The Tide Has Turned, The Future Beckons

By Cesar Fernando Lumba

When I started this blog in 2012, I felt like the legendary lone wolf voice in the wilderness. There were many readers who did in fact agree with me and even thanked me for voicing my opinions, but they were a mere handful in comparison to the total population of this, the greatest country in the universe.

Today, Hillary Clinton is saying it, Donald Trump is saying it, Bernie Sanders has said it, even Green Party candidate Jill Stein has a TV commercial that says it.

Every responsible politician in America now swears that he or she is in favor of bringing manufacturing back to America.  Everyone still agrees with President Obama that the country must work to be competitive in the manufacture of high-tech and new industries being created as the world marches toward artificial intelligence, the Internet of Things, the cities and products of tomorrow. No one disputes that America must lead in the manufacturing industries of the future.

But everyone is also now in agreement with the underlying premise of this blog:  that traditional manufacturing must be brought back to America.  From China.  From Mexico. From Bangladesh.  From third-world countries that have been the destination of factories that have fled America in recent decades.

Hillary Clinton’s approach is interesting. She will make sure that the rich people and corporations pay their “fair share” of taxes, insinuating that such people and corporations are not now paying their fair share, which generally means that they are not paying enough.  Which translates to higher taxes for the rich and the powerful corporations.

She will also impose an exit tax for corporations that leave America and transfer their factories to China, Mexico and other countries.

The tax money that is raised will finance job-creating projects like infrastructure repair and new factories that will employ millions of unemployed and underemployed Americans, especially those who saw their factories being closed in favor of cheap labor countries.

This approach is similar to what Bernie Sanders was advocating during his primary campaign for the presidency, signaling to the nation that Hillary has been Feeling the Bern.

Trump has no specifics in his promise to bring back manufacturing.  But he does claim that he will be the greatest job-creator ever and will bring back manufacturing from offshoring destinations China, Mexico and other countries. Because he has no specifics, we cannot take him seriously.

The Hillary Clinton plan does two things:  1) it does bring manufacturing back to the U.S. and 2) it tends to partially reverse the trend of more upward mobility for the rich and super-rich that started in the 1980s.  It reverses the wholesale transfer of wealth from the middle class to the top 1% of the American population.

The net result of the Hillary Clinton approach – if successfully passed in Congress – is that the American middle class will be rebuilt after years of neglect while our politicians coddled the rich and powerful.

How realistic are the chances of Hillary’s plan making it through Congress?  Right now, zero chance.  But, if Congress becomes Hillary-friendly, Hillary’s vision could become reality.  The U.S. Congress does not have to turn blue, meaning Democratic, for Hillary’s plan to succeed.  All that is required is for enough of the country’s lawmakers to be convinced that the Hillary solution is right for the country.

A tall order, considering how polarized the country is and that anything that comes out of a Hillary presidency is bound to be opposed by members of the opposite party.

Which brings us to the Trump campaign.  The Trump campaign is polarizing not only to the red-blue struggle in the country, it is polarizing within the Republican Party itself.  Out of the in-fighting and implosion in that political party can come – after the elections and assuming that Trump ultimately loses – a breakup of the Republican-Tea Party coalition, resulting in a smaller but tighter Republican Party that can actually work with a Democratic President.  A coalition of Democrats and enough Republicans who are willing to work with Hillary to put the country on a course correction can lead to legislation designed to bring manufacturing back from offshore and the creation of new high-tech industries that will manufacture the products of tomorrow.

Republicans and Democrats worked together in the past for the good of the country.  They can do so again if the Republican Party and the Tea Party obtain a divorce, albeit a rancorous one, and the remnant Republican Party sees the light and concentrates on helping the needy in the country instead of trying to torpedo a Hillary Clinton presidency.

What are the prospects of this happening?  Don’t bet your house on this.  But, as Obama says, there’s always the audacity of hope.  Let’s hope that Hillary Clinton becomes president and enough Republican members of Congress join with the Democrats for the good of the country and that the millions of American workers who saw their factories closed and manufacturing transferred abroad, mainly to China and Mexico, can look forward to working in the new, modernized factories that shall be built.

There is of course the alternative – one I’ve been advocating for years.  If Hillary can convince enough Republicans to work with Democrats, still assuming a Hillary victory in the Fall, they could adopt our proposal:  Congress and the President could forge a new doctrine that will guide all commerce and manufacturing in America not only today but down through the coming centuries.

The doctrine that says 51% of all manufactured products sold in the U.S. must be manufactured in the U.S.

Major manufacturers that make their products in foreign countries and sell those products in the U.S. will be given 5, 7 or 10 years to comply with that new doctrine, depending on the complexity of the production process. After such a system is installed in America, we will encourage other countries to adopt a variant of that system so that the wealth created by manufacturing will be shared by most industrialized countries in the world.

The net result will be the reawakening of Europe, Canada, Australia.  It will mean a more equitable distribution of wealth through manufacturing in Asia, especially Japan, South Korea and India.  It will mean the rise of many countries in Africa and South America as manufacturing centers in their regions of the world.

The Chinese, Mexican and Brazilian growth rates will slow down, but in their place will come a new world prosperity that will create wealth for most of the nearly 8 billion people in the world, including the Muslim world, which might succeed in reducing the number of Muslims who turn to radicalism because it beats being long-term unemployed and being disrespected because they are long-term unemployed.

The world will permanently bury the theory of comparative advantage, which the colonizers sold to their colonies to assure the perpetuation of colonial empires.

We do the manufacturing and mining, you plant the rice and bananas,” so said the colonial masters to their subjects.

And, “We do the manufacturing for the world, you take care of selling our cheap products to your people,” so say the Chinese to the rest of the world.

Both bold statements screamed into microphones at the altar of the principle of comparative advantage.

If the world ignores the theory of comparative advantage and adopts the policy of making sure that local populations have a hand in the manufacture of both traditional and futuristic products, every individual in the world will have a chance at a good life.

The dream of a truly United Nations shall be closer to reality.

(Cesar Fernando Lumba’s email is lumbacesar@gmail.com.  You may either post your comments in the comments section of this blog, or you may email me any of your concerns or questions.)