Thanks to three factors – Reagan’s supply-side economics, three decades of the gospel of deregulation, and the idea that all government is corrupt and somehow inherently evil, America’s manufacturing sector is a shell of what it once was. This is not news, this is a fait accompli. America will never again be the economic powerhouse it once was.
So what do we do now? First of all, we don’t give power back to those who got us into this economic mess in the first place. The majority of economists – including Alan Greenspan and Paul Volcker – agree that the Bush tax cuts for the wealthy need to go away. The majority of economists agree that the Obama stimulus was, if anything, too modest, too small to get the job done. Of course, the fact that the majority of professional economists agree on these matters is all that the Republicans need to know in order for them to oppose the economists. Why? Because the economists are the professionals, and Republicans certainly seem to distrust professionals. The proof lies in their opposition to the idea of global warming caused by human civilization despite the fact that 97% of climatologists know that it’s very real, and in that many in the religious right oppose the teaching of evolution despite what any child knows after having been to a museum of natural history.
Second, we need to remember that we are not the first country that has had to adjust to a significant reduction of its manufacturing base. England has already traveled this road, from being the world’s preeminent industrial economy in the late 1800′s to its present state. How did England adjust? I suspect most economists would agree that they finally realized that they could not compete with the American economic colossus, so they concentrated instead where they still had the advantage: high finance. This is why the LIBOR, the London Interbank Offering Rate, is perhaps the single most influential factor in the determination of credit offering rates in the West. Of course England’s financial sector probably cannot compare to what Wall Street has become, but the efforts and opinions of London’s finance industry still matter significantly in the world. England has already blazed the trail of how to adapt to diminishing influence while maintaining dignity, and we should bear their example in mind.
Third, we do not necessarily have to give up our place of industrial leadership in the world quite yet. Not only do we still have the very best aircraft manufacturers in the world (all of which are unionized), but our automobile industry is going strong once more – in fact, GM’s car sales in China are on pace to outdo domestic car sales here! Of course those GM cars in China are made in China, but a significant portion of the profit comes back here, just as a significant portion of the profit made by Toyota cars manufactured here makes its way back to Tokyo. If GM had been allowed to fail, it’s been estimated that America would have lost two million more jobs than we have thus far, that number including not only GM employees, but all those in their supply and contracting infrastructure, and those in cities where GM is a major factor whose jobs supply secondary and tertiary support: cafes, fast food joints, department stores. This also includes those whose jobs are paid for by tax revenue from GM employees: teachers, policemen, firemen, et cetera.
But what do we DO? How do we propel America into world leadership once more? Spend hundreds of billions of tax dollars converting our empty factories to manufacture solar cells. I was once against solar power (it’s not THAT green)…but something has changed. For the first time, solar power is now cheaper than nuclear power. But such a proposal is fraught with political infighting, for the coal and nuclear power industries in America are quite powerful. In order to get them on board, we would have to offer to build solar cell (and support) factories in districts that would have the most to lose, such as the coal mining districts of West Virginia and Kentucky. We would have to give the billionaire owners of those industries the opportunity to get in on the ground floor of investing in these factories, or they would spend millions in Congress defeating such legislation.
We would then guarantee loans to homeowners to upgrade their homes with solar power panels, and before we laugh at such a ludicrous notion, this year in Germany, more than four-fifths of the 9,000 MW of solar PV operating in Germany was installed on rooftops. But in order to make such a transition, we would have to make a great effort as a nation in the form of hundreds of billions of tax dollars since no commercial industry is willing to make this investment on such a grand scale.
But what’s truly sad is that this will not happen. Not in America, and not for at least a couple decades to come. Why? Because it requires hundreds of billions of tax dollars, and the Republicans and the conservatives still live in their fantasy that nothing good comes of paying taxes.