Bold New Steps

Column by Paul Hein.

Exclusive to STR

How goes manufacturing in the United States? Not very well. We’ve all seen the empty stores in the mall, and read of small--and sometimes not so small—firms failing, or being gobbled up by larger ones. Only if you were in a coma could you fail to know of American firms moving to Mexico, or China, and the resultant loss of jobs.

Manufacturing employment has declined steadily since 1979, especially in the 2000s, with the expansion of Chinese companies, which contributed to an amazing drop in American jobs. Specifically, a loss of nearly 6 million jobs--about one third of the workforce. Manufacturing in this country has yet to return to its pre-2008 level.

Some writers on this subject have opined that if this decline is to be reversed, the government must take “bold new steps” to accomplish it.

Personally, I cringe when I think of our Rulers taking “bold new steps,” since whenever they do, someone gets trampled. Sadly, however, our Rulers are so entwined with every aspect of society that it is a virtual impossibility that any significant economic change can occur absent government involvement, built, perhaps, upon a foundation established by Obamacare.

Let’s look at the automobile business. You needn’t be very old to remember the Oldsmobile, Pontiac, Plymouth or Mercury, which have only in recent times departed the automotive scene. If you are as ancient as I, you may recall the DeSoto, Packard, Studebaker, Hudson, Nash or Willys. At one time, a less populated America supported all of these marques. So what happened? A simple--maybe overly simple--answer is: nobody bought them! Or, more correctly, not enough people bought them to make their continued manufacture profitable. They were sacrificed to free up the resources necessary to make them, for other, more profitable, ventures.

So what “bold new steps” might our Rulers have taken to prevent this shrinkage of automobile manufacturing? With the hindsight gained from an analysis of Obamacare, we can see what went wrong. In a word, lack of incentives.

There are two kinds of incentives: carrot and stick. The Rulers could have simply declared: buy a Studebaker, or else! That would likely not have been well-received. But how about: buy a Studebaker, and get a tax credit? Given the size of the tax credit, that could have boosted Studebaker sales. Ditto for Packards, Hudsons, etc.

But wait! What about the continuing brands like Ford or Chevy? The gain in Studebaker, Hudson, Packard, et al. sales could be at the expense of the non-failing brands. The whole purpose of the program, after all, isn’t simply to have people switch brands, but to entice non-buyers into the automobile market for cars that weren’t otherwise selling well. How could that be accomplished?

This is a thorny problem, and the solution, not surprisingly, would be the creation of a new government bureaucracy, the Automotive Manufacturing Commission. If the scheme was to work, it might be necessary for more regulation as to automobile pricing, the establishment of quotas for manufacture and sale, oversight of advertising and marketing, etc.

In fact, as it turns out, my ideas are already creeping into effect in the form of government inducements regarding electric automobiles, the impracticability of which is such that their sales would approach zero were it not for government meddling--oops--intervention. And that intervention could have been facilitated by judicious political contributions from the marketing gurus as Nash, Hudson, etc. (If only the Clinton Foundation has been around then!)

Sadly, it’s too late to resuscitate the automobile manufacturers who’ve long since gone belly-up. But look around and see all the other opportunities for “bold new steps” in myriad other industries! Remember when TVs were Philcos, or Motorolas, or Zeniths, or Admirals? Or when your shirts were not made in Zimbabwe? Or your refrigerator in Korea?

Our benevolent Rulers have already transformed manufacturing in this country with their imaginative policies of taxation and regulation. Now it’s time for them to stop pussy-footing, and really show what they can do! If Big Government has brought us the present level of prosperity that we’re told we’re enjoying, think of what REALLY Big Government can do! Packard, anyone? Kelvinator? Admiral? We’d still have them if our Rulers had done then what they’re doing now!

Proper incentives could bring back the Edsel!