Thomas Donlan of Barron’s explains in his latest editorial commentary why both major-party presidential candidates miss the mark in their approach to American manufacturing jobs.
[O]ne of the most significant issues of the presidential season is one on which the two major party candidates do agree: manufacturing. They say the U.S. should regain its lost dominance in manufacturing.
Donald Trump has talked strong-armed protectionism. “We’re going to get Apple to build their damn computers and things in this country instead of in other countries,” he said last January. And while campaigning in Pittsburgh more recently, he said, “We are going to put American-produced steel back into the backbone of our country.” He claimed, “This alone will create massive numbers of jobs.”
Hillary Clinton has a different strategy but the same goal. Although she has madly backpedaled from the Trans-Pacific Partnership, protectionism is not her primary focus. As she said in last week’s debate, she wants to help business with “the biggest jobs program since World War II, jobs in infrastructure and advanced manufacturing. I think we can compete with high-wage countries, and I believe we should. New jobs and clean energy, not only to fight climate change, which is a serious problem, but to create new opportunities and new businesses.”
She also wants to raise the national minimum wage, which will help those who have jobs at the expense of those who need jobs. She wants more technical education to prepare people for the jobs of the future, though there’s no crystal ball of knowledge about the future and its jobs.
Neither side has the courage to present and defend economic facts and principles.
The major fact is that manufacturing is not leaving the U.S. economy. Yes, jobs in manufacturing are down 30% since 1987, (leaving 12 million last year), but America’s remaining makers make more stuff, of higher value, than ever before. Manufacturing output, adjusted for inflation, rose 85% in the same period. …
… To turn to principle, no country, not even the U.S., can successfully rely on its government to maintain international superiority of its businesses. Remember how Japan Inc. was winning the technology race? No matter how fast we seem to be losing some kind of national race, we should understand that profit and prosperity are private matters that do not respond to stimulus, management, or investment by an omniscient government.
The largest problem with imposing political changes on the manufacturing economy is that we all need trade to prosper. The U.S. cannot close its doors to imports of things it needs, whether cheap or expensive, low-tech or high tech. If the government tries to do so on a large scale, it will raise costs and lower quality in its other industries.
