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Michael Collins wrote, “Hope is not a plan” in his
book
Dismantling the American Dream, How Multinational
Corporations Undermine American Prosperity.
In other words, we cannot hope to rebuild American
manufacturing without doing things differently than
we’ve done in the past 30 years. The industrial
policies we have been following resulted in the
decimation of the U.S. manufacturing base with the
loss of over 70,000 manufacturing companies and 5.8
million manufacturing jobs.
Michael proposes
a number of solutions in his book, some of which are
the same or similar to solutions I proposed in my
book,
Rebuild Manufacturing – the key to American
Prosperity. First, we both agree that we
need a new industrial policy and plan. The
free trade policy we’ve followed since WWII has only
benefited multinational corporations at the cost of
millions of manufacturing jobs and an escalating
trade deficit. Every President in the past 30 years
had the goal of doubling exports and creating more
manufacturing jobs, but the trade and industrial
policies they promoted did just the opposite.
President Biden’s Build Back Better Plan has the
goal of creating five million jobs, but without
measurable objectives and a plan to achieve those
objectives, Michael feels “nothing will change.”
Michael points out that “it will take a
reduction in the trade deficit of 20 percent to
bring back one million manufacturing jobs.” That
means, we would have to reduce our trade deficit by
100% of the 2020 trade deficit total to create five
million jobs. However, the opposite occurred as the
trade deficit increased from “$676.7 billion in 2020
to $861.4 billion in 2021… [and] $945.3 billion in
2022” according to the
Bureau of Economic
Analysis.
Michael notes that
“politicians, Democrats or Republicans, don’t seem
to be willing to publicly commit to an objective of
reducing the trade deficit.” He comments, “This is
dangerous territory, and government is the only
entity that can do anything about the trade
deficit.”
I came to a similar conclusion in
the chapter on “Have Free Trade Agreements Benefited
American Manufacturing” of my book. I also
recommended that the U.S. do not enter into any new
trade agreements, and Michael agrees, writing. “We
should oppose any FTA that will cost jobs or
increase the trade deficit.”
The question is
how do you reduce a trade deficit.? Since
Michael and I are both members of the Coalition for
a Prosperous America (CPA), we support addressing
currency manipulation and the overvalued dollar as
two of the main ways to balance trade. Michael
wrote, “The root cause of the trade deficit is that
the United States is not price competitively
primarily because the dollar is overvalued by 20 to
30 percent.” However, he wrote, “Most of the large
importer corporations and Wall Street do not want
the government to enforce the current WTO and IMF
laws against currency manipulation or to devalue the
dollar because they want to keep foreign import
prices low.”
Michael summarizes four methods
that can be used to reevaluate the dollar:
-
Impose countervailing duties (CVDs) – tariffs or
taxes on imported goods that offset subsidies by
trading partners.
-
Tax purchases by using a Market Access Charge
(MAC) on all foreign investments in the U.S.,
including stocks, bonds, real estate, companies,
or intellectual property.
-
Implement a withholding tax on the profits and
dividends earned by foreign inventors that
finance the dollar.
-
Tax sellbacks – impose a 30% tax on the profits
of companies that have offshored.
Michael wrote that “A new working paper from
the CPA called ‘Imports Growth and Job Creation from
a Competitive Dollar’ reveals that if the dollar
value could be reduced by 27 percent it would result
in export growth five times faster than baseline,
while imports would grow more slowly.”
Another CPA proposal that Michael supports is “Make
existing China tariffs permanent” and “impose the 4A
and 4B tariffs.” He wrote, “The Trump
tariffs with China are working, and in fact, are our
only defence against China’s mercantilist cheating.”
He recommends that “Congress should limit tariff
exclusions for importers, especially those that are
not using the imports to manufacture in the United
States.”
Michael also recommends creating “a
more level playing field with our trade partners” by
building reciprocity into our trade agreements.
This would “allow the United States to impose
reciprocal duties on all countries who have higher
tariffs if they do not lower their tariffs and
VATs.” I wrote in my book, “Over 150 countries in
the world have shifted a significant portion of
their tax mix to border adjustable consumption taxes
—Value Added Taxes (VATs) or goods and services
taxes (GSTs)…The rates range from 12% to 24% and
average 17% globally.” In 2017, CPA proposed a 12%
GST to be applied as a credit to the 15.3% payroll
tax. Michael wrote, “We should level the playing
field by introducing a program to match the foreign
country’s VAT…”
In order to reduce the
unfair advantage that multinational corporations
have under current U/S. trade policy, Michael
supports CPA’s proposal for “Sales Factor Tax
Apportionment” that “would tax profits based on
where the product is sold and eliminate the ability
of multinational companies avoiding taxes by
shifting profits offshore.” I had explained that
this tax proposal would be “determined solely on the
percent of a company’s world-wide sales made to U.S.
customers.”
He also recommends the new
proposal for a “Global Minimum Corporate Tax of 15
percent”, which “would give government the ability
to tax our home company’s overseas profits at 15
percent, and deter them from us9mg tax shelter
countries to avoid taxes.”
Michael supports
CPA’s proposal for the U. S. to withdraw from the
World Trade Organization (WTO) because the
requirement of consensus on trade rules and
decisions by the 164 member countries have “turned
out to be detrimental to the United States,” In
addition, he supports “repealing the Permanent
Normalized Trade Relations (PNTR) with both Russia
and China.”
He writes that these actions are
first steps in “decoupling form China” and then
lists a dozen different steps to be taken thereafter
that CPA recommends as part of the decoupling
process.
Michael also briefly mentions the
work of Harry Moser, founder of the Reshoring
Initiative, to help companies use the Total Cost of
Ownership Estimator™ to reshore manufacturing to
America. I have had the pleasure of
collaborating with Harry Moser since 2010 as an
authorized presenter on how to use TCO to return
manufacturing to America and devoted a whole chapter
on reshoring in my book.
The Reshoring
Initiative 2022 Data
Report
states, “Jobs announced in 2022 were a
record-breaking
364,000 – up from 238,000 in 2021.
The total number of
jobs announced since 2010 is now nearly 1.6million.”
However, Michael notes that “at the current rate of
reshoring, it will take over 30 years to reach
Biden’s goal of five million jobs.”
Michael’s last chapter makes a brief mention of the
need for workforce training and comments that
instead of training, “MNCs have used stop gap
measures such as outsourcing, automation, buying
services from foreign vendors, and poaching trained
workers from their suppliers, but these strategies
no longer work and the shortage of workers has
caught up to American companies.”
I felt
that workforce training was so important to
rebuilding American manufacturing that I included a
chapter on the subject of how to foster and develop
the next generation of manufacturing workers in my
book. Since my book was published, I have written
many articles on this topic.
Most of the
above recommendations are focused on government
policies, but the likelihood of making such major
changes in policies is slim to none at the present
time. That is why we need to shift the mindset from
a prevailing worldview of ‘inevitable decline’ of
American manufacturing to one of ‘vibrant
opportunity. We need a new level of thinking and
action that scales solutions at hand with
unprecedented collaboration and organize our efforts
to achieve the following true north goals by 2030:
-
50,000 world-class domestic manufacturing small
– medium– large enterprises (10x increase)
-
Add 5 million middle-income manufacturing jobs
(40%)
-
Add $1 trillion to the economy (40% increase)
We need to focus our attention on disruptive
and emerging opportunities that create new growth
opportunities for companies, people, communities.
We welcome collaboration with
Industry Reimagined
2030.
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