Former US Government comptroller: If there is no return of manufacturing jobs, there is no recovery

[NNN0LHI]

http://www.thedailyjournal.com/article/20101221/OPINION03/12210326

December 21, 2010

Save public sector jobs, bring back manufacturing

Recently, David M. Walker, former comptroller of the U.S. Government, made an astounding observation about the economy: "If there is no return of manufacturing jobs, there is no recovery."

This warning from someone like Walker, who ran the General Accountability Office (GAO) from 1998 to 2008, tells us that the true source of wealth creation -- the taking of basic materials and making value-added improvements -- may for the first time in U.S. history fail, and with it, the hope of any recovery.

Remember all those factory jobs outsourced to foreign companies by the millions for the past 20 years because of NAFTA, CAFTA, etc? They are (well, were) the key component to any economic recovery. Service sector jobs just cannot create enough taxable wealth, both corporate and individual, to replace the missing tax revenues from manufacturing.

Who now will be affected by this national tragedy? It will be mostly public sector workers.

Government employees generally and educators in particular, due to their numbers, are faced with a declining tax base from which to draw their pay. They are at risk of cutbacks, just as manufacturing has experienced for past decades.

[FreakinDJ]

1. Exactly what I've been saying for 2 years now

[madokie]

2. The big moneyed interest has killed the golden goose

This decade will be the decider whether or not we survive as a democracy. Already the fourth leg, (press) of the stool that is called our government has been chopped off. Not much longer can we stand on the remaining three as there is no one to hold them accountable except themselves and we all know how that goes.

[SmileyRose]

3. They are already beginning to come back.

Ford and GM closed plants in Georgia but the Kia Plant is now up and running. They employ about 2/3 of the employees Ford and GM had combined. Unfortunately, the wages are less than half of what UAW workers in Georgia made.

[TBF]

6. Really good point -

even if President Obama came to his senses and offered massive tax relief for relocating manufacturing plants in the states (which would be the first step to getting them back), they would be offering much lower wages. The unions now employ between 9-12% of the country (depending on which estimate you trust). We will be back to square one on wages (and likely safety) if they were to return.

[NNN0LHI]

7. Which means those new workers making half the pay are now paying half the withheld taxes as before

Which equates to there only being half the tax dollars we once had to pay our public employees and to fund our social programs like SS and Medicare.

See the problem we are up against with falling wages?

Don

[leftstreet]

25. +1

[lfairban]

28. Do you really believe they could have hired as many workers at the same pay as before?

They probably hired twice as many people at half the level they were getting paid before as they could have at full pay. It was probably more than twice as many, in fact it is possible they would not have hired anyone at all if they had been compelled to pay as much as before.

Half pay may still be twice the minimum wage, and considered by most a "living wage".

[SoCalDem]

31. and with rising health care costs, there is even LESS money to "spread around"

It's a race to the bottom

[Raksha]

20. Duplicate

[Raksha]

21. My husband saw outsourcing as a conspiracy or almost-conspiracy

to break the backs of the unions. He believed that after American workers had been sufficiently humbled by extended periods of unemployment or the threat of it, they'd be willing to allow the corporations to dictate the terms of their employment. They'd stop getting uppity about things like a living wage and the enforcement of safety regulations. THEN and only then would the manufacturing jobs start to come back.

And that was in the 1980s! My husband passed away in 1994, but he foresaw the trend very clearly when it was still in the early stages.

[Blue_Tires]

23. he pretty much nailed it...

[WCGreen]

29. And yet the cars didn't fall by 15%....

The cost cutting just ads to profits and not to consumers...

[PearliePoo2]

4. One thing Ross Perot was right about.....

"The giant SUCKING sound...."

[Vinca]

5. Many of us have been saying that for years and there is another thing to consider, too.

Security. If we had to relive the WWII era, we'd be hard pressed to find enough manufacturing plants to use Rosie the Riveter for anything. What happens when you have a conflict with a foreign power that manufactures the parts for your equipment? You can't defend yourself from China by throwing Big Macs and super-sized fries.

[no_hypocrisy]

8. Walmart (among other things) killed the economy.

Must buy in bulk at lowest imaginable price.

Manufacturers can only do that if they have operations in China or elsewhere.

Walmart is the largest retailer in this country. It isn't going to change.

[MODem75]

30. Yep, the whole race to the bottom destroyed our manufacturing.

[Autumn]

9. Some of us have known for a while.

there is no fucking recovery, they can spin that shit any way they want to, repeat, there is no recovery.

[IDemo]

10. Combine that with R&D jobs rapidly moving towards outsourcing

Asia is gaining thousands of US firmware and engineering jobs formerly thought to be our greatest remaining stronghold.

[The2ndWheel]

11. With aging populations, globalization, and automation working against that return

Plus all the environmental issues associated with large scale manufacturing.

[kentuck]

12. If they have the desire to take our jobs overseas....

then we should have the desire to not accept their products in our markets.

[Raksha]

13. A movement to "Buy American" could work,

but ONLY if it was organized and on a large scale. It would require both individual commitment on a sustained basis and large numbers. Its theoretically possible, but it's hard to see it actually happening.

[Phlunk]

14. The problem with manufacturing in the US

1. Higher labor costs.
2. More regulation.
3. Higher taxes.

I think the higher labor costs can be absorbed in a lot of cases, I think the regulations are good for the most part as long as they don't get out of control.

Perhaps we need to lower the corporate taxes for companies that keep their jobs here. The revenue would be made up by the fact that you would have more people working and paying taxes.

Between higher labor costs, higher regulations, local, state and federal taxes it's very expensive to do business in the US. With a high tax rate companies are going to continue to go overseas and keep the profits over there as well. When that happens we get no tax revenues and no jobs.

It needs to be fixed or we are in for a lot of hurt.

[niceypoo]

15. Oh, the economy will eventually collapse

The republicans are hellbent on it happening while Obama is president.

[Raksha]

16. K & R - Exactly what I've been saying for years,

when I haven't been too embarrassed to say it. I know that sounds ridiculous, but whenever I bring up the subject I feel as though I'm coming on as hopelessly Luddite, nostalgic and unrealistic in the face of the conventional wisdom: "those jobs aren't going to come back." After that there's usually a lot of hot air about why they aren't going to come back and how "service jobs" or something else are going to replace them.

But the truth is that NOTHING is going to replace them, because nothing can replace them. Without the return of manufacturing jobs we descend ever deeper into third-world status.

[conspirator]

17. I knew that in 2009 n/t

[fascisthunter]

18. of course not.... any idiot knew this would happen

it's all about keeping wages down. They want us workers to work for pennies too.

[Little Star]

19. Yep!

[Spike89]

22. Some may come back, others don't exist any more

There is no doubt that labor is still a vital part of manufacturing. However, job loss in manufacturing isn't solely because of outsourcing overseas. An often overlooked trend is the continuing advances in automation and computerized manufacturing. Bringing the factories back to the U.S. is likely to accelerate this trend as newer factories come online. Nothing is going to change the fact that even as products become more and more complex, there is less and less need for skilled labor to create them. Ironically, one of the areas where the U.S. has managed to maintain a strong manufacturing presence is in automation and control systems.
I know of very few people advocating a "service-based" or knowledge economy, but that is the inevitable result. Although it isn't likely that we'll see true black-box manufacturing (basically requiring little or no actual human labor) in our lifetimes, we will continue to see fewer and fewer humans on the factory floor every year. We're in the early stages, but I fully expect the automation revolution to be every bit as disruptive to the social order and economy as the industrial revolution was in its day.

[Kayla2010]

24. This is the scariest thread I've ever read.

Because it's what I've been saying for quite a while now, that we turning into a third world country. People act like I'm some conspiracy nut when I say it. They laugh.

[RegieRocker]

26. Wait...That's Supply Side Economics!

[pampango]

27. All developed economies have declining manufacturing employment, even with increasing output.

"In the United States (the red line), manufacturing as a share of total employment has fallen 15.5 percentage points in recent decades, from 26.4 percent of jobs in 1970 to 10.9 percent in 2008. In some other countries the decline has been even steeper. In Britain, for example, the share of employment held by manufacturing has fallen 21.9 percentage points in the last few decades, from 33.9 percent in 1971 to 12 percent in 2008.

There are several generally accepted explanations for these trends. They include productivity growth and new technologies; the rise of the service-sector economy; and the shift of manufacturing jobs to areas of the world where labor is cheaper."

http://economix.blogs.nytimes.com/2009/11/16/manufacturing-around-the-world