‘Trillions of Dollars Are at Stake’: It is a Battle Over ‘The Future Wealth of the United States’

Is that headline dramatic enough for you?

Since writing the four part series focusing on trade and manufacturing jobs (one, two, three, four), Jim Dicks at American Thinker added some interesting political information to the mix.

Steve Bannon, Jim Dicks wrote, has begun an

epic confrontation between the multinational corporations on one side (and their congressional politicians, to whom they have lavishly contributed) and the newly emerging Republican Party of the Little People on the other — the forgotten working class, championed by Donald Trump in his successful presidential run.

It is a crucial struggle, where, as stated best by Sundance of The Conservative Treehouse, “trillions of dollars are at stake.” It is a battle that will determine who controls the future wealth of the United States, where the manufacturing sector and portions of the service industry sector of the U.S. economy have been eroded, stripped from the United States and moved to cheap-labor countries, leaving behind a massive loss of jobs and wealth.

The goal of the Trump agenda is simply to “generate an economic renaissance with a dramatic infusion of wealth for middle-class workers,” Dicks wrote. President Trump “rejects the notion that the demise of U.S. manufacturing is inevitable and irreversible.”

Bannon believes that if we are to revitalize our moribund Obama economy and safeguard our future against the implications of profound technological advancements coming over the horizon, this economic and political reformation is essential. Corruption through bribery of our political class by multinationals must be stopped. Macro-level decisions concerning our national wealth must include the workers who build it and whose very future is at stake.

Bannon asked what’s more powerful: “the money of the corporatists or the muscle of the people”? His bet is on the people.

In part four, in my article I hyperlinked the words “creative destruction” to a definition of it at the website of the Library of Economics and Liberty. I’ve bolded the text on a key passage:

[Creative destruction] has become the centerpiece for modern thinking on how economies evolve.

[Economists who adopt the summary] of the free market’s ceaseless churning echo capitalism’s critics in acknowledging that lost jobs, ruined companies, and vanishing industries are inherent parts of the growth system. The saving grace comes from recognizing the good that comes from the turmoil. Over time, societies that allow creative destruction to operate grow more productive and richer; their citizens see the benefits of new and better products, shorter work weeks, better jobs, and higher living standards.

Herein lies the paradox of progress. A society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress. … The process of creating new industries does not go forward without sweeping away the preexisting order.

It seems to me that the question of how many people will be permanently worse off is key. The page goes on to give helpful examples of how progress did away with jobs as technology evolved.

In a nutshell, cars wrecked the horse and buggy industry, planes lowered the number of people travelling by train, and “all this creation did not come without destruction.”

“Each new mode of transportation took a toll on existing jobs and industries”:

What occurred in the transportation sector has been repeated in one industry after another—in many cases, several times in the same industry. Creative destruction recognizes change as the one constant in capitalism. Sawyers, masons, and miners were among the top thirty American occupations in 1900. A century later, they no longer rank among the top thirty; they have been replaced by medical technicians, engineers, computer scientists, and others.

Technology roils job markets, as Schumpeter conveyed in coining the phrase “technological unemployment” E-mail, word processors, answering machines, and other modern office technology have cut the number of secretaries but raised the ranks of programmers. The birth of the Internet spawned a need for hundreds of thousands of webmasters, an occupation that did not exist as recently as 1990. LASIK surgery often lets consumers throw away their glasses, reducing visits to optometrists and opticians but increasing the need for ophthalmologists. Digital cameras translate to fewer photo clerks.

Companies show the same pattern of destruction and rebirth. Only five of today’s hundred largest public companies were among the top hundred in 1917. Half of the top hundred of 1970 had been replaced in the rankings by 2000.

That’s all easy to understand. What’s not easy to understand is — what happens if not enough new industries arise to provide the kind of good-paying jobs that are lost with the elimination of the old jobs?

Change is happening faster and faster — technology no longer creeps forward, it leaps, leaving many behind. We all know and live that. But many of those manufacturing jobs lost over the past few decades weren’t lost due to technology or progress. Many were just shipped overseas.

It is a fundamental fact: manufacturing is an important aspect of a nation’s wealth. Equally important is the fact that our nation’s policies should be geared towards benefiting our nation’s people. Like it or not, there is a segment of the population who will never write computer code or start a small business. What do we do about them? I don’t pretend to have the answer. The search for that answer is why the Illinois Family Institute decided to bring attention to John Westberg’s proposal. It is also why IFI provides this list of articles for anyone who wants to learn more on the topic.

As noted, click here for the rest of the articles on Trade and Manufacturing that I easily collected for about two years. Depending upon the value of anything new that I see, I will add links to the list.

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International Trade: Plenty of Destruction, Not Enough Creative

“Creative destruction” is a common phrase used in economics. One simple example that’s in the news a lot lately, is the phenomenon of Amazon.com. Since it launched in 1994, countless small books stores have been put out of business, and at least one large chain, Borders, has closed. That’s the destruction part. The creative part is the locating of new distribution centers all over the country — Illinois has been trying to land one as this article gets posted. The benefit to consumers is that within minutes, customers can find the book (or whatever) they want online and have it shipped in days.

When the American textile industry was decimated a few decades ago, the jobs were sent overseas due to free trade policies. Clothing prices dropped, but not without many Americans losing good paying jobs.

One common argument from the pro “free” traders is that trade, unrestricted by tariffs, raises the standard of living. For example, the middle, lower middle class, and the poor can afford things they wouldn’t otherwise be able to afford. I have no doubt that’s true. For example, the last time I was in a Walmart I was shocked at just how inexpensive those foreign-made massive flat screen TVs are these days.

Of course, it’s not just clothes and TVs that are less expensive with free trade, but computers, furniture, clothes, and food (though evidently not meat).

Maybe there is someone out there who supports fairer trade who wants Americans to be priced out of necessities of life basics. If there is, I haven’t met them.

But is it just me or is the storage unit business a growing industry? Maybe I didn’t notice many of the Public Storage, Self Storage, and U-Haul Storage facilities when I was younger. I have noticed many new ones being opened, however.

It’s reasonable to surmise that what fills up many of that storage space is furniture and other items that could be afforded because of “free” trade. It’s also not unfair, it seems to me, to wonder about the impact on the average standard of living by having so much affordable stuff that a person winds up paying monthly storage fees.

That said, my assumption over the years has been that “free” trade is to be preferred. Only in recent years have I begun to read articles from serious men and women who are not pro-big government or economic isolationists making the case for a fairer trade.

While “creative destruction” leads to innovation, my concern is that the creative part doesn’t keep up with the destruction part. Factories close, towns die, and a lot of men and women who earned a good living working in manufacturing cannot find work that will allow them to maintain a decent standard of living.

It has been widely noted that Hillary Clinton lost states like Ohio, Pennsylvania and Michigan in no smart part due to their concentration on identity politics and their ignoring the economic challenges of the working class.

Former Trump advisor Steve Bannon refers to a lot of what has been taking place concerning working class jobs as “economic hate crimes.” Bannon calls Washington, D.C. a “business model,” in that those on the inside always prosper. The think tank culture is also, no doubt, a “business model,” as big donors that benefit from “free” trade write big checks to defend current policies. There aren’t a lot of big donors in those dying towns across America.

Recently, townhall’s Kurt Schlichter was tough on the “free” traders in an article:

Conservativism forgot about the real world conservatives we expected to line up behind us. While we were talking about free trade, we were ignoring that GOP voter who fought in Fallujah, came home, got a job building air conditioners, raised a family, and then one day watched the video of the oh-so-sorry CEO. . . sadly informing his beloved employees that their jobs were getting shipped to Oaxaca. And our response to the 58-year old Republican voter who asked us how he was going to keep paying for his mortgage and his kid in college? Pretty much, “Well, that’s how free enterprise works. Read some Milton Freidman and go learn coding.”

That’s not a response, not for a political party that requires people to actually vote for it. That’s an abdication…

Last year, Victor Davis Hanson also weighed in on the topic during an interview with Laura Ingraham: (see here starting at about the 8-minute mark).

I saw a whole generation of people in agriculture completely wiped out by unfair trade with the European Union. And Every time I would write about it I was told that I didn’t understand free market economics. And the same thing with China, and the same thing with outsourcing.

I grew up in a small town where everybody had a good job at a manufacturing plant. Now it’s 16 percent unemployment and I’m supposed to say this is creative destruction.

And I read in [National Review], that I’m affiliated — that this is good. That people lose jobs. They have to move. You just abandon your family your house, everybody, your community, and you just get in the car and follow the job.

And then I think to myself, I get up every morning at the Hoover Institution — I don’t worry that somebody from the Punjab is gonna walk in my office and say I’ll write that column for 40 percent of what you’re doing.

. . .

I know people in Silicon Valley that are being outsourced right now by people coming in on Visas. The elite has never suffered the consequences of their own ideology.

It’s not just conservative commentators who are not experts in economics. Economist Stephen Moore, no Trumpian protectionist, recently wrote about how NAFTA needs to be improved, and cites unfair practices of our trading partners.

Another expert is John Westberg who we mentioned in part two. His solution is innovative and deserving of attention and study — you can read more about it here ADD LINK.

As I noted at the outset of this 4-part series, this is a huge topic worthy of an ongoing debate. The need for a healthy middle class is obvious — and impossible without enough good paying jobs. Just looking at the employment/unemployment numbers isn’t enough. We must look at the actual human impact on the ground — that is how we will measure how well trade is working for working Americans.

This isn’t a matter of feelings and emotions but of dollars and cents. American policy should be aimed at benefiting Americans, even if we wind up paying more for goods, and less on storage units.

Up next: ‘Trillions of dollars are at stake’: It is a battle over ‘the future wealth of the United States.’

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The Debate: Free Trade, Fair Trade, Balanced Trade

Last time we heard from Illinoisans John Westberg and Steve Rauschenberger, two knowledgeable voices when it comes to the topic of manufacturing in the United States.

An article earlier this year by American Thinker’s Thomas Lifson titled, “Free Trade, Fair Trade, and Reality,” lays out his perspective on the free v. fair debate: President Donald Trump “has repeatedly stated that he wants ‘free trade’ that is also ‘fair trade,’” Lifson writes, “I am all for free trade, but it’s got to be fair.”

Academic and political critics are quick to point out the oxymoronic nature of this statement. Free trade means no government interference with private entities making the deals they see as beneficial. “Fair” trade means that someone else’s idea of fairness is imposed on deals that the parties find satisfactory to themselves.

Lifson cites examples of how corporations and governments engage in a “give and take” all the time. Governments force companies “to offer concessions for the privilege of doing business unhindered by limitations and harassment.”

President Trump is the first postwar president to acknowledge this reality, and to promise to play the game as well as it is being played against the US. When he blasts the negotiators who have inked trade deals, he is really criticizing the policy of the US playing by the rules while others play hardball, with pressures both formal and informal being used to extort value from American companies and ultimately from the American economy. Those [research & development] jobs overseas won’t generate nearly as many American jobs as they would if located in a US facility.

President Trump is really writing the obituary for the era in which the US kept everyone else happy by conceding to others the ability to play economic blackmail while self-righteously refusing to play that game to protect our own interests. He is a realist, and it is refreshing.

In another article at American Thinker, Steve Feinstein, in a piece titled “Manufacturing a Crisis,” writes:

If there is one thing that Democrats and Republicans always seem to agree on, it’s this: Manufacturing jobs are the key to economic success in this country. We’ve got to “revitalize” the manufacturing sector if the economy is to generate strong job growth and economic expansion.

That’s just such total hogwash, because it’s not true and it’s not reflective of reality.

Cheaper foreign goods, Feinstein writes, enables “American consumers to spread their money around in more areas and it frees up American workers to pursue other — better-paying and more sophisticated — things.”

Have those “better-paying and more sophisticated” “‘things”(!) been keeping pace with the number of jobs lost in the manufacturing sector? A lot of the people in Rust Belt states, whose standard of living has stagnated or fallen over the past 20 years, said “no they haven’t kept pace” when they voted for Trump.

According to some “economic troglodytes,” Feinstein writes, “we’re only in the economic sweet spot if we’re manufacturing cheap Bic pens and Keds.”

Actually, the value of our manufacturing sector’s output is at record levels, even if the absolute number of workers employed in manufacturing is less than the peak. It’s directly analogous to our agricultural output being the highest ever, even though none of you farm.

Take that you economic troglodytes!

Next time you hear an ill-informed politician talk about how we need to “bring our manufacturing jobs back,” you’ll know better. We manufacture exactly what we should in this country. There’s always a plus/minus to how much we make here depending on the specific conditions of the moment, but you should hope you never see a U.S.-made Bic pen again.

There is also an interesting bunch of articles at American Thinker written by Howard, Raymond, and Jesse Richman (here is their personal website). They are big on the topic of “balanced trade,” and they regularly promote their idea of using a “scaled tariff.”

They also remind everyone that the word “trade” is used in the U.S. Constitution. I’ve linked to a few of their articles below.

And if you think economists are mild mannered group, note this opening from one of their articles last year:

In one of National Review’s hit pieces against Republican presidential frontrunner Donald Trump (“What Trump Doesn’t Understand — It’s a lot about our Trade with China”), correspondent Kevin D. Williamson called Trump a “dangerous buffoon” because he would threaten tariffs upon China’s products and thus risk a trade war with China. But it’s not Trump who is the buffoon on trade; it is National Review!

Trump plans to take on the huge U.S. trade deficit with the world, and especially with China. He threatens to place upon Chinese products a tariff like the 45% tariff that China recently placed upon some U.S. cars. Such a threat could lead to negotiations between the U.S. and China about balancing trade, and Trump wrote the book on negotiations.

When an article tears into a candidate for having his facts wrong, the magazine that prints it probably should check to make sure that the candidate is actually wrong. But, National Review failed to fact-check this piece.

They go on in the article to compare the NR’s “facts” with their own.

Next up, more on the debate about manufacturing jobs and trade.

Three articles by Raymond Richman, Howard Richman and Jesse Richman:

Free Trade vs. Balanced Trade

The People are Right: It’s Time to Balance Trade

How to Restore America’s Manufacturing Innovation

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Seeking Solutions: John Westberg’s ‘New Hope for America’

In the last article, we outlined John Horvat’s argument that America’s economy cannot be solved merely by bringing back jobs from overseas, but rather, “America faces a grave moral crisis that needs to be addressed.”

Then we introduced former manufacturing company owner John Westberg, who not only understands our county’s moral challenge, but also has some ideas on how we can bolster American manufacturing and improve our country’s trade position to benefit American workers.

On the website of his foundation New Hope for America, Westberg provides both summary and details of what he is proposing:

The Problem

During the last 40 years, living the American dream became almost impossible for the working people of America because of the “outsourcing” of U.S. manufacturing. Observing this loss of good paying “middle class” jobs, Mr. Westberg established the NHFA foundation to find a solution to this problem.

The Solution

Through research he rediscovered the solution that Japan had used to rebuild their manufacturing base after the devastation of WW 2. Using this concept, they went on to become the No. 2 Economic Power in the world. NHFA suggests utilizing this same proven concept to restore U.S. Manufacturing. This, in turn, would create millions of new jobs, raise the wages of American workers, and restore a robust economy to the U.S.

Okay, how, exactly?

NHFA’s website is loaded with detailed policy papers outlining how policy makers can stop companies from importing from low-cost suppliers in China rather than purchasing from high-cost suppliers in America.

If our nation’s trade policy required that U.S. businesses could only import the type of products that they [manufacture], then your customers would no longer be able to import the type of products that you produce.

The Solution:

U.S. businesses can only import the types of products that they actually do manufacture . . .and . . .each manufacturer’s import percentage of their own sales would be limited to the current import penetration of that particular product market.

Got it? Don’t worry if your answer is “not yet.” Economics is called the dismal science for a reason. There is a lot more to Westberg’s pitch — you can find more of his argument on this page of NHFA’s website.

Another Illinois voice on the topic is Steve Rauschenberger, president of the Technology & Manufacturing Association (which is “a Schaumburg-based agency that acts as a comprehensive resource for Midwest manufacturers.”)

Celebrating “National Manufacturing Day,” Rauschenberger wants “to dispel misperceptions of American manufacturing.”

The folks who are involved daily in the industry know that there are three big manufacturing myths — that the U.S. manufacturing industry is in decline; that it is backbreaking work in a dark, dirty building; and that there is little future in a career in manufacturing.

In an article that recently ran in the Daily Herald, Rauschenberger writes that “Manufacturing in Illinois is strong and growing stronger.”

Manufacturing here has experienced a resurgence. As manufacturers have become leaner and more competitive globally, they have experienced tremendous growth.

“Free trade” has been a solid plank in the Republican National Committee’s Party Platform for decades, but candidate and now President Donald Trump has caused that plank to show some signs of weakening.

Without much of an effort over two years, I collected more than a hundred links to op eds, policy articles, and studies focusing on various aspects of the manufacturing/trade issue.

It isn’t as simple as just a debate between free traders and protectionists. Tax rates, regulations, tariffs, globalization, advancing technology, currency manipulation, poorly negotiated trade treaties, countries cheating on trade treaties, trade balance, and theft of intellectual property are all matters of controversy. As we saw last time, cultural issues and skilled labor are also in the mix.

In the next articles, I will only present an overview, linking and excerpting from only a handful of articles. At the conclusion, for anyone interested in drowning themselves in the subject, I’ll provide all the headlines and links I gathered.

To give you a flavor of what I collected, here are just a few that I won’t be quoting from:

Unfair Trade Hurts Ordinary Workers in Both China and the U.S.
By getting tough with Beijing, President Trump can make life better for American and Chinese citizens alike.

Free Trade As a General Rule
When in doubt, free trade is a safe bet.

Despite the Rhetoric, US Trade Deficit With China Is Not a Big Problem. Here’s Why.
In our capital account, the U.S. has a huge surplus with China. That means money is flowing into our country from China.

If anything, globalization increased the cost of meat in America
The two most fundamental needs are food and shelter, and globalization has certainly not reduced the real costs of these.

Dear China: Thank You for Manipulating Your Currency
China’s currency manipulation is a form of foreign aid, and to the direct advantage of millions of U.S. consumers.

Trump Can Succeed On Trade By Ending Global Currency Manipulation
World trade in goods and services has morphed into a gigantic manipulative carnival of currency trading. This needs to change.

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Manufacturing and Trade as a ‘Moral Crisis’

Both as a candidate, and now as president, Donald Trump knows how to intensify attention on a topic. Since he launched his presidential campaign two years ago, manufacturing jobs and fair trade have been the focus of a massive debate on the political right.

Is this a topic for the Illinois Family Institute? Here are a few excerpts from an article by John Horvat II titled “Work without Men” that suggests it might well be. He writes that negotiating new trade arrangements, and lowering tax and regulatory burdens are all critical to bringing back jobs.

Such measures will indeed create jobs and open up opportunities, but they alone will not make America great.

America faces a grave moral crisis that needs to be addressed. As Charles Murray and so many other scholars have stressed, America is coming apart. A vast underclass has developed that is the result of broken families, shattered communities, a nonexistent work ethic, substance abuse, and godless education. The mantra of “bringing jobs back” is not going to reverse the downward path of a nation without finding ways to rebuild a strong moral foundation.

So much for the claim that economic issues are separate from moral issues.

“Americans have changed over the decades,” Horvat writes, and many “no longer have stable families.”

Here’s a shocking stat from the Manufacturing Institute I’d never seen before:

[N]early two million U.S. manufacturing jobs will remain vacant over the next decade if current trends continue. The crisis is aggravated by growing numbers of retiring baby boomers while the younger generations are not stepping up to the plate.

The reason for the lack of workers is a great talent gap between what is needed and what is available.

. . .

Thus, the problem is not a lack of jobs but a lack of skilled workers. In fact, one labor study found that the average U.S. manufacturer is losing as much as 11 percent of its annual earnings due to a talent shortage. Another survey concluded that almost half of executives would consider reshoring manufacturing operations back to U.S. yet are also concerned about the need for skilled workers.

The root of these economic problems is a moral problem.

“There are indeed many Americans who are out of the workforce to the point that they are not even looking for employment,” Horvat writes, and refers to Nicholas Eberstadt’s “masterful study,” America’s Invisible Crisis: Men Without Work:

The book documents a disturbing fact that “an invisible army” of ten million idle American men of prime working age, some ten percent of the male workforce, now “spend absolutely no time at a job.” Most don’t want to change their nonemployed status.

Horvat outlines how many of these men prefer to live — and it is not a pretty picture (you can read it here).

“[T]hat is why the focus must be expanded from just the jobs and infrastructure projects that are now all the rage. Unless the new administration concentrates on invigorating the moral fiber of the country, strengthening marriage and the family and limiting the power of the state, America will not recover from its present woes.

With Rust Belt states like Pennsylvania and Michigan voting for Trump because of his “bringing back jobs” promise, Horvat’s close might be a little overstated:

Indeed, when the jobs come back, there is the risk that no one will show up.

The “invigorating the moral fiber of the country, strengthening marriage and the family and limiting the power of the state,” reads a lot like the mission of the Illinois Family Institute and Illinois Family Action.

A few weeks ago, IFI executive director David Smith and I had the pleasure of visiting with John Westberg, a man who helped build the manufacturing powerhouse AutoMeter in Sycamore, Illinois, about sixty miles west of Chicago.

In the meeting, Westberg was vocal about the fact that the moral foundation of the country is the number one challenge facing us all. But he also has an idea of what to do about the problem of jobs being “shipped out of the country.”

John Westberg’s opinions and ideas deserve attention, since he led his family’s business from 25 to 625 employees, filling 3 plants in 2 states. AutoMeter received national honor by being voted “Manufacturer of the Year” in the automotive high-performance aftermarket. “This honor occurred not once but 4 times.”

After he retired and sold the company, Westberg started the New Hope for America foundation (NHFA), and its website has a plethora of materials supporting his proposed solution.