Eliminating Currency Manipulation Could Restore Lost US Manufacturing Jobs

Feb. 7, 2013
Report says ending currency manipulation by foreign competitors would increase employment, shrink federal budget deficit.

The U.S. could create from 620,000 to 1.3 million manufacturing jobs by eliminating currency manipulation and taking a series of coordinated policy steps, according to a new report from the Economic Policy Institute.

The EPI report called currency manipulation “one of the most important causes of growing U.S. trade deficits, and of unemployment and slow economic growth in the United States and Europe.” It charges that currency manipulation “distorts international trade flows by artificially lowering the cost of U.S. imports and raising the cost of U.S. exports.”

According to the report, the U.S. could reduce its trade deficit by $190 billion to $400 billion over three years by ending currency manipulation. This action would reduce the national unemployment rate by between 1.0 and 2.1%. It would create between 2.2 and 4.7 million jobs overall and shrink the federal deficit by between $78.8 billion and $165.8 billion, the report claims.

From January through November of 2012, the U.S. trade deficit in manufactured goods was $633.76 billion. The overall trade gap in November was $48.7 billion.

“This report shows that Congress is obsessed with the wrong deficit,” said Scott Paul, president of the Alliance for American Manufacturing. “To grow jobs and boost the economy, we must eliminate the trade deficit. Ending currency manipulation will get us part of the way there, but we also need a smart manufacturing policy, one that focuses on innovation, public investment, skills, and trade enforcement.”

Manufacturing Policies Needed

EPI said currency manipulation would only solve part of the trade deficit and should be accompanied by a series of actions to promote manufacturing.

“The United States and its domestic manufacturers are competing in an environment where many other countries, including Germany, Japan, China, and Korea, operate comprehensive manufacturing and labor force development programs to support their traded goods industries; the United States does not,” the report charged.

Among the policy actions recommended by EPI:

  • Expand investments in manufacturing R&D and technology diffusion programs
  • Provide public financial support to small and medium-sized manufacturers
  • Develop school-to-work job training systems for non-college-educated workers, including apprenticeship programs modeled on Danish and German models
  • Develop new trade policies that support fair, balanced, and sustainable trade
  • Plan and implement manufacturing and traded industry strategies, including establishing an institution akin to Japan’s Ministry of Economy, Trade, and Industry
  • Make massive investments in infrastructure, for example by meeting the United States’ $2.2 trillion worth of infrastructure needs over the next five years
  • Greatly expand public and private investments in green and renewable energy technologies

The report said such steps could lead to the complete elimination of the U.S. goods trade deficit and allow the nation to recover most or all of the 5.7 million manufacturing jobs lost between March 1998 and October 2012.

Popular Sponsored Recommendations

Legacy Phone Lines Are Draining Your Profits

Oct. 30, 2023
Copper wire phone line expenses that support emergency devices could be costing your company millions of dollars in wasteful overhead expenses. Rates have been skyrocketing while...

Powering Up Productivity: The Transformative Power of AP Automation in Manufacturing

Oct. 25, 2023
Discover how AP Automation is revolutionizing the manufacturing industry, driving efficiency, cost savings, and security. In today's world, automation is the key to staying competitive...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

3D Printing A More Efficient Factory Floor

Nov. 16, 2023
Today’s additive manufacturing platforms make it simple to print a wide range of high-performing industrial parts as soon as possible and right where you need them — unlocking...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!