U.S. Manufacturing Manufacturing jobs are funded by consumer spending. Infrastructure jobs are funded through taxes.
Everyone agrees that we need to bring manufacturing back into the
USA. The question is how and how much?
Manufacturing over the years has vacated the northeast, as well as other regions of the United States. Some of it has simply moved south, but most of it has moved overseas. If the cost of making a $10 widget overseas is $2, then it obviously make good business sense to have the manufacturing done overseas. Not only has this fact caused the loss of countless American jobs, it can mean the loss of the technical knowledge to create the product.
How can we manufacture this component within the United States at a competitive rate? We can't, but do we need to?
This is our concept:
We don't need to bring back all of our manufacturing. In fact, if we brought 5% of essential manufacturing (manufacturing of technological components, electronics, and necessities, rather than items in categories such as toys) back into the United States, we would not have enough people to fill those jobs.
That is the idea! If we have the jobs available, then downsizing no longer means unemployment. It means cross training, but it doesn't mean a lack of jobs.
Return to the example of the $10 widget. First, we would only be bringing back 5% of widget manufacturing, that's all. We then would apply a tariff on the other 95% of widgets that we import from overseas, increasing the cost from $2.00 to $2.45 for an imported. The revenue derived from this tariff be used to offset or buy down the cost of labor for the 5% of widgets manufactured in the United States, creating a fair market.
Is tariff a bad word? Our high tech industries are concerned that there may be some retaliation from foreign markets for the implementation of tariffs. Low tech manufactures, however, feel differently. Many have shut down.
Is it fair to buy down American labor? Definitely! We have different standards. In the U.S. benefit programs, insurance, labor laws, etc. It has become impossible for many American manufacturers to offer health insurance to their workers (this is also true for small business in general). The workers compensation taxes and unemployment premiums take a large chunk of a business revenues. The cost of these two programs alone exceeds the cost of labor in some overseas markets.
Would countries losing this percentage of jobs object? Yes, but they also know that if the United States economy isn't healthy, it severely affects world markets. Therefore, their economies may gain jobs by giving back a few. And the same goes for U.S. manufacturers.
While a tariff will subsidize labor costs, how would we fund the costs of operations? We propose the creation of a non-profit corporation overseen by an uncompensated Board of Directors comprised of America's largest manufacturers/distributors of widgets. Funding for the manufacturing facility and machinery could be raised by selling U.S. backed, low yield, tax-free bonds.
The Board would hire the corporation's CEO, whose salary would be determined using the guidelines of typical manufacturing entities of similar size. Management's salaries should set in a similar manner. The wages for the factory personnel should be similar to that of US Postal Workers. Bonuses for management should be based upon efficiency, with efficiency being defined as output per man as compared to foreign labor.
Interesting Links:PBS documentary on the financial history of the worldThe United States Public Debt