Make It In America: How We Can Bring Manufacturing Back (No, Really)
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Yet a “weaker” dollar is exactly what our economy needs in the near-term, and exactly what the doctor ordered for American manufacturing. A weaker dollar makes imported goods more expensive and stuff made here more affordable. It makes imported oil less expensive, and it helps lower our debt-load by narrowing the trade deficit. The American manufacturers would be the big winners.
Who loses when the dollar is “weaker”? Banks, which lent out strong dollars and don't want to be repaid in weaker greenbacks, hate the idea. It's bad for Americans traveling abroad, and it hurts those holding a lot of accumulated wealth in dollars. Ultimately, a stronger economy leads to a strong dollar, but even over the near-term, with a ton of excess capacity holding back the “recovery,” talk of maintaining a strong dollar remains pervasive.
And then there's the small matter of China. A lot of the China-bashing out there is unjustified, but there is little question that the Chinese government is manipulating its currency to keep it artificially low against the dollar. Our trade agreements are meaningless in the face of that imbalance, yet Washington doesn't appear to be ready to do anything other than give the Chinese some “tough talk” about the situation.
The good news is that the economic crisis – and the measures taken in response to it – has weakened the dollar to some extent. Combined with higher shipping costs, this may help return some manufacturing jobs to the United States. According to Archstone Consulting, a management consulting firm, shipping costs increased by 135 percent between 2006 and 2009 and Chinese manufacturing wages rose by 44 percent over that period. And a number of respondents to a survey of businesses Archstone conducted say they see clear advantages to locating manufacturing closer to one's market.
But if the global economy is rebalancing, it's not happening fast enough to spur a real economic recovery, or an enduring recovery of the manufacturing sector. What we need in this country is something that has helped other countries grow but is anathema to our “free market” discourse: a comprehensive industrial policy that brings the private sector and government together to encourage us to "make it in America" once again.
Joshua Holland is an editor and senior writer at AlterNet. He is the author of The 15 Biggest Lies About the Economy: And Everything else the Right Doesn't Want You to Know About Taxes, Jobs and Corporate America . Drop him an email or follow him on Twitter .