Investment in Manufacturing and Infrastructure Is Seed Corn of Economy

Friday’s jobs report shows a gain of 19,000 jobs in the manufacturing sector in October. This is big because for all of 2013 the U.S. has gained a total of 35,000 manufacturing jobs, so more than half of those were gained last month. See this chart at IndustryWeek for the long-term picture.

Scott Paul of the Alliance for American Manufacturing (AAM) said of this report,

“Now we have a jobs report that we can cheer about, despite all the chaos in Washington last month. Manufacturing jobs grew at a healthy clip, and it’s about time. Prior to these numbers, only 12,000 manufacturing jobs had been added all year. But there is no guarantee this momentum will continue. Congress, the President, and governors must step up and support smart public policies to spur private sector job growth. Our plan includes a number of bipartisan proposals to do just that.”

Seriously, read their plan.

Much of this gain was probably auto jobs.

Manufacturing and Jobs

A few things about this report. Manufacturing jobs are really important. I was on a train from Washington, D.C. to New York last night, and passed Trenton, NJ. They have a big, well-lit sign across a bridge facing the train that says “TRENTON MAKES — THE WORLD TAKES.” Wikipedia tells me this is the Lower Trenton Bridge. (Go here to listen to an NPR story about this.)

Wall Street Vs. Manufacturing

Trenton understood that making things was a big deal. Trenton is … how many miles from Wall Street, where they understand that selling a country’s seed corn can make you a huge pile of cash, and you’ll have a private jet to fly to your own private island so you don’t have to worry about what comes next? IBGYBG is the motto there — “I’ll be gone, you’ll be gone.” Or maybe just “WALL STREET TAKES — THE SEED CORN.”

Investment in a manufacturing ecosystem and the infrastructure to support that (including education) is the seed corn of an economy. Making (and growing) things to sell to others is the key to prosperity, a middle class and a positive trade balance. China and Germany get that. All of these are things our country is trying to get back.

So let me say this about that:

1) “Trade” agreements that are not negotiated by all the stakeholders lead to unbalanced results. We have had a series of “trade” agreements negotiated by the giant multinationals and Wall Street and their representatives without labor and consumer and environmental and human rights and other groups at the table. Now surprise of surprises the world is out of balance and the economy only works for the giant multinationals and Wall Street. A huge trade deal called TPP is coming that will just make things worse if the interests of consumers and environmentalists and labor and all the rest are not part of the result.

2) Senate Democrats have put together a package of bills to help bolster American manufacturing and jobs. I wrote about this in last month’s post, Big New Senate Push For Manufacturing Jobs. Please learn about this package of bills. Republicans in the Senate will obstruct it, even though it would get a majority vote. The House leadership will obstruct it by refusing to bring it to the floor for a vote, even though it would get a majority vote. Learn about this and tell others and help out on the pressure and publicity so the public can hold them accountable.

3) “Deferral” is something that you haven’t heard about, but it is a big deal. Companies can “defer” paying their taxes on income made outside the country — so they move jobs and factories and profit centers out of the country. We have got to fix that and that doesn’t mean letting them bring cash home without paying taxes. It means that we have to make the tax laws favor making things here, not out of the country. I think a fee on deferred income is one answer. If they want to keep their profits out of the country to defer taxes, fine. Charge them a 5% fee each year to do that. And don’t deduct that from any taxes, just say they have to pay 5% of what they defer as a deferral fee, each and every year it is deferred, on top of the taxes you will have to pay when you bring it back. Watch how fast they bring it back, and the jobs and factories and profit centers, too.

This week, in Tell Congress A Budget Deal Must Stop Tax Haven Abuse Isaiah J. Poole writes about a new Senate bill to do something about tax haven abuse by corporations,

The legislation would take several measures to end the ability of American corporations to escape taxes by laundering profits through offshore subsidiaries. It would also eliminate tax deductions corporations receive when they move domestic operations overseas, and would take away the incentive of American corporations to move intellectual property developed in the United States to offshore entities so that profits on that intellectual property can’t be taxed in the U.S.

Isaiah links to this Stop Tax Haven Abuse petition, saying,

Sign our petition to let Congress know that ending tax haven abuse and insisting that corporations pay their fair share has to stay on the negotiation table, regardless of the intransigence of conservative Republicans.