Sunday :: Sep 14, 2003

Why The Democrats Should Make an Issue Over Manufacturing in 2004

by Steve

One issue that will likely not get the debate it is due in the coming presidential election is the decline in American manufacturing specifically and in domestic employment generally. The conventional wisdom amongst mainstream economists is that we are looking at 4% GDP growth in the fourth quarter of this year, and for 2004, thereby leading (hopefully) to a pickup in job creation. The Bush Administration, which has based its whole domestic hopes for reelection on the supply-side assumption that cutting investment taxes on the wealthy (through dividend and capital gains tax cuts) and income taxes on Corporate America, hopes that these measures will lead to job creation quickly. Contrarian economists and most of the Democratic Party feel that a fiscally-irresponsible supply-side solution of corporate and high-income tax cuts at a time of increasing worker productivity will not lead to new job creation but rather ongoing job losses and fattened corporate and upper-end W-2s.

Since George W. Bush came into office, the U.S. economy has lost over 2 million jobs, a large number of them manufacturing ones. Bush apologists claim that this would have been worse without the Bush tax cuts, and that a cyclical decline in manufacturing is not Bush’s fault anyway. Yet Bush is responsible for his tax program, and whatever his program’s failures with regards to sustaining a healthy manufacturing base in this country are at least as much Bush’s fault as they are the manufacturers themselves. And creating a new Assistant Secretary of Commerce to study manufacturing is nothing more than a political fig leaf a year before the election to pacify the families in Ohio and other crucial swing states into thinking that Bush actually has a plan for bringing those jobs back, and that he even cares if those jobs ever come back. A story in yesterday’s New York Times points out the impact of the ongoing job losses in Ohio and how there may be a political impact from those losses in 2004. Bush apologists of course don’t want to blame Bush for this problem, and want to blame cyclical factors on the assumption that these jobs will come back when the president’s policies fully bear fruit, and as a fall-back they want to blame Clinton because, well because “Blame Clinton” is the default position whenever the GOP wants to escape responsibility for its failures.

However, what if the assumptions about eventual job creation next year are wrong? What if the mounting job losses continue, leading to a decreasing tax base and a skyrocketing deficit fed by military spending, Iraq, and inadequate investment by both government and the private sector? There is a growing fear among economists as a story in today’s Times reflects that these lost jobs, especially in manufacturing, may not return any time soon, if ever at all. With the gains in worker productivity brought about by technological investments in the 90’s and an emerging realization by economists that there truly isn’t enough demand by consumers to inspire producers to begin new hiring, the idea of a jobless recovery through 2004 isn’t remote anymore. Manufacturers see no need to hire more workers at the current level of demand when they can use their technological improvements to squeeze more work out of their current workforce for a while longer. But the vicious circle continues, as it becomes clear that there isn’t more demand because there are fewer and fewer well-paid wage earners to pump the demand.

The solutions we were told since the 80’s by the Reagan wing of the GOP, and the 90’s by Clinton himself were to accept and accelerate a globalized world economy through NAFTA, the WTO, and IMF-led overhauls of developing countries. We were told that letting go of well-paying manufacturing jobs here to developing countries was an inevitable outcome of letting capital and the profit motive chase wherever in the world it wanted to go. We were told that it would be great for the developing countries to get the formerly American manufacturing and textile jobs so that they would see the benefits of democratic capitalism and increase their demand for US products. We were told by Clinton himself that we could have a somewhat painless offset of this inevitable loss of our manufacturing dominance and base by the investment in the training of our affected workers into new careers in information and services as part of the grand bargain and benefits of globalization.

But the workers in Ohio, North Carolina and the rest of the manufacturing and textile base of this country are still waiting for the benefits of globalization. For the sake of saving a few dollars on a shirt at Wal-Mart that used to be made in the United States, those textile and clothing industry workers are being told that their jobs were expendable for globalization. The autoworkers, tool and die makers, steelworkers, and other manufacturing workers are being told that for the sake of corporate executives saving a few hundred dollars per unit to impress Wall Street, their jobs are expendable as well. The grand bargain that the globalization hawks touted of new high-paying careers in nonmanufacturing industries in exchange for their lost manufacturing jobs mean nothing if the promised investment and training towards jobs and industries are eliminated by future presidents. Those promises are hollow if you have lost a job, and the industry you were anticipating a new future in has itself been farmed out by corporate executives to the lowest overseas bidder, as we are seeing now in the near-dead domestic high-tech industry. And the grand trade-off of a better life for the citizens of our trading partners in the developing world who will see democracy and have the economic means to buy American are meaningless if they themselves are the victim of cross-border corporate managers who continue to move jobs around the globe. Workers and their national leaders find that these Wall Street-pleasing managers are only too willing to chase the cheapest costs anywhere in the globe, running roughshod over the host countries through the clout that newly-privatized IMF-arranged “reforms” bring.

The essential question at the end of the day as we head into the 2004 campaign is what should the nation do about maintaining its domestic manufacturing base? Should we continue to shrug our shoulders and hew to the globalization line that these losses are inevitable and hopefully cyclical? Should we accept the GOP supply-side approach of continuous tax cuts for multinational corporations without any strings attached, while the jobs drain away and the deficit goes up?

Why isn’t it our national interest to develop a plan to maintain healthy domestic industries that produce well-paying jobs, yes, an industrial policy? Why isn’t it important for the Democratic Party to show the voters in Ohio and elsewhere that we are not in favor of the globalization status quo, the destruction of our domestic economic infrastructure, and the resulting two-class society? Why shouldn’t the party be able to challenge not only the GOP, but also the DLC wing of its own party with specific measures aimed at reversing the decline in well-paying, high consumer jobs, and yes, union jobs? Why shouldn’t the party be ready for the anticipated smear by those who will immediately claim that any attempt to thwart the ongoing damage of globalization is nothing more than yesterday’s protectionism? Why does the Democratic Party not make an issue of an economic policy that allows Corporate America to collect its tax cuts while actively eliminating jobs here and transferring them overseas? Why doesn’t the party begin asking consumers in this country the simple question if they would be willing to pay a dollar more for that shirt in Wal-Mart, or a couple hundred dollars more for that car if they knew that money would be staying here in our communities employing their neighbors?

There are success stories in the steel and textile industries over the last decade on how to keep domestic industries competitive that are under a challenge from low-cost foreign competition, stories that don’t involve raising tariffs except in cases of foreign-subsidized dumping. Tax incentives should be extended to those industries that maintain and grow domestic manufacturing employment if they commit to verifiably doing so. The offsets in lost corporate tax revenue will more than be made up by the increase in demand and domestic job growth, especially if tax loopholes and havens for foreign investment are eliminated as well.

There is nothing in globalization theory that requires a country to unilaterally disarm its manufacturing base.

The Democratic Party needs to have an answer and an alternative for the voters in Ohio and elsewhere to show that the party knows how to focus on what is important here at home. It will not only help the party next year, but more importantly help our communities and the country in the coming years.

Attacking the culture of corporate welfare against a backdrop of corporate executives shipping American jobs overseas is a potent issue in 2004. Why should corporations that ship American jobs overseas continue to receive corporate welfare and the Bush corporate tax cuts? Why can’t the Democrats make an issue of that? To charges by the GOP that using the tax code for behavioral aims is wrong, Democrats can respond that how is this any worse than using the tax code to obtain votes and reward campaign contributors?

The party needs to have an answer and a set of policies to address restoring our manufacturing base in this country as a national interest. There are thousands of potential voters in Ohio and elsewhere who would welcome a little attention on this subject. Anything that the party can do to help voters see that there is a real difference between the parties on the issue of a strong national economy and corporate welfare and citizenry can only help people vote Democratic next year. While George Bush does nothing, constrained by ideology, the Democratic Party can show voters that one-way tax cuts and subsidies with nothing in return are not a domestic policy. A policy that requires commitment to your own nation beats unfettered tax cuts and welfare any day of the week, even if the shirt at Wal-Mart costs a dollar more.

Steve :: 5:56 PM :: Comments (8) :: Digg It!