First Up: The Wrong Path

Oct. 7, 2010
Attendees at a Washington conference on manufacturing hear a call to arms against the nation's 'downhill trajectory' in manufacturing.

Is it nave to think that we are facing an economic emergency? For some time now, I have felt out of step with much of the political rhetoric about the economy. Despite having gone through a terrible recession, many pundits and politicians seemed too measured, too remote, in some odd way too comfortable in how they were addressing what was going on with businesses and jobs in this country.

So I was relieved to hear former Sen. Don Riegle Jr. of Michigan speak with real passion about how the U.S. is facing a national economic emergency and that it was time for extraordinary measures to combat it. At the
Conference on the Renaissance of American Manufacturing held on Sept. 28 in Washington, D.C., Riegle warned that the U.S. economy is on a "downhill trajectory" and "going at a velocity that is very dangerous."

"The people are screaming to the elected officials that they think we are on the wrong path -- because we are on the wrong path," Riegle observed.

Riegle and a parade of other speakers from government, academia, labor and business all voiced concern about the loss of manufacturing jobs in this country and our relative position in the global economy. Much of the distress was related to China, its currency manipulation and its trade practices.

Leo Hindery Jr., a longtime telecommunications executive, stressed that the nation's "real unemployment" stands at 22 million, and that it will rise by 150,000 jobs every month unless drastic action is taken. "We simply cannot close the gap of jobs of that magnitude without acute attention being paid to the manufacturing sector," he noted.

Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, pointed out that China's portion of the U.S. trade deficit has grown to 75.2%. He cited an analysis by the Economic Policy Institute that growth of the trade deficit from 2001 to 2008 displaced 2.4 million U.S. jobs, almost all of them in manufacturing.

There is an "absolute, unassailable linkage between manufacturing and trade," said Hindery, who chairs the U.S. Economy/Smart Globalization Initiative. He stated that only 10% of the goods cost differential between China and the U.S. was due to labor costs. "The other 90% is subsidy, currency manipulation, environmental practices run amok and labor practices that are simply deplorable," he said.

Ralph Gomory, a professor at NYU's Stern School of Business and former head of research at IBM, said the United States is in a trade war with China -- "only it's an undeclared war and only one side is fighting."

Indeed, many of the speakers warned that the United States has put itself at a disadvantage with China by not having a national economic strategy that would help guide targeted investments and policies to promote fair trade, the growth of domestic industries and new jobs.

"Let's look at where the real problem is," said Riegle. "We do not have a country at work. We're not organized today with a national economic strategy, to perform like Germany or, in a different way, like China. They're concentrating on developing a national economic strategy that works for their people. We're not doing that. We're not even debating it."

Riegle went so far as to suggest that President Obama might want to emulate Franklin Roosevelt and use emergency powers to help stimulate the economy. "The president is going to have to stop sleepwalking," said Riegle. "He is going to have to get an economic team around him with people that think about how we get this engine going again. If we don't think of it with urgency, we're not going to gain meaningful net ground against this problem."

Manufacturing advocate Sen. Sherrod Brown, D-Ohio, had a good suggestion. He said that most elected officials and policymakers in Washington had not been in manufacturing facilities, and that they should visit a factory to "see how things are made." Perhaps if they'll take the time to drive through a declining manufacturing park and visit the remaining plants, they'll finally understand that time is short and that they need to help put us on the right path.

Steve Minter
[email protected]

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