27 Feb Leo W. Gerard: Mother America Always Loved Manufacturing Most
There’s just something about manufacturing. Ask Rosie the Riveter. Ask the computer geeks and artists across America who create “Hacker Space” workshops to help each other invent and fabricate to their imaginations’ content.
Yeah, it’s cool to make stuff. The “maker,” whether an inventor or engineer or welder gets a thrill out of performing work that results in visible, viable products. Manufacturing also gives the “makers” the feeling of empowerment that can be seen all over Rosie the Riveter’s face.
Manufacturing is powerful. And power is coveted. That’s why mother America always loved manufacturing most. Since the early days of this country, visionary political leaders like Alexander Hamilton and Abraham Lincoln nurtured manufacturing. They knew manufacturing builds a country’s economic strength. And the capacity to manufacture secures a nation’s military might. So President Obama’s focus on reviving American manufacturing, including his proposal last week to give American manufacturers a small tax break, is wise, even if the banking brother and service sector sister feel aggrieved as a result.
President Obama said in his State of the Union address that his goal was to forge an economy built to last. That, he said, would be based on American manufacturing and American know-how, American-made energy and skilled American workers.
Since then, he has talked up his plans to reinvigorate manufacturing during several factory tours. At Master Lock in Milwaukee, Wis., he applauded the company for bringing 100 jobs back to America from overseas. The tax code should reflect that, the President said. He proposed the government give tax breaks to companies that on-shore jobs, instead of granting them to those that offshore.
It’s illogical, even unpatriotic to use tax dollars to subsidize companies that send jobs overseas, transferring America’s manufacturing power to foreign countries like China.
Later, in Everett, Wash., President Obama lauded The Boeing Co. for manufacturing planes in America. Orders for Boeing’s commercial aircraft rose by more than 50 percent last year, and it hired 13,000 Americans.
During a tour of the plant where Boeing manufactures its 787 Dreamliner, the President said:
“We can’t go back to an economy that was weakened by outsourcing and bad debt and phony financial profits.”
While Wall Street’s financial gambling took down the nation’s economy, the solid, steady, circumspect practices of manufacturers are facilitating recovery. No wonder manufacturing is the favored child.
Manufacturing, Obama pointed out, supports jobs throughout the economy, from mines to machines shops to malls. At the Boeing plant, he said:
“Every Dreamliner that rolls off the assembly line here in Everett supports thousands of jobs in different industries all across the country. Parts of the fuselage are manufactured in South Carolina and Kansas. Wing edges, they come from Oklahoma. Engines are assembled in Ohio. The tail fin comes from right down the road in Frederickson.”
In addition, those supply chain factory workers, whose jobs pay about eight percent more than comparable ones outside manufacturing, support service sector jobs in their communities.
All of that explains the government loans to car manufacturers GM and Chrysler. It would have been devastating for the country to lose the industrial might and capacity of GM and Chrysler. In addition, at risk were 150,000 jobs at the two carmakers and untold hundreds of thousands of other manufacturing jobs at car part factories across the country and at real estate offices and restaurants and retailers.
Four years later, GM and Chrysler are profitable, repaying the loans with interest, and hiring workers. Still, the number of jobs at the Big Three auto companies is down by about 150,000 over the past five years, reflecting the overall job losses in manufacturing in America. Over the past 40 years, manufacturing employment declined from 25 percent to 9 percent, as manufacturing output fell from 25 percent of GDP to 12 percent.
Some of that loss is unavoidable as robots replace humans, but economist Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities, says, “a lot of it has to do with bad policy.” The government picks winners and losers all the time with tax policy and subsidies and other measures. “It’s just not very smart about it,” Bernstein says. For example, it provides billions in subsidies to corporations to move jobs offshore.
A report called “Why Does Manufacturing Matter” by the Brookings Institution says government traditionally fostered manufacturing:
“History also reveals. . .there is no transformative investment that reshaped our economy, from railroads to the Internet, where the federal government did not partner with the private sector to overcome . . . barriers. . .To ignore this reality in the name of “not picking winners” . . .or whatever misguided ideology you want to plug in, is to concede global competition to those unburdened by such dangerously wrongheaded thinking.”
President Obama believes that. His mantra over the past two months has been:
“I want us to make stuff.”
And he openly admits the nation has a favored child, saying:
“Manufacturing has a special place in America.”
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