Rebuilding American Manufacturing
Apparently, American multinational corporations have no intention of rebuilding American manufacturing. They have factories overseas, they have markets overseas and they are even building research and development facilities in China and India. American banks and businesses are sitting on $3 trillion in cash but they are reluctant to invest, build or hire in America. They say America isn’t business friendly enough because of taxes, regulation and government oversight. The business media are advising investors to “put their money to work” overseas.
All this leads some economists to believe the American economy is the victim of a “capital strike.” On Sunday, August 22, 2010, on Meet the Press, Dick Armey, the founder of the “Tea Party Movement” admitted that there is a capital strike against the American economy. He said: “The private sector is sitting on 2 to 8 trillion dollars of cash.” He said if the Obama Administration would cut taxes on investment profits “…and stand down from new ‘cockamamie ideas,’ money would be put to work in America.” This economic blackmail is the same weapon that was used against President Franklin D. Roosevelt to punish him for the New Deal. This is the real reason the Great Depression dragged on for ten miserable years.
Are we supposed to believe Dick Armey? American corporations account for sixty percent of the products imported from China. What assurance do we have that the sat upon capital will be “put to work” in America? None, of course. Should the American government surrender its legal authority over the private sector? I say no. We tried that from the 1980s to the infamous 2007 global financial meltdown. We must learn from our mistakes.
Massive damage has been done to the American financial and economic infrastructure by deregulation, securitization and globalization. I won’t labor the point, but the doom and gloom forecasts call for a lower standard of living and “more sacrifices” to, supposedly, get our economy “back on track.” This new normal of permanent austerity is an economic model that was created by the same people who gave us the crash of 2007. Painful experience proves that this economic model does not work.
In 1933, President Franklin D. Roosevelt proposed the New Deal to fix a situation similar to what we have today. F.D.R. was opposed by conservatives because, to them, the Great Depression was just a severe manifestation of the “business cycle” and no action was necessary. (This is the same argument we hear today from free market radicals.) A capital strike kept the economy crippled until World War II intervened. Then, the capital that didn’t exist, flowed like water.
Today, we need a new New Deal financed by Treasury issued debt free United States Notes (Greenbacks) [see: U.S. Treasury - FAQ: Legal Tender Status of currency] . If the private sector prefers to invest, hire and build outside the United States, who will rebuild American Manufacturing? Remember, American corporations account for sixty percent of the products imported from China, not to mention the other low wage countries all over the world.
It is a little known fact that, in the past, the United States government did aeronautical research and built world class aircraft. The Naval Aircraft Factory, from 1917 to 1945, built military aircraft right here in Pennsylvania. The work was done at the Philadelphia Navy Yard. Now this valuable property is being sold off to the private sector. How much will the taxpayers lose on this transaction? All over the country, military bases are being shut down and sold off. Why couldn’t these facilities be used for an American manufacturing Renaissance? You can’t beat the price, they’re free. We, the taxpayers, paid for them and we own them.
Some people complain that “Everything is made in China.” But there are others who celebrate the exploitation of impoverished, powerless foreign workers. Retailers, multinational corporations, shareholders and consumers disregard “The Golden Rule” and the consequences to the people on the other end of that transaction. Looking beyond the immorality of this take-no-prisoners economic model, does this system work or is it ultimately destructive? The Crash of 2007 and the current Great Recession are clear illustrations of that destruction.
American workers are told that they must take pay and benefit cuts to be competitive so that we can export our way out of the Great Recession. But can our society function when our workers live under the same conditions as the foreign workers who are now rioting for a better life? We are told that we must export in order to reduce our trade imbalance and increase our Gross Domestic Product. We must stop our dollars from flowing out of the country because foreign countries are getting rich at our expense when we don’t export enough products. But why must we export? We can accomplish exactly the same objectives if we reclaim our own markets. For years, because of tax loopholes, the emphasis was always on exporting. Reclaiming our markets was never an option.
The U.S. Constitution directs the government to “promote the general welfare” and the “domestic tranquility” of the American people. The government can do this by rebuilding American manufacturing. Roosevelt’s New Deal and the Naval Aircraft Factory can be used as an economic model. The objective is to put all able-bodied people, who desire employment, to work making useful products that are now imported from low wage countries. The workers will get good pay and benefits. And the money to build the production facilities and pay the workers will be issued debt free from the U.S. Treasury. No tax money will be involved. And no debt will be inflicted on the American people.
If we reclaim our markets, the trade deficit will immediately start to go down. Fewer dollars will flow out of the country for manufactured products. And American consumers will no longer have to feel guilty about buying products that are made under inhuman working conditions. The economy will be stimulated because workers will have enough disposable income to purchase goods and services. America’s manufacturing infrastructure will be rebuilt, and we will be on the road to full employment. Prosperous workers will pay taxes, and budget deficits will eventually become non-existent. Small businesses will flourish because there will be customers with money to spend.
Patriotic American business people who want to be a part of the American manufacturing Renaissance can partner with the government as subcontractors. This is already a common practice. The only difference will be that the funding will be debt free money issued by the U.S. Treasury.
What will these American made products cost when they land on the store shelves? They will cost the same as, or less than, the products made in overseas sweat shops. That’s the magic of debt free money. And making products in America will eliminate the enormous waste of fossil fuels that are used to ship products, needlessly, around the world. The huge pool of impoverished foreign workers can be employed to produce the products and services that will give them a better life. Many foreign workers live in shacks or worse. Sanitation and medical care are sub-standard or non-existent. Why are they making things for us when they have very little or nothing? What happened to the Christian Golden Rule that is supposed to be the guiding principle of our culture?
The current high rate of unemployment and underemployment proves that the private sector has turned its back on America, the American people and the American economy. It is up to the government to step into the breech. This is a simple, common sense solution to the current Great Recession, inadequate tax revenue and a stagnant economy. It’s a win/win for everybody.I welcome any rebuttal from any reputable economist, politician or pundit to this proposal. Those rebuttals and my counter-arguments will be put on this web site. This will give the public an opportunity to judge the merits of the different points of view.