How to Save US Manufacturing? A Conflict of Vision

How to Save US Manufacturing? A Conflict of Vision

The good news is, President Obama yesterday signed into law "The Manufacturing Enhancement Act," a bill that would reduce tariffs on materials used by manufacturers, an important step in helping reduce costs and make US manufacturers more competitive.  The bad news is, the signing came the same day that the Commerce Department announced the trade deficit had ballooned again, with exports falling and imports rising.  Not only is a jump in exports needed to help grow the US economy in the short-term, but sustained economic growth (including the creation of new jobs) is much harder to achieve without a vibrant manufacturing base.

To that end, Roger Borosage published an op-ed in Politico today, titled "Save American Manufacturing."  Interesting how people can support the same concept (to save US manufacturing) but have diametrically opposite approaches.  He lashes out at what he calls the "conservative dominance" of the past three decades —

"Government was scorned; markets, exalted. It translated into cutting taxes and spending, deregulating, freeing up trade, weakening unions and worker protections, celebrating CEOs, keeping the dollar strong — and letting it rip. …. We know the results. Manufacturing went into long-term decline."

For supporters of government control to blame the free and open market policies of the past three decades for manufacturing's decline is Orwellian double-speak.  The only reason our manufacturers were able to do so well — American manufacturing was more productive and innovative in the Eighties and Nineties than ever before — was because of those pro-business policies.  With the rise of global competition, US manufacturers were hamstrung by the level of corporate taxation, by increased government regulation, and by rising tort costs.  The NAM and MAPI did a study a few years ago that showed the structural cost pressures that our own government policies were creating on manufacturers. That, as much as anything else, was the reason advanced manufacturing started moving overseas to Europe and Asia.

Ask NEMA's small and mid-size manufacturers if, given the choice, they would want more or less government oversight and meddling in the marketplace.  Most would ask for reduced taxes, reduced regulatatory impediments, increased R&D incentives, and protection from the threat of overzealous lawyers.  If President Obama and Congress really want to help the economy grow again, they could focus their efforts on untethering our American manufacturers. 

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