Can Obama save US manufacturing? That's the question raised by the New York Times which points out that US administration has so far pursued only ad hoc initiatives, like helping General Motors and Chrysler and looking to green energy as a way of rebuilding the manufacturing sector. The paper suggests tax initiatives for R&D might help and ensuring foreign taxes paid on profits made overseas are deductible.
Frankly, one would have to question whether any of that would help. The manufacturing industry's problems go beyond the recession. They're actually structural.
As Bill Clinton's former honcho Robert Reich says , manufacturing jobs are never coming back. All around the world, manufacturing is being done by machines. That's true even in China. "What happened to manufacturing? In two words, higher productivity. As productivity rises, employment falls because fewer people are needed. In this, manufacturing is following the same trend as agriculture. A century ago, almost 30% of adult Americans worked on a farm. Nowadays, fewer than 5% do. That doesn't mean the U.S. failed at agriculture. Quite the opposite. American agriculture is a huge success story. America can generate far larger crops than a century ago with far fewer people. New technologies, more efficient machines, new methods of fertilizing, better systems of crop rotation, and efficiencies of large scale have all made farming much more productive.
"Manufacturing is analogous. In America and elsewhere around the world, it's a success. Since 1995, even as manufacturing employment has dropped around the world, global industrial output has risen more than 30%.
"We should stop pining after the days when millions of Americans stood along assembly lines and continuously bolted, fit, soldered or clamped what went by. Those days are over … Want to blame something? Blame new knowledge. Knowledge created the electronic gadgets and software that can now do almost any routine task. This goes well beyond the factory floor. America also used to have lots of elevator operators, telephone operators, bank tellers and service-station attendants. Remember? Most have been replaced by technology. Supermarket check-out clerks are being replaced by automatic scanners. The Internet has taken over the routine tasks of travel agents, real estate brokers, stock brokers and even accountants. With digitization and high-speed data networks a lot of back office work can now be done more cheaply abroad."
Want to see the future of manufacturing? Look at the back of the iPod. "Designed by Apple in California. Assembled in China."
With the best intentions in the world, the Obama administration won't save manufacturing. No one can do that.
Obama will do nothing meaningful for blue collar workers, unless you count giving amnesty to hoards of illegals who can take their jobs.
But then neither did Bush 41, Clinton, or Bush 43.
We cannot stop change. We might be able to manage it a little and minimize some of the damage. Not likely though.
Blue collar workers can be retrained, as subprime mortgage originators?