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Wednesday, August 04, 2010

"Make it in America"

Still on the road, so no time to say much, but this caught my eye:

New Democratic strategy for creating jobs focuses on a boost in manufacturing, by Lori Montgomery and Brady Dennis, Washington Post: President Obama and congressional Democrats -- out of options for another quick shot of stimulus spending to revive the sluggish economy -- are shifting toward a longer-term strategy that promises to tackle persistently high unemployment by engineering a renaissance in American manufacturing.
That approach ... is still evolving and so far focuses primarily on raising taxes on multinational corporations that Democrats accuse of shipping jobs overseas.
The strategy also repackages policies long pursued by the White House -- such as investing in clean energy, roads, bridges and broadband service -- with more than two dozen legislative proposals aimed at developing a plan for promoting domestic manufacturing.
"We know manufacturing produces good jobs, high-paying jobs," House Majority Leader Steny H. Hoyer (D-Md.) said this week as Democrats released a report showcasing small gains in manufacturing since Obama took office. "We have committed ourselves to a long-term agenda aimed at enhancing the manufacturing capabilities in America." ...
Some independent analysts are also skeptical. U.S. manufacturing jobs have been disappearing since 1979, in part because of the heightened productivity of American workers but also because of cheaper labor abroad. During the past decade, the sector lost a third of its workers, falling to 11.7 million last year from 17.3 million people in 1999...
Asked Friday whether Obama will press for more stimulus spending, White House press secretary Robert Gibbs said no. "If you look at the politics of what's going on Capitol Hill right now," he said, "I think we got everything we could."
"Make It in America" offers Democrats a path forward. "It's a way to be prospective instead of retrospective," Democratic strategist Paul Begala said last week, after attending a luncheon for Senate Democrats focused on political messaging. "Every election is about the future, not the past." ...
The seeds of the "Make It in America" campaign were planted earlier this year, when Rep. Mark Critz (D-Pa.) won an unexpectedly large special-election victory by campaigning against tax breaks for companies that move jobs offshore. Then in late June, House Democrats were briefed on a poll conducted this spring for the Alliance for American Manufacturing, which found that voters are anxious about the nation's mounting debt to China. Key voting blocs -- including independents and older people with no college education -- named the loss of manufacturing jobs as a top worry, the survey found.
The poll "crystallized" Democratic thinking, said Rep. Chris Van Hollen (D-Md.), who leads the political committee in charge of electing Democrats to Congress. The poll's findings also helped to rebrand policies the administration was already pursuing, such as a federal restructuring of the auto industry. ...
"We have a vision of how to build a stronger economy," and "Make It in America" is "an essential element," White House senior adviser David Axelrod said. Without federal support for innovations in battery technology for electric vehicles, for example, "those jobs would be to going to China, they'd be going to India. They would not be going to American workers." ...

Gibbs says I think we got everything we could." Perhaps, but why isn't the administration making the point that what they got wasn't anywhere near enough, that more is very much needed, and that it's the Republicans and misguided, so-called centrist Democrats that are standing in the way?

As for Begala's "Every election is about the future, not the past," what about the present? Yes, making people believe the future will be better is important politically, but a long-term strategy devoted to enhancing domestic strategy doesn't do much for the millions that are unemployed right now. It dangles a carrot they might get in the future, but they are hungry now and need more immediate help. We need to worry about the long-run and do our very best to maximize the opportunities to create good jobs, but we also need to help those who are looking for jobs right now, those who can't help but be discouraged by the lousy prospects.

On the "Make It in America" initiative, I have a hard time getting excited about it, and it may leave the administration open to charges of protectionism (though I'm not sure how that charge would play with the Democratic base). I am not a big fan of industrial policy generally, it goes against the instincts that are beaten into economists during their training, but I don't have a better answer to the question of where will the good jobs come from in the future. If the intent and outcome of these policies is to level an unfair playing field, or to correct some problem with a particular market, that is one thing. I would support that unequivocally. But the practical outcome is one where many politically connected businesses are able to use this as a form of protectionism. However, with that said, Dani Rodrik has convinced me that industrial policy may be helpful for developing countries (debate on this), and I suppose there is a way to extend the argument to developing industries, e.g. those in the energy sector. But to me it's a bit of a stretch.

I'm glad the administration finally seems to be getting that it needs to worry about jobs, and that it needs to make that worry -- along with an actual fight for job creation policies -- as public as possible. But the particular strategy the administration has adopted is, to me, too focused on the long-run to suit our immediate needs, and I have doubts about how effective such long-run policies will be.

[I guess I said more than I expected during my lunch stop. Since I'm being pessimistic and wearing a mostly neoclassical hat, let me also give a more optimistic view from the EPI: “Make it in America” bills will advance U.S. manufacturing.]

Update: It's only a fraction of what is needed, but it's something: Senate Vote Clears Way for $26 Billion in Aid to States.

    Posted by on Wednesday, August 4, 2010 at 12:42 PM in Economics, Unemployment | Permalink  Comments (133)


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