Mamas, don't let your babies grow up to be cowboys
Don't let 'em pick guitars or drive them old trucks
Let 'em be doctors and lawyers and such . . . .
Ed and Patsy Bruce, 1978
Manufacturing is declining in America. Biden is doing something about it.
The White House announced a new website showing the effect of the legislation passed by a Democratic Congress and signed by Biden.
Democrats got this done over Republican objections. Republicans opposed the spending, but not the projects. Overall, this should be good politics for Biden -- especially the new spending in the Upper Midwest manufacturing heartland. Democrats should not expect an outpouring of "Biden-saved-our-jobs" voting. There are big trends. Most voters will feel the big trend, not the turnaround. The trend is fewer jobs in manufacturing.
The St. Louis Fed charts the decline in manufacturing jobs since 1940 as a percent of total employment. Construction jobs have been steady at 5%. Forestry and mining jobs have declined. The big visible change is the red line, total manufacturing.
Krugman noted that the Trump tax cut did not boost manufacturing. Companies used the saved money to buy back stock, not to build factories.
The Trump tax cut of 2017, which was sold as a way of promoting U.S. investment, didn’t have any visible effect. Neither did the trade war, which kicked off in earnest in mid-2018. But under Biden, manufacturing construction, as some people put it, has gone parabolic, more than doubling just over the past year.
The White House website is interactive: invest.gov. Here are the places where significant private investment is taking place following this new legislation:
Click on the interactive link above to get the details on each project. Three examples in Oregon are instructive. The green dot is amid productive forest lands. Roseburg Forest Products will be investing $700 million dollars in new facilities. They project 120 new jobs. In Beaverton, in the heartland of Oregon's technology industry, Analog Devices will spend $1 billion. It expects 280 new jobs. In Gresham a microchip manufacturer will invest $800 million. They project 600 new jobs. That is $5.8 million in capital for each job in forestry. It is $2 million in capital for each job in technology.
The recent initiatives will increase the net output of American manufacturing, which will ripple through the economy and make our country more productive and competitive. That is good. There will be value created, but not a lot of jobs created. That is the new economy. The value will accrue to the owners of the capital, not the workers, before it trickles through the economy as stockholders spend money.
The upturn in the trend may help Biden and Democrats. It makes sense that it should. But in the long run the party with policies that will win the hearts of voters are ones that re-align the people of America, the workforce of America, the economy of America, and the voters of America. Our democracy requires that. America has money for health care, but the people who need the health care don't have the money. Same with education. Same with housing.
American workers who cheered the Trump tax cuts were happy, but shouldn't have been. Those cuts are why we have deficits. Wealthy people won't like it and will resist it, but in this economy the fruits of capital need to be taxed at least as heavily as is the earned income of workers. Currently it is the opposite. Dividends, capital gains, carried interest, inheritances, and gifts are taxed far less. The challenge for the American political system is to create an economy that meets the needs of the great majority of people of America.
It is better for all of us, rich and poor, if democratic means are used to bring the fruits of the economy into better alignment. The alternative is not a permanent frustrated underclass. The alternative is undemocratic tactics from the right or left. We have warning that a great many people are open to that.
3 comments:
Thank you, Peter, but This dumps a favorite Republican whine down the drain. They attribute the fear, anger and hatred that has become their stock-in-trade to all the jobs shipped overseas by those pesky liberal globalist elites. Never mind that most “elites” tend to be conservative or that it was to satisfy our demand for cheap stuff.
On the other hand, when have facts ever changed their mind? We're talking about people who still believe in voodoo economics.
I would think that the economic effects of the pandemic would wake people up to the inherent risk of dependence on China and other foreign countries for goods. It should be clear by now that this has only benefited only a very few, very wealthy individuals.
It's also clear that domestic investment is an urgent need, but these bills are not adequately funded, if at all, so the benefits will likely be offset by the need for more government borrowing. These projects are notorious for going over budget and mismanagement. The real cost will not be known for years. In the meantime corporate America will profit while Republicans continue to use the "culture war" to shield them from accountability.
We would have been better served by passing universal health care, an increase in the minimum wage and a repeal of the Trump tax cuts.
We are going to have to decide, what are people for? What sort of place in society do we need to have for each of our citizens?
Some people advocate universal basic income. Give everyone enough money to live on, and let them do whatever they like with their time. This strikes me as impractical:
* many people have a need to feel productive, and like they are making a contribution. Take that away and you get “deaths of despair“, and antisocial behavior like drug dealing and scams.
* how do you motivate people to train for and participate in difficult jobs like nursing or plumbing? Would enough people want to climb those learning curves when there is no associated financial reward?
* do we really want to encourage slackers to lay on the couch watching TV all day?
Industrial jobs satisfied these needs for many people. We made a big mistake allowing our globalist elites to export those jobs to China. (To say nothing of how that has affected our military industrial capacity.)
In addition to bringing the industrial jobs back, we might need to go to a 35 or 30 hour work week to distribute the opportunities for work to more people.
It would also be good for us to simplify our baroque and overcomplicated tax system. A flat tax you could fill out in 15 minutes would free up at an enormous amount of potentially productive human energy.
These are just some thoughts; I am a computer expert, not a restructuring society expert.
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