New Economic Plan, Old Economic Folly

I hope that I have this right. The New Economic Plan, articulated by national conservatives and to be implemented by U.S. political leadership, is designed to bring back manufacturing jobs that have been shipped overseas for the several decades just past. This proposed “re-shoring” will provide high-paying factory jobs for American workers, revive a dispirited working class, restore stability to communities hollowed out by globalization, and strengthen our inherited but now frayed faith-and-family culture.

I am not an economist, but as a longtime American worker, as an employer who has hired hundreds of workers, and as an executive who has managed thousands of workers, this all strikes me as nonsensical.

A few points, or perhaps even more than a few. There are at this moment 195 countries in the world. All but one of them seems to understand that the global trading system was designed by Americans not only to foster the brotherhood of man but, even more intentionally, for the convenience and enrichment of American citizens. Among those 194 non-American countries, there is a clear understanding of exactly which jobs the U.S. has shipped overseas: They are low-wage jobs manufacturing low-margin products. The ambition of those 194 countries is equally clear: They want to move up the value ladder to high-wage jobs manufacturing high-margin products. They want the jobs, in other words, that America has not shipped overseas.

Another point. You hear it said frequently that we Americans don’t make things anymore. While it’s true that we don’t make many of the things you see around the house -- plastic flatware, keychains, underwear, sparklers -- we make many of the things that are harder to make and that create more economic value -- computer software, rockets, semiconductors, medical devices. And we make a lot of them. Of the 195 countries doing or trying to do business internationally, the U.S. manufactures and sells more products than all but one of them -- China, which has a population four times larger than ours.

And a point about the single most important trend in global commerce. The fastest-growing segment of the world economy is not manufacturing. It is services, a segment in which America is the clear leader and may even now be widening its lead. What do we mean by “services”? We mean, among many other things: accounting, legal, engineering, insurance, design, data storage, marketing, cloud computing, financial, and consulting services beyond the imagination. The old economy was powered by muscle. The new economy is powered by brainjuice. And while the U.S. may be running a trade deficit in manufacturing (not all that large, by the way, at 3 percent of GDP), we exported $1.1 trillion worth of services last year and ran up a trade surplus of almost $300 billion.

And as long as we’re on the subject, a point about trade deficits. I have pertinent experience here: I confess to carrying a large trade deficit with Starbucks. It has been mounting ominously for years and may now approach five figures. Over and over again, as often as twice a week and with no thought given to long-term consequence, I have placed a higher value on a morning cup of coffee than on the few bucks I exchange for it. When might some angry birds come home to roost? I have no idea, but I have assumed a businessman’s risk and will continue in my wanton ways. America, one hopes, will do the same. Trade deficits, despite the similar names, are not closely related to budget deficits.

Only three more points, all of them micro.

I was my grandfather Freeman’s only grandson and, in the nature of things, we became pals. He was born in Wales, where as a young man he earned his keep in both the mine and the mill. When he came to America and found a job in a local bank, he thought he had ascended to workplace heaven. He worked indoors and spent his days charming customers with his rolling Welsh accent and his willingness to lend them money to buy starter homes. He imparted to me, more frequently than necessary, only one piece of economic advice: I should acquire whatever skills might be necessary to avoid the soul-killing grind of mining and milling. I have never had reason to doubt that advice.

During the course of my long business career, I co-owned a manufacturing company for most of a decade. We manufactured shoes. We never had a shortage of customers: Our shoes were well made and well marketed. But we always had a shortage of workers. We paid the highest wages in our rural county – and four times higher than our direct competitor’s in Malaysia -- but we were successful in recruiting workers from only two shallow prospect pools: young single mothers, who were admirably determined, and older Amish people, who were reliably dutiful. Able-bodied men, even those whose fathers had worked in the same factory, were not interested. They placed little value on hard, honest work. They preferred to hunt and fish and cash government checks.

And here, in yet another NR exclusive, are the results of internal polls conducted within my immediate family. My bride and I are blessed with nine grandchildren, one of each, as we say in remarking their individuality. I ask them, probably more often than necessary, what they hope to do, or to be, in life. I get a wide variety of answers, some of them head-scratchers and, predictably, at least one of them a mind-number, but I never -- not once in 20 years -- have heard this one: “I want to land a lifetime, union-controlled job on the floor of an American factory.”

So, let’s see if we have this right. The architects of the New Economic Plan seek to disrupt the global competition we Americans designed and are in the process of winning by bringing back (and no doubt being obliged to subsidize) jobs that our grandparents despised, with the intention of recapturing some distant and ill-defined glory that was abandoned thoughtlessly by our parents but is reflected, alluringly to some, in putatively emerging markets now lodged in underdeveloped foreign countries.

Does that sound like a plan?