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When The Free Market Hits Home

Posted by: 14. September 2015

Different industries attract different types of people. In my experience, manufacturers are independent minded, analytical, more likely conservative, hard-working folks. We might also think of ourselves as free-market capitalists who want government out of our business.  So how do you feel about a recent report from the scrupulously nonpartisan Information Technology & Innovation Foundation (ITIF) that insists that U.S. manufacturing is in sharp decline and in desperate need of congressional action to help offset the devastating effects of the free market?

According to the ITIF’s August 2015 report, which criticizes a recent Congressional Research Service (CRS) state of manufacturing analysis, U.S. manufacturing is a victim of global free markets, and not a healthy and growing industry as the CRS analysis portrays.  The CRS analysis was requested by congress to help it determine the actual state and health of U.S. manufacturing. The reports erroneous conclusion of the industries healthfulness will make it much less likely that congress takes action to provide needed economic stimulation for the manufacturing sector.   

The CRS report entitled “U.S. Manufacturing in International Perspective” must have been written by free market ideologues, as it denies 1) that American manufacturing is in trouble, and 2) that congressional action is capable of helping it. The CRS report recommends total inaction in support of the manufacturing sector.

The ITIF critique of the CRS report points out the slight-of-hand, misrepresentation, and camouflaged statistics that allow the CRS to throw manufacturing under the bus.  How do millions of lost jobs over the last 15 years get spun into a success story?  Yes, productivity has increased by about 16 percent, but output has decreased by almost 200 percent.  And there’s a difference between greenfield investment (building new factories) and brownfield investment (transferring assets from U.S. owners to foreign owners), but the CRS conflates the two. In truth, only 3.4 percent of new investment created anything new. The CRS’s conclusion that legislation to help U.S. manufacturers isn’t needed, while the rest of the world’s governments stack the deck to help their own manufacturers is either naïve or cynical, or worse, our competition has infiltrated the government and written the CRS report.

The ITIF’s Critique of CRS’s “U.S. Manufacturing in International Perspective” may change some manufacturer’s minds about the ideology of free markets as the gospel. 

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