ABC World News has been running segments this week about the importance of buying American-made products. In addition to their reality-TV-style experiment of refurbishing a suburban Dallas home with only Made-in-USA goods, news anchor Diane Sawyer pointed out that if every American spent an extra $64 a year on buying American-made goods, it could create 200,000 new jobs in the U.S.
All this makes good sense to us. However, Dan Ikenson at the Cato Institute views it as "dangerous, nationalistic propaganda." Ikenson says this is "reckless" and that U.S. manufacturing "continues to thrive in every metric…except employment." He attributes manufacturing's success to increased productivity-- and that "making more with less is the goal! That’s how an economy grows!"
Needless to say, we profoundly disagree with Ikenson on his conclusion that all is peachy with U.S. manufacturing and the American economy. What we really want to do is call him up and give him a piece of our mind. We imagine a phone call that might go something like this...
ME: Hi Dan, it's Steven Capozzola at AAM. Listen, your viewpoint is just backward. You guys are the ones who've gotten us into this mess.
IKENSON: Free trade works. Our productivity is better than it's ever been. Per capita income is so much greater than it was in 1960, when we hardly imported anything. Household goods cost less than ever. People can buy whatever they want.
ME: Yes, you talk about all these low-cost goods. But Dan, when I lost my job during the recession in 2002, the only work I could find was earning minimum wage at a bookstore. I had no health insurance. It took me an hour to earn the money just to buy a stick of deodorant. I couldn't afford to buy much of anything.
IKENSON: I understand. There has been some shakeout as we've adjusted to the global economy. But on the whole, we are far better as a nation. We don't make and sell low-end retail products any more. Instead, our factories produce top-notch items like pharmaceuticals, chemicals, airplanes, and sophisticated components.
ME: And how does that benefit me if I've lost my job and am now earning miniumum wage?
IKENSON: You're talking about economics. The fact that Americans are unemployed speaks to a mismatch of skills demanded and skills available.
ME: Actually, I was thinking about the exact industries you're talking about. Our factory workers have lost good-paying jobs. But we're also losing ground in high-tech to China every day. What about the Silicon Valley people who've been laid-off because our high-tech has disappeared, too? What about printed circuit boards and semi-conductors and wind turbines and solar panels? I thought that's where we were supposed to be heading...
IKENSON: You want to be a protectionist and start putting up walls.
ME: No, I want China and other countries to stop putting up walls. They're extremely protectionist with all their currency rigging and illegal subsidies. The U.S. is a much more open market. Aren't you bothered by how protectionist China is?
IKENSON: China represents a vast market for U.S. companies.
ME: But our trade deficit keeps going up with China. They're not buying our stuff. Instead, we're becoming more dependent on them for hi-tech, for our military equipment. That worries the heck out of me.
IKENSON: U.S. manufacturing is thriving.
ME: Dan, hang on, can you do me a quick favor? Can you look out the window?
IKENSON: What, it's sunny? What?
ME: I want you to stop looking at your textbooks for a moment and actually take a look at the shape of the country. We've been following your prescription for the past 15 years. Are you telling me that as a nation we are better off than we were then? Do you really think we have better employment, more people covered with healthcare, less debt? Have you actually looked up from your desk and walked the streets, seen who's working, who isn't?
IKENSON: I'm not going to get into an angry discussion.
ME: Okay, so you're comfortable sacrificing millions of American jobs for an ideology.
IKENSON: But other jobs are created. You're only looking at the downside, not the positives.
ME: Dan, show me the positives. Show me that the trajectory we've taken since we opened up trade with China, for example-- that it has lifted up more Americans. Show me that we've been better off under your vision.
IKENSON: Goodbye.
Editor's Note: At this point, Ikenson hangs up on the hypothetical phone call.
IN SUMMARY: There is a path. The U.S. must adopt a national manufacturing strategy to start creating good-paying jobs that can support a stable economy.
