What curious times we live in. Here we have Bernie Sanders, the wacky old socialist Senator from Vermont emerging as the champion of manufacturing; and Mitch McConnell, the Republican Senate minority leader from Kentucky emerging as American manufacturing's worst enemy.
The issue is a bill being pushed by the Democrats that, among other things, will give tax breaks to companies that bring manufacturing back to this country from faraway places, and punish those companies that move jobs offshore. It also directs the Obama administration to demand that the WTO take action concerning China's blatant currency manipulation.
McConnell's take: "This bill … will do nothing to create jobs here in our country. Most of the factories the Durbin bill is trying to prevent from moving overseas are not traveling overseas to sell back to the American market, but are moving there to gain competitive advantage over foreign companies in foreign markets … And in doing so, they create more jobs and more opportunity right here in the United States."
Now that statement is utterly incredible, as if McConnell is wholly unaware of the explosion of the trade deficit, the loss of millions of manufacturing jobs, and the devastation wreaked on thousands of towns with now empty factories that once represented the lifeblood off the community. Sanders, on the other hand, has a firm grasp of reality when he says, "During the Bush administration alone…we lost more than 4.5 million manufacturing jobs, nearly 30% of the total."
Regardless of what you think of the bill – and there are certainly pro's and con's – I am curious as to what you think causes a guy like McConnell to make such an absurd statement, because I am at a complete loss to understand it. I can think of a couple of possible explanations:
The Hack Politician Theory McConnell doesn't care what the facts are. All he knows is that if the Democrats are for something, he is against it. Period. The facts are not something that will stand in the way of politics. The personal power resulting from taking control of the Senate means more to him than any principles.
He's been bought and paid for theory Neither facts nor principles matter. McConnell owes his job to the steady stream of cash he gets from his number one source of support – the financial sector. Wall Street thrives on the short term gains to be had from closing factories and moving them to China. In the long term it is a loser, but Wall Street is adept at finding chairs when the music stops, so they tell Mitch what to think and what to say, and he dutifully complies with the bidding of his owners and masters.
The just plain ignorant theory McConnell has never held a legitimate job in his life. Law school straight to government, and Senator from Kentucky since the Reagan administration. His reality is the 20 mile diameter circle in which Washington, DC sits, and he is unlikely to be able to find Kentucky on a map. If American reality was ever known to him, thirty years in Washington has rendered it but a distant memory. A routine trip to Walmart would demonstrate to McConnell how incredibly ignorant his statement is, but I don't suppose McConnell has seen the inside of a Walmart in his life.
Perhaps there are other explanations, and I would be interested in hearing them. I really would like to know. In the meantime, the world has indeed turned upside down when Bernie Sanders is more in touch with middle America and the realities of our economy than the leading Republicans. It probably doesn't matter why, however, as schmucks like McConnell are the reason tea parties are cropping up left and right and he is destined to sooner rather than later end up in the bone yard of political dinosaurs.
But one thing is clear, and that is that I can no longer vote a straight Republican ticket knowing that Republicans are pro-business and Democrats are pro-labor. I actually have to start paying attention to who these people are, and a 're-elect nobody' philosophy makes more and more sense all the time.
Mike says
Vote Libertarian as an alternative, Bill. They don’t win, but at least I don’t have to hold my nose while voting.
Pete says
Bill, I’m surprised and disappointed that you would vote a straight ticket anyway. There are idiots and rare gems in both parties. As for McConnell I think it is clear his “positions” are negotiable – just look at the waffling on tax cuts last week. My own model for politicians is now sadly cynical:#1 re-election;#2 political power and insider knowledge for #3 personal wealth. If you saw the 2nd segment of the 9/23 Jon Stewart show the Republican recycling of old ideas is made painfully obvious. The section starts ~8:30 into the show at http://preview.tinyurl.com/277b4q5 if you care to look. Also David Stockman, Reagan’s budget director, this past week provided a scathing review of how badly this country has strayed over the last 3 decades – do I need to point out the GOP was in control most of the time. I’m convinced “professional” politicians are in large measure to blame, starting at the local level (they control nominations). Problem: true leaders won’t exclusively toe the party line and the existing political system really doesn’t want the status quo upset significantly. In my opinion we are on a completely unsustainable path and none of the current political leaders have stepped forward to tell our nation how bad it really is and the severe measures required for recovery.
Andy Barg says
Bill,
I’ve been following your posts for some time; I look forward to reading you latest insights; most are quite enlightening and I agree with virtually everything you’ve posted… that is until “Republican Jabberwocky”.
True, today’s era in which we live is unprecedented (at least in my life time); and, it is my growing conviction that most of not all of the old guard needs to go as they have been drinking the DC cool-aid too long. (Dick Lugar from Indiana for instance).
But, think about any “pro manufacturing” bill being pushed by the likes of Durbin and his ilk. Doesn’t make sense, does it? Like most liberal agenda items, the name and the stated intent are pretty much the opposite of the actual intent and outcomes. So, why would that change with this bill? You may be right about McConnell, but what if he knows something about this bill that is not being revealed by the major media outlets? One other theory: He knows something we don’t know.
One last thought: What if the Japanese government constrained Toyota from building factories overseas to compete directly with their competition in their markets, would we have had NUMMI or a Georgetown?
Micchael Papa says
Government intervention to affect the flow of jobs may seem logical on some level, but is a common fallacy outlined in the classic 1946 book, Economics in One Lesson. My opinion – anyone making decisions on our economic policy needs to educate themselves on the basics of Economics before doing so. It makes common sense. We even have to pass a driving test before getting a license. I encourage you to read this as well – as you seem to be supporting the intervention and have asked, in your blog, for some other argument against it. Start with Chapter 14. It’s free:
http://fee.org/library/books/economics-in-one-lesson/#0.1_L15
Bryan says
Michael Papa has made a fabulous suggestion. Hazlitt’s book brings clarity to a world where Bernie Sanders is (sorry, still laughing) pro-manufacturing. (Let’s be clear, he his first and foremost a big labor supporter, protector of the proletariat. At best, he is a crony capitalist – and that is stretching it!) So, I guess if you are into bringing more debt home to VT through crony capitalism, then Sanders is your man. Grab onto your wallet before you go into that voting booth!
Trade deficit: let’s not forget that as the standard of living is increased in other countries, the overall wealth of the economy (capability to trade) is increased. Where does the deficit go? In other words, if I trade $200 (export) for $800 (import) what incentive do I have to do so? Well, the money can back to the U.S. in the form of loans or investment in U.S. assets. Since investment comes from savings, we should be happy that China invests its money in the U.S….(o.k., stop laughing, now the bad news and why that simple system of savings and investment is broken…)
There are two simple dangers in all of this: and it stems from where the capital originates: personal savings, or the government. On the domestic front, our politicians stick taxpayers with the investment bill. And China’s investment doesn’t come from its citizens’ personal savings – but from the government. And its incentive to invest probably isn’t economic is nature, but political. My guess is that very little large scale manufacturing is coming from “personal savings,” except for perhaps small business.
This is where good ole’ fashion, INDIVIDUAL capitalism has gone wrong, by way of crony capitalism or government intervention. And in the end, it isn’t Sander’s or McConnell’s fault, but ours for allowing it to happen.
Bill Waddell says
I think maybe some of you missed my point. Give Sanders – as wacky as the old socialist may be – some credit for at least acknowledging the problem. For McConnell to say that manufacturing has left the USA not to make stuff cheap to sell back into the USA, but to serve foreign markets is incredibly wrong. He apparently has no concept of the frightening trade imbalance with China, or the fact that the ports at LA and Long Beach have steadily expanded for the last 30 years.
I don’t know enough about the bill to support it or oppose it, but the Republican position of simply opposing the liberal agenda that obviously has not, will not, and cannot improve the economy – simply urging that we go back to the same old thinking that created the problem (largely on the Republican watch) – is disingenuous.
The libertarian point of view is wonderful in theory, but right next too useless in practical application. In fact, we exist in a very regulated economy, tilted heavily against manufacturing and in favor of short term financial interests – you know – the businesses ‘too big to fail’ while the failure of manufacturing is apparently of no great concern. To stop the music now in the name of ‘no new regulations’ means the death of manufacturing. Libertarianism works only when eveyone falls under the same theory.
It also naively fails to acknowledge that the rest of the world uses economic policy largely in a predatory manner to support their own national interests, while libertarians, free-traders and other beautiful theorists adopt the silly notion that the US will somehow be helped by allowing the rest of the world to eat our lunch at will.
John Montenigro says
Bill,
In answer to your question, I think you’ve overlooked one theory: Calculated Political Doubletalk Aimed at Influencing Voters.
There need be no logic in what he (or any pol) says, so long as it creates the wave of reaction that gets the desired outcome in the next election. This differs from your “Pol Hack” theory in that it’s not simply reactionary/adversarial. This contains a more subtle element of deviousness.
However, I’d like to point out that all these theories are similar in that each contains an element by which facts can be easily disregarded. Unfortunately, that element is present in most political speech, regardless of party or philosophy.
Always enjoy your writing,
-jhm
Regarding “the classic 1946 book, Economics in One Lesson”, Amazon has the 50th anniversary edition (ISBN 0930073193), which contains a “new” chapter on rent control, and a retrospective.
Bryan says
Well then, you have predicted the end…predators preying on each other. Give up now everyone, or start feeding.
Lean is wonderful in theory as well, but as we all know, doesn’t always work in the messy world of an organization. Yet, for some reason, some companies are able to defy your dismissal of “wonderful” theories and put Lean into “practical use” – in effect, these companies are swimming with the sharks that are feeding on each other, when “in reality” they shouldn’t have even made it that far according to your logic. They have defied all odds. But from your point of view, it is possible for alternative business models to succeed but not for alternative political models? Hmmm…
A closer study of libertarianism will reveal that praxeology defies the government interventionists every day – and in fact, this miracle of nature is one of the main causes of further government intervention in our lives full of action. Thank God for human action and self interest or us Vermonters would be ruled by King Bernie Sanders. (Yikes!)
robert edward cenek says
Bill:
I admire your courage in tackling this issue and in offering your opinions – and believe that you are getting near to the epicenter of the several decade-long slide in US manufacturing superiority. One party may have been more of a culprit than the other, but at the end of the day, both parties have pretty much been the same candy bar – just shrouded with a different wrapper – and that’s been the case for several decades now.
Greed – and the drive to make a fast buck – actually, lots of fast bucks – are the primary culprits in my mind.
Here is an interesting passage from a recent NY Times article by Robert Reich. Whether one agrees with his political persuasions is one thing – but the facts in the piece were pretty sobering for me.
…..”But for years American families kept spending as if their incomes were keeping pace with overall economic growth. And their spending fueled continued growth. How did families manage this trick? First, women streamed into the paid work force. By the late 1990s, more than 60 percent of mothers with young children worked outside the home (in 1966, only 24 percent did).
Second, everyone put in more hours. What families didn’t receive in wage increases they made up for in work increases. By the mid-2000s, the typical male worker was putting in roughly 100 hours more each year than two decades before, and the typical female worker about 200 hours more.
When American families couldn’t squeeze any more income out of these two coping mechanisms, they embarked on a third: going ever deeper into debt. This seemed painless — as long as home prices were soaring. From 2002 to 2007, American households extracted $2.3 trillion from their homes.
Eventually, of course, the debt bubble burst — and with it, the last coping mechanism. Now we’re left to deal with the underlying problem that we’ve avoided for decades. Even if nearly everyone was employed, the vast middle class still wouldn’t have enough money to buy what the economy is capable of producing.
Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income…..”
Chet Frame says
Thank you, Bill.
A good friend of mine hosted the best dinners because they led to lively debate. He set firm rules at the beginning that we could never use terms like Republican or Democrat, Liberal or Conservative, Right Wing or Leftist. Everyone had to explain his/her point of view on each issue. We found we had common ground and we had common focus, but we seldom recognized our common interests in the camps where we placed them.
Rick Bohan says
Of course, then there’s the Hack Politician Who’s Been Bought and Paid For and Is Just Plain Stupid Theory. I think Mitch McConnell fits this one pretty well.