Thursday, February 24, 2011
Obama's point man on the economy has no clue (actually it's been part of the plan all along)...
For the past two years, executives of domestic manufacturing companies -- along with their workers -- were in a daze, wondering why the Obama administration pushed no policies to counter the hemorrhage and the continued offshoring of American production.
Now it is clear.
Obama's outgoing chief economist Lawrence Summers does not think it necessary for the United States to mass-produce products that would be consumed by hundreds of millions of Americans. Summers justifies this position by stating that even the number of manufacturing jobs in China is declining, when in fact, they are not.
"We are moving towards a knowledge and service economy," said the departing director of Obama's National Economic Council in a brusque farewell address at the Economic Policy Institute in Washington, D.C. "You don't succeed by producing exactly the same thing that other people are producing in the same way just at a lower cost," he added. "There is no going back to the past. Technology is accelerating productivity in mass production to the point where even China has seen manufacturing employment decline by more than ten million jobs over the most recent decade for which data is available."
The argument that it's okay for the United States to be losing manufacturing jobs because even China is losing them has been used by free-market economists for the past eight years to justify the de-industrialization of America.
The Obama administration's top economic policy maker's argument is not correct, however. The latest data available from the Department of Labor's International Labor Comparisons Program found that China's manufacturing employment is not in decline but instead rose by an astounding 11 million workers between 2002 and 2006, to 112 million. In four years, China added as many manufacturing jobs as exist in the United States.
But the Obama administration's economic policy team does not care about foreign labor rates. In its 2011 budget submission to Congress, Obama called for the elimination of the International Labor Comparisons program.
In his 3,982-word speech before the Economic Policy Institute, Summers only mentioned the word "manufacturing" once, in the above reference to Chinese manufacturing workers. He did not use the word "imports" or the words "trade deficit."
"The flatness of the world notwithstanding, by far the largest part of the activities Americans engage in and the goods they buy remain quite local," he said. "It is health care and retail services, recreation and education, haircuts and insurance policies, hotels and houses, and I could go on."
The Obama administration's top economic goal has been to stimulate demand, said Summers, through trillion-dollars increases in government spending and recently through continued tax cuts. "There cannot be any question that the constraint on our economy now and for the next several years will be lack of demand," Summers declared. "Without increased demand we are not in a position to pursue our longer-term objectives."
Here's how retired Sen. Fritz Hollings (D-S.C.) explains Obama's economic policy: "Stimulation won't do. President Bush increased the debt and stimulated the economy $5 trillion in eight years. In the same period, household debt increased or stimulated the economy another $7 trillion. The Federal Reserve stimulated the economy a trillion dollars in the remainder of 2008. By January 2009, when Obama was sworn in as President, the economy had been stimulated $13 trillion in eight years, and we were losing exactly 799,000 jobs a month. President Obama in two years has now stimulated the economy another $3 trillion and last month unemployment increased. Stimulation is spent."