Obama's Factory Factor
Just as the ghost dance of the Sioux failed to bring back the buffalo, so the declining dollar and the high price of gas have failed to bring back American manufacturing. To be sure, with the dollar down, exports are up, and with the price of shipping goods from Shenzhen to Los Angeles rising with the cost of oil, Chinese imports have slowed. Nonetheless, as the New York Times' Louis Uchitelle reported Monday, most of the rise in U.S. exports has come in corn, wheat and other agricultural commodities, not in aircraft or machinery.
Will America ever get its manufacturing back? Not unless we move to level a steeply tilted playing field: China and a host of other nations offer generous subsidies to companies locating their plants there, while the United States shuns such mercantilist strategies. But even if we moved toward mercantilism, we'd still have to confront the global economic order of the past quarter-century. American banks and corporations have already made immense capital investments, bringing their technology and expertise to nations with far cheaper workforces. There's no evidence that they've hedged their bets with contingency plans to reinvest in Ohio.
Besides, once you shutter enough factories, reopening or rebuilding them -- and their equivalently shuttered supplier and transportation networks -- is no simple matter. Nor is reacquiring skilled crafts workers in industries such as precision machine tool manufacturing, which have largely been offshored. Two years ago, I interviewed J. Bradford DeLong, a Berkeley economist who had served in the Clinton Treasury Department, for the American Prospect (a magazine of which I'm an editor). He expressed concern that American manufacturing had a tipping point after which, if it were cut back far enough, it might not be capable of again becoming an export engine that fueled national prosperity. "I worry that a lot of manufacturing capacity we could get back now we may not be able to get back in a couple of years," he said. It's looking now as if he was right.
The problem with the decline in manufacturing isn't simply that it has helped turn us from an exporting, creditor nation to an importing, debtor nation. It's also that manufacturing jobs tend to pay more than the service and retail jobs that have replaced them. The loss of several million manufacturing jobs during the Bush presidency coincides with the first economic recovery in American history in which the average family's income actually declined.
As it happens, the Americans most affected by these changes are the Americans most able to sway the outcome of the presidential election: the beleaguered workers of our onetime industrial heartland. Barack Obama can claim the allegiance of the black workers so affected, but it's the white workers clustered in these swing states who will determine our next president.
When you compare Obama's economic positions to those of John McCain, this should be no contest. McCain has supported every offshoring, free-trade accord, past or pending, that has decimated the Midwest; Obama has expressed skepticism that such accords serve the interest of ordinary Americans. Obama further supports making it easier for workers to join unions, giving tax credits to companies that create jobs stateside and enacting a "green jobs" public investment strategy that, if large enough and explicitly committed to domestic production, could help revive the Rust Belt.
But positions are one thing and narratives something else. The Democratic Party has a compelling story to tell about African Americans and women -- groups, suffering from huge and historic discrimination, that the party has championed and whose interests it has helped advance. For the white working class, the Democrats can point to discrete pieces of economic legislation (some, like retraining programs for jobs that don't exist, hardly worth pointing to), but they offer no such narrative.
Yet if Obama cannot tell this story, of workers deprived of economic opportunity and security through no fault of their own, cannot convey his empathy with these workers and his outrage over Wall Street discarding them like so many gratuitous spare parts, he probably cannot win the election. Obama needs to extend the Democrats' historic concern for fairness beyond racial minorities, women and gays to an abandoned working class. His proposal to offer tax credits to employers that create jobs in the United States is a step in the right direction, and it's even better that he spoke of it yesterday to a group of southern Virginia workers who'd lost their jobs in plant closings. It's their story he needs to tell and their concerns he has to address -- not just to win the White House, but, should he win, to rebuild a nation in which broadly shared prosperity is fast becoming a distant memory.