General Motors is shutting 1,100 dealerships by 2010. Chrysler is shutting 800 by June. The economy continues to hemorrhage manufacturing jobs. We’ve lost more than 5 million jobs since the Great Recession began. GM is considering closing most of its plants for nine weeks beginning this summer. Chrysler closed all of its plants for a month in January.
Looking at rising stock market prices, the economists say the recovery has begun. Don’t try to peddle that in Michigan or Ohio or Indiana or in towns and cities hit by the closure of plants, suppliers or dealers.
President Obama has acted boldly to pass a large recovery plan. He has provided GM and Chrysler with billions in loans and set up an auto task force to drive their restructuring. But the conditions imposed on the auto companies are a far remove from those imposed on the banks for the trillions in subsidies afforded them.
The president says that the U.S. can’t go back to the old “bubble and bust economy that led us to this point.” He has wisely laid out a vision of the economy we must build, in which “prosperity is fueled not by excessive debt, reckless speculation and fleeing profit, but is instead built by skilled, productive workers and by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations and discoveries that will shape the 21st century.”
He wants an America that makes things again.
But wishing will not make it so. Obama calls for greater public investment in education and training, in research and development and in a modern 21st century infrastructure. All these provide an essential foundation to a new economy.
But even that is not enough to revive an America that will make things to sell abroad. What is needed is a dramatic change in America’s global economic strategy.
Over the last decades, the U.S. has acted as the consumer to the world. China, Japan, the Asian tigers, Germany–all built export-oriented economies that were based on selling things to us. U.S. multinationals–free to move as they wish–took our jobs to Mexico, Korea and China to make products there to sell to the U.S.
These countries became part of the global trading system, but they weren’t playing by the same set of rules. They subsidized exports. They kept their currencies relatively cheap in comparison to the dollar.
American-based production–and U.S. workers–were the victims. Wall Street jobs expanded; finance captured 40 percent of all corporate profits at its height. And U.S. workers faced layoffs, plant closings, wage givebacks, longer hours with lower pay and benefits. The health-care and pension promises made under old contracts were shredded under new ones. But still that was not enough.
Now in the global downturn, U.S. workers once more will be the leading casualties as countries jockey to see how much each will bear of the losses.
For an America that makes things, that provides manufacturing jobs with good wages and strong benefits, the U.S. government has got to get smart about trade and industrial policy.
It’s time to identify growth industries–such as new energy–and invest in education and training, science and technology accordingly. Then insure a level playing field abroad, not allowing other countries to underprice their currencies, undermine basic worker and environmental protections or sustain barriers to our goods while subsidizing exports of their own.
Some denounce this as protectionism and warn about the danger of a trade war. The reality is that for too long, U.S. leaders, confident in prosperity, scornful of manufacturing and besotted with Wall Street and finance, indulged the national strategies of other nations without protecting our own people. We played by rules that China and others did not follow. Now we no longer have that luxury.
The president is right; we need to make things again to sell to the world. And to do that, the government will have to build a policy that works for the people on the line, not just the people in the suites.