Wednesday, February 29, 2012

Is Manufacturing the Answer?

by Richard Crews
Not long ago (well, a few decades, but think of it as a wink of geologic time) the U.S. was the manufacturing titan of the world. ("Titan" may not be quite the right word here, but you get the idea.) During the first half of the 20th century, U.S. manufacturing grew, and grew, and grew until by mid-century, the U.S. out-manufactured the entire rest of the post-industrial world combined. (True, the Second World War, 1940-'45, demolished manufacturing capacities throughout Europe and Asia while the U.S. doubled down on making ships, planes, Jeeps, guns, etc., but it would be unseemly of me to let some historical subtleties and complexities stand in the way of a strong narrative--I've learned that from watching the Republican primaries.)

Then along came 2008 with Wall Street greed and the housing credit bubble, lots of closed factories and lost jobs (even the mighty auto industry almost folded) and--well--the U.S. is now an "also ran" as a manufacturing powerhouse (think Germany, Japan, and the U.K. with the BRIC countries coming on strong ("BRIC" stands for Brazil, Russia, India, and China)).

But a lot has changed in the world over the past couple of decades: robots build cars with something like 1/10 number of humans needed, electronics speed our financial transactions around the globe, green energy and environmental consciousness rise like a raging forest fire, and political aspirations rise and fall with an iPhone video and a "tweet," not a newspaper headline. The question arises, Is manufacturing coming back to save the American dream (in other words, is the decline in manufacturing "cyclical")? Or has the economic landscape changed in fundamental ways (is the decline "structural," never to return)?

On the one hand (according to a Brookings panel), manufacturing significantly provides (1) high-wage jobs, (2) commercial innovation, (3) trade deficit reduction, and (4) a disproportionately large contribution to environmental sustainability. Moreover, the manufacturing industries and firms that make the greatest contribution to these four objectives are also those that have the greatest potential to maintain or expand employment in the United States: computers and electronics, chemicals (including pharmaceuticals), transportation equipment (including aerospace and motor vehicles and parts), and machinery. American manufacturing, it is argued, needs strengthening through government help in four key areas: (1) research and development, (2) lifelong training and retraining of workers, (3) improved access to finance, and (4) an increased role for workers and their communities in sharing in the gains from innovative manufacturing.

On the other hand, Michael Klein (also at Brookings) points out that the 300,000 new manufacturing jobs created since the depths of the Great Recession represent only 8% of total job growth. Manufacturing's current share of employment is only about 9% of the nation's overall total. Over the past three decades, employment in manufacturing has decreased about 40%. So while manufacturing has been a bright spot lately, this is a story of productivity gains, not of employment growth. Thanks to these productivity gains, the employment drop occurred while the value added by manufacturing increased by 40%. Hourly compensation to workers has remained stagnant; so the question arises: Who benefits from policies to support manufacturing, workers or owners?

Furthermore, manufacturing is characterized by "churning"--simultaneous job creation and destruction. On average, about one in five manufacturing jobs are either destroyed or created each year, and that churn is not especially concentrated within some narrowly defined manufacturing sector.

Klein comments, "The case has also been made that manufacturing matters because of exporting. [But] a bit more than half of all U.S. exports are manufactured goods, and two-thirds of these manufacturing exports come from four sectors: chemicals, transportation equipment, computers (and other electronic products), and machinery.

"Policies to promote exporting would, therefore, disproportionately favor a relatively small set of firms in these sectors. How small a set? Only about 4% of manufacturing firms in the U.S. exported in 2000 and 96% of all U.S. exports are sold by just 10% of this already small set of firms.

"It may be possible to expand the set of firms that export, rather than just the export activity of those that already sell abroad, but the extreme concentration of exporting gives one some pause about export-promoting policies. And exporting is not an end in itself. Is there some special feature of exporting that benefits workers as well as owners?

"There is evidence of a wage premium paid to workers in exporting firms, but those workers also tend to have more education and skills than those in non-exporting firms. Part of the premium is due to this.

"Since higher education and skills result in higher wages, it would be well worth considering policies promoting the skills and education of workers, regardless of the industry in which they are employed."

Thursday, February 16, 2012

Folding a Losing Hand

by Richard Crews
The GOP has become associated with a set of bizarre ideologies and a set of cynical political tactics.

Bizarre ideologies such as--

(1) Anti-Scientism--for example, that anthropogenic global warming is a scientific hoax and left-wing conspiracy, and that evolution is a weak scientific hypothesis while creationism is a worthy one.

(2) Trickle-Down and Deregulatory Economics--which have been tested and discredited.

Cynical tactics such as--

(1) Obstructionism--if the GOP can succeed in paralyzing the government, they can discredit the incumbent administration, and they are willing to do this even if it means crippling the economy of the nation.

(2) Pandering to Corporate and Big-Money Power--wealthy special interests and their lobbyists, if they are favored by legislation, are willing to pump hundreds of millions of dollars into political campaigns.

(3) Distorted Propaganda and Histrionic Rhetoric--the willingness to say anything regardless of the facts in order to garner political support.

The GOP has been willing to pursue these ideologies and tactics, not just at the expense of truth and honesty, but despite pain to the underclasses and threat to the strength and viability of the nation itself.

And they have garnered a lot of political success thereby, first with the surprising win of Scott Brown in Massachusetts in December, 2009, and then with the shellacking the Democrats took in the mid-term elections of November, 2010.

But pursuing this path must surely present a cognitive as well as a moral dilemma for many Republicans, and increasingly so, although as yet they have had very few defections.

However, this week the Republican leadership caved in extending the payroll tax reduction and unemployment benefits.

Perhaps there is hope the GOP may become a truly loyal opposition and provide a valuable brake and counter-perspective for Democratic incumbent efforts.

The country would be greatly benefited.

Sunday, February 5, 2012

Child-Rearing for a Non-Violent Society

by Richard Crews
As to the nuts and bolts of producing a free and non-violent society, that lies mostly in the society's child-rearing practices. A kid who is brought up by parents who favor or enforce obedience to authority at the expense of personal freedom becomes an adult who "knows" that is how to raise kids. Otherwise the kids will "go bad," and will not become disciplined and motivated adults,

In the era of spankings at home and teaching kids at school via bruised knuckles and stinging backsides, the next generation believed that was the ONLY way to raise kids safely, so that they would be secure from vice and sloth. It is possible to turn a kid around later during latency and adolescence--for a kid to learn that freedom and respect beget freedom and respect--but it is hard.

In our society, even in the best of homes where kids are loved and protected, they are taught behavior patterns by a pair of amateurs. Most parents--even in the best of homes--learned most of what they know about child-rearing from the pair of amateurs who raised them.

To what extent can parents be taught to raise their kids with respect for their personal freedom and dignity? How can the cycle (that truly comes out of love, and misinformed fear for the child's welfare) be broken?

That is the key, I believe, to developing a truly Civilized future for humanity.

Transformative for Civilization

by Richard Crews
I am struck by the phrase, "comprehensively transformative and liberating for human civilization." This is the first sensible challenge I have seen in some time to the assumption that humanity is worth saving.

H. sapiens has been a remarkable experiment on the part of DNA, working out some of that molecule's incredible evolutionary potential. Perhaps we properly go beyond chauvinistic hubris to admire, celebrate, and want to protect our human DNA because of (1) the technological ingenuity and (2) the aesthetics we have developed.

Perhaps it is proper for us to do so--perhaps not. Humans have been a savagely ruthless and cruel breed. We have torn up and despoiled Mother Earth who nurtured us; we have tortured and enslaved our own and other species; and we have developed a "civilization" based on greed and the contagion of magical thinking.

Perhaps we can design a future for humanity (and for our fellow DNA Earth-mates) that is transformative and liberating. THAT--as The Bard had Hamlet say--IS THE QUESTION: Can we overcome our instinctual savagery?

Perhaps we can build on the tiny whispers of what Abraham Lincoln called "the better angels of our nature" and develop a truly transformative and liberating Civilization (one where I can at last--and proudly--use the word with no quotation marks and with a capital C).

Or perhaps we should accept that we humans are intrinsically flawed, and can best serve as a stepping stone to higher silicon life forms. Perhaps we should give our Homo siliconensis offspring an encouraging slap on the butt and send them off into space to accomplish new technological miracles (and found new aesthetic glories) beyond our dreams.