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.
When it comes to trade, we need to level the playing field. Manufacturing is all about the unit cost of production. Currently, American companies that offshore, as well as foreign firms that export products to the U.S., bypass American minimum wage laws, environmental laws, and health and safety laws to lower their costs, especially labor costs. This enables the companies to undercut American-made products on price. We should tax imported products to help offset this market imbalance and encourage domestic manufacturing.
Free trade enthusiasts will argue that protectionism would raise prices on American consumers — and they are right. But isn’t it better to maximize the number of employed Americans and pay more for products than to subsidize with our tax dollars a growing number of unemployed people so that we can all save a few dollars at Wal-Mart?
More employed Americans would expand our tax base (only 50% of Americans currently pay federal income taxes), which would reduce the tax burden on each taxpayer and possibly offset the higher prices we pay at the stores. Most important, more Americans would be working, productivity would increase, and our nation would be stronger.
Republicans won the November 2010 election in part because Americans want to restore individual liberty and freedom. But if we wriggle free of Washington’s control, yet are still beholden to Beijing, are Americans any better off?
Alexander Hamilton was one of the founding fathers who favored protectionism and warned about the dangers of the economic policies we have been pursuing over the past few decades. He wrote, “Not only the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures.” Thus, we can only be free if we become more self-sufficient, restore our manufacturing base, increase exports, and put people to work right here in the U.S.A.
Zachary S. Krajacic is a writer and public relations professional from Buffalo, N.Y.