American manufacturing has been on a steady decline for many years. It started just a few years after the end of World War II. The first sectors of the economy to start losing jobs were those that were labor-intensive: apparel, dolls, toys, shoes, millinery, novelties, electronic assembly and so forth. Then the job loss hit capital-intensive production: steel, auto, aircraft, refrigerators, furniture and the like.
When President Ronald Reagan took office, he decided to do something about the onrushing de-industrialization of America, His program, the Manufacturing Extension Partnership, was essentially a how-to program to help manufacturers be more efficient, take advantage of technologic advances and promote the sales of their products. Under President Bill Clinton, the program was expanded.
But alas, the decline of manufacturing jobs in America continued on its willful way. Since George Bush took over the White House, manufacturing jobs have fallen by more than 2 million.
When Bush came into office, he concluded that the program was a waste. He proposed to phase it out. For this year, funding was reduced to $39.6 million from 2003’s $106 million.
But within the past few days, Bush has done an about-face. Yes, he will perpetuate the partnership, better known as MEP. It’s the usual motive. An election is coming up and the President wants to create the impression that he will revive manufacture.
The plain truth is that American companies have not been lacking savvy on how to produce efficiently and how to promote sales. They may also have picked up a few pointers from the MEP program. But, all to no avail. What they have been doing is to take the know-how they had or picked up from the MEP and put it to use overseas where wages are a fraction of what they are in the U.S. For instance:
IBM is a highly efficient company that, among other things, produces computers. A few days ago, IBM announced that it was firing, in one fell swoop, some 5,000 of its most knowledgeable and highly paid computer programmers in order to transfer their work to India. There IBM will get the same work done for a fraction of what its wage and salary costs would be in the U.S. Equally stunning is the fact that the day after IBM announced this draconian move, its stocks leaped skyward. In effect, Wall Street applauded IBM for slashing the jobs of highly qualified employees because, as the “market” sees it, IBM will save millions of dollars by its switch from American high salaries to India’s low salaries.
Just what will Bush’s proposal do? It will prevent manufacturing jobs from being retained in America. What it is likely to happen is indicated by Jerry Jasinowski, president of the National Association of Manufacturers. He expects that the MEP will relieve American manufacturers of costs they feel are unnecessary and burdensome. “It’s a comprehensive review,” he explains, “of the legal, health and regulatory costs and their adverse effects in manufacturing in this country.” In plain words, Jasinowski expects that his members will now be liberated from regulations that hold manufacturing responsible to employees and to public regulatory agencies. That may encourage some manufacturing moguls to thank Bush on Election Day. But, by the same token, there will be millions who will suffer and who are likely to do just the opposite.