Alliance for American Manufacturing – Page 2

Odds and ends number 85

Here’s another in my long-running series of things from my e-mail box and elsewhere that deserve a mention but not a full post. Generally I shoot for three sentences to two paragraphs for each, but that’s simply inclusive and not a strict guide.

In the fall of 2015, there was one candidate out of the rugby scrum of GOP presidential hopefuls who stood above the rest when it came to experience in governing combined with serious thought about the issues. Unfortunately for us, Bobby Jindal folded up his campaign tents rather quickly, but at least he can still dispense truth like this statement:

The Democratic Party has come out of the closet this year in full-throated support of single payer in health care. Those of us who are health care policy wonks have known this was their intent all along, but they were previously smart enough not to admit it.

It’s been a few weeks now, but I knew I would get to write about this in due course and Jindal’s statement is still worth the read. So I kept it around.

Actually, since the Republican Party doesn’t seem to want to favor limited government anymore, choosing instead the goal to be the ones running the circus and supposedly doing it more efficiently, maybe Bobby – who actually cut government spending during his two terms as governor of Louisiana – should join a group devoted to rightsizing government.

Yet there was a controversial decision made by one such group, the Constitution Party (and as disclosure, it’s their candidate I voted for last time – so I follow them more than most people do.) Gary Welch, the Communications Director of the national Constitution Party, explained their decision to back Roy Moore in the Alabama Senate race. This also included a fundraising drive.

To be honest, I’m not sure what the upside of backing Moore would have been had he won. I doubt he would have changed parties again – Moore was a Democrat up until the Clinton era, so you could conceivably add the decades-old accusations against him to the blue side of the ledger – and the amount raised by the CP would have been less than a drop in the bucket in the race. I’m figuring they were assuming Moore would still prevail based on the voting patterns in the state, and admired his stances reflecting the fact we are endowed with rights from our Creator, not from government.

But on the other hand, money raised in support of Moore could have been better used on ballot access and working against a system that somewhat unfairly burdens smaller political groups by making their ballot access more difficult. They may have had common cause but to me that wasn’t a smart use of limited funds.

One last thing about the Moore race that bothers me, though: no one pointed out that, on the same day that the Washington Post broke the Moore story, they also put up a more glowing portrait of Doug Jones prosecuting the last remaining 16th Street Baptist Church bombers from 1963. (The story was since updated to reflect election results but the link still shows November 9, the day the Moore accusations went online.) What a coincidence, eh?

Then again, they’re not the only group who hitched their wagon to Moore hoping for some sort of gain.

(Photo via Women for Trump.)

You may not know the woman at the podium, but I do. Not that I’ve ever met Amy Kremer, of course, but when you’re writing a book on the TEA Party you see the name a lot. In this case, though, it’s a group she co-chairs called Women Vote Trump, and the photo was part of a fundraising appeal from that group on Moore’s behalf. Now I won’t pick on Kremer aside from the fact she seems to be quite the opportunist – she left the Tea Party Patriots shortly after their formation because she wanted to work with their rival Tea Party Express group, and left them for Women for Trump once the Tea Party fizzled out – but this is what aggravates people about politics: the number of hangers-on who make their living from fundraising.

But it’s not just Republicans. This is a snippet of something I received from our erstwhile Vice President:

This Republican plan isn’t anything more than the latest, worst edition of the same-old trickle-down economics that has failed time and time again.

Even more than that, let’s be clear about what’s happening here. The goal the Republicans have today is the same goal they had when trickle-down economics first came on the American scene: Their long-term goal is to starve government. To say we don’t have the money to pay for Medicare, for Medicaid, for Social Security. We heard it last week when one of the leading Republicans in the Senate actually said after passing this new tax cut that we don’t have the money to pay for children’s health care.

Simply put, the values reflected in the Republican budget are shameful. They aren’t my values. And I don’t believe they’re America’s values either.

And so it’s time for a change. Right now, you can show that these actions have very real consequences. From now until 2018 and beyond, I’ll be doing everything I can to help elect a new kind of leadership in our politics. Folks who actually understand the issues an average American faces. Folks who aren’t scared to stand up to big corporations. And more importantly, folks who are absolutely committed to standing up for working people.

Yes, Joe Biden has his own political group called American Possibilities – literally a web portal that solicits contact information and donations. Certainly he will seek out the most liberal people to donate to. But is that really what we need?

Apparently this is Joe’s version of that three-letter word, J-O-B-S. Regarding that subject, I haven’t done a struggling blogger “bleg” story for awhile, but as a guy who’s been laid off before the holidays a time or two I could sympathize with Peter Ingemi’s story of losing his. Fortunately, it may now have a happier ending.

Now I have a question: have you finished your Christmas shopping yet? Over the last several years I have reported on a couple organizations that promote “made in America” presents, so if you’re looking for stocking stuffers or that perfect gift, you may find it from the Alliance for American Manufacturing 2017 Made in America Holiday Gift Guide. Those who are ambitious enough to make it a challenge can also sign up for the Made in America Christmas Challenge that’s sponsored by Patriot Voices. But they concede:

We understand that there are things that are simply not made in this country – like iPhones. It may not be possible to buy everything made in the USA, just try your best.

Maybe that’s why so few have taken the challenge – just 90 at the time I linked. Either that or no one really cares about former Senator and presidential hopeful Rick Santorum anymore.

I may as well finish with a programming note: as opposed to this series that’s been around for over a decade, I think I’m dropping the Don’t Let Good Writing Go To Waste feature. It’s just a pain to compile, and besides it behooves you to track your political opponents anyway. (In my case, it’s to set them straight.)

It seemed like a good idea at the time, but the concept got old fast and if I’m not excited about it then I won’t do them. So I decided to go no further with it, just like this post.

More laborers to celebrate Labor Day

I wasn’t necessarily going to write about this, but as it turns out Labor Day is a pretty good time to make this point.

When the unemployment numbers came out last Friday, it turned out that manufacturing jobs were one of the star performers as the sector gained 36,000 jobs in August – almost 1/4 of the total gain.

You may recall that for most of Barack Obama’s term I often referenced a union-backed organization called the Alliance for American Manufacturing, generally quoting their president, Scott Paul. He’s still there, and while he seemed to be pleased with the August results he’s still singing his protectionist song:

Did the robot revolution take the month off?

Adding 36,000 new factory jobs in August is good news for American workers. For the first time in a long time, manufacturing punched above its weight in the job market, accounting for 23 percent of total job growth. There’s great potential for continued manufacturing job growth – but only if we get the policy right.

How can we keep up the momentum? Pass an infrastructure bill with strong Buy America preferences to put more people back to work. The administration must also invest in training the workers of the future, move forward with rebalancing trade, and hold China accountable.

One facet of the AAM that interested me early on was their tracking of an Obama promise to create 1,000,000 manufacturing jobs – a pledge for which he fell far short by a factor of over 2/3. (Color me surprised </sarc>.) So it’s very intriguing to me that, through just eight months this year, the Trump score is already at 137,000. (Granted, there’s a slight bit of overlap from the Obama administration, but whatever bit of momentum began there may have come once it was assured Trump would be the victor in 2016.) On that pace, Trump would be in the 600 to 700 thousand range in his term.

I also think it’s fascinating that Paul talks about the “robot revolution” taking the month off but in the same statement beseeches the Trump administration to “invest in training the workers of the future.” As wage pressure is placed on the job market through misguided local and state government policies, such as the $15 minimum wage, tasks as mundane as attaching fenders on the assembly line or asking “do you want fries with that?” are going the way of the buggy whip, yielding to more skilled occupations such as working on those robots which make up the revolution. If you’ve seen pictures of modern assembly lines, automobiles and other large objects are put together more and more by mechanized means rather than a worker doing the same task of fastening rivets for eight long hours – a time when he could get tired, be less than at his best thanks to hard partying the night before, or just not trained up to the quality required for the task.

It’s true that unfair labor practices and currency manipulation have been factors in the decline of American manufacturing, but there were other processes that have affected all domestic businesses. Just ask yourself: how else would it be logical that an American manufacturer relocate to China when you consider the shipping time and costs and the learning curve needed to train hundreds of employees who may not be familiar with what the American market desires? Obviously those expenses were outweighed by the far lower wages they could pay Chinese workers, the removal of stringent regulations (not just environmental, but dealing with workers as well), and the lower tax costs. Over a 30-year period, “Made in America” became “Made in China,” and that’s often still the case today.

But I don’t think we have to be protectionist if we can create the conditions that cancel out several of the factors that drove manufacturing overseas. We already have a head start if we can keep our energy costs down by employing the resources we were blessed with instead of pie-in-the-sky schemes like dependence on unreliable wind or solar power. Add to this a corporate tax rate that is fair and not confiscatory – losing almost 4 out of every 10 dollars of corporate income seems to me a much larger piece of the pie than government needs or deserves – and a predictable regulatory regime based on common sense rather than being capricious and arbitrary, and much of the issue will be solved. At that point it’s up to the good old American worker to do the jobs Americans will do if given a shot. For example, someone has to know how to fix those machines that weld together automotive parts, and they probably won’t need a college degree to do it.

My father, who Lord willing will turn 82 in a month and has probably never turned on a computer, grew up in an era where he could finish high school and find a job at a concrete block plant doing maintenance. It was a union shop and gave him a good living, although he was unhappy at times with the union because it treated everyone equally whether they pulled their weight or not. Thousands of men around my hometown of Toledo who grew up in that era could tell a similar story as they got out of high school and went to work at a number of automotive (and other) manufacturing plants: Willys Jeep, GM Hydra-Matic transmission, Ford Stamping, Toledo Scale, Libbey Glass, and so forth – all union shops, and all providing a good middle-class income.

Kids graduating from high school now, though, are seemingly consigned to dead-end service jobs, as the days of your uncle getting you in at the Jeep plant are pretty much gone. But America needs to get back to making things, young men (and women) need jobs that can support a family, and the academic world needs a shakeout to a point where college is geared more toward the students who have the academic chops to succeed there. (Not everyone is college material in the traditional sense – some people just are geared toward and have the aptitude for working with their hands rather than sitting through a freshman English class.) A rebirth in American manufacturing can accomplish all of these goals.

So on this Labor Day and its implied salute to the American worker, consider what could be done to improve his or her lot. Lightening government’s load on industry seems to me a key step in making us the place that makes things again.

Shopping for America

As quickly as Thanksgiving has come up on us, I suppose it should be no shock to find a couple reminders of the holiday season hitting my e-mail box today. It’s even better when they tie in with the manufacturing theme I’ve had of late.

I’m sure I have discussed this a time or two before, but the advocacy group Patriot Voices (the group founded by former Senator and two-time Presidential candidate Rick Santorum) has asked people over the last five years to pledge to buy American for the holiday season. This year they made a different appeal based on the election:

For many years, we have been talking about how supporting the American worker and manufacturing will grow the economy in a way that benefits everyone. We all saw Donald Trump beat Hillary Clinton by being a champion of these issues.

As we enter the Christmas season, millions of hard-working American families in the manufacturing industry or in communities impacted by that industry are struggling to make ends meet.

Rather than wait for Donald Trump to take office and implement new policies, we are going to do what we have done each Christmas for the past four years – ask you to take the Made In the USA Christmas Challenge below and lift up these workers!

Did you know that a large percentage of our Christmas gift dollars go overseas? For every $1 we spend in the USA on manufacturing, $1.81 will be added to the economy. That is a great deal!

Over the time between my receipt of the e-mail and me writing this piece, they have eclipsed 3,000 people taking the pledge. If you figure each can find $100 worth of American-made items they wouldn’t strive for otherwise, hey, that’s $300,000 more for deserving American companies. (They also stress the idea of patronizing small businesses, particularly this coming Saturday.)

Now it’s unfortunate that an outfit I once blogged for called American Certified is no longer around because this was right up their alley. (Hard to believe that was over two years ago now. A lot has changed since then.) But it just so happened that the group that qualifies for frequent flyer miles from my website, the Alliance for American Manufacturing, came out today with their annual Made in America Gift Guide that features one or more companies from all 50 states, and among them is a company from the Eastern Shore:

Maryland: Carlos Santana, Dave Navarro and Neal Schon are among the artists who have partnered with Paul Reed Smith Guitars, which manufactures high-quality instruments at its factory in Stevensville.

They are popular with the local musicians, too.

Needless to say, Scott Paul (the AAM President, who I frequently quote) added his own thoughts on the project:

We know it isn’t always easy to find American-made items at the mall or the big box stores. But by making sure there are at least a few American-made things on your list, you’ll help create jobs and support American workers.

As he noted this comes out in time for Black Friday, Small Business Saturday, Cyber Monday, and the rest of the season.

And speaking of Cyber Monday, I am going to shift gears so abruptly it leaves transmission pieces all over the road. Christmas is roughly the halfway point between baseball seasons and you know I’m jonesing from about September 10 on. (And you would be buying American, even if a percentage of the players come from other nations.)

Interesting to see the Lakewood ticket deal, as these seats will be in what used to be general admission (the old bleachers.)

So as people prepare to shop for their friends and loved ones, just keep these simple things in mind. If you can do it, you may as well buy American. Those people who really believed in what Donald Trump said will certainly tell you that next year your selection of American products will be “yuuuge.”

A more agreeable tone?

The election of Donald Trump was a surprise to most pundits, who were expecting Hillary Clinton to win both the popular vote and the Electoral College. But her plans were spoiled when she lost three states she expected would be her “blue firewall” even if she lost in Florida: Michigan, Pennsylvania, and Wisconsin. Those 46 electoral votes assured her defeat when they accrued to Trump’s column (although Michigan may still switch as a recount is likely required.) Add in a surprisingly lopsided win in Ohio for Trump as well as the expected blowout in Indiana, and the Rust Belt was pretty solidly in Donald Trump’s corner.

Much has been made about the droves of working-class voters that seemingly came out of nowhere to propel Trump over the finish line, and a survey released by the Alliance for American Manufacturing bears this out:

The national survey, conducted by The Mellman Group and North Star Opinion Research (firms that poll for Democratic and Republican candidates respectively) found that 85 percent of those surveyed support a national manufacturing strategy. Support for a manufacturing strategy is robust among both Trump voters (89 percent) and Clinton voters (83 percent).

Manufacturing may have been an election-determining issue, as Trump won manufacturing households by 18 points with Clinton winning non-manufacturing households by 4 points.

It comes as no surprise that by more than a two-to-one margin voters believe manufacturing is critical to our future and reject the notion that high-tech or services could take its place.

“The biggest surprise on election night came from the Industrial Heartland,” (AAM President Scott) Paul said. “Manufacturing is the engine that drives the heartland’s economy. The good news is that Trump and Clinton voters alike want to get it back on track.” (Link added.)

Unfortunately, the survey doesn’t cite the evidence ascertaining the voting patterns of manufacturing and non-manufacturing households, but my presumption would be that a “manufacturing” household is one where a family member either currently works in the sector, is retired from it, or was previously in the sector but lost his or her job. Thousands of voters fit in this category: using my native Ohio as an example, Trump did far better overall than Mitt Romney did in key manufacturing centers like Toledo (Lucas County), Lorain (Lorain County), Cleveland (Cuyahoga County), Akron (Summit County), Canton (Stark County), and Youngstown (Mahoning County).

Lucas County: Romney 68,100 (33.9%), Trump 74,102 (38.7%)
Lorain County: Romney 58,095 (41.9%), Trump 65,346 (47.8%)*
Cuyahoga County: Romney 184,475 (30.2%), Trump 179,894 (30.8%)
Summit County: Romney 111,001 (41.4%), Trump 109,531 (43.8%)
Stark County: Romney 86,958 (49.2%)*, Trump 96,345 (56.4%)*
Mahoning County: Romney 41,702 (35.5%), Trump 52,808 (46.8%)

*winner in county.

In total, Trump amassed 27,695 more votes in these industrial counties, and while he only won 2 of the 6, he averaged a 5.4% improvement overall. Having a little residual knowledge of how Ohio politics works, seeing how Trump was close in the initial count was a good sign for him – oftentimes in the urban counties the closer election districts report first (they are more heavily minority) so a Republican almost always starts out behind. It’s a matter of whether they get too far back to reel in the leader as the suburban and rural precincts begin to come in. And like the Eastern Shore of Maryland, the rural areas of Ohio are also an indicator for GOP candidates who need to rack up totals in the 65 to 75 percent range to make up for the losses in urban counties. Trump did this in spades, garnering an astounding 80.7% in Mercer County along the Indiana border – part of a group of adjacent western Ohio counties where over 3 out of 4 voters were Trump backers. (Of the few Ohio counties that went for Hillary Clinton, just one was a non-urban county and that comes with a caveat – Athens County is the home of Ohio University. Somehow, as a Miami graduate, I’m not surprised.)

It would be my guess that the AAM will be much more Trump-friendly than they may have appeared at first glance as a union-backed creation. The President-elect is promising heavy investment in infrastructure (a priority of theirs) and has a view on trade much more in line with the protectionist playbook the group has created.

And certainly I don’t want to say the manufacturing jobs are gone for good; however, those workers who are of a certain age (basically my age or older) may not share in the rebirth of manufacturing like they hope they might, if only because the ship of state which has sailed since the days of NAFTA and the rampant offshoring of the era will be difficult to turn around right away. Not only are trade and infrastructure key factors, but so is reducing the tax burden on American companies. On the other hand, the prospect of punishing American companies that move offshore may hasten their plans and create more headaches in the short run.

Donald Trump won his electoral votes in the Midwest by promising a return to the good times of a half-century ago, when it was possible for a guy to graduate high school and get a job through family or friends with a union shop that would keep him employed for the next forty years or until he decided to take his pension and retire. Those days are a memory. But we can still be a nation that makes stuff, and it would be to our advantage to become that nation as the world becomes a more competitive place.

Odds and ends number 83

Subtitled, the post-election edition.

I have a number of items I collected over the last few weeks that I figured I would end up getting to after the election. Well, the election is over so now I can clean out the e-mail box with this handy feature.

Despite Donald Trump’s stated defense of Planned Parenthood (coupled with his vow to defund it) and shaky position on abortion, the head of the pro-life group Created Equal was pleased with the election results and their efforts in securing them.

“Now, we must hold our new president-elect accountable for his promises to defund Planned Parenthood, pass a 20-week ban, and nominate a Constitutionalist to the U.S. Supreme Court,” said Created Equal’s Mark Harrington.

Defunding Planned Parenthood will be a battle since Congress controls the purse strings and a Republican majority couldn’t get the job done in this edition of Congress. And as a reminder: they are funded through September 30, 2017 – the end of the federal fiscal year. Passing a 20-week ban and getting a pro-life SCOTUS justice will also be difficult with 48 Democrat Senators, although eight of them may want to keep in mind that Trump won their state and they are up for re-election two years hence. (In 2018 Democrats face the same minefield Republicans did this time: 23 of 33 Senate seats at stake are held by Democrats, along with two “independents” who caucus with the Democrats.) But I suspect the pro-life side will be disappointed with a President Trump; however, I never thought he would be President either so he may shock us all.

Another group angling for a payoff is my old friends at the American Alliance for Manufacturing, who are begging:

President-elect Trump and Congress must come together on much needed investment that will put Americans to work building and repairing our nation’s crumbling infrastructure. Stronger trade enforcement to address China’s massive overcapacity and a crackdown on countries trying to circumvent U.S. trade laws can boost manufacturing jobs.

Factory workers were more than a prop in this election. Now’s the time to deliver for them.

The signs are there that Trump may be their kind of President: we know he’s more hawkish on trade, and he’s planning on making it possible for up to $1 trillion in private-sector infrastructure investment over the next decade. But it takes two (or more) to tango on trade, so progress on that front may be slow. And the union-backed AAM may not be happy with the infrastructure plan if it doesn’t feature union-friendly rules and prevailing wage regulations. (Maybe this is a good time to repeal the Davis-Bacon Act? I doubt Congress has the guts to.)

But if you thought AAM wanted a tougher stance on trade, this diatribe came from Kevin Kearns, head of the U.S. Business & Industry Council:

Trump’s antagonists (on trade) are Wall Street institutions, multinational corporations, major business organizations, academic economists, editorial boards, business journalists, opinion writers, bloggers, and the generally knowledge-free mainstream media. All are opposed to Trump because they are wedded to a false, outdated “free trade” dogma, which has decimated the working and middle classes.

On Capitol Hill, a minority of Democrats and majority of Republicans are partial to the same free-trade theories. Speaker Paul Ryan admitted as much in his remarks on the election victory, noting that Trump alone had recognized the dire plight of average Americans.

I found it interesting that the LifeZette site has as its editor-in-chief Trump ally (and radio talk show host) Laura Ingraham. But this was the real payoff of the Kearns piece for me:

Trump must impose a Value-Added Tax of 18-20 percent applicable at the border to all imports. Over 150 of our trading partners use such taxes to make American exports pricier in their home markets. We should reciprocate.

So anything we import becomes 18 to 20 percent more expensive? Yeah, that will end well.

Another item in the election hopper was some attempted reform from another guy who I’ve oftentimes cited on my website, Rick Weiland. A “trifecta of reform” his group successfully put on the South Dakota ballot went 1-for-3 the other night. Measures for redistricting reform and non-partisan elections failed, but South Dakota voters narrowly passed a sweeping campaign finance reform package the state’s Attorney General said “may be challenged in court on constitutional grounds.”

Personally, I would have been fine with the two that failed in a broad sense – as a Maryland resident, I know all about partisan gerrymandering and would be interested to see how non-partisan elections pan out. (The duopoly would have a fit, I’m sure.) But this campaign finance reform was a bad idea from the get-go, and it tips the Democrats’ hand on how they would attack the Citizens United decision. One controversial facet of this new law would be a $9 per registered voter annual appropriation to pay for this public financing – such a law in Maryland would be a required annual $35 million appropriation from our General Fund. (The fund Larry Hogan used in his successful 2014 campaign was built with voluntary donations via a checkoff on income tax forms; a checkoff that was dormant for several years but was restored last year.)

And instead of “democracy credits” as this amendment proposed, a better idea would be one I believe Ohio still uses: a tax deduction of up to $50 for political donations. But I’m sure soon a South Dakota court (and maybe beyond) will be ruling on this one.

I also received some free post-election advice from the creators of iVoterGuide, which is an offshoot of a small Christian group called the Heritage Alliance (not to be confused with the Heritage Foundation.)

Pray specifically for the appointment of Godly people as our newly elected President selects his Cabinet and closest advisors. Pray that the Administration, Senate and House will work together to honor life and liberty as set out in our constitution by our founding fathers. Pray for ALL elected officials to humble themselves and seek God’s will for our nation. We need to repent, individually and as a nation, and turn from policies contrary to God’s word.

Pray for unity and peace. Our country is deeply divided. Christians must truly start loving our neighbors as ourselves so that there can be a spiritual awakening. Now is not a time to gloat but to turn our hearts continually toward God so we can be examples of His love and work toward reconciliation and unity. Pray for all nations, as a new stage is being set both nationally and internationally.

I think I can handle that. Oddly enough, this was also a subject of our Bible study prayer group Wednesday – maybe one or more of them is on this e-mail list, too. As for iVoterGuide, what they need is a larger state-level base as Maryland and Delaware aren’t among the handful of states they cover (it’s mostly federal.)

As iVoterGuide‘s executive director Debbie Wuthnow concludes, “we ask you pray about how God wants you to be involved in retaining the freedoms He has so graciously granted us.” I suspect I’m going in the right direction here but one never knows what doors open up.

I was originally going to add some energy-related items to this mix, but I think I will hold them until later this week for a reason which will become apparent. There’s one other subset of items I’m going to have fun with tomorrow – I would consider them odds but not ends. And so it goes.

Compare and contrast: government vs. the private sector

A few days ago I mentioned the manufacturing advocates the Alliance for American Manufacturing (AAM) in a post regarding their convention plans. I wasn’t surprised to see they were very pleased with Hillary Clinton’s remarks, including a plan to “pass the biggest investment in new, good-paying jobs since World War II.” Ah yes, the old “investment” in infrastructure, where taxpayer money will be shoveled to cronies and unions in an effort to build things we may not need or use (like facilities for public transit, bike paths, and so forth) at the artificial “prevailing” wage. Spend five dollars, waste two or three more – they don’t care because it’s all on the credit card anyway.

It sounds to me just like the promises regarding the “stimulus” package from Barack Obama, officially known as the American Recovery and Reinvestment Act (ARRA) of 2009. Those “shovel-ready” jobs actually turned out to be, among other things, government backstopping certain public-sector jobs that may have been destined for the chopping block. Only a small portion of the over $800 billion spent actually went to infrastructure, but ARRA was sold as an investment in infrastructure. So pardon me if I expect little good to come from Hillary’s plan.

Anyway, last night I read a contention that was more interesting (and realistic) from American Enterprise Institute scholar (as well as professor of economics and finance) Mark J. Perry. Here is the money line:

The bottom line is that America’s abundant and low-cost natural gas and electricity have more than offset higher labor costs in the U.S. and have contributed to the strongest profitability in a generation or more for U.S. manufacturers. Within three years, and possibly even sooner, it will be cheaper for most U.S. companies to manufacture goods for the American market at home, compared to producing those same goods in Asia. (Emphasis mine.)

Of course, that prediction is fraught with peril. We could regulate our way out of the energy boom by continuing to mandate the use of expensive, inefficient renewable energy sources (or, in lieu of that, transfer payments from utility providers), we can maintain the oppressive tax climate that has been one of many reasons companies are choosing to go offshore – any bean counter will tell you it’s better to pay 15% tax than 35% – or actually enact the increasing minimum wage that unfortunately Donald Trump is now supporting. Any or all of these are possible regardless of who wins the Oval Office.

And that’s the shame of it all. Over the course of the nation’s history, we have seen America become a great industrial power only to lose its advantage to upstarts like Japan and China. (Then again, we wrested the title from the British in the 1800s so things are always fluid.) These Asian nations took advantage of newer technology and less expensive labor to attract American manufacturing jobs that were in older, less efficient unionized plants, despite the fact these items would have to shipped back thousands of miles to their primary market.

But here we have the chance to get some of this back, and my fear is that too many people want to keep the status quo in place as a political issue rather than solve the problem. We talk about being a free market insofar as trade is concerned, but I contend that we need to work on freeing our own market:

Toss out these federal and state regulations and carveouts that only benefit special interests or large, established competitors trying to corner their respective markets.
Encourage the adoption of right-to-work laws so unions are forced to compete and sell the benefits they provide for the cost to workers.
Instead of debating whether the minimum wage should be increased or not, we should be debating how quickly we phase it out. The true minimum wage is zero, which is what workers who are tossed out of a job when companies can’t afford the increased labor costs will earn.

In reading the GOP platform (and I’m just going to ignore the Democrats on this one, since they aren’t selling themselves as free-market, limited-government types) I saw some attention paid to these issues, although their approach seems to be more of just controlling growth and pruning around the edges than a wholesale reduction. Needless to say, that platform could be completely ignored by the elected members of the party from Donald Trump on down if the idea of enriching their friends, rather than the supporters of the other side that have engorged themselves over the last eight years, remains in place.

Sadly, over most of the last century it hasn’t really mattered which side was in power because government has grown regardless of who was in charge. (The one exception: the Harding-Coolidge era of the 1920s, when the federal budget was drastically reduced – and annually balanced – after World War I. In a time where we are stuck with Trump, Clinton, or maybe Gary Johnson, what we really needed was a Coolidge. Bobby Jindal was probably the closest we had in the GOP field.)

I began this whole process by talking about infrastructure, and there’s a legitimate need for prudent spending on upgrades where it is appropriate. Sometimes there is a need for a new federal or state facility. But I have also seen how the government uses infrastructure to maintain a cash cow, with my favorite example being the Ohio Turnpike I grew up close by.

You see, the original plan was to eliminate the tolls once the bonds to construct the road were paid off in the 1980s. (This was promised when the highway was built in the early 1950s – my dad remembers them staking it out a few miles from his house.) But then they decided that some new exits were necessary (which they were) so they decided to build those. Then it was adding a third lane in each direction between Youngstown and Toledo (a process still going insofar as I know, since I haven’t been that way in a couple years), then renovating all the rest areas (twice in thirty years, and ditto), and so on and so forth. Forget the promise to remove the tolls once the highway was paid off – they constantly spend money on projects that weren’t within the original scope, perpetuating the agency that runs the Turnpike.

In theory, we could spend money from now until doomsday on government-sponsored projects. Some contractors would benefit, but others would be left out in the cold because there’s a certain procedure required to bid on and win public works contracts. But it wouldn’t necessarily be the best use of our funds – and by that I don’t mean the money in the public till but the money that we earn for our collective pockets. If we really want to get manufacturing going and bring it back to America, we need to maximize their potential for meeting our marketplace. They may make mistakes, but that should be up to the market to pick winners and not the government.

Showing their colors

On several occasions, since my brief dalliance with a company and website called American Certified – which, alas, is no longer in business – I have cited a group I first ran across around that timeframe called the Alliance for American Manufacturing (AAM.) I have also pointed out that their perspective comes from their backing, as it is a conglomeration mainly composed of unionized steel manufacturers – so I always assumed they were more in line with the Democratic Party than the Republicans, which traditionally have been more in favor of free trade rather than protectionism.

So I had an e-mail in my back pocket that I was going to mention in a piece like this. Originally it laid out AAM’s plans for both conventions, but I received an updated version of their plans for the Democratic convention confirming that’s where the effort would be.

Here was their slate for the GOP in Cleveland:

AAM is hosting the Keep it Made in America tent, a space located just outside the Quicken Loans arena where we are chatting with convention-goers about ways to grow American manufacturing jobs. We also are speaking at a number of state delegation breakfasts, sharing with local, state and national lawmakers the issues that we think must be on their policy agendas.

AAM president Scott Paul added in a blog post last week:

(T)rade and the atrophy of middle-income factory jobs are dominating the national political discussion. Trump talks about it constantly. But he’s not alone, and this is the first time in the post-World War II era that we’ve seen both party candidates take the issue so seriously.

It’s better late than never. Before you write off Trump’s bellicose “45 percent tariff” rhetoric as low-brow protectionism – or find the change of heart on the Trans-Pacific Partnership that Hillary Clinton experienced on the trail a little too politically convenient – keep in in mind that a lot of our fellow Americans agree with this sentiment. They certainly do here in Ohio.

The logic behind free trade, though, is that nations benefit when value is maximized and it may be possible to add more value to a product in another location than it is in America. Yet the AAM argues – correctly to an extent – that nations like China take advantage of the rules by not dealing fairly through a policy of subsidizing industries and currency manipulation.

On the other hand, though, AAM will certainly be pulling out all the stops for the Democrats in Philadelphia, including what they describe as a “scene-setting Town Hall meeting”:

The Alliance for American Manufacturing (AAM) is hosting a conversation about why these issues matter for our economy, our children’s future and our politics today.

Recent focus group and polling data show these topics are driving voters’ decisions on which candidate to select. Both Hilary Clinton and Donald Trump have been aggressive in defining their plans for trade and manufacturing.

Confirmed Speakers Include:

Gene Sperling, key economic adviser to Hillary Clinton

Leo Gerard, president of the United Steelworkers

Rep. John Garamendi (D-CA 3rd District)

Mark Mellman, award-winning pollster for Democratic leaders

Scott Paul, president of the Alliance for American Manufacturing

Mike Langford, president of the Utility Workers Union of America

Tom Conway, international vice president of the United Steelworkers

This to me represents less of an exchange of information as it would be an echo chamber.

Protectionism and punishing corporations that choose to offshore manufacturing is one possible answer, of course. But the thing I always think about when this conversation comes up is the East German Trabant automobile that was hopelessly stuck decades behind the times when Germany finally reunited in 1990. Because it had a protected market, what incentive did Trabant have for improvement?

Unfortunately, a short-sighted government-centered approach that saw manufacturers as cash cows for big government and favored the big guys over leaner, hungrier start-ups through regulation too burdensome for smaller competitors to withstand has done as much (or more) to curtail American manufacturing as our trade policies have. While I certainly don’t believe many of our larger trade agreements were tailored to suit our interests enough, for the most part it’s the complexity of the deals and how they worked out exceptions for certain industries and players that is the issue. If we simply said “we won’t tariff your stuff if you don’t tariff ours” and both sides stuck to it, eventually the market would find its own level. America should be able to use the advantages of a predictable legal system, well-educated workforce, abundant sources of energy, and outstanding transportation network, but they are negated by the policies in place that I describe above.

The generation of my grandparents won World War II by being able to produce within our borders much of the material and equipment needed to keep a two-front fighting force going. Can anyone honestly say we could do that today? I don’t wish us to be on a war footing, but I’m convinced America can be a place that makes things again. It’s a simple matter of policy over protectionism, and adopting a hands-off approach at the federal level (yes, there’s that limited government idea of mine again) would be the best course of action. I just don’t think AAM would be willing to listen to that argument.

The manufacturing dilemma

Over the last few years I have seen the American worker become more and more an endangered species. Sure, there are jobs out there but fewer and fewer of them involve making stuff. Last month the Alliance for American Manufacturing (AAM) glumly noted that manufacturing jobs were off an astounding 29,000 in March. As AAM’s Scott Paul noted:

With 29,000 manufacturing jobs lost last month, it is clear this issue isn’t going away anytime soon. China’s massive industrial overcapacity, currency manipulation, and our growing China trade deficit continue to tip the scales, and it’s laid-off U.S. factory workers who pay the price. That’s not right. American manufacturers can outcompete anyone in the world, but they need a level playing field.

As I have pointed out before, AAM is an outgrowth of the steel industry, particularly the steelworkers’ union. So their perspective leans toward protectionism to a point where they regularly accuse China of cheating us on trade through both currency manipulation and their “dumping” tons of steel on the market. One Illinois steel worker they quoted put the latter charge thusly:

For the past 38 years, I’ve been a steelworker at U.S. Steel Granite City Works in Granite City, Illinois.

I’m proud of the work my 2,000 colleagues and I do at the mill. We produce a high-quality product that’s used in automobiles, construction and energy exploration. In one case, we even made a grade of steel for a major automaker that no other mill had been able to produce!

But right now we need your help.

Because of unfair trade, 1,500 of my coworkers are currently laid off. They don’t know when they’ll be called back – or even if they’ll be called back.

Granite City isn’t the only place coping with layoffs. More than 1,000 people who work at the U.S. Steel Fairfield Tubular Operations in Alabama are laid off. Nearly 350 folks at U.S. Steel Keetac in Minnesota also are out of work, as are hundreds of people at facilities in places like Colorado and Oregon.

All told, more than 13,500 steelworkers are facing layoffs – and the list is growing.

(snip)

We’re facing an unprecedented onslaught of dumped steel from countries like China, which is producing way more steel than it can use. That steel is heavily subsidized by China’s government, which also doesn’t require its companies to abide by strict labor or environmental laws. China needs to get rid of its steel, so it dumps it into our market at a rock-bottom price.

That’s not fair to American steelmakers and workers, who compete in an open market.

And steelworkers aren’t the only ones who deal with the burden of unfair trade.

I can’t stop anywhere in town without being asked about the layoffs. When so many workers are forced to tighten their belt, it impacts everyone – from restaurants to grocery stores to retail.

Fair trade groups such as the Manufacturers for Trade Enforcement now oppose China’s possible ascension to a “market economy” for trading purposes by our Commerce Department, while AAM also questions China’s effect on our national security as steelworkers lose their jobs:

Plant closures, mass layoffs, and the loss of key technology and manufacturing know-how are sure to follow unless we act.

Moreover, with the loss of U.S. steelmaking capabilities comes a dangerous dependence on these same potentially hostile foreign governments to supply the steel products necessary to equip our military, respond to disasters, and modernize our increasingly fragile infrastructure.

This has actually been a concern for several years. In some respects the concerns about steel parallel our oil crisis, when we lost the ability to supply our own needs and became vulnerable to OPEC’s embargoes in the 1970s. Having lived through that as a child and seeing how it affected our economy, I have issues with the greatest country in the world becoming such a disposable society that we forget how to be self-sufficient. We should have never put ourselves in a position where, for so many of those devices and conveniences that make our lives easier and promote commerce, we depend on a nation that points missiles at us.

That’s not to say everything is bad news, though. As Bryan Riley shows in the Daily Signal, foreign investment in America far outstrips what we invest overseas. And while it’s true Carrier is moving 2,100 jobs from Indiana to Mexico, Riley argues that the net effect will be less as foreign automakers Toyota, Honda, and Subaru are adding a total of 1,600 jobs around the state. Riley adds:

While Carrier has been called “greedy” for moving to Mexico, no one in Indiana is calling Toyota, Honda, or Subaru greedy for choosing to invest in the United States.

(snip)

In total, over 2 million American manufacturing workers are employed by foreign-owned companies. And while American companies have invested over $700 billion in foreign production facilities since 2000, foreign-owned companies have invested over $1.3 trillion in the U. S. manufacturing operations during the same time frame.

The result: a $614 billion manufacturing investment “surplus” for the United States from 2000 to 2015.

Granted, the year 2000 may have been an artificial and arbitrary deadline considering the exodus of manufacturing jobs from our shores began decades earlier, but there are thousands of Americans who work for foreign-owned companies in all sectors – heck, most people who drink a non-craft beer are supporting American workers toiling for a foreign-owned conglomerate.

Still, we should be doing all we can to promote the old-fashioned art of making things here. There were millions of families around the country (including mine) where there was only one breadwinner (Mom stayed at home) who could still achieve middle-class status because they made good money while creating the products America needed. (In my dad’s case it was concrete block and other cement products. That plant has long been out of business, sadly.) Now that’s all but impossible, as the norm has become two-earner families who can barely keep up with expenses, living paycheck to paycheck. By the time I was in high school, our family was one of those, too.

Perhaps the boom times of the last half of the twentieth century were bound to come to an end sometime, but we should be doing our best to bring them back by allowing workers and companies to create and enhance the value of raw products as much as possible. To use a simplistic example of building a car: we create value for iron ore by extracting it somewhere in the upper Midwest, add value by shipping it by ship down the lake to a steel mill in Indiana, further enhance it by processing it into steel there before shipping it again via truck or rail to a Toledo auto plant, then create even more value by its becoming the fender to a new Jeep, which again is placed on truck or a railcar to deliver to your local dealer. Each step in the process creates a little bit more value from that chunk of rocks once buried underground to the new Wrangler sitting at the dealership, meanwhile helping to create a better standard of living for hundreds of employees in the process.

But somewhere a few decades back we decided it was cheaper to have someone else do it – iron ore from one of a host of countries may or may not be processed there, but it goes to Japan or Korea and they build the cars. Granted, their success led them to put assembly plants here in America but I’d like to keep the process more in-house where we can.

Just because there’s a global economy doesn’t mean we in America have to settle for second best. But it does mean America needs new, fresh leadership that believes in American exceptionalism and wants to create the conditions where we can once again prosper.

Out to build a state (and a nation)

Originally I was going to add some of these items to my “odds and ends” post but decided to promote the idea to a post of its own. I have a lot of things which I can neatly tie together.

It’s now been a decade since America’s economy even grew at a 3% rate, as Rick Manning pointed out a few weeks ago. While he lays a lot of the blame for what he later termed an 8.9% “real” unemployment rate on government regulation and policy, other industry groups like the U.S. Business & Industry Council (USBIC) and Alliance for American Manufacturing (AAM) point the blame squarely at China. First is USBIC President Kevin Kearns:

Can anyone doubt that America’s trading relationship with Beijing is a one-sided, one-way catastrophe for the American economy? Our massive trade deficit with China represents a constant outflow of jobs and productive capacity to a country that refuses to play by the rules of world trade. It’s been 15 years since China joined the World Trade Organization. There can be no doubt that America’s experiment in so-called ‘free trade’ with China is a miserable failure.

AAM’s President Scott Paul:

Now we have even more evidence as to why voters are deeply concerned about China and its impact on the American economy. Our trade deficit with China in 2015 again surged to record levels, and that helps explain the struggles we’ve seen in manufacturing recently – particularly in critical sectors like the steel industry.

The 29,000 factory jobs gained in January is good news, but it’s certainly no indication of an upward trend. Many dangers persist, including a strong dollar, China’s economic weakness, and its massive industrial overcapacity. It strikes me as an inopportune time to be pushing a Trans-Pacific Partnership that is projected to cost America more than 121,000 factory jobs, according to the Peterson Institute of International Economics.

So just how do we compete? There’s no question that 40 years of buildup and advantages accrued by foreign competitors in the areas of lower wages, lack of regulation, and outright cheating more than make up for the millions of dollars in shipping costs required to ship cargo across the Pacific to the American consumer market. The relics and ruins of our Rust Belt convey the depth of the opportunities squandered. If we can’t beat them on price, we have to beat them on quality and be smarter than they are.

One thing I’ve noticed about the Senate race is that several GOP candidates are focusing on the manufacturing sector as a ticket to the state’s prosperity. For example, Rich Douglas had this to say the exodus of jobs to Mexico and about his platform:

Ten thousand jobs lost in Maryland alone. That’s what Texas businessman Ross Perot meant when he predicted a “giant sucking sound” of U.S. factories moving to Mexico after Congress approved the North American Free Trade Agreement (NAFTA). If elected to the U.S. Senate from Maryland in November, I will work to bring them back.

The “sucking sound” was real. In the mid-1980s I lived and worked in Ciudad Juarez, Mexico, across the river from El Paso, Texas. The Juarez of my memory is a vast collection of big-box factories in the desert, bearing well-known U.S. names. Jobs lost from the U.S.

(snip)

Citizens with a path forward to jobs, homes, and a future remain in school, avoid drugs, do not riot, and keep their unborn children. Maryland needs factories and jobs. A way to attract them is to send the right people to Congress. What sets me apart from the rest of the Senate field? Experience and scars earned in markets where U.S. ethics are mocked. Experience with U.S.-imposed hurdles to U.S. exports. Experience with the human cost of free trade.

But Douglas is not alone. It turns out fellow candidate Chrys Kefalas is a vice-president at the National Association of Manufacturers, which again is urging people to be manufacturing voters:

Notes Kefalas on his social media page:

I’m all about manufacturing more jobs in Maryland and the U.S. And that means fighting so that companies like Under Armour and small businesses can bring more jobs to Maryland. I will.

Adds yet another Senate hopeful, Dave Wallace:

Many will remember when Marylanders proudly made steel, Chevys and many other quality products and enjoyed a prosperous life. Today our infrastructure and job prospect are crumbling, and high taxes and regulations are driving away the jobs and investments we need.

While this is a promising beginning, Wallace remains short on details. But it’s better than nothing, as I’m not finding where the other major candidate, Kathy Szeliga, addresses manufacturing at all.

Actually, I take that back. Nothing is better than this mess that punishes achieving businesses and expands the government’s role at a time when they need to stand down and let the market grow. Remember, doing it this way has led to a “lost decade” of slow-to-no economic growth.

Since this part of the state isn’t dependent on government jobs to survive – but could use an economic shot in the arm to diversify from the poultry and tourism industries – it seems like we would be an ideal location to be the place to make things. The cost of living is fairly decent, the area is nice, and there are a lot of people who are willing to put in a little bit of elbow grease to get things moving. All they need is for the state to let them compete, and even though a Senator doesn’t necessarily guide state policy he or she can lead by example.

Odds and ends number 79

With the winds of Jonas howling around us last night, I decided it was a good night to clean out the old e-mail box. One result of that is the Liberty Features widget I placed in my sidebar. They have a lot of good content I use for these “odds and ends” posts as well as other content – that and once upon a time I was a writer for them. You just never know when doors may open back up.

On Tuesday last I alerted readers to the Maryland Senate bill that would allow Wicomico County to determine whether or not they want an elected school board. It’s doubtful they picked up on the coincidence that their hearing will occur in the midst of National School Choice Week. But we deserve a choice, so there’s just something appropriate about this – it may even occur during the #schoolchoice Tweetup occurring Wednesday afternoon.

Teachers may be gaining a choice in how they wish to be represented thanks to an upcoming Supreme Court case. Here’s hoping the side of right prevails and teachers are freed from paying excessive union dues to support political causes they don’t agree with.

And since a lot of my cohorts in the region are using their heat, it’s a good time to talk a little about all the energy news that’s been piling up. For example, energy writer Marita Noon recently detailed the Obama administration’s War on Coal. She quotes one Pennsylvania United Mine Workers officer who says, “Obama’s actions have alienated those who work in the industry from Democrats in general.” I think someday there may be thousands of workers in the green energy field, but for now the people who work in the coal mines are looking desperately for jobs.

On the other hand, if the government showers you with favored status, you have a golden ticket. Noon also wrote about the subsidies and rent-seeking that green energy company Solar City is in danger of losing in several states.

Our fracking boom has gone bust, though, since oil has approached $25 a barrel. Some of those furloughed employees could be rehired to pump oil for export, but this game of chicken between OPEC and American producers shows no sign of ending soon.

Those would-be workers could also be good candidates for rebuilding American manufacturing – if any jobs were to be had, that is. Over at the Alliance for American Manufacturing, Scott Paul notes:

I know I don’t have to tell you how important manufacturing is. More than 12 million Americans are directly employed in manufacturing, and many more are employed indirectly.

These good-paying manufacturing jobs are key to a healthy middle class. It’s no coincidence that the middle class is shrinking at the same time manufacturing is struggling.

Manufacturing certainly faced a tough 2015. There were only 30,000 new jobs created nationwide. We still only have gained back 40 percent of the jobs lost during the Great Recession.

They ponder what the 2016 Presidential candidates will do and invite you to ask for yourself (through their form letter, of course.) The valid question is:

What will you do differently? How do you plan to help spur manufacturing job growth and grow the middle class?

Perhaps Larry Hogan’s plan is one answer, although federal intervention may be needed to bring jobs back from overseas. Maryland, though, could create the conditions for growing new companies.

Finally, I wanted to give a shout out to a long-distance supporter of mine over the last several years, one who has decided to make the leap and run for public office. Jackie Gregory threw her hat into the ring for Cecil County Council back in November, running as a Republican in the county’s District 5. That district covers the central part of the county, from the town of North East south along the Elk Neck peninsula.

If you are in the area, she’s having a breakfast next weekend in North East so I would encourage you to drop by and give her some support. Cecil County has been an interesting subject to me for several years, with Gregory’s Cecil County Patriots group being an advocate for change.

So my 79th edition of odds and ends comes to a close as my heater kicks on again. I don’t know about you, but I’m ready for summer. By the way, I also finally finished my updates to the Shorebird of the Week Hall of Fame so the page is back up. I’m not sure it’s odd, but it is the end.

The magic potion?

One little piece of Larry Hogan’s FY2017 budget proposal caught my eye, but I want to begin with a little reaction to the State of the Union show from my favorite manufacturing advocacy group, the Alliance for American Manufacturing and its president Scott Paul:

President Obama cited economic progress in his State of the Union address, and he also noted the need to address income inequality. If he wants to address this, he need look no further than manufacturing, which had its worst year in 2015 since the Great Recession.

While the president was right to highlight economic progress, he missed an opportunity to address some of the core concerns that are holding back manufacturing. Yes, manufacturing has added nearly 900,000 jobs over the past six years, but that represents less than 40 percent of the factory jobs lost over the recession. Only 30,000 jobs were created in 2015.

Keep that in mind as you read on, particularly the income inequality part. So I noticed a particular piece of news today, and after a bit of searching I found that Baltimore Sun writer Erin Cox included this in a story on Hogan’s tax plan:

Hogan also proposed granting a 10-year corporate tax income break for manufacturing companies new to the state who open in Western Maryland, Baltimore and the lower Eastern Shore, areas where unemployment is dramatically higher than the rest of the state.

“We’ve lost 28 percent our manufacturing base because other states were stealing our manufacturers,” Hogan said. “It was like spearing a fish in a barrel. It was too easy. We’re trying to bring back the manufacturing base because there are a lot of hard-working people in the heartland of Maryland who want to work.”

Hogan’s manufacturing tax amnesty would extend to employees of those businesses. Workers earning less than $65,000 a year would be exempt from state income taxes for a decade.

So let’s say XYZ Widgets opens a manufacturing plant in Salisbury. Not only would they get a tax break from the state of Maryland for a decade, so would the workers who make less than about $30 an hour be exempt from paying Maryland state income tax. (This would probably come as a refund once the taxpayer files his or her return.) I will cheerfully admit this goes against my grain of not supporting targeted tax cuts – particularly since it’s micro-targeted to maybe a few thousand taxpayers at most over the ten-year period – but it is an idea for the hopper that could be successful.

In fact, it extends a practice of states and municipalities granting a tax abatement to chosen entities to convince them to set up shop there. We have enough of a knowledge base now to see how these programs work for large-scale employers such as automotive assembly plants – here is one example from South Carolina, where BMW set up shop over two decades ago.

The other fly in the ointment, though, is determining what happens when the decade is up. Surely it’s the hope of Hogan and his economic development team that these companies would stay, but if not it’s the problem of his successor. My suspicion is that this program will maintain the exemption for the workers, because let’s say you’ve put your ten years in at XYZ Widgets and have become accustomed to that big state refund check. When those sands run out there will be a lot of upset taxpayers who just saw their state tax bite increase by up to $3,000 depending on income and deductions.

There’s also the question of timing. If we are to assume that the 10-year clock begins to tick for a company when they set up shop, we may see a cottage industry of new employers taking advantage of workers who are on the eighth or ninth year of their term of employment and hiring them on. Not only does the new employer poach skilled labor from the older competitors, the older companies won’t have the incentive of being able to work tax-free anymore. Conversely, a blanket starting date means that the program will work well for years 1 through 5, then begin to peter out unless extended.

And then there’s the job creation aspect that Scott Paul and AAM touch on above. Oftentimes with the use of tax incentives a manufacturing job isn’t so much created as it is transferred from somewhere else, and this particular proposal is specific to companies new to the state. So we may see a zero-sum game being played, particularly in Western Maryland and the Eastern Shore as companies simply move a few miles from Delaware, Pennsylvania, or West Virginia to take advantage with many of the same workers staying on. Locally, we will see this in reverse as Perdue moves some of its operations in the next few years just across the state line to Delaware – it makes Delaware’s bottom line look a little better and takes a little bit from Maryland, but the workers are just driving a different distance and will stay in this area. (Those who live in Maryland and work in Delaware, though, will have the joy of filling out two state tax returns.)

Overall, this is an interesting idea but there are a number of ways I’ve already found to play devil’s advocate with it. Lord knows ours is a region of the state which could use an economic shot in the arm, though. I still think the complete elimination of the corporate tax (which is also discussed briefly in the South Carolina study I referred to earlier) is the better play as a job creator overall.

And lastly, I’m sure Democrats will be whipping up their base in the Capital region by pointing out they’re not included in this deal. I guarantee that if this program works for the areas with high unemployment there will be a bill within the first year or two adding the rest of the state to the mix (in the interest of fairness, of course.)

Since it’s not clear what the vehicle for attempting to bring about this change will be, I can’t track this proposal to see just what progress it makes. Perhaps it will create a split in the majority party since Baltimore City will be a beneficiary and they’ll back the Republicans who follow the governor to see this through with a narrow victory.

Report: High wages aren’t the issue with manufacturing

As you surely know, I have taken an interest in rebuilding manufacturing within our nation in general and this region in particular. While much of our local economy takes the form of manufacturing in an agricultural sense, either through grain farming or its primary purpose of assisting in the raising and processing of chickens, the advantages to the local and national economy if America began to make things again is beyond dispute.

So when I was sent a link to a manufacturing report by the union-led Alliance for American Manufacturing (AAM), I wanted to see what the perspective would be. Up front, it was clear that the AAM had their eggs in one basket.

“American factory workers are the solution, not the problem,” said Alliance for American Manufacturing President Scott Paul. “Instead of scapegoats, America needs a manufacturing strategy. That strategy should be built on balancing trade, investing in our infrastructure, enhancing our training programs, and rebuilding our innovation base.”

This report, with the lengthy title “Exchange rate policies, not high wages, are why U.S. lags China and Germany in export performance,” comes from the liberal Economic Policy Institute (EPI). Paul’s interpretation of the report:

“The idea that high wages in the manufacturing industry are causing job losses is common, but incorrect,” (report author Robert E.) Scott said. “Pushing manufacturing jobs into the low-wage, non-union south is a race-to-the-bottom strategy that should be rejected. Instead, we need to fight currency manipulation by countries like China and take a page from Germany and Europe to rebuild American manufacturing.”

His is a truncated summary of the last bullet point solution offered in the EPI report:

The strategy of pushing manufacturing into the low-wage, nonunion southern states is a race-to-the-bottom strategy that should be rejected in favor of high-road strategies: fighting currency manipulation and doing more to rebuild American manufacturing, taking a page from the German and European models (with supply-side policies that benefit and support the manufacturing sector, including increased spending on research and development as a share of gross domestic product; support for “stakeholder capitalism” in which boards of directors include an equal number of representatives of workers and managers; and heavy investment in training and job creation).

Obviously there is a certain appeal to some of getting back to the conditions we had circa 1960, when American manufacturing was the undisputed heavyweight champion of the world, workers brought home a salary that could support a family while Mom stayed home to take care of the kids, and Big Labor had its own corner of the political table. Five decades later, we have ceded that crown to China for a number of reasons. But I don’t think currency manipulation is the primary reason.

The EPI’s worry that manufacturing jobs are flocking to the “low-wage, non-union south” is in and of itself a tacit admission that wages and benefits are an important factor in site selection. China got to be a manufacturing leader because they have a very inexpensive workforce of semi-skilled laborers – the same sort of workforce that illegal aliens bring to the table in this country, although it depresses wages here in a different manner. Given the equality of other factors nationwide such as the federal regulatory regime and abundant cheap energy, those who do site selection tend to choose the places where they can get the biggest bang for their buck.

By the same token, willing local governments which assist these manufacturers with providing new infrastructure and greenfields for development tend to have more success than those urban areas with problematic old systems and brownfields that require remediation. But that’s not the only reason nice plots of available land sit empty in regions of the country outside the South.

Here in Maryland, we are saddled with a state government that refuses to even consider right-to-work legislation and has gone out of its way to punish large non-union employers. A decade ago when I began this site, the largest state issue was the (so-called) Fair Share Health Care Act and whether the Maryland General Assembly would override Governor Bob Ehrlich’s veto, which they did. The bill was narrowly tailored to affect just one employer: Walmart. And while correlation is not causation, the fact a proposed Walmart distribution center in Somerset County was placed on a continuing hold was blamed on the unfriendly climate for non-union businesses in Maryland. (The bill itself was later struck down in court as an ERISA violation, something I thought improper at the time.)

If you assume my overall argument is in favor of this “race to the bottom,” you’re forgetting a simple fact: a little bit of something is better than a whole lot of nothing. There are many paths to prosperity our nation, state, and city have available to us but it seems to me the best one is where we add value to the goods and services everyone needs. This is why our chicken industry succeeds, since we take that which is available to us to raise and process chicken for a world market and have developed an expertise that competitors have a hard time matching. Granted, not everyone in the industry makes a ton of money but that’s a function of the value placed on chicken by the market. Chicken is a very useful food product but people also like and can choose beef, pork, seafood, or vegan as well. On the other hand, there’s a reason oil is called “black gold,” to use another useful commodity for an example. The resource has a very high value thanks to its functionality, relative scarcity, and lack of alternative products.

America as a whole needs to again become the place where the most value is added, and once we get there we will all succeed because of it. (That will be the point where trade takes care of itself as well.) Back in 1960 we were the leaders in adding value, but now we’re not because we let others take our place. Re-establishing our manufacturing base will help us get that crown back, even if some parts of the country do more to help themselves in improving their economic state.