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Friday, May 20, 2011

Paul Krugman: Making Things in America

Ignoring the advice of "right-wingers — ideologues" has been an important component in the turnaround of manufacturing:

Making Things in America, by Paul Krugman, Commentary, NY Times: Some years ago, one of my neighbors, an émigré Russian engineer, offered an observation about his adopted country. “America seems very rich,” he said, “but I never see anyone actually making anything.”
That was a bit unfair, but not completely — and as time went by it became increasingly accurate. ... Manufacturing, once America’s greatest strength, seemed to be in terminal decline.
But that may be changing. Manufacturing is one of the bright spots of a generally disappointing recovery, and ... a sustained comeback may be under way. And there’s something else you should know: If right-wing critics of efforts to rescue the economy had gotten their way, this comeback wouldn’t be happening. ...
I don’t want to suggest that everything is wonderful about U.S. manufacturing. ... Still, better to have those jobs than none at all. Which brings me to those right-wing critics.
First, what’s driving the turnaround in our manufacturing trade? The main answer is that the U.S. dollar has fallen against other currencies, helping give U.S.-based manufacturing a cost advantage. A weaker dollar, it turns out, was just what U.S. industry needed.
Yet the Federal Reserve finds itself under intense pressure from the right to make the dollar stronger, not weaker. ...
And then there’s the matter of the auto industry, which probably would have imploded if President Obama hadn’t stepped in to rescue General Motors and Chrysler. ... And this ... would have undermined the rest of America’s auto industry, as essential suppliers went under, too. Hundreds of thousands of jobs were at stake.
Yet Mr. Obama was fiercely denounced for taking action. One Republican congressman declared the auto rescue part of the administration’s “war on capitalism.” Another insisted that when government gets involved in a company, “the disaster that follows is predictable.” Not so much, it turns out.
So while we still have a deeply troubled economy, one piece of good news is that Americans are, once again, starting to actually make things. And we’re doing that thanks, in large part, to the fact that the Fed and the Obama administration ignored very bad advice from right-wingers — ideologues who still, in the face of all the evidence, claim to know something about creating prosperity.

    Posted by on Friday, May 20, 2011 at 12:42 AM in Economics, International Finance, Unemployment | Permalink  Comments (88)


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