Protectionism is the solution to America’s jobs shortage

It has been said that Ireland’s greatest export is its people. America’s greatest export may be its manufacturing jobs.

Yes, Republicans should try to cut taxes, slash spending and reduce the size of government. But the agenda should also include reviving the country’s manufacturing sector, stemming the exodus of jobs to other countries, and correcting our nation’s trade imbalance. Our nation’s economic future depends on keeping jobs here, not shipping them overseas. If Americans don’t have jobs, nothing else matters.

Long-term economic strength depends on a resurgence of our manufacturing base. Based on figures from the Bureau of Labor Statistics, over three million manufacturing jobs have been lost over the last ten years. The loss of manufacturing jobs started in the late 1970s, continued in the 1980s, accelerated in the 1990s after the signing of NAFTA, and accelerated again when China was given most favored nation trading status in 2003. This has not only increased unemployment in the U.S., but has transformed the country into a service economy that offers relatively low-paying jobs.

The core economic philosophies of both political parties, which focus on taxes and spending, fail to address this critical economic issue. Trying to build a strong economy without a framework for increasing manufacturing jobs is like bailing water out of a boat instead of trying to patch up the hole. We need to be fiscally responsible but, ultimately, long-term economic strength is about creating value — that is, making products that people need and are willing to purchase. If we are not producing and selling products in our country, we will continue to lose jobs, deplete the middle class, and eventually resemble a third-world nation with a thin layer of affluence at the top and poverty everywhere else.

Although some manufacturing jobs have been lost due to technology, there are still many products we use every day that are not significantly impacted by technology. In addition, while technology has reduced the number of traditional manufacturing jobs that involve routine motions, it has also created advanced manufacturing jobs, such as those that require assembly for high-tech products like the iPod. In the U.S., advanced manufacturing jobs are being offshored; in Germany, they are helping the country sustain a strong manufacturing sector and a high volume of exports. That is one of the reasons Germany’s unemployment rate is the lowest it has been in 18 years.

Understanding why our manufacturing base is shrinking depends more on honesty than on intellectual vigor. It’s simple: American companies are building factories in other countries and shipping jobs overseas. This is obvious to even the most casual observer who finds it almost impossible to buy anything that is not made in China or another country. We can either deny that this is a problem and continue to slide down the precipice, or we can do something about it.

To correct the problem, we should create tax and trade policies that favor investment in the U.S. We should cut taxes on American companies that build factories in the U.S. and impose higher taxes on companies that engage in offshoring. We should lower taxes on all domestic products and raise taxes on all imports.

  • rdefazio

    Considering that only 1/3 of all employable adults in the United States have a college education and that the lion’s share of advertised job listings require a college degree, it would seem that a structural employment pattern is being set up due to the lack of work that does not require a college degree. Manufacturing jobs generally do not require a college education, and they have historically paid far more than service sector jobs. So, it would seem that from a national interest point of view, the fostering and support of manufacturing would be in the best interests of the country.

    What is not clear is how to get to that place where U.S. manufacturing can be competitive from a cost perspective. For all the reasons outlined by JJSmithers in his post above, manufacturers have left the country in droves. Politicians, who seem to think that funnelling money from the public treasure chest to local districts is the only way to be re-elected, have created tax and regulatory structures that discourage any real private investment in manufacturing, so protectionism would only be another layer of incompetent decision making layered on another. Yes, it would be good to have full employment, but if the employment we create is of the variety that exists in Greece, Spain, or other countries where the socialistic pressures are such that private initiative is sacrificed for security, then we will have an even greater problem than we have now.

    If we really want manufacturing, to thrive here, we as businesses have to choose to buy from domestic manufacturing companies and forego the price advantages that might be obtained by buying from foreign suppliers. Manufacturers in the U.S. have to step up their game and deliver more than just goods. They have to deliver superior customer service and higher quality control to justify the added expense. It’s a two way street, this loyalty thing.

    Rattling sabres in the name of nationalistic fervor is not the way to create manufacturing jobs. There has to be a real commitment on the part of the nation as a whole to buy American first. Anything short of that will simply mean that the U.S. manufacturing will fade into the twilight.

  • jjsmithers

    The author does not understand why manufacturing jobs leave this country, so it is not a shock that he has no idea what the solution is.

    Putting tarriffs on imports will only cause other countries to respond in kind. So, exports will be hurt, resulting in job losses. Making the product in the US will raise the costs, then the prices go up. That hurts consumers and reduces their buying power.

    The problem is regulations, regulations and more regulations, topped with a huge helping of government red tape and bureaucratic nonsense. Then, for good measure, throw in years of environmental lawsuits that are often just shakedowns by the “green” crowd.

    Endless regulations continue to be piled on businesses after they are up and running. A nightmarish maze of Federal, state and local laws, combined with a tort system that encourages frivolous lawsuits only exasperates the problems. The day-to-day costs drag our economy into the mud. Obamacare will really bring things to a crawl.

    Then there are the unions– every entrepreneur’s nightmare. Just like arguing with liberals, there is no upside to trying to have a realistic negotiation with union goons. They will absolutely destroy your business over time. Any benefits to a national manufacturing economy will be given back in the costs of dealing with unions. And it won’t take that long.

    The costs of doing business in America cannot be negated just by giving tax cuts to corporations– the next administration can undo everything, anyway. Then you have no benefits to any part of this author’s unrealistic plan.

    To get manufacturing back to America will take a major, across-the-board effort to drastically reduce regulations, cut the red tape and lawsuits involved in building new plants, reign in the unions and make every state a right-to-work state, and reform the tort system.

    Then, when there is a new, more business-friendly environment… cut taxes. Then cut them some more.

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