On December 16, 2019, Ben Casselman and Karl russell write in The New York Times:
Percentage change in total employment,
Dec. 2016 to Oct. 2019
See https://www.nytimes.com/interactive/2019/12/16/business/trump-midwest-swing-jobs.html?action=click&module=Top%20Stories&pgtype=Homepage
The American economy has found its footing after a summer recession scare. But much of the Midwest is still stumbling.
President Trump campaigned in 2016 on a pledge to restore jobs — manufacturing jobs, specifically — to long-struggling Midwestern communities, and he has made the economy a centerpiece of his re-election campaign.
But job growth has slowed sharply this year in Michigan, Pennsylvania and other states that were critical to Mr. Trump’s victory in 2016, as well as in states like Minnesota that he narrowly lost. Hiring in the region has remained sluggish even as it has picked up this fall in much of the rest of the country. Other economic measures show similar weakness.
The states are struggling in part because they depend heavily on manufacturing and agriculture, two sectors that have been hit especially hard by Mr. Trump’s trade war. Tariffs have driven up prices for imported parts and materials, and pushed down demand for American goods abroad.
“Apart from agriculture and manufacturing, everything’s going OK,” said Ernie Goss, an economist at Creighton University in Omaha who publishes an economic index that tracks nine states from Minnesota to Arkansas. “Well, in this part of the country that’s not comforting. Those are the two industries we depend on.”
An unexpected surge in manufacturing jobs early in Mr. Trump’s term was never as pronounced in the Midwest as elsewhere in the country. Now, those states are struggling as the boom has faded. State-level data through October shows a steep drop in factory employment in Wisconsin, Pennsylvania and other states. Other data paints a somewhat rosier picture, but there is no question that growth has slowed.
“We do believe that manufacturing is in a recession,” said Sarah Crane, an economist at Moody’s Analytics. “That is almost always going to have a disproportionately large impact on the Midwest.”
Still, compared with the crisis of the Great Recession — or even the years of more gradual industrial decline that preceded it — the economy in the Midwest remains on relatively solid footing. The unemployment rate is hovering around 4 percent in much of the region and is even lower in some states. Almost every Midwestern state has added jobs in the past year with the exception of Michigan, where the strike at General Motors temporarily knocked some 17,000 workers off payrolls in October. (November data, which should reflect the end of the strike, will be released later this month.)
It isn’t clear how voters will respond to what has been, so far, a mild economic slowdown. Early polls show Mr. Trump leading in the Midwest against several of his prospective Democratic opponents, and his approval ratings have remained largely steady. Patrick Anderson, an economist in East Lansing, Mich., who has studied how the economy affects elections, said he doubted that voters would view the slowdown as a crisis.
“Many of these voters are resistant to the notion that this is a bad time because they have lived through a very bad time,” Mr. Anderson said.
There is some evidence, however, that the economy is suffering more in places that are particularly important for Mr. Trump’s re-election chances. Job growth has been markedly weaker in Midwestern counties that went from voting for Barack Obama in 2012 to voting for Mr. Trump in 2016 than in the rest of the Midwest or the country as a whole. Manufacturing employment in those counties fell outright in the year ending in June, the most recent data available.
Macomb County, Mich., for example, voted twice for Mr. Obama, but favored Mr. Trump by 48,000 votes — more than his margin in the state as a whole. The county, a suburb of Detroit, fared well economically during the first year and a half of Mr. Trump’s term, adding 7,400 jobs, including 5,600 in manufacturing — making it one of the fastest-growing counties in the country in terms of factory employment.
Since then, however, Macomb’s fortunes have reversed. The county lost nearly 1,400 manufacturing jobs in the 12 months that ended in June and overall job growth had slowed to a crawl. Other counties that swung to Mr. Trump, like Racine County, Wis., and Erie County, Ohio, have seen similar reversals.
Hiring in the Obama-Trump counties has also been weaker in the transportation and warehousing industry — a possible sign that the effects of the trade war have begun to filter through to the rest of the economy.
“It’s spreading beyond manufacturing to industries that move, ship and store goods,” Ms. Crane said.
The United States and China on Friday announced they had reached an agreement to reduce tariffs in what Mr. Trump described as a “phase one deal” between the countries. Few details were available, and past thaws in trade hostilities have proved short-lived. But even if the deal holds, it will take time for the economic damage done by the tariffs to reverse. Michael Hicks, an economist at Ball State University in Indiana, said that job losses were likely to worsen in the coming months and that it was unlikely that the Midwest could fully recover before the height of the election season next fall.
“By September or October of next year, if you’re campaigning in Wisconsin, Michigan, Ohio, western Pennsylvania or Indiana, you can point clearly to the trade war as a cause of growing economic malaise in those states,” Mr. Hicks said.
Gary Reber Comments:
For manufacturing to be re-energized in the United States it will require our decoupling from Communist China and all other slave-wage countries by imposing strong tariffs on all supply-change parts and materials, as well as finished goods and products, and protecting our technology secrets and uniqueness.
Otherwise, we will become increasingly dependent on foreign manufacturing to support American lifestyle ambitions. This fundamentally becomes a security risk for our country as without the capability to manufacture the strength of the country is inflicted.
The difference in wage levels in U.S. dollars is tremendous between what I term slave-wage countries and the United States. Further, there are far fewer or next to none when it comes to regulation for worker safety and environmental protection and enhancement.
These factor result in far lower cost manufacturing in slave-wage labor countries and the prime reason why American corporations have and continue to exit our country to increase profitability by manufacturing in such countries. Over decades, our governments have supported American for-profit corporations with massive tax cuts and subsidies, which have been used to invest in building factories and offices around the world, shutting down jobs and economic growth in our homeland.
Our elected representatives are oblivious to the masses who have been left jobless, with $0 incomes. United States job losses have long surpassed real job gains, and instead the gains have been associated with eliminating full-time, well-paying and benefited jobs and replacing with insecure minimum-wage full-time, part-time and gig jobs.
If we continue to outsource manufacturing to other countries and ignore the consequences of tectonic shifts in the technologies of production, the result will be a collapse of our economy and the incitement of turmoil and upheaval, if not revolution. Why, because the vast majority of Americans are entirely dependent on a job for economic survival.
The majority of Americans, dependent on labor worker wages, no longer think that good jobs and labor wages will return suddenly — if at all — and at a livable earnings level, that they will be able to afford purchasing a home, or that their limited retirement funds (Social Security) will last them into old age. Americans are scared but attribute their worsening finances to job losses, reduced hours, wage givebacks, having to work two jobs and overall reduced earnings. They do not understand the role of productive capital (the non-human “things” used to produce) driven by technological invention, innovation and science, and the requirement for them to become capital “workers,” to support or replace their earnings as labor workers, as the means to earn a viable economic future. And until we, as a society, understand how wealth is produced, how consumers earn the money to buy products and services and the nature of capital ownership, we will not be able to set a course to attain an affluent quality of life for middle and working class citizens, and poor Americans, where everyone, as President Obama stated, “can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” The REAL solution is to build an economy of universally productive individuals and households through broadened wealth-creating, income-producing capital asset ownership.
The wealthy minority understand wealth-building is the result of ownership accumulation of productive, income-producing capital assets, using the for-profit corporate structure to operate as a business.
While welfare, private charity, boondoggle employment and other redistribution measures are now seen as necessary, they do not have to be sustained indefinitely. There are policies that can be adopted and executed to reverse the ultimate direction of collapse of the American market-economy system. Such policies are based on the recognition that as the production of goods, products and services changes from labor intensive to capital intensive, the way in which every human being — not just a few, but EVERY person — earns his or her income must change in the same way. At the core of this quiet revolution is the understanding and commitment to broadening the ownership of productive capital simultaneously with the responsible growth of economy.
Starting with the for-profit business corporation, a legal entity created and sanctioned by state and federal government and judicial law, in place of retained earnings (reinvesting the corporate earnings already earned) and debt financing to finance future corporate growth (neither of which creates any new owners but further concentrates ownership among those who already own), there are two ways to approach reforming the system.
The incentive approach would raise the corporate tax rate to at least 90 percent with full-earnings dividend payouts to the actual owners tax-deductible to the corporation, allowing corporations to completely eliminate paying corporate taxes. Right now there is double taxation. Under this proposal, the actual owners would then have their corporate share earnings subject to personal income tax rates. Incentivizing or requiring corporations to finance their growth by issuing and selling new stock would create opportunities to broaden capital asset ownership. New owners could be created using insured, interest-free Capital Homestead Account financing, instead of retained earnings and corporate debt financing. This way, the market would become more competitive as established corporations and new corporations with viable capital formation projects would have a source of raising monies representing the true asset value of the projects and not have their profits subject to corporate taxation. Thus, the new money creation would be directly tied to the asset value of growth projects, and not inflationary.
This is a win-win for corporations as they can simultaneously create new owners and thus “customers with money,” whose income is generated from the full earnings payout of the corporation. This new source of income will enable Americans to purchase what they produce and create demand for the products and services they need and desire. Ordinary Americans would be further enriched as the economy takes off and grows substantially to double digit percents annually with every citizen contributing productively through their capital assets and becoming a better “customer with money” to support what is being produced. As growth occurs, there also would be created new employment opportunities.
Such corporation ownership-broadening approaches would go a long way to reform an otherwise unjust system whereby the rich get richer systematically and capital ownership concentration is furthered, facilitated by financing future productive capital acquisition out of the earnings of existing productive capital (past savings).
The forced judicial law approach would be a government reform, under the terms of incorporation, requiring for-profit business corporations to issue and sell full-voting, full-dividend payout stock to the general public when they launch an Initial Public Offering (IPO). And thereafter to underwrite their growth with the purpose of providing opportunity for both their employees and non-employees, to participate in their growth, and thereby the economy’s growth, by purchasing the newly issued stock using insured, “pure” interest-free capital credit (CHAs), repayable solely with the full earnings generated by the earnings produced by the actual future capital assets, and without any requirement for past savings to pledge as loan collateral security.
Of course, with either means, there needs to be a financial mechanism put in place that will guarantee loan risks associated with the commercial banks making the “pure” capital credit loans; otherwise banks and lending institutions will not make the loans, and the system will continue to limit access to capital acquisition to those who already own capital — the rich, and those who can afford to speculate on the ups and downs of Wall Street market value. This is because “poor” people and the majority of Americans have no security or collateral, or sufficient income resulting in savings to pledge against loans as security in the event full repayment does not occur, and/or are disqualified on the grounds of either unproven unreliability or proven unreliability.
Criteria must be created to qualify the corporations wanting to form new capital projects, both viable new start-ups and established ones, subject to this policy and those corporations that qualify overseen so as to ensure that their executives exercise prudent fiduciary responsibility to generate loan payback. Of course, the number one criteria would be that any proposed capital project be determined to be viable. Once the guaranteed, interest-free capital credit loans are paid back to the lending entity, the new capital formation will continue to produce income for existing and future owners.
It is critical that viable capital formation projects be selected. This annual capital credit, equally allocated to EVERY citizen (every child, every woman and every man), would be used exclusively by citizens to invest in corporations (both established companies and viable start-ups) seeking to grow. Thus, as corporations add new productive capital, every citizen will have an equal opportunity to acquire new ownership shares in those corporations. The dividends generated by the new shares, after being used to pay off the citizens’ capital loans, will become a second source of personal income, and over time a primary source of income, thus enabling the economy as a whole to grow in a more just and sustainable way.
Through a transparent, multi-vetted, insured financial system, Capital Homesteading would unite the interests of corporations seeking to grow, citizens seeking to invest in those companies, local commercial and cooperative banks, capital credit insurance companies, and the twelve regional Federal Reserve Banks. (See Projected Citizen Wealth Accumulations Under Capital Homesteading)
While tax and investment stimulus incentives (such as government contracts, grants and loans) are tools to strengthen economic growth, without the requirement that productive capital ownership is broadened simultaneously, and in the case of issuing public contracts that the companies awarded the contracts by fully employee-owned, the result will continue to further concentrate productive capital ownership among those who already own, and further create dependency on redistribution policies and programs to sustain purchasing power on the part of the 99 percent of the population who are solely dependent on their labor worker earnings or welfare to sustain their livelihood. By stimulating economic growth tied to broadened productive capital ownership the benefits are two-fold: one is that over time the 99 percent will be enabled to acquire productive capital assets that are paid for with the future earnings of the investments and gain greater access to job opportunities that a growth economy generates.
The key to transforming our economy into one that fully produces efficiency is to embrace innovating and inventing technologically advanced “machine” automations driven by intelligent operational computerization developed by both established corporations and viable start-ups, as well as academia. The approach would need to ensure that the market would become more competitive as established corporations and new corporations with viable capital formation projects would have a source of raising monies representing the true asset value of the projects and not have their profit subject to corporate taxation as long as the full profits are paid out to their owners. Thus, the new money creation would be directly tied to the asset value of growth projects, and not inflationary.
This is a big vision for our country. Americans have to start thinking about the impact of a future in which non-human “things” born of technological innovation and invention will play the dominant role in manufacturing and service providing, and not require masses of human labor.
The choice is either OWN the Future or BE OWNED by an oligarchy of capital asset owners who will control government and the fate of Americans who become jobless and dependent for their economic well-being on the State and whatever elites control the coercive powers of government, using job dependency, the police, courts of law, prisons, the tax system and so on as their means to control.
