Manufacturing Coming Back?

In the midst of the Carrier deal as well as the long election lead up op on manufacturing, here are a couple thoughts.

Look at the Carrier deal. Good, keeps some jobs, which pays some employees, who pay taxes, and spend. Remember your spending is my income and my spending is your income. One stops, we all lose. But a few points as part of the bargain. We know the State committed to tax breaks of $7 million. We know the jobs saved to be 730. We don’t know what was promised at the federal level at all. So we know taxpayers are paying a minimum of $9,589 per job. Not going to do all the math on the tax and economic value of that, suffice it to say there is some, even quite a bit, just not a key point here. In fact the State essentially paying to have manufacturing jobs could even be argued to be say, a bit Socialistic. Hmm. The point is we traded tax revenue.

We also have to look at the long-term trend. Not just for the U.S. but the world. There is an overall down trend over time, for both.

value-added_us

U.S. Value Added

value-added_world

World Value Added

What’s it mean is the question. Perhaps it means the profit margins are lower…labor costs, global competition, soft markets? Perhaps it means consumption is down …austerity, personal trends, death of the American Dream (I call it scheme) mentality? Perhaps it means competition from areas not measured accurately by World Bank and associated monetary systems. Or that the manufacturing heyday has long passed as theorized by some economists and is my own belief. If it’s trending downward globally as data suggests, it’s certainly not coming back to the US without some major proprietary technological or quality breakthrough regardless of what we heard during the campaign.

But it certainly makes the point that one cannot asses the value or compare the impacts of domestic jobs and/or trade policies without taking into account the global and national trends. So when we hear folks, both politicians and friends, claiming success or failure of some action (like the Carrier deal) or policy. Ask about the long-term trends. And what they think it might mean. Too easy to just parrot the party response.

Leave a Reply

Your email address will not be published. Required fields are marked *