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America, a nation of ‘makers’ no more April 14, 2016

Posted by JP in Politics, Venting.
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America used to be known as a nation of ‘makers’. Production was the lynch pin of our economy and our place as the largest producer (of anything) in the world was the envy of the world. Sadly, this in no longer the case and our nation’s economy is built on a foundation of cards rather than stone.

No longer are we a nation of makers, we are a nation of service providers, and as a nation if we continue to base our economic future on buying and selling goods we do not produce we hand that future over as hostage to those that do produce.

At the turn of the century, factories employed more workers than education and health care combined or professional and business services. Nowadays the latter two groups of industries both employ millions more Americans than those making things.

While many positions in education, health care and professional and business services pay well, those often require a college or advanced degree or expensive specialized training beyond high school, and nowadays girls do better in school than boys. And the grimy environment of many factories was appealing to men, a lot of jobs in the abovementioned sectors are as attractive or even more appealing to women.

Hence it is no surprise that as the fortunes of women have been improving—the feminist revolution and rise in female labor force participation notwithstanding—and the nation now confronts a crisis of despondent men.

Nearly 7 million men, between the ages of 25 and 54, are neither employed nor looking for work

Manufacturing has been a victim of its own success—productivity growth in manufacturing has outstripped other sectors of the economy creating a natural migration of job opportunities from factories to service—but international and domestic policies pursued by presidents dating back to Kennedy have exacerbated the plight of men without a college degree.

Free trade agreements have been advertised as jobs creators but the facts simply belie that claim. Whereas exports create jobs, imports destroy even more of them. The United States has a trade deficit on goods and services combined exceeding $500 billion. That kills 4 million jobs directly and at least another 2 million including from lost spending of workers initially displaced.

Manufacturing accounts for the lion’s share of the trade gap—especially goods from China and elsewhere in Asia that are often subsidized by national governments and benefit from artificially undervalued currencies. Presidents Bush and Obama have talked about fixing those practices, but the trade agreements they bring home only make matters worse.

The South Korea Free Trade Agreement implemented on Obama’s watch has increased the trade deficit by more than $15 billion dollars and killed about 120,000 jobs—mostly in manufacturing.

Similarly, Washington has largely left assisting manufacturing to the states, which have fewer resources, while it has ramped up subsidies and shifted job opportunities to education and health care.

Peter Morici served as Chief Economist at the U.S. International Trade Commission from 1993 to 1995. He is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He is the five time winner of the MarketWatch best forecaster award. Follow him on Twitter @PMorici1.

 

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