Posts Tagged ‘manufacturing jobs

20
Feb
18

Time: The Voters Trump Forgot

Time: The Voters Trump Forgot

Time: The Voters Trump Forgot by Molly Ball February 26,2018

Vonie Long, president of the United Steelworkers’ local union in Coatesville, Pa.
Vonie Long, president of the United Steelworkers’ local union in Coatesville, Pa.
Jeffrey Stockbridge for TIME

By Molly Ball / Coatesville, Pa.

February 15, 2018

Donald Trump was saying everything Vonie Long wanted to hear, not that Long believed him.

The head of the United Steelworkers’ local union in Coatesville, Pa., Long was sitting in his electrical-maintenance truck in June 2016, listening on the radio to Trump give a speech on trade at an aluminum plant on the other side of the state, outside Pittsburgh. Trump had begun with a tribute to the steelworkers who built America. He blasted the politicians who pursued globalization and pledged to fight unfair trade practices that threatened U.S. jobs. Most of all, he made promises, from renegotiating the North American Free Trade Agreement (NAFTA) to imposing a tariff on steel.

Long, a stout man with a bristly gray mustache, was impressed. Republicans didn’t usually talk like this. “Any of us steelworkers could have given that exact speech,” he told me recently. And while Long, a Democrat, voted against Trump, after the election he hoped that Trump might actually follow through.

But it hasn’t panned out that way. A year into Trump’s term, the factories have not roared back. His accomplishments–a massive corporate tax cut, a strong stock market–have largely redounded to the benefit of the bankers and fat cats. Trump has taken few of his promised actions on trade and manufacturing. The American steel industry has suffered as the market floods with imports, forcing prices down, all while the Administration dithers and delays over tariffs.

As Long sees it, no one should feel more betrayed by the Trump presidency than the archetypical Trump supporter: the white working-class voter whom Trump dubbed the Forgotten Man. And yet, to his great frustration, many of his fellow blue collar workers don’t seem to grasp how Trump has abandoned them. As of last month, the President’s approval rating was 46 percent among white non-college-educated voters, down 7 points since he took office, according to the polling firm Morning Consult. “The most vocal supporters of him, they’re just unwavering,” Long says, shaking his head.

Coatesville was once known as “Pittsburgh East” for its steel production. Today the local steelworkers’ union has just a few hundred workers at the town’s plant
Coatesville was once known as “Pittsburgh East” for its steel production. Today the local steelworkers’ union has just a few hundred workers at the town’s plant
Jeffrey Stockbridge for TIME

The immovable loyalty of Trump’s narrow but vocal base has broad ramifications, not just for the Democratic Party but also for the nation. Unbridgeable divides make governing nearly impossible: there can be no consensus in a politics of blind tribalism. But the real tragedy of Trump’s broken promise to the working man is the missed opportunity it represents. Trump had a chance, advocates argue, to bring back American manufacturing–and spur a populist political realignment in the process. Many of the residents of Trump Country, the nation’s hollowed-out former industrial heartland, still hold out hope that he can do it. But the President seems to have forgotten them.

The blue collar man is the mascot and enigma of the Trump era: endlessly analyzed, endlessly interrogated. Reporters and researchers have returned again and again to Trump Country since 2016, asking the same question–What do you think of the President now?–and getting the same answers: It’s a witch hunt. He’s shaking things up.

Scott Paul, head of the Alliance for American Manufacturing, has given up asking; the answers are always unsatisfying. “There’s a lot of forgiveness,” Paul, a slight, fine-featured 51-year-old, tells me as he drives his battered Ford SUV down the two-lane highway out of Coatesville. “There’s kind of a list of reasons why he hasn’t done this or hasn’t done that.” But Paul keeps coming back to places like Coatesville anyway. He’s not on a mission to win votes for the Democrats. His aim is to try to get the President to keep his commitments.

A picturesque town of 13,000, Coatesville was once known as “Pittsburgh East” for its booming steel industry that employed as many as 8,000 people. The massive plant that looms over the town is the U.S.’s longest continuously operating steel mill, open since 1810. It produced the 152 nine-story fork-shaped supports that formed the base of the original World Trade Center–many of which stayed standing when the towers fell on Sept. 11. It makes nuclear-submarine parts and mine-resistant armor for military vehicles in Iraq and Afghanistan.

Today the plant is badly diminished. In 2003, it was acquired by an investment group led by Wilbur Ross, now Trump’s Secretary of Commerce; it was eventually bought by the Luxembourg-based industry giant ArcelorMittal, and operates at a fraction of its capacity. The steelworkers’ local that Long oversees now has just 580 members at the plant.

Like Long, Paul hails from Trump Country, having grown up in rural northwestern Indiana. A former trade lobbyist for the AFL-CIO, his association is funded by American steel unions and manufacturers. And while he didn’t vote for Trump, he understood why so many working-class white people did.

“When you see Pennsylvania, Michigan, Ohio and Wisconsin all end up in the same place,” Paul tells me, “there’s a reason for it.” Trump’s opposition to globalization broke with the GOP’s elite consensus. But it tapped a wellspring of sentiment in the party’s base that politicians like Ross Perot and Pat Buchanan recognized decades ago. There’s a similar fissure in the Democratic Party, where populists like Bernie Sanders opposed the Obama Administration’s push for deals like the Trans-Pacific Partnership (TPP). It’s not a coincidence, Paul believes, that both Sanders and Trump drew so much support from the industrial Midwest.

To be sure, some white working-class voters were nativists who thrilled to Trump’s rants against China, Mexicans and Muslims. Paul doesn’t deny that racism and sexism played a role but says that “some of it is a sense that their manufacturing communities have been left behind.” President Obama promised to add a million manufacturing jobs in his second term; the total came to only about 360,000.

Business is booming and workers are in demand at the John Rock Inc. pallet company in Coatesville. Owner Bill MacCauley says Trump’s recently enacted tax cuts spurred him to invest in new equipment
Business is booming and workers are in demand at the John Rock Inc. pallet company in Coatesville. Owner Bill MacCauley says Trump’s recently enacted tax cuts spurred him to invest in new equipment
Jeffrey Stockbridge for TIME

Paul was willing–even eager–to work with Trump. He saw it as an encouraging sign when the just-elected President asked him to serve on a newly created advisory council on manufacturing jobs. “A year ago, I thought there was a reasonable possibility we’d get an infrastructure bill, we’ll get ‘Buy American’ laws, there’ll be a crackdown on China, he’s going to look out for the steel industry, and he’s going to renegotiate NAFTA,” Paul says. “That’s something I wanted to be a part of.”

Instead, Paul found himself cringing as Trump did things he didn’t support, from pulling out of the Paris Agreement to the ban on travelers from some Muslim-majority countries. In August, when Trump hesitated to denounce the deadly white-nationalist march in Charlottesville, Va., Paul hit his breaking point. He was one of eight members to resign from the manufacturing initiative, which the White House then disbanded.

Since then, Paul has watched from the sidelines as Trump’s promises have been indefinitely delayed. The lack of progress on a controversial Chinese steel tariff is a case in point. An obscure provision, Section 232 of the Trade Expansion Act of 1962, allows the U.S. to restrict imports if national security is at stake. In an April ceremony at the White House attended by steelworkers’ representatives and CEOs, Trump announced an investigation into steel imports under Section 232. But the Administration’s original June deadline has come and gone, and still no decision has been announced.

The “Buy American” order Trump signed in January didn’t actually, as he claimed, require that the Keystone XL oil pipeline be built from American steel. The trade deficit with China recently hit $375 billion, the highest level in history. Although Trump pulled out of TPP and has undertaken talks to renegotiate NAFTA, all the trade agreements the U.S. was a party to when he took office remain unchanged. It wasn’t until Feb. 12 that the White House finally unveiled its infrastructure plan, to indifference on Capitol Hill. Rather than support building new highways and bridges and airports and railways, as Trump once promised, the proposal provides seed money to encourage private companies to build things like toll roads.

The lack of action is partly the result of a battle under way within Trump’s own Administration. Trade hawks like Peter Navarro and Robert Lighthizer stoke Trump’s protectionist impulses, only to be resisted by more mainstream economic advisers, from Gary Cohn to Republicans in Congress. Meanwhile, the Chinese have wooed the President aggressively, with apparent success: so far, the only win for the protectionists has been a minor action imposing trade restrictions on solar panels and washing machines. (Recently, the President has appeared to refocus on these priorities, touting infrastructure and meeting with senators on tariffs. “Everything that President Trump has done since taking office has been directed toward making the country better for all Americans,” a White House official told me, “including the men and women who had felt forgotten by decades of bad deals and regulations that sent their factories and jobs overseas.”)

Economists differ on the potential effect of trade restrictions. But in the near term, the effect of Trump’s indecision on towns like Coatesville has been immediate. When Trump announced the Section 232 investigation, other countries began pumping out steel to ship to the U.S. before a tariff took hold. The glut of supply sent steel prices tumbling. A pipe mill outside Harrisburg has had layoffs, as has a steel mill in Conshohocken. Another in Kentucky announced it will shut down.

Paul wonders what might have been. “I’ve been around politics enough to know there’s a gap between campaign promises and what an elected official can deliver,” he says. “But imagine if, at the beginning of his Administration, Trump had said to Democrats, ‘Let’s work on trade enforcement, let’s do infrastructure,’ instead of trying to repeal the Affordable Care Act and pushing a very partisan exercise on taxes.” He chuckles ruefully. “What a different place we could be in now.”

Trade proponents argue that the steel jobs aren’t coming back, and towns like Coatesville need to adjust to a new economy. In Coatesville, the future may have already arrived in the form of the humble pallet.

“There’s plenty of jobs,” shouts Bill MacCauley, yelling to be heard over the sound of heavy machinery as he strides through his cavernous warehouse. Just across town from the old steel mill, the John Rock Inc. pallet factory is booming. “Our biggest challenge is labor,” says MacCauley, a rangy, easygoing man in blue jeans. In his telling, the pallet, that simple slatted platform, is the unsung hero of the American economy. “Pallets are a better barometer of the economy than anything else,” he contends. “Everything in this country moves on a pallet.”

MacCauley, who grew up on a farm, was working as the plant manager in 1997 when its founder decided to retire. Since taking over the business, he has modernized and expanded it, commissioning efficient new nailing and sawing machines and doubling the warehouse’s footprint. Today MacCauley’s plant nails together 20,000 pallets a day, making it one of the top five pallet-making facilities in the country by his reckoning. The nails are from Korea–they tried American nails, but the quality didn’t pass muster.

Winters are typically busy in the pallet business as the holidays and Super Bowl spur shipping demand. But MacCauley says business has been gangbusters since Trump took office a year ago. Since the passage of corporate tax cuts in December, MacCauley has dramatically increased his capital investments: he has $2 million worth of new machinery scheduled to arrive in the next three months, purchases he says he wouldn’t have made now if not for the legislation.

With unemployment down to 4.1%, companies across the U.S. have had to scramble to find workers, driving wages up and forcing recruiters to get creative. John Rock is no exception. Pay starts at $11 per hour, with full benefits and a 401(k). MacCauley has raised wages by $1 over the past year, in part to compete with landscaping jobs. He estimates that a majority of the plant’s workers are Latino. The job market is so tight that the company has started recruiting women for what has traditionally been men’s work. “Whether you like Trump or not, the fact remains: everybody’s doing better than they were a year ago,” MacCauley says. “We’re probably going to look back at this as one of the biggest booms in our lifetime.”

It’s not quite accurate to attribute all this to the new Administration. Unemployment was plummeting before Trump was elected; in fact, jobs have grown more slowly under Trump than any other year since 2010, and wage growth slowed during his first year. The President boasted in his State of the Union on Jan. 30 about the addition of 200,000 manufacturing jobs, but there are still 1 million fewer Americans working in manufacturing than there were 10 years ago.

Still, to MacCauley, things look better than ever. Foreign trade doesn’t bother him: “When they import goods, they import ’em on a pallet,” he says. Reducing immigration would worsen MacCauley’s hiring crunch–that’s a part of Trump’s agenda he’s not so keen on–but so far Trump’s crackdown hasn’t affected him.

We walk out past MacCauley’s office, where a bikini-girl calendar hangs on one wall and the others are festooned with livestock-show ribbons for the specialty ewes he raises as a hobby. Above a receptionist’s desk is a mug reading I just want to drink coffee and listen to Rush Limbaugh. This plant, powered by global trade and immigrant workers, may not match Trump’s populist vision, and MacCauley, the man with his name on the payroll checks, was never quite forgotten in the global economy. But from where he sits, there are plenty of reasons to be happy with Trump.

The Trump base –that part of the electorate that supports him not reluctantly but ardently–is not the political mainstream: just 22% strongly approved of the President in one recent poll. But Trump’s working-class supporters continue to fascinate and flummox political experts in part because they are stubbornly, heartbreakingly hopeful that he will eventually keep his promises to them.

At Coatesville’s Little Chef Family Restaurant, 64-year-old John Gathercole sits at the lunch counter with a cup of coffee, talking about how Trump will bring back steel jobs. He spent 29 years cutting heavy steel, retiring two years before the plant closed and laid off the remaining workers. Politicians romanticize manual labor, but it was a brutal job: Gathercole believes he could have been killed if the Occupational Safety and Health Administration hadn’t intervened to protect him from illegal emissions. Now he makes pocket money driving Amish workers to and from their factory gigs.

“I’m a big union man. I always will be,” Gathercole says. Solidly built with slicked-back gray hair, he wears a gold chain under his Under Armour shirt. A lifelong Democrat, Gathercole cast his first-ever Republican vote in 2016. “I don’t know how Trump is on unions,” he says. “I liked him because he was change.”

Sentiments are similar 30 miles up the road, in the once vibrant manufacturing hub of Reading. The city’s garment factory is now an outlet mall, and it has one of the highest urban poverty rates in the U.S.. at 39%. At an indoor farmers’ market here, between stalls selling Amish pastries and fresh poultry, locals are yelling at one another about politics.

“Trump is going to revisit NAFTA and take a hard line with China,” insists a voluble man with curly gray hair in a Snap-on tools jacket. Trade, he says, is his No. 1 issue; his wife is a United Automobile Workers union member, and his sons both work at a steel-alloy plant. “They’ve been busy as heck since Trump got in,” says the man, who won’t give his name because he’s afraid he’ll be attacked by Trump critics.

At the other end of the table, a white-mustached man in a black driving cap can’t believe what he’s hearing. Eighty-two-year-old Charlie Fisher doesn’t like the slogan “make America great again,” he says, because he always believed America was great. When Fisher demands that the other man defend the Access Hollywood tape, the Trump supporter brings up Hillary Clinton’s emails. “How about eight years of Obama, the Muslim in Chief, who never made 3% GDP growth?” he hollers. “See, I do my homework. I know what I’m talking about.”(In fact, the economy grew 3% during several quarters under Obama.)

At the next table, Todd Hiester, 61, sits quietly thinking about the past. In 1979, when he was 19, his father got him a job at the Dana auto-parts plant. Hiester apprenticed as a tool and die maker, loved the work, and did it until the company went bankrupt in 2000. The day the factory closed, two men who worked alongside Hiester were so despondent that they shot themselves, he says. Hiester had been pulling in $36 per hour but missed qualifying for a pension by three months. He tried going back to community college for a computer degree, but he never found another job that paid half of what he had once made.

Hiester says he voted for Trump for a host of reasons: because of the need for Judeo-Christian values on the Supreme Court, because he believes undocumented immigrants are living off government benefits, because he didn’t like Clinton and because of trade. He blames the system for Trump’s struggles and holds out hope that change is still coming.

“I think his intentions are good,” says Hiester, a soft-spoken man wearing a dark green fleece. “His heart is very good.” He is sure that Trump is doing his best to fight for the working man, and you have to admit, he says, that the President is not like all those other politicians.

No matter that Trump’s lawyers worry that he will perjure himself if he is interviewed by special counsel Robert Mueller. Forget that the Washington Post has recorded more than 2,000 falsehoods in Trump’s first year alone. “At least,” Hiester says of the President he trusts, “he doesn’t lie.”

This appears in the February 26, 2018 issue of TIME.


Editor’s Comments

It is not surprising that the hard core Trump supporters would believe anything that Trump says.  But let us look at the facts, not the “alternate facts.” What was the reason for the decline of manufacturing in the Midwest and elsewhere in the United States? Greed, of course, is the answer (and who is the party of the rich people? the GOP). How did it all happen from being a manufacturing behemoth to Rust Belt City? First, in order to break up the Unions, (which Republicans hate, if you didn’t already know) CEOs moved their unions from union-rich cities to non-union cities and towns throughout the Midwest and South. Then, as these CEOs got greedier, they asked their Republican counterparts in Congress to make it easier to move their industries overseas. By what means? These are called the Free Trade Agreements. The Trade agreements (like NAFTA and WTO) drafted and written by Republicans made it extremely profitable to offshore their factories where labor is cheaper, there are no benefits for workers, no regulations and, the creme de la creme, the products being brought back into the United States would no longer have to pay an import tax. And voila, the loss of 8 million manufacturing jobs since 1980 and President Reagan. And that is where we are today.

Trump, the off-shorer in chief, has promised the world to our gullible blue collar workers. Trump was very late to the game when he switched from being the “biggest Free Trader in the World” to suddenly being against NAFTA in January 2016. Trump and his daughter still have all their clothing lines made in China. His current “Make America Great Again” hats are made in China. You would think if Trump were genuine that his clothing line and hats would be made here in the USA. It has been over a year and still no mention about moving his factories. Trump has made noise about NAFTA, but NAFTA only effects Canada and Mexico. The giant deal is with China through the WTO (World Trade Organization). Don’t you think it is puzzling that we still give import tax relief to the largest economy in the world – China?

So, if you vote Republican, you are voting for off-shoring American jobs, you are voting against American manufacturing, and you are voting for the rich to get more tax breaks. Here is the message to the manufacturing workers: Wake up. Sure you may have voted for the official worst President of all time (according to 170 Presidential scholars), but you can learn from your mistakes.

#worstpresidentofalltime

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23
Oct
16

What would trade policy look like in a Clinton White House today? | PBS NewsHour

What Would Trade Policy Look Like in A Clinton White House Today?

PBS talks with Democratic Senator Sherrod Brown of Ohio. Senator Brown has been one of the few Senators that has been a true opponent to Free Trade policies that have ravaged the manufacturing jobs of the United States. It was through his hard work that he saved the Hugo Boss Clothing Plant in Brooklyn, Ohio. He brokered the deal that help Keystone Tailoring take over the closing plant, saving 160 jobs. The plant now produces Hart Schaffner Marx Suits (made in the USA).

Source: What would trade policy look like in a Clinton White House today? | PBS NewsHour

GWEN IFILL: But, first: If immigration is one of this year’s big policy debates, the other is free trade. And when it comes to the future of how the U.S. does business abroad, the two major candidates are not sounding that far apart.

Last week, correspondent Paul Solman spoke with economist Peter Navarro about Donald Trump’s approach.

Tonight, Paul talks trade with Ohio Senator Sherrod Brown, one of Hillary Clinton’s biggest supporters.

It’s part of our Making Sense series, which airs every Thursday.

SEN. SHERROD BROWN (D-Ohio): Denise? Denise.

PAUL SOLMAN: Sherrod Brown’s been buying suits made in Brooklyn, Ohio, for years. The Democratic senator has long pushed made in America, long fought free trade agreements which, he says, have shafted blue-collar workers.

MAN: Senator Brown is calling for action against cheating China.

SEN. SHERROD BROWN: They don’t play fair, and we have got to fight back.

PAUL SOLMAN: The message carried him to reelection four years ago in a state that’s bled some 300,000 manufacturing jobs in the last 20 years.

SEN. BERNIE SANDERS (I-Vt): We have lost millions of decent-paying jobs. That has got to end.

(CHEERING AND APPLAUSE)

PAUL SOLMAN: Left-wingers like Bernie Sanders have long shared Brown’s stance on trade. But opposition to trade deals has gone mainstream in 2016.

DONALD TRUMP (R), Presidential Nominee: We’re letting our jobs go to Mexico.

HILLARY CLINTON (D), Presidential Nominee: As president, I will stand up to China and anyone else who tries to take advantage of American workers and companies.

PAUL SOLMAN: The big switch is Clinton, long associated with free trade agreements. Brown threw his support behind her early on, because, her insists, she now gets it.

SEN. SHERROD BROWN: She is someone who understands trade, who understands we want more of it, but we want it under a different set of rules.

PAUL SOLMAN: Brown brought us to the Keystone suit plant in the Cleveland suburbs to elaborate.

SEN. SHERROD BROWN: What she wants to do on enforcing trade policy, she wants to triple the number of trade enforcement officers, which will really matter in trying to level the playing field fighting with South Korea and China and other countries that don’t play it straight.

She wants a special trade prosecutor directed specifically at China, where we have by far our largest bilateral trade deficit. We lost five million jobs from 2000 to 2010, 60,000 plants closed — this one almost closed — in large part because of unfair trade practices.

PAUL SOLMAN: Two years ago, Hugo Boss it would close this factory. But Brown helped facilitate its sale to Keystone Tailored Manufacturing.

The workers here have been making Hart Schaffner Marx suits ever since.

SEN. SHERROD BROWN: You know, these are not high-paying jobs, but they’re good union jobs with good union benefits.

PAUL SOLMAN: No surprise, then, that the senior senator is something of a hero here. Brown says he walks the walk on trade, while Donald Trump doesn’t.

SEN. SHERROD BROWN: I have a number of suits that were made in — on this shop floor. Donald Trump outsources his suits to Mexico. He could have bought them here. He could have had them made here. He outsourced — outsources his ties to China. He outsources. This tie’s made in the U.S.

Donald Trump talks a good game on trade, but he’s never lived it. He’s lined his pockets by outsourcing jobs to low-wage countries, and now he’s talking about trade as if he actually means it? I have been engaged in this fight for 25 years against bad trade policy, I have never seen Donald Trump stand with us. I have never even heard Donald Trump’s name or voice while we’re working against bad trade policy.

PAUL SOLMAN: Well, you haven’t heard Hillary Clinton’s voice on this issue either.

SEN. SHERROD BROWN: I absolutely trust Hillary Clinton to stand strong on these trade agreements. When she was in the Senate, she voted against some, she voted for some.

PAUL SOLMAN: Clinton has taken plenty of heat for changing her mind about the Trans-Pacific Partnership. As secretary of state, she said:

HILLARY CLINTON: This TPP sets the gold standard in trade agreements.

PAUL SOLMAN: But candidate Clinton has reversed course.

HILLARY CLINTON: I will stop any trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership.

(CHEERING AND APPLAUSE)

HILLARY CLINTON: I oppose it now, I will oppose it after the election, and I will oppose it as president.

PAUL SOLMAN: You understand why people would say she’s absolutely done an about-face on this issue, right, and that she might well go back on the position she now has if she becomes president.

SEN. SHERROD BROWN: Well, she supported TPP in the early days because she was the — she worked for the president of the United States in his cabinet, and so did everybody else in the Cabinet support TPP.

As a candidate, she understands it, and she looks at TPP in a different way, fixing rules of origin, fixing currency issues, fixing investor-state dispute settlement, which undermines environmental and worker safety standards.

PAUL SOLMAN: In nearby Cleveland, at the former site of
Premier Manufacturing, we met economist Susan Helper, a progressive Democrat who also supports Hillary Clinton.

So, when a plant like this closes down, there’s substantial economic damage.

SUSAN HELPER, Economist: yes. The people in the plant lose their jobs. People working in restaurants nearby lose their jobs. Home values fall, et cetera.

PAUL SOLMAN: This steel wire plant, which moved most of its work to Mexico, exemplifies the migration of U.S. manufacturing.

SUSAN HELPER: The decline of unions and the figuring out by management of strategies to avoid unions in the U.S., and then a movement, particularly after NAFTA was signed, to Mexico, and even lower wages there.

PAUL SOLMAN: The North American Free Trade Agreement was signed by Bill Clinton in 1993. But his wife has become a critic, for good reason, says Professor Helper.

SUSAN HELPER: I think that one of the things now, we have greater experience. We can see what — what’s happened as a result of some of the trade agreements.

There’s some very excellent work that suggests that workers who are displaced by trade or other reasons, but particularly by trade, don’t easily find new jobs. And particularly in the case of a lost manufacturing job, the new job that somebody gets doesn’t equal their previous wage.

PAUL SOLMAN: But many economists argue, robots, not trade deals, are the real job-robbers.

So, I asked Sherrod Brown, isn’t it technology that’s actually replacing jobs, as opposed to unfair trade?

SEN. SHERROD BROWN: Well, it’s all of the above. It’s unfair trade practices. It’s technology. About five miles from my home is a company called ArcelorMittal. That plant was the first plant in world history where close to one person hour of labor produces one ton of steel.

That’s technology, that’s efficiency. That’s put some steelworkers out of work because they’re so efficient.

PAUL SOLMAN: Right.

SEN. SHERROD BROWN: But unfair trade practices has also — have also put a lot of those workers out of work.

PAUL SOLMAN: Moreover, Susan Helper’s research suggests that technology can actually add jobs at ArcelorMittal or anywhere else.

SUSAN HELPER: When your productivity goes up, your price falls, so more people are going to want to buy things made out of steel. We looked at manufacturing industries over the last couple of decades, and found that those industries that had the greatest productivity growth actually had the most job gains.

PAUL SOLMAN: But why?

SUSAN HELPER: Because they found new markets. They were able to expand into new markets and find new uses for the technology that they had innovated.

PAUL SOLMAN: Even so, Sherrod Brown believes candidate Clinton’s tougher stance on trade is a welcome one.

SEN. SHERROD BROWN: I’m glad we are most efficient steel plant in the world less than 10 miles from here, but we have got a lot of work to do to make sure trade enforcement is done the way Secretary Clinton wants it done. And that — that will ultimately provide jobs. It will save jobs. It will help manufacturing rebirth.

PAUL SOLMAN: This is economics correspondent Paul Solman in and around Cleveland, Ohio.

11
Sep
15

American Made: Why Making Things Will Return Us to Greatness

We have heard how manufacturing can bring back the U.S. economy to greatness several times now (like from  the Alliance for American Manufacturing), but the latest iteration of this idea is found in this 2015 book called: “American Made: Why Making Things Will Return Us to Greatness”. It is written by Dan Dimicco, ex CEO of the largest and most profitable U.S. Steel company and the largest recycler in North America, Nucor.

America made why making things

Recommended by Clothingmadeinusablog

If you took excerpts from my previous editorials about the U.S. economy, free trade and off-shoring, this book, “American Made: Why Making Things Will Return US to Greatness”, would be the ultimate culmination of that. These views about bringing Manufacturing back are somewhat unique with modern day pundits, and, therefore, very seldom expressed in public. The reason for the paucity of “Buy American” is because the vast majority of economists are hard-core Free Trade lovers.

The Introduction

The author, Dan Dimicco, starts off the book by looking at America at the rapid expansion of the Great Recession – looking at the numbers: 1) loss of 8.2 million jobs during the recession; 2) loss of 5.2 million manufacturing jobs since 2000, one-third since 2008; and 3) a real unemployment rate of 17.1% in October, 2009 (and not the published 10.2% which discounts people not looking for work). By the way the current official unemployment rate is 5.1% (real rate 11%).

The Philosophy of getting Away From manufacturing

The next section discussed what brought the US economy to its present situation. The new policies were about creating “service jobs” and that it was fine to lose manufacturing jobs. One of the problems is that since 1980, we worshipped free trade – “we supported an economic model and trade policies that say we could cease being a nation that creates, makes, and builds things, and become instead a nation that just services things-and not only could we  remain prosperous, we could grow richer. Sorry, that isn’t the way the world works.” The new wealth was coming from smoke and mirrors -many Ponzi schemes originating from Wall Street and what we got was bubble after bubble.

The author has noted that there has also been a change in the way Wall street invests: “A malicious trading-room capitalism has evolved on Wall Street over the past 20 years. A trader doesn’t care whether the company he’s buying or selling makes anything. He doesn’t care whether it’s going in any direction in the long term. He only cars if he makes money today ahead of the other guy tomorrow, or this minute ahead of the next minute. And those are the guys who make the money and reap all of the rewards”.

The result was a loss of contributions from manufacturing: in 1950, manufacturing contributed to 40% of GDP; 1980 20%, Since the recession 12.5%.

Manufacturing is the best bang for your buck. For each $1 invested in manufacturing means $1.4 for the total economy, more than any other category. (This is called the multiplier effect).

Manufacturing multiplier effect

Manufacturing multiplier effect compared to other industries

Depending on which reference you use, manufacturing may be really underestimated as being an economic multiplier

Depending on which reference you use, manufacturing may be really underestimated as being an economic multiplier

 

Free Trade is Bad For America

Another section was an attack on “Free Trade”:

“Free Trade is wonderful in theory, but it doesn’t work. It is an academic luxury that the real world doesn’t enjoy. If you want to study it at Harvard or Chicago, be my guest. But understand that global trade today is anything but free.”

It is free trade that has destroyed the American economy, especially when other countries like China use state supported companies getting subsidies, unfair tariffs and artificially devalue their currency.

Mr. Dimicco is also quite critical about the way China does business: “Behind the facade of tax breaks and incentives, we’ve seen widespread cases of corruption, bribery and blackmail.” p69.

Solutions include fighting devaluation of monetary units, and increasing import tariffs on occasion. Hard-core Free Traders always bring up: If we raise our tariffs, then they will increase their tariffs and their will be a trade war. Mr. Dimicco argues that we are already in a trade war, the US is the only one playing “by the rules”. (It is funny that in capitalism where there is no rules, that the U.S. is playing by an artificial set of rules).

Infrastructure

The author sees a real need for infrastructure, it will not only add US jobs, it will improve our productivity. The author believes that our recovery has been tepid with a GDP growth of only 1-2% and that the U.S. actually needs to create 30 million new jobs by 2025 (taking into consideration the growth of the US population) and we need to invest $3.6 trillion in infrastructure by 2020. He says it is just too bad that Congress can’t get anything done, and that a certain party is being too short-sighted at looking strictly at the deficit – investing in infrastructure will actually decrease the deficit.

Other Recommendations

Like most Republicans, Mr. Dimicco says we should cut the corporate tax rate to 23%, even though special taxes and loopholes have greatly decreased the percentage of GDP paid by corporations. Also, he says we need to cut regulations – whereas my suggestion is: instead of states competing each other for business – that they work together; that we get rid of corporate rebates for offshoring jobs to other countries and making the Chamber of Commerce an actual working group instead of a political one – they can streamline the process for potential new entrapreneurs – like getting all permits you may need, line up a number for inspectors, organize phone numbers to people who are willing to loan them money – basically do what China does to get US businesses over there. It is easier to start up a business in China that it is in the U.S. because there is nobody in the U.S. that will help you. In China they hold your hand and walk you through the process.

Criticisms of American Made

Although I truly believe that Buy American is a great book with identifying the true problems and solutions of today’s US economy. Mr Dimicco is a hard-core Republican, hard-core capitalist, and Ronald Reagan hero-worshipper. What is unique about Mr. Dimicco is that despite being “all of the above”, he actually is the 1-2% exception that think we should dump Free Trade and Buy American.

Re-writing the economic policies of Ronald Reagan

It is interesting in how Mr. Dimicco cherry picks the facts when describing the administration of Ronald Reagan who more than anybody else put America on the path to: “supply-side” economics, Free Trade and Trickle-down economics. In fact, the biggest things that have caused the crash of the US economy are the things that started by President Reagan. Mr. Dimicco’s defense for Reagan was a “band-aid” when he outlawed foreign currency manipulation in 1985 (against his own advisors) and when he imposed a 45% tariff on Japanese motorcycles to help out Harley-Davidson (Two episodes of “Protectionism”). And then, in 1987, Reagan appointed Mr. Free Trade himself, Alan Greenspan, as Chairman of the Federal Reserve.

Think like a Capitalist

Some people have difficulty about the mental process of a capitalist. People who don’t understand Capitalist say “Why do they send jobs to China and Bangladesh? Don’t they care about America? Don’t they worry about mis-treating workers? My answer is of course not, it is only about money.

Here is a quote from Mr. Dimicco that gives you some insight: “.. don’t ever blame a company for trying to make money. Corporations didn’t move to China to destroy American jobs. A corporation exists first and foremost to make a profit for its shareholders. If one country passes laws, raises taxes, and erects a wall of work rules and business regulations while another country cuts taxes,carves out exceptions to certain laws, and keeps regulations to a minimum, where would you want to do business? Where are you more likely to fulfill your obligation to your shareholders?”p71

That is their “loyalty: Profits and shareholders.

I do have to commend Mr. Dimicco’s behavior during the Great recession, instead of doing what all other corporations with still giant profits were doing, which was firing tons of workers, instead, he kept all of his employees working, albeit at a reduced pay rate. That should have been the point that Mr. Dimicco should have hammered home – CEO’s should be loyal to their employees.

Overall

I would recommend this book in those interested in bringing the US economy back to greatness. The solutions are practical – there are no “we-are-just- waiting-for-the-next-tech-boom-to-save-us thinking that some economists have passed as their solutions. If you can get through the one-sided political thinking, and just see the facts that Free Trade and off-shoring are bad ideas and that investing in manufacturing and infrastructure are good ideas, you will enjoy this book.

Final Editorial Comment

Mr. Dimicco did a great job at looking at the factors leading to the downfall of the U.S. Economy, but he misses the point that everybody else has missed. The number one reason the U.S. economy has done poorly in the last 30 years is just overwhelming American Greed. That is why Wall Street has come up with schemes to make more money without any work: Derivatives, Buying Back your own stock, Bundling Loans, etc. That is why the top financiers came up with Free Trade, to maximize profits for CEOs. And why don’t we fight back especially against China who uses their one sided tariffs and monetary manipulation (artificially de-valuing the Chinese Yuan)? Because American CEOs still want to get into that big fat, potential Chinese market of 1.37 Trillion citizens (compared to the US population of a measly 321.4 Million). China has been trying to lure American business with this promise for years, it is like offering a bride with a giant dowry, except they keep putting up roadblocks and changing rules and the Americans are too stupid to realize that the only one that is going to get this bride is someone from China. That is why America doesn’t fight against monetary manipulation. Because our leaders are stupid and extremely greedy.

 

 

20
Oct
14

China Just Overtook The US As The World’s Largest Economy – Yahoo Finance

China Just Overtook The US As The World’s Largest Economy – Yahoo Finance. By Mike Bird, Business Insider, October 8, 2014

REUTERS/Shannon Stapleton Sorry, America. China just overtook the US to become the world’s largest economy, according to the International Monetary Fund.

Chris Giles at the Financial Times flagged up the change. He also alerted us in April that it was all about to happen.

Basically, the method used by the IMF adjusts for purchasing power parity, explained here.

The simple logic is that prices aren’t the same in each country: A shirt will cost you less in Shanghai than in San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.

China_Just_Overtook_The_US-c9374c7a288bdc195dc5869e63f4bf95

So the IMF measures both GDP in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, China is overtaking the US right about now and becoming the world’s biggest economy.

We’ve just gone past that crossover on the chart below, according to the IMF. By the end of 2014, China will make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion):

China US economies

IMF, Google Public Data Explorer Adjusted for purchasing power, China’s economy is now the world’s largest. It’s not all sour news for the US. It’ll be some time yet until the lines cross over in raw terms, not adjusted for purchasing power. By that measure, China still sits more than $6.5 trillion lower than the US and isn’t likely to overtake for quite some time:

View gallery

.

US China economies

IMF, Google Public Data Explorter But in terms of the raw market value of China’s currency, it still has a long way to go.

Editor’s comment

Well, ‘Financial Times’ is the first to proclaim that China is the number one economy in the world, however, in the next couple of years, all of the economic literature will clearly demonstrate that China is the number one economy. So, how did this happen? For the United States, the decline started in 1980 with Ronald Reagan administration. The credo for this administration is that the rich aren’t rich enough, the corporations aren’t big enough and the regular workers make too much money. The results – loss of good paying jobs to other countries especially manufacturing jobs. And, in 2014, the income inequality in the U.S. is at its highest in over a hundred years, 90% of all profits go to the top. Salaries for workers have plateaued  and, possibly, will decrease in the future (especially when taking into inflation). China’s story starts in 1990, when the Chinese government went all in on manufacturing. By 1995, by hook and by crook, they were allowed as a preferred trade partner through the World Trade Organization agreements, which meant they could charge any import tax rate on U.S. imports coming into China, while getting 0% tax placed on their products shipped into the USA. This was the floodgate that caused an immediate and irreversible decline in jobs, especially manufacturing jobs, all the while sucking money out of the U.S. economy and directly deposited into the Communist Chinese banks.

The Future

The future of the economy of the U.S. is not very rosy, especially when it continually is aiding its main competitor, China. Whereas the Chinese government is doing everything it can to encourage its economy to grow, large stimulus package during The Great Recession, huge infrastructure projects – improving freeways, bridges, airports and bullet trains and putting millions to work, the United States has done nothing (except for the minor stimulus package of 2009), and has been totally hands off, much like the Herbert Hoover administration during The Great Depression. Despite verbal commitments from the President and some Congressmen – nothing has been done. All projects to: increase jobs, raise wages, bring jobs back from foreign countries have time and time blocked by the multi-national corporations (because it is in their best financial interests). As the mid-term elections in 2014 looms, the future looks even bleaker with a good possibility that the Party of the multi-national corporations, the GOP, will become a majority in the Senate, together with their majority in the House, American jobs have never looked more vulnerable. This looks exactly as I predicted in my entry: How Did We Get To Here Part IV: Years 2014 – 2034. Remember to start collecting your Made in USA artifacts – they will be very valuable in twenty years.

23
Jun
14

How Did We Get To Here Part IV: Years 2014 – 2034

The long awaited fourth part of “How Did We Get to Here” (about the downfall of the U.S. economy)  is now completed. The last edition was published in 2013 (for the years 1980- 2013), but there has been a lot of time that has passed since then. First, we will take a brief look from the strong economic times of 1950 to the the downfall of the U.S. economy after 1980, with 2010 (as the midpoint) up to the present year, 2034. And then we will look at a couple of the factors that have caused this downfall.

 

History

The United States was once the most powerful country in the world in many ways, but that was 50-80 years ago. Multiple changes have occurred since then. We will cover some of the more important causes of what happened in a little bit.

U.S. Manufacturing Overview

First, we will do a quick look at U.S. manufacturing in categories such as their position in their world, the number of manufacturing jobs, the percentage of jobs to the rest of the workplace and how it met our domestic needs in respect to the years: 1952, 1980, 2010 and 2034. Obviously, overall manufacturing has greatly diminished. Manufacturing of clothing was 2% in 2012, now it is only a novelty or a hobby (percentage-wise, probably, 0.0001%).

Year                                      1952                    1980            2010              2034

# in economy/world            1                            1                     1                       3

# in manufact/world            1                            1                     1(tie)              13

# manufact jobs in U.S.      16.5M                  19.5M           11.5M                  3.2M

% US manufacturing of

total needs                        95%                      60%                5%                 <0.1%

% US manufacturing as part

of total U.S.economy          53%                       20%             11.5%              2.5%

U.S. manufacturing jobs from 1980 - 2034

U.S. manufacturing jobs from 1980 – 2034

The Decline of U.S. Manufacturing (Causes)

Manufacturing and exporting has been the backbone of strong economies for many centuries. However, starting in 1980, a new economic movement started in the United States, Europe and Japan, but not in China. The theory that was followed has been called “Supply-Side Theory”, a form of extreme Free-Trade policy, which insinuated that any regulation was bad. And any tax was also bad. Therefore, the United States ultimately abolished all import taxes. This caused a major problem that wasn’t discovered until much later – that American workers had to directly compete with 4 billion other global workers – it is a “flat world” after all. This caused a major disappearance (outsourcing) of American manufacturing jobs to the point that almost nothing is made in America today except some military weapons. But, the loss of manufacturing also created not only chronically high unemployment and an unstable economy but it created a high dependency on imports. This caused massively high Trade Deficits (no exports, high amount of imports, lots of borrowed money) . After ignoring the ever increasing massive Trade Deficits for many years, the U.S., in 2025, under President Tad Romney, declared that debts caused by Trade Deficits were not legally recoverable (part of the Balanced Budget Act), which eventually escalated into major financial depressions all over the world. Then, the austerity cuts  made things much worse and government was constantly kept out of any recovery plan. This was exactly the Herbert Hoover plan, only this occurred in the 21st Century. But, did attention to Trade Deficits bring back manufacturing by increasing exports? No. The Depression further decreased manufacturing jobs and even as the U.S. economy has slightly improved over the past two years, there was never any push to increase American manufacturing. Present situation as of June 15, 2034: terrible economy, manufacturing sector dead.

National Economies

Below is a list of the top countries as far as their economies (GDP). We will look at the countries with the top three economies: China, India and the USA.

Top Economies of 2034

  1. China
  2. India
  3. U.S.A.
  4. Japan
  5. Germany
  6. Brazil
  7. United Kingdom
  8. France
  9. Indonesia
  10. U.S.S.R.

China

China has been the leading manufacturer in the world since 2012, and has been the number one economy since 2019. The Chinese economy continues to grow with rare setbacks due to shrewd governmental interventions with industry. Growth rate from 2030-2034 is stable at 6-7%, down from the double digit growth of the 2010’s and down from 8-9% of the 2020’s. But still impressive in this age of oversupply (less world-wide demand of products, [however, supply-side advocates still do not acknowledge this fact of worldwide overproduction]). Shanghai is the leading financial center for the past ten years. Other countries follow the news from China closely as they are, pardon the old fashioned term, “the movers and the shakers”. China carries the most political clout in the United Nations with an ever increasing number of allies (aligning with the #1 economy of the world is pretty easy actually). Allies include India, Russia, Southeast Asia, the Middle East, most African Nations, about a half of the South American nations and about a third of the European nations since the dissolution of the European Union in 2021.

India

After many miscues in the 2010’s, India came into its own in the 2020’s with government becoming more involved and totalitarian in regards to industrial policy. Growth had been in the double digits for several years, but has slowed to 6-7% for the past eight years. India has surpassed China as being the most populated country just two years ago, 2032. Pollution and income inequality continue to be major problems.

United States

The United States has slipped to number 3 in regards to national economies. Automation continues unabated. Drones check forest fires, there are very few human forest rangers. Automation is now the standard at fast-food and regular sit-down restaurants. The  “Mega- Merger” movement continues to expand. There are four major banks. There are five major insurance carriers. There are three major airline carriers.There are three companies that control multi-media communications. Free Internet is as dead as the horse drawn carriage. Income inequality continues to grow unabated. Geographic differences continue to expand, for example, minimum wage in Washington, D.C. is $20.35, Austin, Texas is $7.25, and in some states, minimum wage has been repealed. Chinese-made automobiles flood the market, since 2026.  3-D printing is extremely big, but most of the raw materials come from China. Miami has had to make major renovations for its ever rising water level. Gay marriage is legal in 40 states. Here is one interesting story: the New Balance factory in Massachusetts was put out of business by its own subsidiary. In a major power play, Yue Yuen, in the fall of 2022, had been over-producing New Balance shoes secretly for six months, when it suddenly announced that they were going to be the sole maker of New Balance shoes, enforcing contracts with all the major shoe chains to buy only from them and then selling the shoes at a reduced rate, so that the U.S. shoe manufacturer could not survive. There were threats to sue, but these were quietly dissuaded by prominent members of Congress. Mandarin is taught in most schools, and many Americans travel to China to get jobs. The economy forecast of 2035 and beyond, (like my prediction back in 2013)  is bleak, only worse.

Conclusion

The United States once the most powerful nation has continued to slip, still clinging to Free Market Thinking, even after 50 years of results that show it doesn’t work, but reason and facts never get processed when it’s political. The U.S. has no economic plan, it has entirely abandoned manufacturing, and is awash in a mountain of debt. It is impossible to find anything made in the USA anymore. This blog which once was a portal to find “Made in USA” clothing in stores and on the internet and an avid backer of American manufacturing has become a blog on how to find American made clothing at Vintage shows and how much these clothing gems are worth. (They are worth a lot). So, hold on to those old “Made in America” garments, see my blog entry on “How to Preserve Your Made in America clothing.”

Long live the American Dream.

 




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