How Government Can Export Manufacturing Jobs

Purpose:

To outline steps the government must take to export manufacturing jobs and industries.

Methodology:

Increase the cost of manufacturing goods inside of America while reducing the barriers and costs to foreign produced goods for sale in the USA.

Procedure:

1. Raise taxes (payroll and income) on goods production industry
2. Increase regulation on goods produced in America
3. Eliminate import duties
4. Strengthen collective bargaining legislation
5. Increase minimum wage.
6. Enhance liability legislation (non-US manufactures have no pockets)
7. Improve anti-pollution laws / carbon taxes.
8. Increase fuel taxes (ships use untaxed fuel).

Conclusion:

At this point you may be wondering why this article belongs on a financial blog. The trigger was the July 2009 jobs data when I realized that the manufacturing job losses of this Great Recession were probably permanent.

Even in the "good" economic times of 2004 through 2006, we were shedding manufacturing jobs. To put some perspective on what is happening, 31% of all manufacturing jobs have disappeared since January 2001.

We have entered the New Normal.

Manufacturing was 12% of the non-farm private workforce at the end of our last recession in 2001. It is currently 9% of the workforce today. When you trend recessionary effects such as employment and unemployment from past recessions, you do not expect to find such a distortion in the underlying data occurring at such a rapid rate.

America is going through a rapid metamorphosis. The underpinnings of our economy are based on manufacturing – tax structure, social laws / programs, education, and economic inner workings. The effects of our rapid de-industrialization are adding to the chaos of this depression cycle.

Have a good day.

Disclosures: None

Comments

[Dave Wrixon:]

No you haven't. The new normal will emerge when Government and Service Industry Jobs shrink sufficiently for the contracted wealth generation sectors to be able to support them. We are a long way from there.

Aug 10 03:46 AM

[De Graaf:]

The real problem is flawed thinking.

Like in science, we base our models on the short term. We use steady state models that we 'improve' by using a correction input on the steady state model. Problem is, we eliminate the time constraint. Hence the flawed thinking.

If you define a source (problem or process) and only improve its path, you end up in excesses (peak volatility). Other way round: altering the source without its pathway, also results in inbalance.

We continue on a steady state model that is inherently flawed from the beginning. We should change the source AND its path to restore the nature balance. A recession should be embraced and can be limited in volatility by long term models that incorporate flawed thinking.

Its basically hedging your risk on the premise of lower growth. A controllable dynamic state of balance. Steady state is impossible! Nature doesn't provide for that!

When will we realize that the homo sapien is not able to change reality. Why do we want to continue on a path of imaginary results while history clearly shows we need a natural balance in this world.

Remember, volatility is an imperfection. The United states has continued on a steady state model that was unsustainable. People need to realize this or they become victims of their own demise.

Have a good day.

Aug 10 09:45 AM

[Jake Towne:]

Good piece. But how about?

9. Destabilize the currency so that economic calculation is confused. Generate a negative rate of interest (bank savings rate minus real inflation rate) to destroy capital formation
towneforcongress.com/e...

Aug 10 10:50 AM

[Tom E.:]

What is good for business is not necessarily what is good for America.

Aug 10 12:28 PM

[Jimbo:]

Are we describing a policy of national suicide?

Aug 10 12:52 PM

[Gregman2:]

There's a very strong chance that had those jobs not been outsourced
(offshored) they would have automated away. In some ways this is the story about excess efficiencies speeded up by the internet.

Aug 10 01:39 PM

[H. T. Love:]

Steven,

Maybe this article should be sent to TPTB?

I suspect that a strong correlation between what you show above and increased polarization (disparity of incomes) exists. I.e. shrinking middle class.

I also suspect that if your data points were to go further back, you'd see the exporting of jobs started much earlier, and still a strong correlation to a shrinking middle class. What would the "lag" be between cause and effect? I can't even guess, but once identified it should be consistent.

HardToLove

Aug 10 02:13 PM

[MfgCrunch:]

An absolutely brilliant piece -- just posted it over at MfgCrunch.com, and tweeted it, urged every mfr in the US and EU to do the same - and to send it to their Senators and Member of Congress. So much of these costs come from Washington. If they really cared about mfg - and it wasn't just lip service - they could fix it. We are first in the world in tort costs - 7 times higher than the second-place finisher, Germany. We are narrowly second in corporate tax rates behind Japan. We have no one to blame but ourselves. Ask your elected officials what they're doing to make us more competitive.

Aug 10 10:54 PM