Detroit, Manufacturing And ReMaking America

We have to have things to sell to others to bring in the money to buy things from others. Detroit’s bankruptcy shows what happens when a country forgets that.

I hosted a blogger call yesterday with Carl Pope and Scott Paul to discuss the new book ReMaking America. I wrote about the book a month ago. (Harold Meyerson said, “Going down to Mississippi wages does not signal a bright future for American economy.”) Please visit for more information about this book.


Click this link to play a recording of the call.

But first, here are my remarks introducing the call:

On today’s call we are talking about the revival of manufacturing. This is especially timely because of the bankruptcy of Detroit, a city that used to exemplify of America’s manufacturing prosperity, now a wasteland of crumbling buildings and homes – and people.

So let me set the stage for today’s call.

Detroit’s bankruptcy shows exactly what this whole manufacturing discussion is really about.

Manufacturing is one of the main ways a country makes a living. We have to have things to sell to others to bring in the money to buy things from others.

American used to sell far more to the world than we brought in. Until the early 80s we were the largest “creditor” nation. We made things and sold them. Then tax and trade policies transformed us to the world’s largest debtor nation – we moved factories out of the country or just bought things from elsewhere – and since then that imbalance has only gotten worse and worse … and worse and worse.

The Southend portion of the 452-acre Buick City site, currently an EPA disaster area.

The Southend portion of the 452-acre Buick City site, currently an EPA disaster area.

Do you remember the movie “Roger and Me,” about what happened to Flint? THAT movie showed what happens to cities when “government gets out of the way,” and lets factories and industries move. That movie was in 1989, and the same thing has only gotten worse and spread around the country.

As the factories moved well-paying manufacturing jobs disappeared, and were replaced by low-wage jobs at places like Walmart and Staples. This started a downward spiral and now everyone feels the downward pressure on wages.

Entire regions were devastated as manufacturing left the country, and suppliers left the country, and design jobs and machine maintenance jobs and all the rest of the jobs associated with manufacturing left the country and over time the middle class started to shrink and feel the squeeze.

And now we see the results in major cities like Detroit.

So what are we going to do about it?

As a country we have to rethink this and remake America, and to talk about a new book called Remaking America I would like to introduce Scott Paul.

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Scott Paul, Alliance for American Manufacturing

Scott is President of the Alliance for American Manufacturing, a partnership of some of America’s leading manufacturers and the United Steelworkers union, working to restore American manufacturing competitiveness.

After Scott talked he introduced Carl Pope, former Executive Director of the Sierra Club. Carl’s chapter in the Remaking America book, “Energy Manufacturing: The Linchpin for America’s Future,” argues for more support for renewable energy technology innovation and explains precisely how this can be done. Carl is going to tell us about this today.

 Listen to the call below:


This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Blame The Auto Trade Deficit, Not Detroit’s Workers

Wow, it sure is convenient for Republicans and Wall Street to blame unions and working people and government for Detroit’s problems. (It’s what they do.) They talk about crime and corrupt inner-city politicians – Republicanspeak for “black people.” (It’s also what they do.)

So of course their solution is to further weaken government, weaken unions, strip working people of their pensions, tell workers they have to take even more pay cuts … and all the rest of the usual Republican/Wall Street solutions that always just happen to make a few already-wealthy people even wealthier. (It’s what they do.) Of course. And of course, always, always blame taxes. (It’s what they always, always do.)

Obvious Causes Ignored

But the obvious reasons for Detroit’s problems are right there in front of our eyes, so clear and obvious. Free-trade deals have forced jobs and factories and industries out of the country and we have a huge, massive, bloated, vast, incomprehensible trade deficit that is sucking the blood and money out of our economy. When the jobs left Detroit many of the people (and tax base) left and the problems exploded.

Here is a simple fact that tells us all we really need to know about what has happened to Detroit (and Flint and similar cities.) The trade deficit in automobile, parts and supplies is about $12 billion a month. Here is 2012 data from

Automotive is another category where the U.S. ran a trade deficit in 2012. It imported $298 billion worth of cars, trucks and auto parts, while only exporting $146 billion, running a deficit of $152 billion. (Source: Census Bureau, Real Exports by Principal End-use Category, monthly, 1994 – present and Real Imports by Principal End-use Category, monthly, 1994 – present. Note: These figures have been adjusted for inflation).

A January 2012 report from the Economic Policy Institute (EPI), “Jobs in the U.S. auto parts industry are at risk due to subsidized and unfairly traded Chinese auto parts,” discusses some of the cause and effect of this automotive trade deficit:

Although U.S. automakers have enjoyed a strong turnaround since the government helped restructure General Motors and Chrysler in 2009—with sales up 29.1 percent—that has not translated into a turnaround for the U.S. auto-parts industry, as indicated by the best-available measure of concern to American workers: jobs. Since the deepest point of the recession in 2009, the U.S. auto-parts industry has regained only 60,000 jobs, an increase of 13.8 percent (Bureau of Labor Statistics 2011). This gain is nowhere near what is needed to erase years of losses: The United States lost more than 400,000 direct jobs in auto parts between November 2000 and November 2011.

… Chinese auto-parts exports increased more than 900 percent from 2000 to 2010, largely because the Chinese central and local governments heavily subsidize the country’s auto-parts industry; they provided $27.5 billion in subsidies between 2001 and 2010 (Haley 2012).

It’s The Trade Deficit

Teamsters President James P. Hoffa drove the point home in March, well before the bankruptcy, in “It’s the Trade Deficit, Stupid“:

The root cause of the nation’s budget crisis is the same as Detroit’s. In both cases, decades of misguided trade policy hollowed out our manufacturing base, caused wages to fall and starved our governments of revenue. In both cases, our trade imbalance is masquerading as debt crises.

Detroit and its people are suffering collateral damage from decades of bad trade deals and trade concessions. For decades, the Motor City was the greatest manufacturing city in the world. Then the U.S. government started to dismantle the nation’s industrial base in order to achieve foreign policy objectives.

A Trade Imbalance Masked As Debt Crisis

This was echoed a few days later in Teamster Nation, in “Detroit’s problem: Trade, not debt“:

Detroit’s financial troubles are a trade imbalance masquerading as a debt crisis. Detroit and its people are suffering collateral damage from decades of bad trade deals and trade concessions.

$12 Billion/Month Auto Trade Deficit Ignored By Media

Finally, here is Dr. Charles McMillion writing at Manufacturing and Technology News the other day, “Motor City Dies, But The Big Wheels Keep On Turning“: (emphasis added, for emphasis) (Please click through and read the whole thing. It’s important.)

Ignored by the media, the U.S. Commerce Department routinely records $12 billion monthly trade losses for the country’s auto industry. There was no reporting earlier this year when it was officially noted that auto trade losses — including trucks and parts — rose last year to an annual world record of $146.9 billion. Since 2000, auto industry trade losses total $1.7 trillion as low-wage or heavily subsidized foreign-produced imports continue to devastate highly productive American jobs and wages, slash tax revenues and public services, and undermine U.S. financial independence requiring massive domestic as well as foreign borrowing. Especially in America’s Motor City, families, businesses and communities have been devastated. Now, with Detroit’s bankruptcy, more dreams and promises are being broken and debts unpaid.

Detroit has been singled out as uniquely corrupt and financially inept. Yet it is the small globalist financial community that has been in or near a constant state of failure, corruption and public bail out since promoting deregulation and a new form of globalization 30 years ago. Almost as absurdly, Detroit is ridiculed for not adequately adapting to the low-wage global and subsidized “market,” with New York Times columnist Paul Krugman literally raising the cliche of “buggy whips,” blithely urging Detroit to find a new competitive advantage. (Who wants to buy autos today?)

Over the past 30 years of lobbying by the financial sector in Washington and support by naive academics for “free” trade, the normal, small U.S. trade surplus in goods and services has turned into an unbroken torrent of 30 consecutive annual deficits that now total an astounding $9 trillion of which $7.7 trillion is for manufactured goods.

Detroit Not Alone

Detroit is not alone. The terrible trade imbalance is wiping out the middle class and entire regions of our country. Yes, it is making a few already-wealthy people fabulously wealthier, and yes, they have tremendous influence over our politicians. But we can do something about it. We the People have to stop being distracted by the lies. If we continue to pump hundreds of billions out of our economy every year with these massive trade deficits — caused by these terrible “free trade’ agreements — it will just keep getting worse and worse.

Call your member of Congress and tell them to stop the trade giveaways. Demand that we take steps to balance trade so we can get the jobs back.

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Free Trade?

I just want to be sure everyone sees this, The Free-Trade Blues, by Nancy Folbre, an economics professor at the University of Massachusetts, Amherst. The key parts, to me:

The specific estimates of economic losses lend support to critics of free trade. Unfortunately, their political impact may be diminished by sheer faith that such losses will be countervailed by benefits like lower prices or higher income growth in less developed countries.

Trade theory emphasizes that those who benefit from free trade should be able to compensate those who suffer, making everyone better off. What trade theory doesn’t explain is why the beneficiaries would offer such compensation unless they are forced to do so.

And this:

The winners in the last round of trade agreements can invest their profits in campaign contributions and political lobbying strategies to ensure their victory in the next round. In other words, winner takes all.

That next round is the Trans-Pacific Partnership, which so far looks to be a corporate end-run around our democracy.

Jobs Fix Economy, Cuts Cut Economy

The President is pushing a jobs agenda to grow the economy “from the midddle out.” Insider DC is mocking him because the ideas — infrastructure, American manufacturing, fund our schools — are not “new.” Here is what else isn’t new: budget cuts take money out of the economy, costing millions of jobs and harming our country’s future competitiveness.

The President’s Jobs Campaign

The President has launched a series of weekly campaign-style speeches pushing jobs instead of austerity. He is again trying to break the DC logjam. But this time he is starting to name the problem so the public can bring pressure to bear where it is needed. The idea is to pressure Republicans to back off their insistence on cutting government and start supporting programs that will bring jobs, higher wages and some degree of security to American workers.

But before we can move forward we have to stop backing up. That means we have to stop cutting back.

Cuts That Cut

In a democracy government spending is, by definition, things that We the People decide to do to make our lives better. But instead of supporting doing things that make our lives better Republicans have been forcing cuts in government so taxes can be lower for the wealthy few. They have even been using hostage tactics to force those cuts. They keep losing elections but are using their ability to block and obstruct things to keep the country from moving forrward.

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The Coming Fast-Track Trade Outrage

Trans-Pacific Partnership – the corporate sovereignty treaty – is coming and they’re going to try to push it through Congress with “Fast Track.” It’s really, really important to pay attention to this one.

You have seen what the “free trade” agreements have done to cities like Detroit and Flint, along with entire regions of the country, several key industries, the middle class and ultimately our democracy. Now a super-treaty is coming down the pike and corporate forces are asking Congress to give up their Constitutional authority to act as a check-and-balance with something called “Fast Track.” We have to stop this before it is too late.

Next Up: Trans-Pacific Partnership (TPP)

The super-treaty coming down the pike is called the Trans-Pacific Partnership (TPP). This is a mega-agreement involving several Pacific-rim countries at the same time, with a special “docking” provision that lets new countries join without new negotiations.

Only a small part of this “trade” treaty is about trade at all. Most of it is about elevating corporate rights above the rights of citizens and sovereign countries to reign them in. Much of TPP is about “investor rights.” “Investor” in this case means people with tons of money, and this is about giving them rights so their interests come above what citizens and their meddlesome laws might try to do to mess things up for them. Minimum wages, environmental protections, workplace safety and other “regulations” are all things citizens do to make their lives better but that make trouble for investors.

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While Tax-Evading Corporations Paid Only 12.6%, We Cut Schools, Firefighting, Etc.

Republicans insist on cutting and gutting the things government does to make our lives better because, they say, “we’re broke.” Meanwhile a new study by Congress’ Government Accountability Office (GAO) shows that in 2010 the big U.S. companies paid only 12.6% in taxes on their reported worldwide profits. Corporate taxes have gone from 5-6% of GDP down to only a third of that. The corporate share of all taxes paid has gone from 28% to a third of that, too. And these lower taxes have hurt, not helped our economy and country.

Republicans Say “We’re Broke”

Republicans say we have to cut spending on schools, infrastructure, research, cancer clinics, everything government does to make our lives better because “we’re broke.”


We aren’t “broke.” We are the richest country in history, but those riches are now being channeled to a very few people instead of shared among We, the People. This video will help you understand where the money went.


We are currently in year one of the “sequester.” Even cancer clinics are forced to close. This follows trillions of dollars of other budget cuts. Our infrastructure if falling apart, bridges are falling down, our ancient power grid can’t keep up with demand, our rail system system is like something in the third world compared to other countries, and at the same time we are experiencing extreme income and wealth inequality as more and more of everything goes only to a top few.

But hey, corporate taxes are low.

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Austerity Is Dead – So Can We Fix The Infrastructure NOW?

You might have heard that “austerity is dead.” You’ll certainly be hearing it, and with good reason: the U.S. deficit is down more than 50 percent from what President Bush left behind, projections of the rise in medical costs that drove future deficits are way down, the “intellectual foundation” that justified the push for cutting government has collapsed (as if it ever existed), and the European experiment has shown that budget cuts really just make things worse – much, much worse – and cause misery and suffering to boot. Meanwhile we have two real problems to worry about: unemployment and crumbling infrastructure. So can we hire people to fix the infrastructure now?

Economists Had Learned How To Revive A Falling Economy

Before the financial collapse economists had nailed down the way to get out of an economic crisis: Government has to spend to pick up the drop in demand caused by businesses and consumers cutting back. This investment into the economy causes businesses to hire again, which helps people to be able to spend again, and after things recover the resulting growth pays off that investment.

The Great Depression in particular had taught us that a downward spiral could develop in which a drop in demand caused businesses to cut back, lay people off and/or cut wages, and of course this caused people to have to cut back, which meant demand dropped even more so businesses laid off more people, so demand dropped more, etc.

The FDR administration tried various things to stop this spiral and found that programs that injected money into the economy, such as unemployment benefits and other assistance, direct hiring, investments in infrastructure, etc., could turn things around. And then after things turned around we had all that new, modern infrastructure driving continuing economic growth!

We also learned the hard way. In 1937 the government cut back too soon, and the economy sank into recession again. Then World War II came along, the government spent massively, and the economy grew so much that the ratio of debt to the size of the economy shrank dramatically. We had it figured out.

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Just Stop It: This Is NOT A Good Economy. We Can Fix It.

Recent stories appearing in “mainstream” opinion-leader outlets would have you think that things with the economy are going great – if you didn’t know better (and they don’t). The thing is that outside of the geographic areas and cultural circles these opinion leaders inhabit, everyone knows better. Especially “Old Economy Steven.”

better than his kids

The old economy collapsed because it wasn’t sustainable, and to put that another way, “unsustainable” means it couldn’t be sustained. And it wasn’t. It didn’t work then for 99 percent of us and it won’t work now. We can’t go back to that.

“Good News”

The economy is slowly improving. Car sales are rising, housing has “bottomed” and started back up (and is in absolute bubble-mode again in some areas), and we’re actually seeing about as many new jobs as new people entering the economy! But that’s it. And this has taken how many years?

These small gains are enough for our media opinion-elite to declare good times are rolling. All around us we are hearing that we are out of the woods. For example, at The Washington Post Neil Irwin and Ylan Q. Mui wrote Tuesday that the sequester’s austerity (which has only partially kicked in so far) hasn’t really held back the booming economy. In “The economy is holding up surprisingly well in a year of austerity,”

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Another Bridge Falls — Fixing Infrastructure Fixes Jobs And Deficits

Another aging highway bridge fell the other day, cars and people in the water… This problem was well-known and urgent years ago! But Republicans block it, saying fixing our infrastructure is “more government spending.” Fixing our infrastructure is also jobs and economic growth. And after you fix or build a bridge you have the bridge.

In Seattle another aging bridge has fallen. The American Society of Civil Engineers report America’s 2013 Infrastructure Report Card gives us a D+ and says we are $3.6 trillion behind in infrastructure maintenance. And this is just to catch up, not get ahead.

This work has to be done at some point but today we have a 10 million person employment gap. And today we can get the money to do this at close to zero percent. We have the double need — it needs doing and we need jobs — and we can get the money almost free.

The hiring and purchase of American-made materials involved in fixing the infrastructure would bring millions of jobs. It would boost the economy, increase the tax revenue and decrease safety-net spending.

Fix Or Build A Bridge: You Have The Bridge

And did I mention that when we fix or build a bridge we have the bridge? After we have updated the roads, bridges, electrical systems, dams, airports and everything else that means our economy is much more competitive and efficient. So the benefits continue. Compare that to the supposed benefits of tax cuts. After the tax cuts you are left with the debt they cause and less revenue with which to pay it off.

This is a trifecta of the urgent need to fix our aging infrastructure matched with all the good that it will do for us to do this now.

WTF is the matter with Republicans, that they won’t even let us maintain the country’s infrastructure?? They call it “just more big-government spending.” In fact they force this sequester of cuts, and demand even more cuts! (More here, here, here, here, here, here, here.)

In this mornings post, Washington’s Literal Sinkhole, And Our Idiotic Fixation On Deficitswritten before the bridge collapse — Bob Borosage laid it out,

There is an idiocy about our current national politics that is simply stupefying. We are sitting idly, watching, and suffering, as our nation disintegrates into a run-down backwater. Our airports are a global disgrace. Our railroads, broadband, energy grid are all outmoded by international standards. A bridge falls every other day. Our sewage systems are overwhelmed by normal use, and collapse in the extreme weather that has become the national norm. Sinkholes now are becoming a life-threatening peril.

At the same time, over 20 million people are in need of full-time work.

1) Urgent need to fix the infrastructure.
2) Urgent unemployment problem.
3) Fixing #1 fixes #2.
4) We can get the money for free.
5) It isn’t “government spending” it is investment in ourselves because after we fix or build a bridge we have the bridge and all the things that does for the economy.
6) WTF?


This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

TPP: A Deregulation Treaty Not A Trade Treaty

The upcoming Trans-Pacific Partnership (TPP) agreement is using a process that is rigged from the start. It is not being negotiated by governments for the benefit of their people, it is being negotiated by executives (or future executives/lobbyists currently in government) largely for the benefit of the giant corporations they serve. The process has these giant corporations “in the loop” but groups citizens, working people, consumers, the environment, human rights groups and especially democracy are not part of the process. That can only go one way: if you don’t have a seat at the table you are on the table — the meal.

Chile’s TPP Negotiator Quits, Warns Citizens

Rodrigo Contreras, Chile’s lead TPP negotiator recently up and quit to warn people of the dangers this agreement poses to everyone except the giant multinational corporations. In The New Chessboard, (English translation) Contreras warns that the TPP is solidifying multinational corporate control over the Internet, copyrights, patents (especially drug patents), and in particular warns that the giant financial interests are solidifying their current control over the regulatory process. He writes that this will block countries that are trying to “restore the space for applying financial safeguards. In these circumstances it does not makes sense to further liberalize capital flows, depriving us of legitimate tools to safeguard financial stability.”

In particular Contreras warns that smaller countries face a threat from this agreement’s solidifying of the con trol of the giant multinationals, concluding,

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Apple Avoiding Billions And Billions Of Dollars In Taxes

Apple (like many giant, multinational corporations) has been avoiding paying the taxes they owe to the country by setting up foreign “subsidiaries” in tax-haven countries, and moving jobs and profit centers out of the country. They have accumulated billions upon billions of dollars in these tax havens. Now they want a special tax break to reward them for doing that.

Tomorrow the U.S. Senate Permanent Subcommittee on Investigations is scheduled to hold a hearing titled “Offshore Profit Shifting and the U.S. Tax Code – Part 2 (Apple, Inc.)” with Apple’s Tim Cook. Apple is holding more than $100 billion in tax haven countries, to evade U.S. taxes. At the hearing, Cook (2011 compensation $378 million) is expected to offer a proposal for changes to the corporate tax system.

Cook’s proposal is likely to be for a “tax repatriation holiday” and a “territorial tax system,” both of which mean giant, multinational companies like Apple will pay less in taxes, people like Cook will have even more money, and We the People will end up with higher taxes, fewer good schools and good roads and police and teachers and the other things government does to make our lives better. As a bonus, this makes giant multinationals that move jobs and profits overseas even more competitive against smaller American companies that keep jobs and profits here and do not have foreign “subsidiaries” located in tax havens.

New Report On Apple’s Tax Avoidance

Citizens for Tax Justice (CTJ), Americans for Tax Fairness (ATF) and the AFL-CIO held a conference call today to talk about a new report by CTJ, “Apple Holds Billions of Dollars in Foreign Tax Havens,” documenting Apple’s offshore tax avoidance. The report states that,

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Deficit Fixed. Now Fix The Job Gap, Wage Gap And Trade Gap

The deficit is now down 60 percent as a percent of gross domestic product. It is down more than the deficit hawks Alan Simpson and Erskine Bowles asked for. This rapid reduction is seriously hurting the economy and jobs, but demands for cuts continue. It is time for Congress and the President to “pivot” to focusing on our real problems: the jobs gap, the wage gap and the trade gap.

Mythical Deficit Problem Solved

The “deficit problem” is man-made. When Bill Clinton was president we were paying off the debt. George W. Bush turned Clinton’s budget surpluses right around, calling deficits “extremely positive news” because they would later force cuts in government. Ronald Reagan’s “strategic deficits” began a strategy to make the borrowing appear so bad that the public would be panicked into allowing cuts in the things government does to make our lives better – so the wealthy few could have even more wealth and power. (Reagan tripled the national debt, Bush doubled it again.)

So after Bush we had a problem. When ‘W’ left office the budget deficit was $1.4 trillion. Then after Obama took office Wall Street and the right started terrifying the public about deficits and outlining their “solutions”: Cut government, cut regulation of the giant corporations, cut entitlements, cut investment in infrastructure, privatize public assets, cut the safety net, etc… Cut the things that government does to make our lives better (government spending) and cut the things government does to protect us from the immense power of the insanely wealthy and their giant corporations.

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