No [tariff] duty should be permitted to stand as regards any industry unless the workers receive their full share of the benefits of that duty. In other words, there is no warrant for protection unless a legitimate share of the benefits get into the pay envelope of the wage-worker.
Acceptance Speech to the Progressive Party Convention, August 6, 1912
Reshoring manufacturing and vital supply chains after decades of neglect was always going to be a difficult process. This article is a good primer on how to do it and the kinds of issues that must be addressed to harden our economy against shocks like COVID-19. Trade agreements that prevent us from favoring local production may have to be abrogated and domestic policies that empower workers will be necessary to prevent the benefits from flowing primarily to Wall Street rather than workers. The article also proposes some radical changes in labor relations to achieve this goal, but minimizes or misses two other necessary policy changes.
We learned in the aftermath of FDR’s New Deal that protected industries can easily slide into anti-competitive practices that create monopolies. The article advocates direct regulation rather than reviving antitrust laws to prevent this, which was actually the approach TR took in his New Nationalism speech in 1913. However, the 2008 financial crisis showed us behind-the-scenes regulation can be captured and then neutered by the very industries it is trying to control. New and robust antitrust laws enforceable in the courts would add transparency to the process of controlling this market power.
The article also fails to mention the importance of education and training. As the author points out, the jobs of the future will require high-level technical skills to create the kind of superior products that command correspondingly high salaries. All levels of government should increase their support for the community colleges and quality vocational tech schools that will be required to provide the necessary training. In the end, our education system and employers will need to develop lifelong learning mechanisms to keep American workers competitive with the rest of the world’s workers.
Americans have the talent. They just need a government that will give them the skills and the opportunity to succeed.
I value and thank all of you who are following New Nationalism whether on this site, the New American Nationalism Facebook page or my Twitter account (see links below). Today, I want to highlight one new follower who brings significant expertise to our debate. Alan Tonelson worked with a number of think tanks over the last 30 years and is a former associate editor of Foreign Policy magazine. His particular expertise is in trade, manufacturing and economics. He is the author of “The Race to the Bottom”, a book chronicling the effects of the hollowing-out of our manufacturing capacity published back in 2002. Alan operates his own weblog called RealityChek at the link below. I expect to rely on his past and future work on the effect of offshoring and unfair trade agreements on American national security, jobs and the economy.
Thanks and I look forward to hearing from all of you during the course of this important discussion!
Military leaders are familiar with the “fog of war”, which refers to the need to make difficult decisions risking lives in the absence of full and clear data. They accept that some of those decisions will prove to be mistakes in hindsight. As the quote from TR makes clear, the courage necessary to make such decisions is not confined to war.
President Trump was correct to liken the coronavirus fight to a form of war. I maintained that we needed a military- style response from the beginning. There will be plenty of time in the future to debate whether the early response to the crisis was sufficient. However, the bickering and indecision in Washington over the past week is inexcusable.
We begin with Trump’s delay in utilizing the Defense Production Act’s powers to force production of vital medical supplies. The President invoked the Act over a week ago, but dithered in actually using it until now, apparently over the misguided idea that industry could be coaxed to respond and that competition was better than government mandates. The US Chamber of Commerce also reputedly opposed forcing production under the DPA because of concerns about “red tape”. In short, the inconvenience of complying with government restrictions was worse that the potential loss of lives.
As TR knew, indecision and uncertainty in a time of crisis will only produce chaos. The federal government needs to provide not just the financing in the economic stimulus package. Industry also needs the certainty in demand and direction in supply to quickly and efficiently gear up to produce the needed medical supplies. Indeed, compliance with a DPA order would effectively shield business from liability lawsuits that could arise out of the inevitable disputes over allocation decisions. Otherwise, the bidding war between the states for supplies will drive up the cost to the government and allow business to unconscionably exploit temporary monopoly power. At a time like this, the federal government should insure that industry directs its attention to the needs of the country as was done during World War II, not the maximization of their own profits.
Speaking of misuse of power, the partisan maneuverings on Capitol Hill are almost as sickening as COVID-19. The stimulus and aid bill should include more targeted protections for workers and a limitation on stock buybacks for at least a year after loans are paid back. In addition, a higher antitrust standard limiting mergers and acquisitions by aid recipients during the same period should be considered. The suspicions built up over the last few years between the White House and Congress also call for the maximum amount of transparency in the aid package. However, the attempt by Democrats to hijack the bill to add pet climate change and social welfare projects betrays their professed concern about aiding workers and the health care system. Republicans need to concede to the worker protections directly related to the virus response and Democrats need to drop the irrelevant riders. Otherwise, this indecision on Capital Hill will cost them the respect of the American people as well as lives.
The fog of this war against COVID-19 requires our leaders to exercise courage in the war itself and restraint in dealing with each other. TR was capable of delivering swift and cutting insults to his enemies in private, but remembered the need to cooperate in public to address a crisis. Our current leaders need to do the same.