Leo W. Gerard
By Leo W. Gerard
USW International President
When the leaders of the G-20 nations arrive in Pittsburgh later this month, I want them to know I am fomenting revolution. Industrial revolution. Specifically, a 21st-century burgeoning of green manufacturing in the United States.
Americans going green – manufacturing windmills and solar cells – would benefit the whole world’s economy and environment. Restoring manufacturing would rebuild the U.S. economy. And a strong United States is essential because countries in the old world, such as Germany, and those in the developing world, such as China, depend on Americans to buy their exports.
For years, during every G-20 meeting, workers took to the streets to protest free trade, and they’ll resurface along Pittsburgh’s Liberty Avenue on Sept. 24 and 25 as American workers demand fair trade. But at each successive gathering of the G-20, the United States has produced fewer and fewer goods to exchange.
Over the past decade, 40,000 manufacturing facilities across the United States have closed. Since the recession began in December 2007, 2 million U.S. manufacturing workers lost their jobs, making their unemployment rate 12.4 percent. Those who found new jobs got lower pay, according to studies by the Economic Policy Institute.
This is a topsy turvy world for those who recall the nation’s flourishing factories during the 1950s and 1960s. Just after World War II, the rebuilding of Europe and Japan generated demand for U.S. exports. The United States ran a trade surplus that amounted to about 1 percent of gross domestic product.
In the 1970s, however, that flipped. Now, each year the United States imports hundreds of millions of dollars more in commodities – mostly manufactured goods – than it exports. As a result, the United States has accumulated a trade deficit over that period of more than $7 trillion.
This is all just fine with countries like China, Japan and Germany that base their economies on building goods for export. Their factories are humming; their citizens are working and saving. By contrast, U.S. factories are closing; our citizens are borrowing on credit cards and against the value of their homes to buy imported products. And the U.S. government is indebting itself to China to cover its trade shortfall. It’s an unsustainable debt cycle.
A sign of its fragility appeared this spring in the form of a slashed annual trade deficit. For 2006, before the recession, the deficit was $800 billion, representing roughly 6 percent of GDP. This year, if the rate remains as it was in the first quarter during the depths of the Great Recession, it will be $400 billion.
That collapse occurred because high U.S. unemployment begat low consumer spending, which begat low import demand. Americans locking their wallets touched countries worldwide. Factories closed across China. Japan’s economy contracted more rapidly than it had since the 1970s. Germany ran up a $24 billion budget deficit in the first half of this year, contrasting sharply with the $7 billion surplus it netted for the same period last year.
An industrial revolution in the United States is the solution. There are two key components. One is that the U.S. must manufacture commodities of international value to export to reduce its trade deficit. The second is that factories must provide good jobs for workers whose paychecks enable them to support their communities and to buy both domestic and imported goods.
To spur an industrial revolution – and to save the American economy – the U.S. government must begin observing free trade the same way the rest of the world does. Here’s a good example: Both the United States and China want to export renewable energy products. China is doubling down on its investment – even if it violates free trade agreements to do so.
Its largest solar-panel manufacturer, Suntech Power Holdings, told The New York Times recently that it was selling its panels in the United States for less than the cost of materials, assembly and shipping. They can do that because Chinese companies receive massive government support, including low-interest loans, cheap electricity, free land and grants for research and development.
Although China appears to be illegally dumping its panels on the U.S. market, it’s not going to stop. So there’s no point in the United States playing patsy and allowing more American industrial bankruptcies.
The United States needs a coordinated industrial policy like every other major First-World country to direct development. Focusing on green-energy development is the way to go – to create jobs, clean the environment and reduce reliance on imported oil. President Barack Obama’s administration recently expressed interest in establishing a national manufacturing policy. A leading candidate to head the effort is a former Lazard Ltd. investment banker and former United Steelworkers financial expert named Ron Bloom. This could produce a blossoming of new American plants, which could, in turn, nurture all G-20 nations.
Posted September 2, 2009 at 3:56 pm, in From the USW International President
September 3rd, 2009 at 10:21 am
Real wealth and real monetary value is created only when a family (or an organization, tribe, country, etc.) grows and harvests something from the earth, extracts something of commercial value from the earth, provides professional services (medical, legal, dental, engineering, architecture, accounting, land surveying, technology, etc.), and/or makes (manufactures or constructs) something that is consumable (or permanently useful) and then sells these items and/or services to parties outside of their family in return for a net transfer of gold, currency or commodities from other parties into their family. The members of that family reflects their real wealth with the accumulation of grain, gold, cattle, jewels, land, buildings, commodities and/or other marketable products for reserve use in times of emergency and/or also to raise the standard of living for the members of that family.
The USA has almost entirely ceased to generate wealth for future US generations. Instead the USA has elected to sell or export title to our wealth including US located real estate, farms, agri-businesses, food supplies, dairies, forests, industries, breweries, hotels, factories, casinos, financial institutions, retail businesses, and most other assets located in the USA (that were created by past generations) in order to pay people in foreign countries to manufacture the things that US citizens consume, and also to pay for US government expenses when the expenses exceed the taxes raised by the government. The US government is selling our childrens means of creating future wealth, in order to pay for the imported products that US citizens consume and also to pay for US government expenses that are in excess of the tax collections.
September 3rd, 2009 at 10:55 am
After the American revolution, the newly formed USA instituted extremely high import tariffs to encourage the industrialization of the USA, and it was successful in establishing a positive balance of trade, accumulating Gold reserves, creating a manufacturing base, creating a technical data base, and making the USA independent from England for technology.
One way or another we must stop the selling of title to everything of value in America as required to pay for government expenditures plus things that we import and then consume. We must create a positive balance of trade by any means possible. If not, we will destroy the purchasing power of the US dollar.
Without import tariffs, most all products will be available for less money if they are manufactured in foreign countries where labor costs are minimized. The US labor force has no future without high import tariffs to prohibit foreign imported products.
Without high import tariffs, US workers must compete with foreign workers at or below foreign wage scales for employment in the USA. Most USA citizens do not want to work for wages that the same job in a foreign country would pay.
Until we re-industrialize and correct our foreign trade imbalance, and eliminate our federal government borrowing to pay expenses, we cannot afford to have free trade because it will destroy the US Economy.
After the American Revolution there were probably many shopkeepers that imported goods from England and they probably objected to having to deal in more expensive US manufacturer goods.
The Wal-Mart, Home Depot, NTB, GM, Ford, GE, Chrysler, GE, Westinghouse and etc. will probably object strenuously when and if the US Government prohibited them from importing the products that they sell to US consumers.
Until the USA can re-industrialize and correct our foreign trade deficit, and eliminate our federal government borrowing to pay for government expenses, maybe we cannot afford to have free trade because it will continue to totally destroy the US economy.
September 3rd, 2009 at 11:34 am
We have met the enemy and it is ourselves. There is nothing more saddening or devastating than mass unemployment such as existed in countries such as Mexico or Asia in the last century. I have visited Asia several times on Business in the last part of the 20th century. Crime, family abandonment, divorce, selling your own 12 year old (and younger) daughters for the equivalent of about $45 in the 1990′s for 10 years of indentured servitude to brothels, selling your 12 year old sons to rug weavers, and other bad things increase during these periods of economic difficulty. Our basic industries such as steel, computer chip manufacturing, petrochemical refining, appliance manufacturing, tire manufacturing, automobile parts manufacturing, aircraft manufacturing, textiles, and etc. have been decimated and/or totally eliminated from this country by US government laws and treaties. The North American Free Trade Agreement has almost eliminated the remainder of the basic industrial manufacturing jobs from the USA.
The USA must re-industrialize. Even if we started to re-industrialize today, it would take decades to re-create the scientific, engineering, manufacturing and industrial production bases that we destroyed in the past few decades.
Without re-industrialization, the USA is destined to become an impoverished nation of unemployed, starving, and homeless musicians, poets, historians, literature experts, philosophers, social workers, psychologists, MBAs, economists, political scientists, journalists, and other individuals that did not contribute to correcting the economic problems of the USA. We needed to correct the Foreign Trade Deficit, which is the structural foundation portion of the US Economy.
New environmental cleanup jobs created by the EPA are nice, but they are about as economically useful to correcting our negative trade balance of payments and re-building our industrial base as paying people for raking leaves, digging holes and re-filling the same holes, flipping hamburgers, selling insurance, etc. These actions do not produce anything economically useful that we can consume and/or export.
The International Trade Deficit must be corrected by any means possible! This is the basic structural economic problem that will destroy the USA.
The USA is losing the Economic War! We must re-industrialize, or become a third world nation of unemployed beggars.
The USA is losing World Technology leadership! We must change the emphasis of our education systems.
The USA is becoming Bankrupt! We are selling our land and assets to pay for imported products and growing US government expenses (rather than have US citizens work to create wealth and to produce the things that we consume).
The USA is Committing Economic Suicide! The USA will become a third world nation when our US dollar loses all of its purchasing value.
It does not matter which political party that US citizens vote for, if all political parties continue to destroy the US economy with their destructive foreign trade policies.
September 24th, 2009 at 11:13 am
[...] the Steel City playing host to the G-20 in a blog post a couple weeks back. Here’s the link: Fomenting a Green Industrial Revolution in the U.S. It’s my sense from reading the blog and being in Pittsburgh this week that the USW intends to [...]
November 10th, 2009 at 12:05 pm
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