Made in nostalgic America

 
US President Barack Obama speaks to workers at the Masterlock factory in Milwaukee, Wisconsin 15 February 2012 President Obama chose to speak at Masterlock, a company that brought jobs back from China

President Obama sounded fired up in Milwaukee, telling the crowd, "Manufacturing is coming back!"

He spoke of "three proud words" - Made in America - and promised "an economy made to last - an economy based on American manufacturing".

It had me wondering if this was an economic strategy or nostalgic self-indulgence.

The nostalgia would be understandable. The world recognised America was the coming superpower when its steel production outstripped the rest of the world in 1900.

Henry Ford not only invented modern industrial production; his cars unleashed mass mobility and with it, a new American dream. Industrial might cemented America's superpower status, churning out ships, planes, guns and tanks to win World War Two.

In peacetime, manufacturing jobs provided a ticket to prosperity and the bigger cars, refrigerators and washing machines that went with it, and that made America the envy of the world.

Rising powers

The president's insistence is partly a riposte to the decline of this dream. For some, China is today what America once was: a rising and vigorous power. So the visit by China's heir apparent, Xi Jinping, cannot pass without a subliminal political commentary from the president.

The destinies of the world's two most powerful countries are interwoven and the need for friendship and understanding is strong. But Obama can't afford to be seem as a soft touch, in hock to the Middle Kingdom for the national debt.

His visit to Masterlock in Milwaukee is because that company has relocated jobs back to America from China.

He stressed that the Chinese shouldn't be allowed to get away with unfair trade practices and that companies should get tax breaks for staying in America rather than relocating abroad.

That might sound more like retrenchment than global expansion but it has an appeal. Manufacturing currently makes up about 12% of the American economy.

Making things can make sense. When many in Britain were convinced that the future lay in banking and services, Germany clung on to its manufacturing industry.

It is the source of the country's strength and ability to weather the European crisis. But as Steve Evans explains in this excellent article, there are particular conditions that make it so successful.

Factory production figures out today suggest America's manufacturing industry is recovering, as does some data from the New York Fed.

Manufacturing's political value

But not everyone thinks building America's future on manufacturing makes sense.

Obama's own former economic advisor Christina Romer isn't convinced it makes much sense, arguing haircuts and healthcare are as valuable as "making things".

Others dismiss this, saying that while manufacturing may never return to its old heights, it is still the bedrock of prosperity.

But this could also be an appeal to voters who have gone awol. The people who work in America's factories used to be the stalwarts of the Democratic party.

Now that the Democrats are reckoned to have all but lost the white working class, Obama is telling them that they are a vital part of America's future.

Whether or not making things can put the American economy back on track, talking about making things appeals to patriotic pride and makes political sense.

 
Mark Mardell Article written by Mark Mardell Mark Mardell Presenter, The World This Weekend

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  • rate this
    0

    Comment number 18.

    #15

    Question 1: I would consider the consequences of the "leave it" part. I would think about the responsibilities I might have to my family over some union. I would balance them and If I decided that they are worth less than the union, I would "leave it".

    Question 2: Unions only have a pretension to middle class status. Without any proven merit to that effect. Is a grease monkey "middle class"?

  • rate this
    0

    Comment number 17.

    @14 readwriteandblue: "Surely insisting on improved working conditions for them would benefit us and them."

    I agree completely on the principle. The trick is how one does the 'insisting.' Tariffs and trade barriers can lead to trade wars that no one wins.

    Seems to be a very vexing global issue, with no easy solutions.

  • rate this
    -4

    Comment number 16.

    #14 "...being happy to buy iphones, made by folks that havn't had a day off for a month isn't the way."

    Why not? Do you think the Chinese are worried about how many days off some auto union worker has had, when the Chinese buys an American car?

    "Surely insisting on improved working conditions for them would benefit us and them."

    Surely, you proclaim. But fail to substantiate.

  • rate this
    +4

    Comment number 15.

    @13 "Which they sneered at, all 465 of them..."

    What would you do if given a take it or leave it 'offer' of a (on average) 45% cut in pay and benefits?

    You can argue that the race to the bottom is beneficial to some, but I can't see how it benefits society as a whole.

    WHat good is economic growth if it's benefits are concentrated in the upper levels? Is the post war middle class doomed?

  • rate this
    +1

    Comment number 14.

    Sooner or later you have to make something to sell
    You can't just keep making money out or refinancing
    That's delusional.
    While imports from countries are cheaper because labour cost are less, being happy to buy iphones, made by folks that havn't had a day off for a month isn't the way.
    Surely insisting on improved working conditions for them would benefit us and them.
    Just not the Mega Corps

  • rate this
    +1

    Comment number 13.

    #12 "Caterpillar bought a locomotive factory in London Ontario, demanded a 50% wage cut from the unionized workers..."

    Which they sneered at, all 465 of them...

    "...locked them out, and shut down the plant this month..."

    No business is in the business of losing money. Except the US government.

    The union decided that suicide is better than working for lower wages.

  • rate this
    +5

    Comment number 12.

    Caterpillar bought a locomotive factory in London Ontario, demanded a 50% wage cut from the unionized workers, locked them out, and shut down the plant this month. They've stripped the London firm of some valuable patents, technology, etc, and are moving operations to Muncie In, at $12-$19/hour.

    Even with subsidies, having trouble finding skilled workers in the US.

    http://tinyurl.com/77exaxm

  • rate this
    -6

    Comment number 11.

    "He stressed that the Chinese shouldn't be allowed to get away with unfair trade practices and that companies should get tax breaks for staying in America rather than relocating abroad. "

    That's the ticket! Blame those who work for less, as being part of "unfair" practices. Don't blame the slobs who work for more...but happen to vote!

    Pathetic. BO is doomed.

  • rate this
    +5

    Comment number 10.

    Problem is, you can't export haircuts and health care. So, the balance of payments just gets more negative. The problem just gets worse.

  • rate this
    +7

    Comment number 9.

    When it makes economic sense for a company to manufacture in the U.S., companies will do so.

  • rate this
    +4

    Comment number 8.

    A couple of years ago, I met an economics professor on flight out of London. He believed the US could survive as a service economy and have no manufacturing. I so wish I had got his name and contact info. There are armies of such people advising our politicians. It is no wonder this country is a bad state!

  • rate this
    +12

    Comment number 7.

    3.Adrian - Absolutely! In the US, there are millions of high skill positions going unfilled, meanwhile the younger generation are running up huge college loan debts and finding themselves unemployable upon graduation. It may be more fun to get a BA in English Lit, while draining kegs of beer but it's a lot more profitable to learn to be a plumber, electrician, HVAC tech, etc.

  • rate this
    +2

    Comment number 6.

    Made in America is something I support.

    But America product greatness came from innovation and is definitly non union

    Support right to Work!

  • rate this
    +7

    Comment number 5.

    Definitely an economic strategy. We'll never manage to tackle the budget deficit as long as we have a massive trade imbalance. Manufacturing will never again be the large percentage of GDP it once was, but a thriving manufacturing sector is necessary in a balanced economy.

  • rate this
    +3

    Comment number 4.

    #2
    McJ UK also reliant upon fetid and corrupt financial sector - diversification essential along with a realisation that living standards are gonna go down -so the rich will need to start paying taxes at sensible levels.,

  • rate this
    +6

    Comment number 3.

    By some metrics, e.g. value of goods made, US manufacturing has remained strong and is very close China's output. Increasing automation has led to job losses while production stayed high. New manufacturing jobs are high paying & high skill. Pushing for numerous low skill jobs could be seen as technologically backward. Investment in training could be better than tax breaks for low skill employers.

  • rate this
    +5

    Comment number 2.

    I hope this is not just a political ploy or hype. Our economy needs a diverse base in order to survive and prosper.

  • rate this
    0

    Comment number 1.

    Tax breaks....goes against the free market principle...nah, maximise profits export jobs to China.

 

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