worrysome, for the reasons stated above.
I’m pretty sure this will be an unpopular point of view here, but I feel it must be said.
Agree completely on the investments you suggest. They are the right ones to make. And we can’t rely on the markets to incubate manufacturing, because otherwise we’ll all be relying on high speed rail, energy efficient materials, wind turbines, and solar panels made overseas. That’s been the great disconnect.
Short term stimulus also includes clean water systems, which is a good market for steel. But both the direction and amount of the stimulus are completely inadequate.
Yes, that is where we should be thrusting. Clinton was a very lucky guy. He happened to be in office when the Soviet Union collapsed and the dot com and housing bubbles took off. That’s where the employment came from. Problem was that it masked the continuing deterioration of our productive base. it was Clinton, Larry Summmers, and Bob rubin who continually repeated the mantra that “a strong dollar is good for hte American economy.”
i hope you are not referring to the fed budget deficit as the debt that needs to be paid off.
also, completely disagree with you re economic nationalism. that may need to be necessary (if the dollar loses reserve status), but it is not progressive. is galbraith is advocating that? that would be a massive change.
It is important for everyone to know what Ralph Gomory says about the current situation.
Gomory is former president of the Alfred P. Sloan Foundation, and was in charge of IBM R&D for 15 years.
He says that the multinational corporations have abandoned America.
Americans relied upon these companies for their livelihoods. And now they are gone.
Nothing has replaced them.
They employed tens of millions of Americans.
We have 306 million Americans.
We need to create tens of millions of jobs.
If millions of jobs are no longer being created by the American multinational corporations then who will create them?
We have a monumental challenge in front of us. A societal change has occurred that Americans have not yet recognized. It is similar to the one brought on by the industrial revolution. Now it is the de-industrial revolution.
Thank you, Clyde, for inadvertently making my point (see my comment above). Between 1791 and 1945, there was the War of 1812, the Civil War (where Britain played a role in supporting the South), the Franco-Prussian War, World War I, and World War II… all thanks to the economic struggle between the great powers.
The pay-off: many tens of millions dead.
We cannot play the next hundred or so years the way we played the last one or two hundred. We cannot afford the cost.
Jeff…we are not suggesting protectionism unless you use a creeping definition of it. And I’m certainly not suggesting lousy work rules. I personally support EFCA. I don’t think we need a corporate tax cut, but I do think we need reform and a redirection of tax benefits to companies that actually make stuff here. We need high-road strategies. AAM works with labor and management, which makes it kind of cool. We definitely need dramatic, progressive change.
No. Most countries are currently practising some form of protectionism. It is a fairly natural reaction, especially in light of the lack of leadership shown by the US under Obama and his economics team and secondarily by the Europeans and Japanese and beyond them China.
agree 110%
advocating economic nationalism, in the context recent our history, is imo profoundly irresponsible.
we’ve benefitted, at the expense of other poorer people, for a long time due to, among other things, the reserve status of dollar. we have a responsibility — moral and practical — to find solutions that work for all of us.
thank you so much for your comment.
Not unpopular. There is much in what you say. I also worry about the militarization of American public life. But where I think you get it wrong is to think in terms of throwing foreigners out of work to create jobs for Americans.
At the moment, it is working the other way around. Mercantilist countris are suppressing their own demand and creating excess export capacity to feed an export led growht strategy. This strategy can only work at the expense of the imporing country, the U.S. in this case. So they are actively operating to throw our workers on the street.
We need to have jobs too. So we need to respond in a way that results in americans having the jobs they rightfully deserve and would have if there were no mercantilist strategies.
The foreign countries like China can maintain full employmnet by fostering greater domestici consumption and employing their workers to supply a growing domestic market. right now China is saving 60 percetn of GDD and consuming only about 38 percent. that is a wartime savings rate. Even during WW II the U.S. only saved about 50 percent of GDP.
Exactly, but then he has the burden of “stimulating manufacturing/jobs creation”. The realization looks, by my fuzzy eyes, to be on track to sink in right about the time the next presidential election cycle is cranking into full gear, and he sure won’t have the gumption to be advocating “more costly programs” (opponents talk; not mine). I am starting to wonder how long we can put off this discussion. And this is from a guy that has got nothing to do with the sector.
Aw come on. Either you don’t know your history or you are just being disingenuous. of course, we had wars. But we had high tariffs from 1817 until 1952. We subsidized development of hte telegraph, the cotton gin, the steamship, the airplane, and so forth. Teddy Roosevelt famoulsy wrote in 1908 “Thank God I am not a free trader.,”
Our attitude and policy toward economic development for most of our history was the same as that of China today and of Singapore, Taiwan, Japan, Germany and many other countries that experienced economic miracles. In fact, the US. was the first country to have an economic miracle. it wasn’t all war driven.
One thing we haven’t touched on much today is the social cost of deindustrializtion. John Russo and Sherry Lee Linkon write in their chapter that America will look a lot more like Youngstown, Ohio if we continue to follow the same path. This manufacturing challenge, as Richard pointed out in his reference to California, is not limited to the Industrial Heartland. Manufacturing is one of the top 3 sectors in 40 states, so the pain will continue to be felt across the country.
I agree completely on this. The stimulus should be taking us somewhere. It should be a bridge to a new industrial policy. It should not be so unfocused. It also looks like it will produce very few jobs, and what ones it does will be phase out by 2011. Indeed the talk of how many jobs it will create has largely disappeared. The last time I ran the numbers, I figured that by 2011 we would have a job’s hole of 13 million from the beginning of the recession to 2011, not looking at any job losses in 2010 but adding in jobs needed to keep up with population growth.
Concerning economic nationalists and the need to keep everyone else in the world employed:
The CBO just put out its monthly financial statement for the U.S. government.
http://www.cbo.gov/ftpdocs/104…..06-mbr.htm
“The federal budget deficit for the first 10 months of fiscal year 2009 reached $1.3 trillion, CBO estimates, close to $880 billion greater than the deficit recorded through July 2008. Outlays rose by almost $530 billion (or 21 percent) and revenues fell by more than $350 billion (or 17 percent) compared with the amounts recorded during the same period last year.”
The key here: “revenues fell by more than $350 billion”!!!!
Why?
Because millions of Americans have stopped paying taxes.
We better start thinking about America in order to save the rest of the world, and the rest of the world had better understand why we need to do so.
policies of usa protectionism in the context of both a real industrial policy and strong support for even more protectionism by developing counties can be developed in ways that meant to be beneficial not just to us but instead to all on a global scale. but that’s not economic nationalism.
i’m no free trader. not in the slightest bit. but i also reject economic nationalism.
I sort of landed in the middle of a high school reunion last night. Had a lot of conversations with people who had left Pittsburgh. It was interesting…
The key is that it doesn;t have to be costly. We don’t need big subsidies. What we need is sensible, well thought out policy. Example, Ten years ago Korea was far behind the U.,S. in telecommunications infra-structure. Today it is far ahead. It didn’t subsidize more than we did. But if focused intensively on getting the fastes and most widely deployed broadband internet. our FCC on the other hand, focused on trying to create competition in a market dominated by oligopolistic giants. did you see the article yesterday, saying that Verizon, ATT, etc. are not taking the stimulus money specifically allocated to extend broadband deployment. so it’s not so much money as attitude and focus on an objective.
Thank you for mentioning Youngstown; it is done far too infrequently these days.
Having the dollar has the world’s reserve currency is a two-edged sword. For it to be a reserve currency, a lot of dollars have to go abroad via trade deficits, but being the reserve currency makes it easier to deal with those deficits. But it is a balancing act, and the US has been abusing the dollar’s reserve status to build up huge mountains of debt.
An opportunity we have not availed ourselves is a a deep comparison of innovative attributes of different countries.
The nordic countries have a rich tradition with regards to freedom of information going back several hundred years. They are huge proponents of open source technology, and yet they are not afraid of technology transfer.
They also pay workers along a flatter income curve; my stepson’s Swedish girlfriend made the US equivalent of $16/hour as a hamburger restaurant worker (that’s what she called herself). She made enough at this one full-time to buy a new car and live on her own, which I seriously doubt the average worker at a “hamburger restaurant” here in the US could do.
doesn’t galbraith say it just the opposite? that it has been operating to our benefit?
no, it our own policies — especially our fear of fed budget deficits. what else is preventing the usa from a massive fed jobs program as i linked to above?
The word protectionism is a pejorative, like “liberal.”
Yes, sadly I did see that. You are also touching on something that is a personal pet peeve of mine, the existence of corporate personhood that resulted (intentionally or not) for the Santa Clara v. Southern Pacific case. I am a firm believer that corporate personhood needs to be reeled in, and that doing so would help in a lot of areas.
As a former teacher, I keep returning to education as a part of the answer:
**education so folks can be trained for jobs
**education so they can understand the issues transparency would provide
**education so they can see the value of union jobs, health care, and the higher prices which result from these benefits.
I’m always disappointed when talk about “infrastructure” doesn’t include education.
Yes, and Lou Dobbs/Pat Buchanan policies won’t work. But as Clyde will surely say, trade is not always win-win, as we are schooled to believe. Unfortunately, the MSM characterize any attempt to neuter another nation’s mercantalism as the next Smoot Hawley depression causing tariff war. All of that is complete nonsense, but it is the environment in which we try to get our message and policies across.
As we come to the end of this lively Book Salon,
Richard, Scott and Clyde, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book and manufacturing in America today.
Marcy, Thank you very much for Hosting this great Book Salon.
If you haven’t bought, Manufacturing A Better Future For America yet, here is a link.
Thanks all.
We have a lot to learn from other countries.
I have covered manufacturing and technology for the past 25 years.
All through the 1990s the story I wrote was about “best practices.” American companies studied the best practices of overseas firms.
Now it is time for the U.S. government to do the same, with regard to innovation policies, and industrial and economic competition programs.
We have a lot to learn from the Nordic countries, from Germany, from China, Japan, Korea.
Yes, the flight out of deindustrialized places is alarming. that must have been fascinating.
Thanks to fdl, Marcy, and Bev, and to everyone who participated!
Thank you.
I look forward to reading through the threads.
– Richard
No, Jamie doesn’t disagree with me on mercantilist countries. He would say the same thing about them.
the difficulty I have with Jamie’s argument for massive spending is two things: First, it won’t necessarily solve our jobs problem. If we don’t make windmills, batteries, solar collectors, etc. then massive spending only means we creat temporary construction jobs to install them, but no permanent sustained production based employment. It also means that most of the jobs created are abroad and that our trde deficit gets even biggere.
that leads to the second problem. To fund the trade deficit we have to borrow more from China and the Saudis. Those are not good people to be in debt to.Eventually you get to a dollar crisis and the likelihood of a very nasty cdrack up. Now, of course,if the spending is supported by increased revenue or savings that’s a differnet hting. But Jamie doesn’t talk much about that. He and I differ somewhat on these points.
Amen to that.
Is there any interest for a new industrial policy in this country by our elites? As the Verizon, AT&T example illustrates, corporations in this country want to control the marketplace not risk their position in it by opening it up to innovation. As for our political leadership, they seem obsessed with resurrecting the late financial and economic system which so spectacularly failed over the last 2 years. Looking at the climate change bill and the healthcare debate, I don’t see any new thinking by either corporations or politicians. It isn’t that there aren’t solutions. It is that none of the practical ones are being considered. If it works, then that is the first thing taken off the table.
You are welcome. We’ll be doing a big book event there in the fall.
It was very fascinating. I’m from MI, so the same thing has/is happening there. (And I was born just miles from where Toby lives, close to the old Johnson City shoe manufacturing.) But I haven’t lived in either of those places to track a bunch of people (my age) who grew up in a city going through this.
egregious (and Eli) are upstairs!
Netroots Nation ‘09 – More Photographs from Eli
Thanks all!
This was a fascinating book salon–great conversation.
Hugh: some, but they narrowly define it to suit their own interests. GE, Ford, Dow, others have talked about it. The steel guys definitely get it. But we don’t want GE defining industrial policy in this country.
This subject is on my mind a lot, as I live in an area of Ohio that once was strong in manufacturing and has gone downhill. In my area, car floor mats were made, pottery is still made but much less of it. Transformers for power lines, etc. (Corning glass and Colgate Palmolive are still running, last I heard.)
It’s got to come back. We can’t afford to buy from abroad forever.
Parents also think that their kids should go to a “name” college, and then on to law school or business school.
How’s that working out for the Ivy grad living in your basement, Pops. [Not you, Toby; just a generic “Pops”.]
Scott, I hope you will still be around to read this. I highly recommend Shop Class as Soul Craft by Matthew Crawford. It’s a meditation of the value of working with one’s hands, the high degree of imagination required by such work, and the wrongful devaluation of “shop class” type jobs while “academic track” jobs are beling glorified.
I highly recommend it.
without massive fed budget deficits, if the private sector continues to try to pay down debt / save, we are in for a world of hurt.
no amount of economic nationalism will change that.
I agree with you and Paul that U.S. policies are not solely responsible for world economic problems, or even U.S. national problems. What you refer to as the mercantilist policies of other states are a big part of the problem. But I am making a criticism of the nation-state system, and the project of balancing world economic priorities by setting one nation-state or people against another. Under capitalism, there are winners and losers. That is the nature of the Market.
As for the issue of wars, I did tend to move from a U.S. to a world perspective and back again, and caused some confusion in the process. We cannot totally compare the world of the 19th and early 20th century to today. The wars over colonial domination do not have the same intensity or take the same forms. But how can anyone look at the Iraq invasion and not see in it an attempt by the U.S. to assure control over major world oil fields, and a statement by the U.S. that it is and must remain the world dominant power? U.S. supremacy as a means of keeping world order is only another way of saying that global competition over markets and resources will only end up with another world war.
What I’m saying is that there is no way to prevent that, as the attempt to maintain U.S. political and economic supremacy is doomed beyond anything but a short historical period.
Economic nationalism means blindness to international and historical realities. Humankind is at a very awful and terrible crossroads. The previous administration played off very real fears of nuclear war in order to maneuver U.S. public opinion into supporting or at least remaining passive on its Iraq-Afghanistan policies.
We cannot maintain our blinders any longer. The de-industrialization of the U.S. did not have to happen as it has, nor at the pace it has, but it was an inevitability as other newer competitors began producing. To think otherwise is to share the small producer worldview of the artisan class of a previous century, who thought that their superior goods, and craft protectionism would protect them from the onslaught of cheap manufactured goods from England, or indeed, the United States, Japan, now China, Brazil, etc.
The catastrophically failed experiment of the Soviet Union has led most to think the problems of capitalism and war are no more. Anyone with an inkling of history knows that is not the case, and that we still exist on a razors edge regarding nuclear annihilation. Nor are we in control of that genie anymore.
We had better find a way to put together a world system that does not rely on the dominance of single nation-states, or alliances of nation-states. So-called smart world leaders played at that for the first half of the twentieth century at catastrophic cost. It is only the shadow still of that horrendous second world war that stays the politicians from believing, as the fictional Dr. Strangelove did, that we can survive the third world war. Diplomacy and treaties won’t save us, only serious, structural, fundamental change and a move from a world-view of cooperation instead of competition will give humanity even a shade of a chance.
I propose $100/hour minimum wage. That should take care of this problem. LOL. It is very risky and costly to start and run local, national or international business today. I wish some of you would try it. Put everything on the line. The competition is fierce the margins are low. The work never ends.
Why do people do it? I do not think that money (greed) is the number one driver. We really try to fill the need, judging by my personal experience. We should respect businesses of any size not vilify them, I think. They have enough challenges. You know we rich people are “working people” too and we too have children and wives. LOL.
What else can we do? I am about to hang it up. It’s just not worth it. Perhaps, your stepson’s Swedish girlfriend could come and take over the payroll, benefits and personal problems of 75 people. LOL.
Have you ever predicted anything accurately with sufficient statistical accuracy? I mean anything! Do you know what the price of Microsoft shares would be at the closing on Monday? How about 10 am? Regardless of all that, you sound good!
I hope you are just being snarky. If not, you don’t know what you’re talking about nor anything about whom you are addressing your comments.
My spouse and I are investors in a small manufacturing company; he’s the president and has P/L accountability for his facility, part of a larger holding company of similar companies manufacturing capital equipment. Over the course of 25-plus years, my spouse has worked his way from entry-level product engineer to his current role; most of the folks in the business have similar stories and are not merely co-workers but friends.
They are frequently the last thing on our minds and the center of pillow talk; our biggest concern isn’t their wages, which are as competitive as they can be given the lack of new incoming purchase orders and flat work. Our biggest concern is health care, which represents 35% of total expenses and makes the firm less competitive in comparison to foreign competitors in the same products. Next year, without health care reform, the percentage will be higher and the firm may be priced out of the currently thin market for capital equipment. If the site had to shut its doors for lack of orders and work, the workers would flee to whatever other employer could pay them $16 to 100/hour so they could keep a roof over their heads AND pay for their much-needed health care.
Seriously, I hope you were being snarky; you would do well not to assume what kinds of backgrounds some of the commenters here have.