Context — June 19, 2015, 3:28 pm

Up from Globalism

“Today, the idea of maintaining genuine American prosperity without a vibrant manufacturing sector stands exposed as a fairy tale.”

Published in the January 2010 issue of Harper’s Magazine, “Up from Globalism” explores how efforts to revive the U.S. manufacturing industry have been undermined by foreign trade policy. The full article is free to read at Harpers.org through June 22. Subscribe to Harper’s Magazine for access to our entire 165-year archive.

[Lede]

From a Politico report, published June 18, 2015, on President Obama’s efforts to push the Trans-Pacific Partnership trade agreement through Congress.

President Barack Obama’s trade agenda was jolted back to life Thursday, as the House voted narrowly to grant him fast-track authority to finalize a sweeping accord with eleven other Pacific Rim nations.
     Now, in order to score a major victory on a centerpiece of his economic agenda, he has to convince a handful of key Senate Democrats to take a leap of faith ahead of a crucial procedural vote Tuesday. So far, several are holding back.
     “I’ll tell you I’ve come to the conclusion that for many Democrats, not all but many, trade is now the toughest economic issue,” [said Oregon Sen. Ron Wyden].

The cold-eyed economic case for reviving manufacturing is overwhelming. Americans rightly want a high-tech national economy full of “knowledge workers,” but this goal is unachievable without major re-industrialization, because manufacturing companies and their workers perform an estimated 70 percent of America’s research and development. Americans also want a big, vibrant middle class, and a much bigger domestic industrial base is crucial for this goal as well, since only manufacturing has ever lifted large numbers of working-class Americans into these ranks.

Most important, a major manufacturing resurgence is key to overcoming America’s debt-fueled economic crisis and to re-establishing prosperity based on wealth creation and earnings. Despite a mainly recession-induced fall in imports, manufacturing still accounts for every bit of America’s trade deficit—the huge, chronic shortfall between America’s purchases from abroad and its overseas sales. Meaningfully reducing the biggest source of excessive U.S. foreign debt requires a massive commitment to boosting manufacturing, both to expand exports and to replace much of the vastly greater import flow with domestically produced goods.

Unfortunately, exactly the opposite has been happening. The enormous job loss within American industry has been widely noted: manufacturing represented a little over 14 percent of real GDP in 2007, but since the recession’s onset, through October 2009, it has suffered nearly 29 percent of total job losses, about twice its share. (And the Obama Administration’s own questionable data indicates that the 640,000 jobs it claims were created or saved by the stimulus bill included only 2,500 in manufacturing.) Yet even less attention has been paid to the far more important trends in manufacturing output. After all, unless their output is growing vigorously, highly productive industries—in which technology is substituted for labor all the time—will never see any real job growth.

Read the full article here.

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