The Obama administration doesn’t put any particular emphasis on rebuilding America’s manufacturing. Manufacturing doesn’t even make the cut for the list of jobs they see growing over the next seven years. A recently released report from the Council on Economic Advisers says:
While manufacturing overall is projected to continue to decline as a share of total employment, several manufacturing subsectors – such as aerospace and drugs, along with other similarly-advanced manufacturing industries – are anticipated to grow (but not enough to make the list in Figure 2).
As Ralph Gomory recently wrote, a healthy US economy cannot depend exclusively on high-end services. Because the demand for these services is limited, we continue to buy more from abroad than we sell, resulting in higher trade deficits. By selling goods from the manufacturing industry, on the other hand, we can pay for the goods we consume with the goods we sell to the rest of the world, thus ensuring comfortable levels of consumption without increasing debt.
What is particularly striking about the administration’s position is that it’s not clear we can continue to let the industry suffer. If we want to keep our “comfortable” levels of consumption we must replace debt by selling more goods to the rest of the world, Gomory argues. If the United States is to “export our way out of the crisis,” manufacturing must be the cornerstone of this strategy.
Manufacturing also has many other benefits: It pays higher wages. It has a higher multiplier effect than other sectors. And finally, it is the major driver of productivity growth.
New America Foundation is hosting a discussion tomorrow on the roll of manufacturing featuring Ralph Gomory, former Vice President of Science and Technology at IBM. “Does America Need Manufacturing?” will start at 12:15pm at the New America Foundation. Click here to RSVP.
— Samuel Sherraden