US – China Summit: If Trade Was Trade…

Today the US-China Strategic and Economic Dialogue begins in Washington. This is the third such meeting, and it’s time for the Obama administration to get it right. China has not been engaging in “trade” with us, they have been engaging in something else entirely.
The Washington Post sets the stage, with an editorial, The U.S. must push back against China’s investment controls

…It is still holding the renminbi at about 25 or 30 percent below its probable market value. … Beijing has increasingly used government procurement rules, technical standards and tax laws to force foreign companies to transfer their technology to state-owned Chinese firms in return for access to the Chinese market. … Beijing’s objective is the mercantilist one of building up state-owned “national champion” firms that can then capture global markets from Japanese, European and U.S. competitors. No matter that the state-owned sector already receives massive official support, direct and indirect — while more efficient private-sector job- creators must scramble for resources.

Last week’s Let Trade Be Trade, explains,

Since China’s admission into the World Trade Organization we have been packing up our factories and sending them over there. We have been buying so many things made in China, but they have not been buying very many things made here, and the resulting “trade deficit” has gotten worse year after year. Everyone is afraid of what China might do with all those trillion$ in US Bonds they have accumulated. … There is a better way to solve the problem: let trade BE trade.

Time To Buy From Us
There is a simple solution: tell them to start actually trading with us,

When the meeting begins Secretaries Clinton (State) and Geithner (Treasury) and Locke (Commerce) should slide a big stack of order forms across the table and say, “Your turn. Let us take your orders now, please.”

China has been selling but not buying and it’s time for them to to start buying. That way we might be able use the word “trade” without wincing. It would also help fix our economy, our budget deficit, our unemployment rate and many other pressing problems.
China Holds $1.5 Trillion Of Our Debt
Trade by definition is a two-way street, buying from and selling to others. But China has accumulated $1.5 trillion by selling to us and not buying from us. This one-sided “trade” relationship has hurt or killed industries, companies, factories and jobs here in the United States, while forcing wages and living standards to drop. It has also placed China in an unhealthy position of power over us.
It is understandable that some American interests have benefited from this arrangement, becoming fabulously wealthy while at the same time strengthening their whip-hand by pitting China’s low-wage rights-suppressed workers against American employees who have enjoyed all the protections and benefits of democracy. But it is not clear why our own government has gone along. It is obvious now to all that the one-way arrangement with China has hurt us, closed our factories, devastated our “rust-belt” communities, created vast income disparities and created terrible imbalances in the world’s economy.
Placing Orders Here Fixes Both Economies
If China were to place orders tomorrow for $1.5 trillion in American-made goods, the effect on our economy, unemployment level, manufacturing base, budget deficit, state budget shortfalls, public-employee pensions, and a host of other problems would be immediate and dramatic.
And with our economy and wages restored, our own orders of goods from China would increase, boosting their economy, too. Their trade manipulations are costing them. Workers, facing labor-rights suppression and import restrictions from joining the world’s economy, are increasingly restless. They face inflation and a pending financial crisis. And that huge cash reserve is increasingly at risk from the worldwide imbalances it causes. If China repositioned its policies from mercantilism to trade it would fix so many problems. So why don’t they?
If Not Trade, What?
If China were using trade to build their economy they would use that $1.5 trillion dollar reserve to place orders here for American-made goods, boosting our economy, and boosting our ability to trade further with them. But they are not. They are sacrificing their own economic position to instead build their power position.
China is cleverly using the greed and power of our Chamber of Commerce, huge multinationals, Wall Street, etc, to manipulate our government into letting them to sell China the rope to hang us with. The more China continues these manipulations even at its own expense, the more we should perhaps be understanding these imbalances as a national security problem instead of a trade problem.
China isn’t trading, it is seizing the means of production. It is using manipulations of trade to gather wealth and power to itself at the expense of the rest of the world. It is vitally important for US opinion leaders and policymakers to address this. We have been hypnotized by the word “trade” and the result is we are ignoring our national security. We are not minding our business.
It is time to tell them to start trading fair or we’ll start minding our business with a big, fat tariff on imports so we can start paying down our deficits and rebuilding our manufacturing and jobs base.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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China Tells US To Mind Our Own Business – And We Should

China’s Vice Finance Minister lectured US administration officials about our debt and told us to mind our own business when it comes to China’s currency manipulation. It is about time the United States started minding our own business by taking steps to protect our business and bring manufacturing and jobs back home.
Leading up to next week’s US-China Strategic And Economic Dialogue, China’s Vice Finance Minister Zhu Guangyao butted into our business and told the US we should reduce our debt. He also told us to keep out of their business and not bother them about their currency manipulation. In the story China Paying ‘Close Attention’ to U.S. Debate on Increasing Debt Ceiling, Bloomberg News reports,

“We are paying close attention to the domestic discussion in the U.S. on debt and deficits,” Zhu told reporters in Beijing today. “We hope the U.S. can take effective measures toward fiscal reorganization just as President Obama suggested.”
[. . .] Zhu also said that currency policy is the “sovereign right” of every country.

China says currency manipulation is their “sovereign right.” They say we should mind our own business. But they insist that “free trade” means America does not have a right to mind our own business and protect our own workers, companies and jobs.
It’s Time To Mind Our Own Business
It is time to finally mind our business and take action. For decades the United States has refused to mind our business by pursuing “free trade” policies that allow other countries to engage in all kinds of trade schemes, while we just sit back and let them. Our leaders have not protected American workers, companies and jobs, instead sending them out of the country. We are told that the resulting “low prices” at Wal-Mart justify letting manufacturing move out of the country,
It is time for us to mind our business, and engage in our own sovereign duty to protect American companies, workers and jobs from the trade manipulations and schemes others engage in. It is time to hold countries like China and Germany accountable for the damage done to our businesses by their mercantilist trade policies. Trade barriers, currency manipulation, even outright extortion – demanding that our companies transfer proprietary technologies and processes if they want to do business selling into other countries – has cost us factory after factory, job after job and company after company.
As an example of how this has worked, in 2008 George Bush made the following argument for a trade treaty with Columbia,

In other words, the current situation is one-sided. Our markets are open to Colombia products, but barriers exist to make it harder to sell American products in Colombia.
I think it makes sense to remedy this situation.

President Bush wasn’t saying he was going to do something about the one-sided arrangement and hold Columbia accountable, he was saying that since we just let Columbia do this to us, therefore we need to reward them with a free-trade treaty that gus American jobs even more! But why not just mind our business and stop it? All we really have to do is tell Columbia we are going to do what they do, until they stop doing that, start paying workers a decent wage and protecting their safety and rights.
Why China Really Cares
The fearmeisters say China is concerned that we might not meet our debt obligations. This is not at all what China is concerned about. China holds $1.15 trillion in Treasuries, accumulated as they sell goods to us, and don’t let us sell goods to them. What they are concerned about is that our currency might drop, which will help bring factories and jobs back to America. From the Bloomberg story,

“Reduced U.S. fiscal spending may lead to a higher possibility of the U.S. dollar appreciation, therefore it helps China to maintain the value of the U.S. debt it holds,” said Li Jun, a Shanghai-based strategist at Central China Securities Holdings.

Their concern about our debt is really just about keeping their currency low, which gives goods made in China a huge price advantage in world markets.
Let Trade Be Trade
It is time to mind our business and mind our businesses. It is time to take action on mercantilism and currency manipulation. It is time to stop China and others from flooding our markets with goods made without the wage, safety and environmental protections that democracy provides.
Let trade be trade. Trade is supposed to be about trading. It is not supposed to just be a scheme to drive wages and living standards down by packing up factories and moving them across borders. It is not supposed to be “take a pay cut and a cut in benefits or we’ll move your job.” It is not supposed to be “well, we have something called globalization now so everyone should expect to be poorer and poorer every year.”
Trade is supposed to be we buy what they make and they use the money we pay them to buy things we make. And then we use the money they paid us to buy things made there. And then they use the money we paid them to buy things made here. It is supposed to go on like that, and everyone does better and better. Better and better, not poorer and poorer.
It really is time to mind our own business and tell countries that can’t sell to us until they meet our conditions. Which is just what they do to us.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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The Deficit America Has Forgotten — And Is Eviscerating The Middle Class

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
We can service each other till the cows come home but if we don’t start making more things here and selling them there more and more jobs will be lost, more and more communities devastated and our standard of living will continue to drop. Everyone is focused on the budget deficit. But here’s the thing: the trade deficit is the jobs deficit and the jobs deficit is the budget deficit.
The Trade Deficit
Before “The Reagan Revolution” America made things and sold them to the rest of the world. Since Reagan America borrows money to buy things made somewhere else. And since Reagan we’ve seen the whole game play out: wages stagnate, savings plunge, debt soars, growth slows all while wealth concentrates at the very top.
And it just goes on. The trade deficit last month was above forecasts, and a big jump from last year:

The U.S. trade deficit with China widened to $18.8 billion in compared with $16.5 billion in the same month last year. The government also revised the deficit in January to $47 billion from $46.3 billion.

The February monthly trade deficit fell, but only because the decline in exports was less than the decline in imports.
The Big Change
In the early 80’s conservative trade policies designed to pit American workers against low-paid, exploited workers in non-democratic countries transformed the United States from the largest creditor nation to the largest debtor nation in just a few years, and it has only gotten worse since then:

Democracy vs Thugocracy
America is supposed to be a democracy of We, the People. Democracies set up protections for their people that protect wages, rights, safety, dignity and the environment. Conservative “free trade” agreement allow companies to get around the borders of our democracy, pitting their employees against the exploited people living under thugocracies with few or no protections at all. This has created a “race to the bottom” for our wages and benefits. Of course our workers cannot compete against workers who are not able to fight for better pay and benefits. This is the reason we fought to build and preserve our democracy.
Instead of fixing our trade problems, we have gone back to the same old same old. Especially vis-a-vis China.
Alliance for American Manufacturing Statement on Latest Monthly Trade Figures

The monthly U.S. international trade deficit in goods and services was $45.8 billion in February. The goods trade deficit with China was $18.8 billion.
–Year over year, the 2011 trade deficit is running far higher than 2010. January-February 2010 clocked in at $74.3 billion, while the first two months of 2011 have already reached $92.7 billion.
–Year over year, the goods trade deficit with China is also running ahead of 2010. January-February 2010 totaled $34.8 billion, while the first two months of 2011 have already reached $42.1 billion.
–Of particular note is that China ($18.8 billion) now accounts for 70% of our overall monthly non-oil goods deficit ($27.0 billion).
Said Scott Paul, Executive Director of the Alliance for American Manufacturing (AAM):
“Washington has focused a lot on budget deficits this year, but scant attention has been paid to the trade deficit. That must change. The trade deficit serves as a drag on GDP growth and requires financing, just like any other debt. While only 9.5% of our national debt is financed by China, that nation is responsible for fully 70% of our trade deficit in non-oil goods.”

China, China, China
Over and over our trade relationship with China demonstrates so many things we are doing wrong in the world competition. Among so many other problems:
– We let them manipulate their currency rate which means their goods have a cost advantage of as much as 40% going out the gate, before other factors come into account.
– Their government subsidizes and promotes key industries. We don’t have an industrial policy.
– Their workers are not free to organize and push for better wages, benefits and working conditions. (Ours aren’t either, but are more able than theirs.)
– They restrict and otherwise discourage imports
– They follow “Buy China” policies, we do not have “Buy America” policies
Etc., etc., etc.
The Trade Deficit Is The Jobs Deficit
Our trade deficit is our jobs deficit. When you close the factory we can’t make a living. When you move the jobs over there the jobs aren’t here. And the people who could have those jobs are collecting unemployment instead of paying taxes and buying cars, houses, food, clothes, saving etc.
American Prospect, The Plight of American Manufacturing,

Since 2001, the country has lost 42,400 factories, including 36 percent of factories that employ more than 1,000 workers (which declined from 1,479 to 947), and 38 percent of factories that employ between 500 and 999 employees (from 3,198 to 1,972). An additional 90,000 manufacturing companies are now at risk of going out of business.

Giant Sucking Sound
So we closed our factories (trade deficit) and shipped the jobs to other countries (jobs deficit) where they pay less and don’t protect the environment. Again, from The Plight of American Manufacturing,

Long before the banking collapse of 2008, such important U.S. industries as machine tools, consumer electronics, auto parts, appliances, furniture, telecommunications equipment, and many others that had once dominated the global marketplace suffered their own economic collapse. Manufacturing employment dropped to 11.7 million in October 2009, a loss of 5.5 million or 32 percent of all manufacturing jobs since October 2000. The last time fewer than 12 million people worked in the manufacturing sector was in 1941. In October 2009, more people were officially unemployed (15.7 million) than were working in manufacturing.

Millions and millions of good-paying jobs. Gone.
The Jobs Deficit IS The Budget Deficit
People with jobs pay taxes. People with jobs don’t collect unemployment benefits. A huge component of our budget deficit is the result of unemployment, much of it caused by the trade deficit.
Of course there is the core component of the budget deficit that was caused by tax cuts for the wealthy, the huge increase in the military budget and the interest on the borrow for these. But the big increase since the financial crisis is due to the recession and restoring our manufacturing base addresses much of this. People with good manufacturing jobs pay mortgages and buy houses and cars and shop at stores and make the economy work. And when thrry buy things made in America the money stays in America.
What We Can Do
This is from a year ago — yes, a year, with nothing done: It Is Time To Put Our Foot Down: Ten Steps We Can Take To Stop Closing Factories And Eliminating Jobs,

Here are just some steps that We, the People can take to start turning this around:
– A border tariff on imports to remove the price advantage of goods produced by exploited, underpaid workers.
– A border tariff to remove the price advantage of goods produced in ways that harm the environment.
– A border tariff on goods from countries that are not democracies, to remove any pricing advantage gained from not allowing people to vote and set rules that benefit themselves.
– A border tariff on goods from countries that restrict workers from organizing to improve their wages and working conditions, to remove any pricing advantage gained from not allowing workers to bargain. (America currently doesn’t meet this standard.)
– Remove tax benefits and instead impose tax penalties and fines on companies that close factories here. Don’t let it be profitable to do this!
– Increase taxes on the big monopolistic companies to remove the advantages that help them destroy America’s smaller, regional and local businesses — the very job creators we need.
– Increase income taxes on high incomes to reduce the incentive to pursue short-term windfalls instead of long-term interests. Make it take a long time to accumulate a fortune. Making a fortune is great but it should be a reward for helping our economy and society, not destroying them.
– Break up the “too big to fail” Wall Street firms that wrecked the economy. And get the money back — all of it.
– Explore the use of Eminent Domain to keep factories in communities and workers in the factories.
– Formulate and follow a national economic/industrial strategy to build a new green manufacturing economy

Those are just a few things we can do.
And, to close, Frank Sobotka:

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Did American Workers “Get What They Deserved?”

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
What did people expect would happen when they voted for Reagan, Bush and other conservatives, or supported their policies? In the Holland (Michigan) Sentinel community columnist Ray Buursma writes, American workers got what they deserved. Some of the things he says might resonate with many of us,

Remember the Reagan standard? Are you better off today than you were a decade ago? Two decades? Three? Unless you make more than $380,000 a year, the answer is no. In fact, your standard of living over the last quarter century has actually decreased while millionaires have added 30 percent to their net wealth. Why? Two reasons.
First, hundreds of thousands of manufacturing jobs went overseas while the politicians you elected did nothing to stop them. Yet you continue to elect leaders who offer nothing but tax cuts, as if that would stem the flow of disappearing jobs.
Did you demand your leaders address America’s trade imbalance or continuous outsourcing of jobs? Did you demand your leaders require foreign countries to buy a dollar’s worth of American goods for every dollar of goods they sell here?
No and no. You didn’t bother.

Buursma writes that instead of resenting people who make more because they are in a union, people should join a union and fight for your job, wages and benefits. He continues,

Maybe you’re thinking, “I’m not a union worker, so this doesn’t affect me.”
Stop being stupid. Union benefits provide a standard other companies have to match, or at least come close to. When those benefits are cut, yours are, too. Or do you think you operate in your own little employment vacuum?

Agree or disagree, please click through and read his entire piece.
Whose Fault?
There is no question that things are not going the way they should be going. We see decline all around us — all pointing back to the changes made after the election of Ronald Reagan. Tax cuts led to massive debt. Deregulation led to mine, oil and financial disasters that cost us more than deregulation ever saved. The infrastructure is crumbling. It seems like we are entering third-world status.
So is it the fault of American workers that their wages and benefits have declined as jobs are shipped overseas?
I don’t blame working people. After all, they’re working! So they’re busy, and stressed, and focused on work. They can’t be expected to keep up with the little details and facts and nuances — especially when they are attacked daily with a barrage of well-funded and professionally crafted corporate/conservative propaganda!
This assault on information and truth has been going on for decades. Under Reagan there was a dramatic shift toward “market” — one-dollar-one-vote — sources of information and away from objective, citizen-oriented democratic — one-person-one-vote — sources. This market-sourced information necessarily reflects a conservative/corporate view because it is driven by money and profit instead of humanity and humanity’s needs.
Information for Democracy!
How do we counter the corporate/conservative assault on truth? One answer to the problem of getting accurate, objective information is to use (and support) alternative sources that are not offered by the conservative/corporate machine. Here is a list of a few links to alternative news sources. Please send these to relatives, friends, and even post them to conservative forums.

PLEASE suggest more progressive information and news sources in the comments! And forward this to others.
Added suggestions, not necessarily just news:
AFL-CIO Now Blog
Manufacture This
Scholars & Rogues
Crooks And Liars
Black Agenda Report
Washington Monthly
The Raw Story
Today’s Workplace
Republic of T
Jack and Jill Politics
Liberal Oasis
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When You Close The Factory We Can’t Make A Living

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
In a signal of change in elite attitudes, Steven Pearlstein wrote a Washington Post op-ed, Chinese follow same old script (and they get the punch line), describing the cost-to-us of the business-as-usual game we have been playing with China. Pearlstein has seen the light: China has an industrial policy and it is working for them as a nation. We do not. We have a lassez-faire ideology that enables a few at the top of “Multinational Corp.” to get really rich moving manufacturing infrastructure to China, leaving the rest of us with no way to make a living. Next week President Obama can announce that he is changing that.
Pearlstein writes about China’s bullying mercantilism, how it benefits China, the cost to us, and says “Enough!” He makes a startling suggestion to address the problem: do unto them as they are doing unto us. He writes,

“The right response to these challenges would be for the president this week to laud China for the success of its economic policies and announce that the administration will begin forthwith to apply each and every one of them to Chinese exports into the United States. Subsidies and directed credit for local companies, buy-American provisions for government agencies and government contractors, currency manipulation, the rules on “conditional market access” and “indigenous innovation” – surely China could hardly complain if we were to pay them the highest compliment by embracing their economic model.”

Read that paragraph again.
Pearlstein goes on to describe how a national industrial policy brings advantages to China, while our everyone-in-it-for-themselves ideology hampers us,

“…China can strike deals that may provide short-term profits to one company and its shareholders but in the long run undermine the competitiveness of [our] economy. What’s good for GE or Honeywell or Rockwell is, in this case, almost certainly not good for America and American workers.”

The Establishment
This column is significant because Pearlstein is part of what you might call “the establishment,” a DC opinion leader, not part of the labor movement or a social-justice non-profit or, worse yet, an advocate for the unemployed. But here he is joining with us on the “far left” to say that we can’t keep going down this road — that it is time to see ourselves as a country of people who are in this together, with common interests. He actually makes the far-left argument that, “What’s good for GE or Honeywell or Rockwell is, in this case, almost certainly not good for America and American workers.”
Will he keep his job? Or will others join him and begin to see that this is all of a piece. Our trade deficit is part and parcel of our budget deficit and our terrible unemployment problem and our bank bailouts and our deteriorating infrastructure and our deregulation and our tax-cuts-for-the-rich and our on-your-own ideology and our corporate-financed elections and our slow economic growth.
Evergreen Solar
To illustrate the difference a national industrial policy makes Pearlstein uses the instructive example of Evergreen Solar, a solar panel manufacturer that made waves this month announcing it is closing down its US manufacturing and moving it to China. Solar panel prices are plunging because of Chinese-subsidized manufacturing, and “Evergreen can still make money in China because of the lower costs and considerable government subsidies offered by the government there.” But not here.
The NY Times covered the Evergreen Solar story last week, in Solar Panel Maker Moves Work to China. These snippets tall the story,

… But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.
. . . Chinese manufacturers, Mr. El-Hillow said in the statement, have been able to push prices down sharply because they receive considerable help from the Chinese government and state-owned banks, and because manufacturing costs are generally lower in China.
. . . In addition to solar energy, China just passed the United States as the world’s largest builder and installer of wind turbines.

The article includes a reminder that we are, after all, talking about China,

… Evergreen’s joint-venture factory in Wuhan occupies a long, warehouselike concrete building in an industrial park located in an inauspicious neighborhood. A local employee said the municipal police had used the site for mass executions into the 1980s.

Business As Usual
China cheats. We don’t stop them. They manipulate currency. They restrict imports. They subsidize exports. They subsidize companies. They steal intellectual property. They coerce companies to give up proprietary technology. They do what it takes to win key strategic industries, regardless of treaties and laws. And why should they if we won’t stand up to this cheating and stop them? They watch out for themselves, and we do not.
Yesterday, describing China’s currency manipulation as part of an industrial policy, I wrote that China looks at the overall, longer-term picture, seeing themselves as a country of people with a common interest. We do not. They understand that attracting industries to China is good for China and its people in the long term. We do not.
We follow a corporate/conservative greed-is-good ideology that says that the interests of individual companies and a few wealthy people are the interests of the country-at-large, and if companies can make larger profits in the short term and a few people can get wealthy closing factories and moving them to China that’s just fine, even if it means a loss of jobs and of the country’s overall ability to make a living in the long term. This just doesn’t work for us as a nation. Or, as Pearlstein put it, “What’s good for GE or Honeywell or Rockwell is, in this case, almost certainly not good for America and American workers.”
Obama’s State Of The Union Opportunity
Next week the President delivers his State Of The Union speech. This is an opportunity to announce a new direction. He can lead us in a transition back to a nation that sees itself in this together as a people watching out and taking care of each other. He can reject the conservative vision of each of us on our own, following a greed-is-good ideology that enriches a few but just doesn’t work for We, the People. He can announce the formation of a bold national industrial/economic policy where we again lead the world toward greater prosperity. And he can announce that we are going to, as Pearlstein writes, “pay [China] the highest compliment by embracing their economic model” — meaning do unto China as China is doing unto us. Enough!
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America Needs An Industrial Policy

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Over the weekend Daily Kos ran a front-page story, America needs an industrial policy, making the point that Germany is doing well because their government understands that a national policy of promoting manufacturing drives the economy and jobs.

There is a simple reason why Germany manufactures so many high-end goods, from the best watches to the finest grand pianos, all the way up to Porsches and highly complicated precision instruments: it is the policy of the German government.
Well, it isn’t exactly a policy. It is more of a framework. Germany’s method of creating wealth is straightforward: 1. Produce a highly educated workforce. 2. Have that workforce create and make advanced, precision things for high wages. 3. Export the things at a high price and then re-invest that money back into item 1. This is why Germany is the Number 2 exporter in the world despite having only 27 percent of America’s population and only 6 percent of Number 1 exporter China. The Germans realize they cannot beat either China or India based on cost. Advanced nations can’t compete on cost. America could bust all the unions, get rid of the minimum wage, eliminate all social benefits and taxation and we would still lose jobs to low-wage nations. Germany decided to avoid going down the same path of downward spiral among its middle class that we are in. Instead, they invest in their people and in research.

Investing In People And Research Pays Off
As the Daily Kos story points out, Germany invests in their people and research. “America could bust all the unions, get rid of the minimum wage, eliminate all social benefits and taxation and we would still lose jobs to low-wage nations.” And the results are there for all to see. Germany is recovering faster from the economic downturn with jobs returning. Manufacturing and exports lead the way.
Over the last 30 years, and the last 10 years in particular, America has conducted an experiment in letting “the markets” decide. Markets are a one-dollar-one-vote system, and of course those with the most dollars to begin with ended up deciding that they should be the primary beneficiaries from this experiment. Namely, them. Wall Street’s share of profits jumped from around 16% to around 40% of all profits in the economy.
The “markets” experiment has failed for the rest of us. It is time for We, the People to realize that our government is us, and we need it to make decisions for us. Markets mean one-dollar-one-vote. When dollars decide those with the most dollars will decide to do things that benefit them. Democracy means one-person-one-vote, and that means making decisions that benefit We, the People. Our government – We, the People – must start deciding things that work for We, the People and not those who already have the most of everything. That means developing an industrial policy that invests in We, the People to pull us out of the mess that one-dollar-one-vote has put us in.
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Germany’s Economy Shows Government “Interference” Works

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Can we compete with China’s wages? Does government interference and regulation hold us back? Are our unions keeping us from being competitive? Do we need to lower our standard of living in a race to the bottom? You might be surprised to learn that Germany pays higher wages, has strong unions, has much more government involvement and is doing better as a result. Conclusion: our wages, unions and government are not the problem, they are the solution.
In July I wrote about something Harold Meyerson wrote about Germany and China and manufacturing and recession.

Germany is NOT a low-wage country. But they weathered the recession. They value manufacturing and have national policies to bolster their manufacturers.

Today I want to write about something Harold Meyerson wrote about Germany and manufacturing and the recession. In Save the economy by keeping jobs at home, Meyerson writes,

Hourly manufacturing compensation (wages plus benefits) was $48 in Germany in 2008 – the most recent year surveyed by the Bureau of Labor Statistics – while it was $32 in the United States. Yet Germany is an export giant, while we are the colossus of imports.

Please go read Meyerson’s entire piece.
In Germany, workers also get six weeks vacation – by law, federally mandated, a right. They get health care, university, child care and pensions and as a result they have higher productivity. In Germany, the government requires worker representatives to hold seats on the boards of directors of companies, depending on the number of workers. Government-funded research and vocational training, and policies to retain skilled workers bring another competitive advantage. Germany values manufacturing and the government has an industrial policy. The government is currently helping promote green manufacturing, for example.
The result of all this government interference is that Germany’s export-oriented manufacturing economy recovered from the recession and is doing OK, and their workers are paid well and have great benefits.
Our government is supposed to be of, by and for the people. But today in the U.S. it is considered “socialistic” to talk about these things because it violates the dominant conservative “free market” ideology that is designed to enrich a few at the expense of the rest of us. If we try to talk about a national industrial/economic policy, it is derided with such slogans as “government interference” or “picking winners and losers.” If the discussion is allowed it very quickly will move to the dominance of fossil fuels and the other industries that are holding us back but have a lock on influence over the government. If we talk about taking the burden of health care off of the people and businesses, the giant insurance companies beat it back, calling it “socialized medicine,” to keep us from doing something about how their profits are draining the rest of the economy. And imagine the furor that would result if anyone even suggested mandating worker representatives on boards of directors so the companies take the interests of workers and communities into account!
Our adherence to conservative free-market ideology is clearly holding our country back. The ideology is designed to transfer wealth from the public to a very few, and hold the lead of the already-dominant. This is killing market innovation and it is destroying our competitiveness and standard of living. We should be looking at what works for the country instead of what keeps the few at the top at the top.
Just Who Is Interfering With Our System?
We need to develop a national economic/industrial policy to help us with our competitive position relative to the rest of the world. We need Medicare-For-All to lower the burden on our people and companies. We need to reorient our labor policies to bring better wages and benefits to our people. We need to restore a level playing field on which innovative smaller companies can complete with the giants—who are interfering with the system while complaining that the attempts by We, the People to stop them are interfering with our system.
Later we can talk about whether China’s government interferes with its businesses, and how their economic growth is doing compared to ours.
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The Storm That Created The “Rust Belt” Is Heading For Silicon Valley

This fall I was invited to cover the the Keep It Made In America Tour put on by the Alliance for American Manufacturing. I spent a week driving around Michigan, Ohio, Pennsylvania and West Virginia, ejoying the fall colors and visiting small towns all along the way.

I live in Silicon Valley where in spite of the high unemployment — still 10.6% — it’s still pretty nice here, so the extent and especially breadth of the decline of so many cities and towns was a shock. Everywhere you go you see America’s infrastructure crumbling! Of course I know this has been going on, but when you actually come from somewhere that is still pretty nice and see it firsthand – and everywhere – you really see it.

As I drove around these states I saw pretty much the same thing in town after town. As you approach the town on the highway the first thing you encounter is what I will call the vulture circle that surrounds it. This is the circle of Wall Street-owned chains emulating the Wal-Mart model of sucking cash out of the area and sending it away to the wealthy elites who own … almost everything now. These are the national chains that are all the same in every town, all selling the same stuff, all made in China, all putting the local small businesses out of business.

As you drive into town the next thing you encounter is the circle of home equity extraction, with newer houses that have taken on big first and second Wall Street mortgages. These houses mostly look OK — except the foreclosures with the brown lawns and grass growing in the cracks in the driveway. This area has car dealers and strip malls that used to sell expensive cars or nice goods. These dealers and stores feasted on those “take money out of your house” refinancings or second mortgages. Now they have nail and hair salons or are just “for lease.”

As you get closer to the center of town you come to the areas of older houses, more of them boarded up than you want to see, with old, boarded-up stores on a few of the corners of the larger streets. Where there are still-occupied houses they have bars on the windows.

Finally you come to the old, crumbling downtown where there are many empty storefronts, some boarded, the lost dreams of the local small business-owners. Here and there you see, between the vacant lots, a few government buildings.

And then somewhere is what they always call “the old plant.” This is one or more closed-up, fenced-off, rusting old factories or mills. They are fenced off, with lots of broken windows, and maybe part of a building is falling down. This is where the people used to work but the jobs moved to Mexico or China.

Much of the country is like this now. So many of the older small towns, crumbling, the money sucked out by the Wall Street elite. The factories sold off, closed. The people can’t make a living, the towns can’t make a living, the country can’t make a living, the Wall Street elite making a killing.

You can see the process starting here in Silicon Valley, too. As you drive around this area you see that one of every four or five office or light-industrial buildings has an “Available” sign. The region has the same number of manufacturing jobs as it had when the “tech revolution” began. The rest have moved to China. We don’t make cell phones here. We don’t make flat-screen TVs here. We don’t make computers here. We certainly don’t make iPads here — even though Jobs is his name!

Even exclusive Palo Alto has empty storefronts on the main drag. (You know the economy is bad when the rug stores on University Avenue are actually going out of business!) It is even happening here. It will get worse.

In July Intel’s retired CEO and Chairman Andy Grove wrote an important opinion piece,
How to Make an American Job Before It’s Too Late, in which he warned,

Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late — unless you are counting Asia, where American technology companies have been adding jobs like mad for years.

[. . .] As time passed, wages and health-care costs rose in the U.S., and China opened up. American companies discovered they could have their manufacturing and even their engineering done cheaper overseas. When they did so, margins improved. Management was happy, and so were stockholders. Growth continued, even more profitably. But the job machine began sputtering.

Please take the time to read Grove’s entire piece.

The storm that created the rust belt is heading our way, and we need to pay attention. What will it take for American companies to create American jobs rather than jobs outside America?

This post originally appeared at Speak Out California.

9.8%: The Number That The Deficit Commission Left Out

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
9.8%! It’s still all about jobs. It’s still an emergency. And the DC elite still don’t get it — or don’t care. They give us a “deficit commission” not a jobs commission. They’ve got it nice while the rest of us have it not-so-nice. Maybe we should move the Congress out of DC so they can see for themselves what is happening to America.
If you visit DC (and don’t go to the “wrong” areas) you see nice buildings, nice stores, nice houses, nice hotels, nice trains, nice cars and lots and lots of nice and very expensive restaurants. You see lots of nice nicely-dressed people walking in a hurry to their nice jobs. Lots of nice jobs. Nice, very expensive houses. Nice cars. Nice life. Nice fantasy.

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China’s Goverment Helps Manufacturers, Economy Booms. Ours, Not So Much.

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
As an election strategy conservatives blocked or watered down everything they could that might help the economy, hoping voters would blame the President’s party for job losses. Tomorrow we will learn if this strategy succeeded. But Wednesday can we start doing things to help the economy and the country again? Please?
Candidates on both sides are running ads asking for fixes to trade with China. Chinese manufacturers are starting to fight, claiming that (now jobless) Americans will have to pay more for goods if they have to adjust their currency toward market rates. But Chinese manufacturers are doing just fine, according to recent surveys, because their government is doing everything it can to stimulate their economy, their manufacturing and their jobs.
Where’s our government?
Today’s Progressive Breakfast hilites two stories:

Chinese manufacturers, complaining that their government has adjusted currency too much, tell Americans Christmas will be more expensive. W. Post: “‘If the renminbi keeps appreciating, our prices have no more room to drop,’ said Cai Qin Liang, 38, who has been in the business making Christmas ornaments and handicrafts for more than a decade. ‘We can just stop making these Christmas accessories, but foreigners still celebrate the Christmas holiday and need these things.’ It is small manufacturers such as these that the Chinese government says it is worried about as it resists calls for a larger and more rapid appreciation of the currency.”
Yet Chinese manufacturing doing just fine, buoyed by stimulus. AP: “Chinese manufacturing accelerated in October with spending on infrastructure projects spurring a jump in new equipment orders even as export demand remained subdued, surveys showed Monday.”

What kinds of things is the Chinese government doing to help its manufacturers? Earlier this year I wrote, in Lessons From China’s Stimulus

China’s stimulus brought them through the economic crisis, even as they lost some exports because of the slowdown. They made the leap into alternative energy technology, spent $100 billion just for high-speed rail, and showed the world how fiscal stimulus works. Their growth rate is currently 13%. Ours is currently … nowhere near 13%.
. . . So their stimulus totaled about 14% of their GDP. Our own stimulus was $862 billion in a $14 trillion economy, or about 6%. The differences between the priorities of the two plans are clear when seen on charts.
From a year ago: China’s Stimulus Package: A Breakdown of Spending: (please click through for more)
. . . China focused on investment in public infrastructure, which leads to future economic growth. We are mired in conservative ideology so we focused on tax cuts, which do little more than increase our debt.
. . . Quick lessons:
– China spent serious money, quickly. It worked.
– China focused on infrastructure. It worked.
– China has a national economic/man manufacturing strategy and invests in R&D and developing strategically important industries. We don’t.
– Don’t cut taxes, it only causes massive yearly deficits and accumulated debt.

Frank Sobatka describes one of the main reasons for the problem:

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Erie, PA Town Hall: “No Country Ever Went Broke Investing In Its Own People”

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Last night’s “Keep It Made In America” Town Hall meeting was at the Bayfront Convention Center in Erie, Pennsylvania. Kyle Foust, Chairman of the Erie County Council welcomed the attendees and led off the Town Hall meeting, quoting Hubert Humphrey: “No country ever went broke by investing in its own people.”
I recently spoke with a Tea Party member who did not know that it is government that builds the roads, airports, sewer systems, etc. that make up the infrastructure that is the foundation of our country’s ability to have companies at all. He actually thought that private companies do this, and that “government spending” just “takes money out of the economy.” Maybe this is why so many candidates in this election say that “government spending” is bad but will not say, no matter how hard they are pressed, what spending they plan to cut in their quest for “smaller government.”
The Town Hall
Following a Unitarian invocation by Rev Steve Aschmann, Scott Paul of the Alliance for American Manufacturing (AAM) — the organization that is putting on these “Keep It Made In America” Town Hall events — explained what AAM is about, strengthening manufacturing in this country. Scott gave the audience several facts about manufacturing:

  • 74% of Tea Party supporters support more manufacturing, as do 82% of union members.
  • 563,500 in Pennsylvania work in the manufacturing sector
  • This is down from 864,000 in 2000
  • And represents a 35% cut in manufacturing jobs.

Candidates Speak
Two local House candidates spoke at this meeting. Mike Kelley, Republican candidate for Congress spoke first.
“We can’t control unfair competition. Just make it fair, that’s all, make it fair. Enforce the rules. We play by the rules, other people don’t. Chinese currency.”
Q: “Will you support buy American policies?” A: Who would not? Especially in taxpayer-funded projects.
Q: “Hold China accountable?” A: The world has been waiting for America to take the lead. China has to be held accountable when they break the rules.
Q: “Policies?” Competition, we never back away from competition. We need to get a national strategy in place. Taxes – need a VAT. Others all do it. (Note, Kelley’s answer is good for manufacturing. Short explanation: Other countries use a VAT to boost their manufacturing sector. Their manufacturers get a VAT rebate, but goods imported from the US do not, so in effect a VAT is a either a subsidy of their companies or a tariff on imports from us.)
Next up was his opponent in the race, Congresswoman Kathy Dahlkemper:
We need to get back to a manufacturing economy, to provide that good family-sustaining wage.
How to keep it made in America, three points:
1) Close the loopholes, Republicans’s did not vote with us on this. My opponent has pledged, signed a pledge no to remove the tax advantages given to companies for moving factories out of the country and outsourcing American jobs. (Note see my post on this today.)
2) Stop China’s cheating. Everyone knows China cheats. The currency bill, voted for it, the Chamber of Commerce – that’s the national Chamber which is a very different thing from the local Chambers — is against it. We also have to stop China’s illegal trade practices and dumping (selling below cost to capture markets).
3) Invest in our domestic manufacturing base. The COMPETES act has passed the House, but Senate… Education.
Raw materials – rare earth elements, China is saying they can get these IF they bring manufacturing t their country.
We can produce them here, but don’t. Because China subsidizes, it is not profitable to start production here.
The Panel
This Town Hall’s panel of local experts:
• Kenneth Boothe Jr., General Manager, Donjon Ship Builders
• Reverend Jeffery Priscaro, St. Ann’s church
• Ron Oliver, Community Labor Leader
• Tim Ryan President, Apex Offshore Wind.
• David J. Rosenberg, Head of Marketing, North America Gamesa Energy
• Hillary Bright, Blue/Green Alliance Field Organizer.
Priscaro – When people make things It create sjobsm, revenue, they buy houses, participate in economy.
Ryan – Windmills, local wind turbines on old steel mill site, made in the US. Sun Ray project in Texas used GE wind turbines, GE Transport made the gearboxes. Gemasa, of Sain, has set up manufacturing near here. The Export/Import bank financing requires high local content. We need a national Renewable Energy Standard, then there is a tremendous opportunity for American manufacturing in wind energy.
Oliver – the effect on people of losing job, moving, move in with mom, manufacturing is the heartbeat of America.
Boothe – Donjon has recently gone from 13 employees, in 10 months have 118. 125 by end of year, 150 then up to 250.
Bright – Labor and environmentalists share common goals Hadn’t recognized how intertwined manufacturing is with a healthy community, environment, wages, families, healthy communities. And healthy environment. The way we see America in future generations, manufacturing is key to recognizing that.
Q: “Where are we going to get jobs? We need the infrastructure rebuilt, everything reconstructed. How?”
Bright – AAM, others have recognized that one of the largest opportunities is in clean energy. The stimulus was a down payment. Opportunity at federal policy level like Renewable Energy Standard to create the market and the demand to get it going, otherwise we lose the race to countries like China.
Oliver – We need to create the jobs here, the stimulus was using money to buy windmills made in China.
Ryan – We need new power plants as well as wind energy power plants. National policy has been up and down up and down, industry can’t survive on federal programs that last 6 months or a year, we need national policy that looks at the next 20 years or so.
Priest, we lost jobs because of legislation, we can gina jobs by legislation.
Q: “What can we do to stop the leak of jobs from US?”
Scott Paul: Stop tax breaks to ship jobs overseas.
(Note – All pictures by Ike Gittlen, USW, with permission. Click any pic for enlargement, see the entire collection here.)
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Wheeling Town Hall — BIG Turnout — Focus: Tax Breaks For Offshoring

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Driving across Ohio toward Wheeling you pass one small manufacturing company after another – but not too many with lots of cars in the employee parking lot. I stopped in a coffee shop in a small township. They offered me a cookie, and when I declined, the owner said, “We’re giving them away, it’s our last day.” After 14 years the shop and the restaurant next door are closing because the landlord is giving up, auctioning off the building, and they don’t see how they can reopen somewhere else and make it. Too many manufacturers in the area have had to close.
Every manufacturing job supports four or five other jobs in the economy. This is seven or eight more gone. The Cut Nail plant dominates a section of Wheeling. It closed last week, after 152 years in business. That’s a lot more gone.
The Town Hall
Friday night I attended the Wheeling, WV “Keep It Made In America” Town Hall meeting. This was a BIG event – 600 attendees big . (Note – All pictures by Ike Gittlen, USW, click any pic for enlargement, see the entire collection here.
Many elected officials, starting with Governor Joe Manchi (now running for Senate) attended and spoke. Quite a few candidates for Congress attended and spoke as well. And there was a panel. The Intelligencer / Wheeling News-Register has a great writeup of the event.
The meeting began with a flag entrance presented by an honor guard of Young Marines:
This was a big event with a lot of speakers, so I’ll only put up snippets of what was said. But the entire town hall was webcast live: see the recording of it here.
Alliance for American Manufacturing Executive Direct Scott Paul gave “manufacturing facts” between each speaker.

“Why should people care about manufacturing if they don’t work in a factory?
* Manufacturing provides 70 of all r&d, 90% of all patents, so if you care about innovation, next best thing…
* Manufacturing largest purchasers of technology, so if you care about…
* Manufacturing still employs 12 million, sizable portion.
* Also manufacturing has a multiplier effect, each job supports 4 or 5 others in your community. More than any other.
* Finally manufacturing jobs pay 22% better.”

Vice President of the United Steelworkers Tom Conway spoke first,

“Thanks for coming, having a discussion, about what we think is a crucial issue, and one that America has been struggling with for a while. We’ve lost 50-60,000 factories over the last few years and millions of jobs. Labor and management do not have the luxury of not being together on this. We need to be together on this. Doing it jointly, telling a common story.
Trade is good but trade needs to be balanced, but now for 30 years we have had an imbalance that has gone on and one, and you can’t do that and expect to have a thriving economy, and think the country is going to exist off the growth in the financial services sector. Now 40% of our GDP comes from the financial services sector and you’ve all seen what’s happened.
You’ve got to have an economy that is based on something. You can’t keep having your best and brightest go to wall street.
It used to be there were two tickets into the middle class, get a union card or get a college degree.

Governor, Senate candidate Joe Mansion:

First question is will you support buy America policies? Made in America, even better.
There is not one thing in free trade that talks about fair trade. We can compete with any workforce in the world as long as it is on a level playing field.
Currency manipulation 40%, no rules or regulations on environment, and then we give tat incentives to companies to move jobs offshore.

Charlie Wilson OH-6, which borders on Wheeling:

We all have common interest, returing to economic security, returning our neighbors back to work and returning our communities to prosperity is a priority for all of us.
We shouldn’t be looking to advance new trade deals if the ones we have aren’t working. I’m proud to be a co-sponsor of Repeal NAFTA. Trade is important but it has to be fair trade and we have not had fair trade.
We have been outsourcing jobs, crippling thing in our economy, voted 2 times in last few weeks to close tax loopholes that encourage companies to outsource. How can we possibly justify rewarding people with tax breaks who send our jobs to other countries. Come here I’ll show you what has happened to our economy from jobs lost to trade deals.

The Conservative Tax Pledge
One speaker said something I want to hilight: Mike Oliverio, Congressional Candidate, WV-1, said something about the “Norquist No New Taxes Pledge” that I think was significant. Oliverio called it a pledge to keep those tax incentives for closing factories and outsourcing jobs.

I support legislation that prevent outsourcing of jobs, these tax giveaways have to stop, my opponent signed a tax pledge to continue these giveaways to corporations. I just can’t imagine how you can sign that kind of pledge in today’s world.

His opponent David McKinley:

The stimulus failed, only added debt to the government. We’re driving business away by overtaxing and overregulating. National Association of Manufacturers, Chamber of Congress, Tea Party backs me, Right to Life back me.
I want to freeze tax rates where they are now to remove uncertainty. Create confidence what our tax structure is going to look like they will start hiring again. Eliminate overregulation of business.
Nancy Pelosi is toxic to our political environment.

About 3-400 other candidates spoke. The Libertarian Party, the Mountain Party, the Constitution Party, others.
The Panel
After approx 28,245 more candidates spoke there was an excellent panel discussion, moderated by Scott Paul, with
* Tom Conway, VP USW
* Kenny Perdue, AFL-CIO West VA
* Beri Fox, CEO of the Marble King Company
Note: About Marble King. Wheeling and WV have been hit hard by imported glass. Glass used to be a very big industry in West Virginia. There were 240 glass manufacturing companies in WV 30 years ago. Marble King is one of only 6 remaining companies.
Berri – Marble King is a 75-year-old company. We want to help keep the American dream alive,. Glass business in WV second only to coal, 240 companies 30 years ago, today 6. The obstacles are substantial. Something has to be done.
We did kids’ toys, supplied game companies. All moved to China, NONE manufactured in US now. This created huge stresses on what was our market share, so we bagan to diversify our product into other areas, creative innovative. Now, you buy spray paint, aerosol, shake it, that sound is our marbles.
Question from audience: Tax Breaks for offshoring?
Conway – companies getting tax breaks are also the companies that have taken control of our government, big multinational companies, they leave American workers and communities behind and we can’t tolerate it any longer.
I think that is the best line to close with. If you need a reason to vote, there it is.
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