August 13, 2010

Mr. President.  This country was great because it provided universal education,

some semblance of class equality and some chance of rising to the top.  Less and

less of the latter, if recent records from  top schools are any guide, and class

inequality is growing rapidly as income differences between top and bottom

continue a shameful divergence.

Our workers used to be the best educated, could think for themselves, offer

useful suggestions and often improve product and process.  Now teachers are

being laid-off, education is a shambles, and the value-added declines as real

manufacturing jobs are shipped overseas.  Tool and die-workers, the cream of

manufacturing operations, taking years to train, are idled and wasted.  True,

computer-controlled laser sintering has been introduced but its impact to date is

minuscule.  Nowadays, assembly operations are ballyhooed by politicians as great

manufacturing jobs.  All of this comes to mind in light of the Manufacturing

Enhancement Act signed into law this week.  Yes, it will improve the situation

(some) for manufacturers by reducing tariffs on their inputs, but we need a major

coherent rethink of policy, not just a patchwork of fixes, if there is to be a

structural shift in manufacturing and service sector trends.

Have you ever driven through the industrial heartland of Europe?  I don’t mean

the relatively new auto plants in Wales and Sunderland (U.K.); they are just

assembly operations like ours in Alabama and Ohio and Tennessee set up by

foreign makers.  No, I mean the industrial heart of Germany,  the manufacturing

centers of high-end machine tools and precision machinery there, or in

Switzerland, France, or Sweden and so on.  By the way, Holland might be known

for cut flowers and butter but it also houses Phillips one of the largest electrical

manufacturers in the world and joint inventors of Blu-Ray.

We and the U.K. responded to industrial pressure from newer economies by cost-

cutting (generally workers salaries while increasing management bonuses),  

trying to compete on price.   The Europeans decided, instead, to move upscale

improving training levels and skills.  So while European automakers are thriving,

ours (and the British) have been moribund.  Recent GM successes, too, owe a

heavy debt to the designers and engineers at Opel in Germany.  There is a

shortage of engineers and computer scientists in Germany while ours are being

laid off and new graduates can’t find a job.

Economists boast of our per capita GDP but that disguises a multiplicity of sins,

all raising our GDP:  the guarding of prisoners in jail (highest rate of incarceration

in the developed world); crime and its associated machinery (also highest); the

lawyers in a litigious society; the income chasm between high-end and low-end

services when the manufacturing middle has been hollowed out; thus each

billionaire CEO raising the per capita GDP of thousands of minimum wage

earners; the wasted resources in mindless form-filling and rule enforcing by our

health care industry (costs for administration, again, the highest in the

developed world while health care delivered is rated near the bottom).  The list is

endless, although it clearly demonstrates the futility of equating per capita GDP

with quality of life.  On the latter subject, did I mention the six-week and more

European vacation, paid leave for up to a year following the birth of a child,

unemployment compensation plus retraining to secure a new job, or working

1500 hours or less compared to 2000 and more in the U.S.  We work a third more

than they do, or they work a quarter less than we — this alone points to how

confusing and deceptive numbers can be.

To see the difference between GDP numbers and quality of life, one can walk

around a city here and in Europe for comparison — but not in Britain for they

having followed similar policies to us are suffering the same consequences.

It is high time we investigated apprenticeship and retraining programs (the

German model is a good starting place) necessary for a work force to meet the

needs of modern manufacturing.  No longer will the high-school-plus-corporate-

training model suffice if we are to become competitive again and restore the

working middle class.

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