The Echo Chamber
“With metronomic regularity, gauzy accounts extol the return of manufacturing jobs in the United States.” That’s how Steven Rattner began his January 25th New York Times article – “The Myth of Industrial Rebound.” The Times describes Mr. Rattner as “a contributing opinion writer and a longtime Wall Street executive who served as lead auto advisor in the Obama administration.” That makes him somewhat of an insider, so let’s hear what he has to say.
“One day,” he goes on, “it’s Master Lock bringing combination lock fabrication back to Milwaukee from China. Another, it’s Element Electronics commencing assembly of television sets – a function long gone from the United States – in a factory near Detroit.
“Breathless headlines in recent months about a ‘new industrial revolution’ and ‘the promise of a “Made in America” era’ suggests it’s a renaissance. This week, when President Obama gives his State of the Union address, he will most likely yet again stress his plans to strengthen our manufacturing base.
“But we need to get real about the so-called renaissance, which has in reality been a trickle of jobs, often dependent upon huge public subsidies. Most important, in order to compete with China and other low-wage countries, these new jobs offer less in health care, pension and benefits than industrial workers historically received.
“In an article in The Atlantic Monthly in 2012 about General Electric’s decision to open its first new assembly line in 55 years in Louisville, Ky., it was not until deep in the story that readers learned that the jobs were starting at just over $ 13.50 an hour. That’s less than $ 30,000 a year, hardly the middle-class life usually ascribed to manufacturing employment.
“This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga, Tenn., in 2011, the company was hailed for bringing around 2,000 fresh auto jobs to America. Little attention was paid to the fact that the beginning wage for assembly line workers was $ 14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.
“With benefits added in, those workers cost Volkswagen $ 27 per hour. Consider, though, that in Germany, the average autoworker earns $ 67 per hour. In effect, even factoring in future pay increases for the Chattanooga employees, Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).
“All told, wages for blue-collar automotive industry workers have dropped by 10 percent, after adjusting for inflation, since the recession ended in 2009. By comparison, wages across manufacturing dropped by 2.4 percent during the same period, while earnings for Americans in equivalent private-sector jobs fell by ‘only’ 0.5 percent, (To be fair, including benefits, compensation for manufacturing workers remains above that of service employees.)
“These dispiriting wage trends are a central reason for the slow economic recovery: without sustained economic growth, consumers can’t spend.
“Low wages are not the only price that America pays for its manufacturing ‘renaissance.’ Hefty subsidies from federal, state and local government agencies often are required. Tennessee provided an estimated $ 577 million for Volkswagen – $ 288,500 per position! To get 1,000 Airbus jobs, Alabama assembled a benefits package of $ 158 million.
“Now Boeing has just used the threat of moving to a non-union, low-wage state to win both a record subsidy package – $ 8.7 billion from Washington State – and labor concessions.
“Over objections from their local leadership, union workers approved a new contract that would freeze pensions in favor of less generous 401(k) plans, reduce health care benefits and provide for raises totaling just 4 percent over the eight-year term. (Boeing’s stock price rose by over 80 percent last year.) …”
Thank you, Mr. Rattner. That was information that FOX and CNN neglected to relay to us. But when you said “… since the recession ended in June 2009″… you really and truly don’t believe that, now do you? The very tenor of your article contradicts that statement. In fact, if it were true, you wouldn’t even be writing this story. But we need to remember, you’re an insider …
Let’s hear what a former insider, Dr. Paul Craig Roberts, has to say about the state of our economy. Dr. Roberts posted his article on January 26th, and the information he provides offers no encouragement whatever.
“The economy has been debilitated by the offshoring of middle class jobs for the benefit of corporate profits and by the Federal Reserve’s policy of Quantitative Easing in order to support a few oversized banks that the government protects from market discipline …
“When US corporations send jobs offshore, the GDP, consumer income, tax base, and careers associated with the jobs go abroad with the jobs. Corporations gain the additional profits at large cost to the economy in terms of less employment, less economic growth, reduced state, local and federal tax revenues, wider deficits, and impairments of social services …
“US policymakers and their echo chamber in the economics profession have let the country down badly. They claimed that there was a ‘New Economy’ to take the place of the ‘old economy’ jobs that were moved offshore. As I have pointed out for a decade, US job statistics show no sign of the promised ‘New Economy’ …
“The same policymakers and economists who told us that ‘markets are self-regulating’ and that the financial sector could safely be regulated, also confused jobs offshoring with free trade. Hyped ‘studies’ were put together designed to prove that jobs offshoring was good for the US economy.
It is difficult to fathom how such destructive errors could consistently be made by policymakers and economists for more than a decade. Were these mistakes or cover for a narrow and selfish agenda?
“In June 2009, happy talk appeared about the ‘recovery,’ now 4.5 years old. As John Williams (shadowstats.com) has made clear, ‘the recovery’ is entirely the artifact of the understated measure of inflation used to deflate nominal GDP. By under-measuring inflation, the government can show low, but positive, rates of real GDP growth. No other indicator supports the claim of economic recovery …
“Just as the American people know that there is more inflation than is reported, they know that there is no recovery. The Gallup Poll reported this month that only 28% of Americans are satisfied with the economy …
“From hard experience, Americans have also caught on that ‘free trade agreements’ are nothing but vehicles for moving their jobs abroad. The latest effort by the corporations to loot and defraud the public is known as the ‘Trans-Pacific Partnership.’ ‘Fast-tracking’ the bill allowed the corporations to write the bill in secret without congressional input. Some research shows that 90% of Americans will suffer income losses under TPP, while wealth becomes even more concentrated at the top.
“TPP affects every aspect of our lives from what we eat to the Internet to the environment. According to Kevin Zeese in Alternet, ‘the leak of the [TPP] Intellectual Property Chapter revealed that it created a path to patent everything imaginable, including plants and animals, to turn everything into a commodity for profit.’
“The secretly drafted TPP also creates authority for the executive branch to change existing US law to make the laws that were not passed in secret compatible with the secretly written trade bill. Buy American requirements and any attempt to curtail jobs offshoring would become illegal ‘restraints on trade.’
“If the House and Senate are willing to turn over their legislative function to the executive branch, they might as well abolish themselves …
“If and when uncertainty spreads to the dollar, the real crisis will arrive, likely followed by high inflation, exchange controls, pension confiscations, and resurrected illegality of owning gold and silver. Capitalist greed aided and abetted by economists and policymakers will have destroyed America.” –
Do you get the impression that economists, policymakers and corporations actually oppose the creation of jobs in this country? Tennessee gives $ 577 million to Volkswagen – Alabama gives $ 158 million to Airbus – Washington State gives Boeing $ 8.7 billion – for how many jobs? 3,000?
None of those “hefty subsidies” created jobs. That money was payoff money. That kind of funding directed to the construction of our patented container ships in the dozens and dozens of struggling U.S. shipyards, though, would put this country back on track. It’s how we ended the Great Depression of the 1930s, and it’s the only way we’ll end this present “recession.” It’s a no-brainer.
Commercial shipbuilding. Then and only then will our “recovery” begin.