Gingrich, Clinton, and The Moldy Economy

Below you'll find a post which addresses the lethargy of the US manufacturing sector, which is historically the most important economic sector (at least since the Industrial Revolution.) It's not very pretty--as a matter of fact, it is damned important to most people in the Upper Midwest (think GM, FoMoCo, Maytag, etc.)

This lethargy arises from two principal causes: NAFTA and MFN/Red China. I have consistently questioned the Bush Administration's benign neglect of the trade deficits--but to be fair, the Bush Administration did not initiate this problem: it was Newt Gingrich and Bill Clinton who put the icing on this moldy cake.

Now Newt wants to be President, and so does Hildebeeste. This is not good news.

More today from P J Buchanan:

Now that the U.S. trade deficit for 2005 has come in at $726 billion, the fourth straight all-time record, a question arises.

What constitutes failure for a free-trade policy? Or is there no such thing? Is free trade simply right no matter the results?

Last year, the United States ran a $202 billion trade deficit with China, the largest ever between two nations. We ran all-time record trade deficits with OPEC, the European Union, Japan, Canada and Latin America. The $50 billion deficit with Mexico was the largest since NAFTA passed and also the largest in history.

... The entire job increase since 2001 has been in the service sector – credit intermediation, health care, social assistance, waiters, waitresses, bartenders, etc. – and state and local government.

But, from January 2001 to January 2006, the United States lost 2.9 million manufacturing jobs, 17 percent of all we had. Over the past five years, we have suffered a net loss in goods-producing jobs.

As for the "knowledge industry" jobs that were going to replace blue-collar jobs, it's not happening. The information sector lost 17 percent of all its jobs over the last five years.

In the same half-decade, the U.S. economy created only 70,000 net new jobs in architecture and engineering, while hundreds of thousands of American engineers remain unemployed.

If we go back to when Clinton left office, one finds that, in five years, the United States has created a net of only 1,054,000 private-sector jobs, while government added 1.1 million. But as many new private sector jobs are not full-time, McMillion reports, "the country ended 2005 with fewer private sector hours worked than it had in January 2001."

This is an economic triumph?

But are not wages rising? Nope. When inflation is factored in, the Economic Policy Institute reports, "real wages fell by 0.5 percent over the last 12 months after falling 0.7 percent the previous 12 months." [And health-care costs have risen, further decreasing NET wages.]

The Libertarians and the "see-no-evil" Bush-ites will continue to whistle past this graveyard; the crowd which insists that "buying cheaper" is the Golden Ring of economic success will endlessly caterwaul that WallyWorld should get the Nobel Prize for economics; and the Fortune 50 will continue to move productive assets offshore (that's factories, machinery, and tools.)

This is a Faustian bargain. I believe that it will have a very significant effect on elections in 2008, when "pocketbook" issues will dominate the kitchen-table conversation, not national security.