President Bush's new manufacturing policy is doomed : LA IMC

So long as manufacturing executives seek labor arbitrage opportunities, employing U.S. blue-collar workers will be expensive. (American workers, after all, expect such niceties as pensions and health care.)

President Bush's new manufacturing policy is doomed.
Daniel Gross, Slate, September 2, 2003

"I want you to understand that I understand that Ohio manufacturers are hurting, that there's a problem with the manufacturing sector," the president told a union gathering in Ohio on Labor Day. "We've lost thousands of jobs in manufacturing."

The truth is we've lost more like thousands of thousands of jobâ??2.57 million (nonseasonally adjusted) since December 2000, to be exact. And as the Washington Post reported, Bush announced he's going to create "a new position, assistant secretary of commerce for manufacturing and services." That's one new job, at least.

Given the steady Democratic drumbeat about the loss of manufacturing jobs and the very likely possibility that Bush could be the first president since Herbert Hoover to see the total number of jobs fall in a four-year term, he's got to do something (see - http://slate.msn.com/id/2082321/).

The new position is somethingâ??barely (what do assistant commerce secretaries do, exactly?)â??but it seems like a thankless job. For if your mandate is to boost the number of manufacturing jobs in the United Statesâ??or even simply to prevent further erosionâ??it's a virtual certainty you'll fail. American manufacturing is in long-term decline, and it's hardly likely that a civil servant can reverse several decades of global economic adjustment in 12 months.

In July, according to the Bureau of Labor Statistics, 14.6 million of the nation's 129.9 million payroll jobs could be found in the manufacturing sector, about 11.25 percent (see - http://www.bls.gov/news.release/empsit.nr0.htm). Astonishingly, that's about the same number of people who worked in manufacturing in 1945. Back then, the 14.3 million manufacturing employees constituted 35 percent of total non-farm payrolls. Over the years, as the data shows (to get it, click here, and then click on "total nonfarm" and then "manufacturing"), manufacturing jobs have declined steadily as a percentage of total jobsâ??to 30.5 percent in 1955, to 22 percent in 1975, and to 14.6 percent in 1995. And since peaking at 19.4 million in 1979, manufacturing jobs have also declined sharply in real terms. The spreadsheet tells a tale of a remarkable transformation of the U.S. economy, which has grown more productive, larger, and more diversified as a result.

The president is also dispatching Treasury Secretary John Snow to jawbone Japan and China into altering their currency policies, which disadvantage American manufacturers. The administration plans to browbeat China into delinking its currency from the dollar and allowing it to float, in which case it would assuredly rise (see - http://slate.msn.com/id/2082936/). (Sending Snow seems like a fool's errandâ??even Defense Secretary Donald Rumsfeld couldn't threaten enough. The cost to China of letting the yuan rise would be too massive for that country's leaders to bear.)

American manufacturing is a victim of the globalist revolution that enormously benefits the United States in general. Capital moves very quickly around the world, continually seeking out places where resources and labor are cheap and available and governments are friendly. So long as manufacturing executives seek labor arbitrage opportunities, employing U.S. blue-collar workers will be expensive. (American workers, after all, expect such niceties as pensions and health care.) Everyone is at risk in this economy. Mexico, until recently the bÃªte noire for U.S. manufacturers, is losing manufacturing jobs to China, too. According to today's New York Times, Hungary is losing ground to neighboring Slovakia, "where hourly wages are 32 percent lower than in Hungary." China's peasants are tomorrow's factory workers, and today's American factory workers are tomorrow's service and information workers. The shift in currencies and the rise in Third World living standards would have to be immense for the United States to become a manufacturing magnet again. But that's good news.

So we shouldn't expect much from this new assistant secretary of commerce or from the president. Unilateral solutions to protect U.S. manufacturersâ??tariffs and susbisidiesâ??are temporary and unappealing, and, in theory, against this administration's free market ideology (not that it stopped the Bushies from imposing steel tariffs). The government could assist with some of manufacturing's structural problems by, for example, assuming pension and health care obligations. But that's ideologically unlikely and financially impossible. And the Democrats don't have anything constructive to say on the issue eitherâ??other than to turn back the clock on free trade.

So whoever accepts the new post should demand hazard pay and a three-year contract. The job is essentially to explain that the job is impossible. The new assistant secretary must persuade American workers that broad, immensely powerful forces are at work against manufacturing in the United Statesâ??forces that are beyond the control of even the most powerful government in the world. Instead of trying fruitlessly to save manufacturing jobs, the nominee should propose ways to turn the job losses into opportunities. We'd be better off devoting resources to retraining auto and textile workers to become nurses, veterinarians, funeral-home employees, and beauty-salon workersâ??four service fields that, according to today's Wall Street Journal, are hot. Retraining may not win votes in the Ohio factories, but at least it's a policy that makes sense.

slate.msn.com/id/2087849/

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