Does Team Obama Believe in Manufacturing?


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.
gomery twn.jpgWhat 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


11 comments on “Does Team Obama Believe in Manufacturing?

  1. easy e says:

    [Not to be redundant]
    Hey Steve, how about the latest TWN perspective on the CIA assassination program. Appears to be quite a bit here………..
    Make sure to also read the “comments” section in following links, especially the one by “DLD” in the first article (tpmmuckraker) and the few by “Kurt” in the second article (rawstory).
    Quite chilling. Would be interested in TWN/NAF positions on this.
    Report: CIA Assassin Program Could Operate Anywhere — Even Inside U.S.
    Report: ‘No geographical limitations’ on CIA assassination program


  2. KK Slider says:

    I think Germany is a good example of a country
    which can continue to produce and manufacture very
    high-value-added modern goods, in contrast to the
    argument that the reason we should let our
    manufacturing sector decline is due to comparative
    advantage, higher-skilled and more creative work
    replacing it, etc.
    I would love to see a paper on the ways in which
    Germany has stayed so competitive in manufacturing
    while other countries have had to let
    manufacturing fade into the past and replace it
    with service sector jobs or jobs which require
    advanced education.


  3. PrahaPartizan says:

    Hasn’t anyone questioned where all of those “construction” jobs are supposed to be coming from? We have an enormous overhang in residential and commercial building and we’re supposed to add 250K construction employees per year to the employment roles? I want some of the herbs the CEA must be smoking over lunch.
    Further, I would point out that the total additions from this list come to only 7M new hires, over a nine year period. That averages out to about 800K new hires per year, with an economy which is adding 150K new potential employees to the workforce every month. For the mathematically challenged among us, that works out to 1800K potential new employees per year. What does the elite plan to do with the additional 1M potential workers being added to the workforce each? Just remember, each 1M unemployed workers translates into another 1% jump in the unemployment rate. I would call the CEA report a recipe for disaster and ruin. Are they just throwing up their hands and saying that they can’t do anything? Keep this up and by 2020 the CEA won’t need to worry because somebody will be throwing them up against a wall before they receive their just reward.


  4. Vince123456 says:

    Obama could take one big, tangible step to making America more competitive
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  6. eberit says:

    I would like to offer the concept of the transportation/goods movement sector as it applies to when it comes in or out of a port and the process of getting the item to and or from it point of origen or its destination.
    The transportation/goods movement sector is a source of high wage jobs and has very good mulipliers. It seems to be under the radar when economic drivers are discussed. Any comments on this?


  7. JohnH says:

    As I said, Obama could take one big, tangible step to making America more competitive by abandoning the commitment to a strong dollar. I doubt that the conference can be serious about restoring American manufacturing competitiveness unless the strong dollar is addressed.
    So why is the strong dollar not being addressed, if not imperial hubris? It has gone without saying for a long time that the dollar as a reserve currency is a symbol of American leadership and power in the world. Do you seriously think that any administration can take actions that would cheapen the dollar? If so, why is there so little discussion of it?
    On our current trajectory, the dollar will eventually be knocked down, most likely at a time and in a manner that the US government will little control over. Why not start thinking and talking about it now–like tomorrow?


  8. シャークスチームモップ says:



  9. Samuel Sherraden says:

    You are very right about a number of your points you bring up – though I am not sure that everyone is as insistent on “imperial dollar” as you say. (Keep an eye out for work by New America on this issue.)
    But, the larger point of this post and of the event tomorrow is that the Obama administration can’t afford to write off the manufacturing sector. The administration supports large investment in the green economy, but does not provide any tangible support to making tradable goods more competitive. They have written off a very large sector (manufacturing) and plan to replace it with a minuscule one (green technology). The consequence on employment is, as we are seeing, devastating.
    -Sam Sherraden


  10. JohnH says:

    I hope someone asks Gomory how the United States can encourage manufacturing when its currency is extremely overvalued. Under present circumstances, it will ALWAYS be MUCH cheaper to manufacture almost anywhere but the United States. Even new technology won’t help much, because production of new products is off shored almost as soon as the product enters commercial production. Bush tried to compensate for the strong dollar by reducing business costs through reducing business taxes, regulations, and lack of enforcement on whatever taxes and laws remained. That did nothing for American competitiveness because of the degree of the dollar’s extreme over-valuation.
    The US government has a stark choice to make–the imperial dollar vs. exports and employment.
    My guess is that imperial hubris will continue to addle the brains of the Washington elite for the foreseeable future, taking precedence over the needs of the economy and the American public.


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