So much for post-industrial America. After decades of our leaders and sages assuring us that the United States would thrive as we moved beyond manufacturing, President Obama used his State of the Union address to officially declare post-industrial America an unqualified bust.
Ours has become, he said, a land of “outsourcing, bad debt and phony financial profits.” Reconstructing “an economy that’s built to last,” by contrast, means revitalizing manufacturing, he said. The president proposed ending tax breaks for corporations that move offshore and imposing a tax on their overseas profits, while cutting taxes on domestic manufacturers. He promised a trade enforcement unit to investigate foreign violations of trade law — for instance, China’s massive state subsidies to solar and wind power companies, which manufacture almost entirely for export. So far, U.S. manufacturers and unions that suspect foreign countries of violating trade laws have had to investigate such practices themselves: No agency of government has been empowered to initiate legal actions against trade law miscreants, which speaks volumes about the unquestioning faith that our elites have had in the blessings of free trade and the benefits of corporate offshoring.
Obama didn’t stop there. In a paper accompanying the president’s speech, the White House promised, “When competitors like China offer unfair export financing to help their companies win business overseas, the United States will provide financing to put our companies on an even footing.” That financing, which requires congressional approval, would include tax credits to embattled clean-energy manufacturers, though they likely wouldn’t match the sums that the Chinese government is handing to its own energy companies. Tim Brightbill, a lawyer who is working with U.S. solar manufacturers on their trade complaint, which is pending before the Commerce Department, says that Chinese subsidies to their solar industry may total $40 billion.
Remarkably, at a time when the two parties can’t agree that the sun rises in the east, the Republican candidates for president concur with some of Obama’s new emphasis on reindustrialization. Rick Santorum has called for eliminating the taxes on domestic manufacturers. Mitt Romney has called for retaliatory tariffs on Chinese imports if the Chinese continue low-balling their currency. A neo-Hamiltonian perspective on the importance of bolstering our manufacturing is abruptly all the rage. Obama has discovered his inner economic nationalist, just in time for the election.
For decades Wall Street, discount retailers and American multinationals have dismissed such thinking as protectionist. Jack Welch, the General Electric chief who shuttered one U.S.-based factory after another while relocating the work to distant lands with cheap labor and undervalued currencies, became the beau ideal for American chief executives. U.S. corporate leaders insisted that their companies were global, not American. Unsurprisingly, many Americans viewed this as disloyal, particularly after Wall Street’s more cosmopolitan economy collapsed in a heap.
But it’s one thing to reject the post-industrial vision and another to actually boost the numbers and incomes of American manufacturing workers. The impressive productivity gains that U.S. manufacturing has made are partly the result of extensive automation and robot-ization of the production process. Many of today’s factories have far fewer workers on the shop floor than they did 10 or 20 years ago.
More problematic still, the new jobs in manufacturing pay a fraction of what such jobs paid, adjusting for inflation, for most of the second half of the 20th century. The new hourly pay for manufacturing workers, even in the most advanced factories requiring specialized skills, ranges from $15 to $19 — that is, from $30,000 to $38,000 a year. These are not incomes that can easily support home ownership, new-car purchases or college tuitions. A manufacturing renaissance would be good in itself — reducing our debt to foreigners, ending our dependence on other countries for strategic goods — but would not in itself rebuild the great American middle class. Turning manufacturing jobs into middle-class jobs will require establishing the kind of advanced, ongoing vocational education that’s made German industry so successful, as well as reestablishing the right of U.S. workers to join unions.
America clearly wants to transform itself from a nation that makes deals back into a nation that makes things — call it a bias for honest work. (Romney, the first financier to seek the White House, could not have chosen a worse year to run.) That will be no easy task, but at least our leaders are acknowledging what ordinary Americans have known for years: For most of its citizens, post-industrial America was no land of opportunity.