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The Reshoring Imperative

Why can’t the greatest economy in the history of the world produce swabs, face masks and ventilators in adequate supply?
—tweet by Lawrence Summers, former head of President Obama’s National Economic Council, March 21, 2020

The Covid-19 pandemic brought tragedy and disruption to America. But it has also provided another stark warning concern­ing the country’s disastrous overreliance on overseas production. It has demon­strated that without a strong, self-reliant industrial base, this country’s ability to forge a healthy, prosperous future—and even its ability to defend itself against foreign enemies—will be severely compromised.

The fact that the world’s largest, and theoretically most advanced, economy could not provide basic medical equipment like masks or the basic components of pharmaceuticals came as a shock, particularly as the country was forced to lean on its leading geopolitical rival, China, to address a health emergency that originated there.1 These developments have stirred some businesses and politicians in both parties to seek ways to encourage domestic production.2

Unfortunately, the response could prove too little and too late. Offshoring is not fundamentally a supply-side problem, as some sug­gest, caused by a lack of skilled workers or technical expertise in the United States, but stems from the insatiable demand of U.S. firms for cheap, non-union, and (if possible) politically unfree labor. Firms engage in offshoring to avoid paying American citizen-workers and sometimes, even at home, exploit short-term foreign workforces lacking in politi­cal, civil, and labor rights.

Rather than simply rehearsing the common boilerplate of “fixes” now being discussed, however necessary, reviving America’s industrial base will require the stronger medicine of a comprehensive national industrial policy. These tools include support for skills training and tax incentives, but would extend to policies like government procurement, local content requirements, tariffs, and quotas to compel firms to local­ize production in the United States, using American workers, and—if necessary—using the power of the government to mandate strategic production.

The Problem

The pandemic demonstrated in the starkest possible way the vulnerabilities brought about by deindustrialization. Camille Farhat, a for­mer top executive at General Electric, Baxter, and Medtronic, and now CEO of Michigan-based manufacturer RTI Surgical, argues that many critical medical products can be produced domestically. “Any­thing in this space is not too difficult to bring back,” the Beirut native suggests. “It’s often a product not of skill and labor but taxation that drives companies else­where. We have to ask ourselves sometimes is America for America?”

Farhat hopes the pandemic will convince other business leaders to stop “destroying the supply ecosystem” that makes production possi­ble. “To stay safe, you have to do contingency planning—you have to restore the network and maintain surplus production capacity. Hope­fully, we are learning that lesson.” The undermining of what has been described as “the industrial commons,” which encompasses not just production, but research and development, supply chains, embedded process development, and engineering capacity, is now widely recog­nized as a critical problem.3

This extends well beyond medical equipment. This year auto pro­duction was curtailed due to a shortage of semiconductors tied to a drought in Taiwan.4 America’s push into renewable energy runs head-on into China’s dominance of solar panels and the essential metals needed to produce “clean” electricity and electric cars.5 And in technology, U.S. companies, even under Trump, increasingly look to places like India, the Baltic states, and the Philippines for high-tech support, and increasingly design as well.6

The most critical loss has been in manufacturing. Between 2000 and 2007 alone, the United States hemorrhaged 3.4 million jobs, about 20 percent of the sector’s total. It lost a further 1.5 million manufacturing jobs between 2007 and 2016.7 These rapid losses were unique in American history, and without parallel in other major Western coun­tries. Throughout the period between 2004 and 2017, the U.S. share of world manufacturing shrank from 15 to 10 percent, while our reliance on Chinese inputs doubled, even as our dependence on Japan and Germany shrank. The trade deficit with China, according to the Eco­nomic Policy Institute, cost as many as 3.7 million jobs since 2000.>8

This deficit now extends even to high-tech products, which sank from a surplus of $32 billion in 1997 to a deficit of $200 billion in the twelve months through February 2021 (in constant 2000 dollars). Innovation remains, but often merely lags production in being off­shored.9 When companies move production abroad, they often follow up by shifting research and development there as well.10;Remarkably, this has also included sources of critical components for military goods, many of which are now produced in hostile countries like China.11

These shifts of production overseas may boost temporary profits but have proved a disaster for many communities, and ultimately many companies. Between 2000 and 2015, the death rate increased for middle-aged white Americans with a low educational level. Anne Case and Angus Deaton say this trend is attributable primarily to “deaths of despair”: suicides as well as deaths related to alcohol and drugs, includ­ing opioids, that are par­ticularly concentrated in deindustrialized communities.12John Russo and Sherry Linkon have described how the impact of deindustrialization on communities like Youngstown, Ohio, an old steelmaking center, undermines the sense of worth and optimism among residents, many of whom can recall better days:

In places like Youngstown, many people still remember what life was like when employment was high, jobs paid well, workers were protected by strong unions, and industrial labor provided a source of pride—not only because it produced tangi­ble goods but also because it was recognized as challenging, dangerous, and important. The memory of what it felt like to transform raw ore into steel pipes and to be part of the connect­ed, prosperous community that work generated still haunts the children and grandchildren of those workers. They long for the sense of pur­pose that industrial labor brought, even as they stock shelves at Walmart, wait tables at Applebee’s, and try to persuade strangers to make donations from a cubicle at the local call center.13

A New Beginning?

Are we at the point of finally addressing these issues? Trade expert Beth Baltzan, Democratic counsel to the House Ways and Means Trade Subcommittee from 2012 to 2016, is hopeful about changing attitudes in both parties on trade. “Covid-19 has exposed a critical flaw in the global trading system: a manufacturing base that has left the world vulnerable to shortages of life-saving supplies,” she ex­plains.14 Economic nationalism, notes the left-leaning American Pros­pect, has gone “mainstream,” even though it was initially raised to prominence by former president Trump, with his often hyperbolic “America First” rhetoric.15

The pandemic further undermined the case for economic globalism. Democrats like New York governor Andrew Cuomo, Ohio’s Sherrod Brown, and Michigan’s Gary Peters joined Trump and Republicans like Senators Rob Portman and Josh Hawley to call out our ruinous depend­ence on Chinese medical supplies and high-tech gear. Democrats, sug­gests former Indiana senator Evan Bayh, need to embrace a pro-U.S. manufacturing stance if they want to compete effectively in the Heartland.16

While rejecting Trump’s often crudely unilateral approach, the Biden administration has continued to pursue many of Trump’s themes.17 The Biden administration has announced plans to bolster U.S. industrial production under its “build back better” rubric and has expanded “buy American” government procurement programs. Both parties favor more robust efforts to meet China’s mounting challenge in science and technology, such as the U.S. Innovation and Competition Act, which recently passed the Senate by a wide margin.18

These programs should both favor American companies and en­courage foreign corporations to locate more production here. One promising sign is Taiwan Semiconductor Manufacturing Company’s decision to build a $12 billion new plant in Arizona. Samsung, a Korean chipmaker, is also shopping for sites in the United States for a $17 billion plant.19 These investments could help tighten supply chains on critical goods.20

The onshoring trend shows signs of expanding to other industries. Black and Decker has recently moved production to a new facility in Fort Worth, Texas, as part of its reshoring strategy. Appliance giant Whirlpool has reshored over two thousand jobs, while General Elec­tric, Apple, Caterpillar, Goodyear, General Motors, and Polaris have reshored some functions as well. This also means new opportunities for smaller U.S. companies who supply these firms and form what has been called America’s “industrial commons.”21

Indeed, even some American firms long dependent on imports are looking for domestic alternatives. Little Tikes, a major toy maker based in Hudson, Ohio, has started shifting production out of China and back to Ohio.22 Executive vice president and worldwide general manager Thomas Richmond says that manufacturing more of its toys at its northeast Ohio plant, instead of overseas, has advantages in allowing the company to meet demand quickly. When Little Tikes started out more than forty years ago, everything was made in the United States, but most production moved to China in the 1980s and ’90s, when that country’s manufacturing sector began to take off. Now, “the wheel is kind of coming full circle,” Richmond says.

Producers of transportation equipment like Extreme Trucking have started shifting factories back to the United States from China and other developing countries as well. Based in Redwood City, Cali­fornia, the company has shifted to sourcing production from firms located in Ohio, North Carolina, Pennsylvania, and Arizona. Com­pany president Daniel Burrows cites several reasons for the move: the threat of trade wars and tariffs, rising costs in China, and the need to be close to major customers, who are clustered in North America. Although this process started before the pandemic, the disruptions made the shift ever more critical. Notes Burrows, “The simplification of our supply chain and logistics cannot be overestimated, especially in our current Covid-19 environment. The pandemic demands fast and strategic decisions in the face of uncertainty. We can still serve our customers if a plant in Mexico is shut down because we have a supplier in Ohio up and running.”23

Blame America First

It is necessary to understand, however, that such sentiments are still relatively rare. Despite some isolated examples of reshoring, there is no evidence that most companies will engage in significant reshoring on their own. Trump’s tariffs did not have the big impact Trump promised. The annual rate of jobs coming from offshore, observes the Reshoring Initiative, increased from 6,000 in 2010 to 180,000 in 2017—a good beginning, but still a mere 5 percent of total U.S. industrial employment.24

Resistance to reshoring remains entrenched, particularly among com­panies with strong Chinese supply links.25 According to a survey by the American Chamber of Commerce in China, 71 percent of U.S. firms have no intention of leaving China in spite of Sino-American trade tensions and growing security concerns. The Economist Intelli­gence Unit predicts that large-scale reshoring to North America will not take place on its own and that multinationals will continue to offshore production to low-cost, mostly Asian countries once pan­demic fears subside.26

The justifications for offshoring are often couched in what could be called a “Blame America First” argument. In this narrative, cor­porations say they would love to keep production in the United States—they really would, honest to God!—but America’s taxes, regulations, and poor workforce make this impossible. Although there is some truth to these assertions, the Blame America First narrative peddled by American business lobbies obfuscates the main reasons for corporate offshoring: boosting corporate profits by means of labor and regulatory arbitrage.

Chinese and Mexican and Bangladeshi workers are not more brilliant than American workers, and not necessarily more skilled. They are just much cheaper. This is unlikely to change in the fore­seeable future, and it’s also unlikely that countries such as China won’t continue to adjust the scales in their favor through intellectual property theft, massive subsidies to producers, and currency manipulation of the kind China has practiced in the past.

It is pointless to denounce corporate leaders for being unpatriotic. If one company sacrificed its profits to support the interests of U.S. workers or U.S. national security, it might lose its markets to more ruthless competitors. Moreover, all multinationals will seek access to all of the world’s major markets—emphasizing North America and Europe and China today, perhaps India tomorrow.

But governments can dictate terms for allowing market access. Lever­aging market access in this way may violate the neoliberal orthodoxy that has dominated the “post-historical” three decades after the Cold War. But when powerful countries like China choose to employ classic national development techniques like state-owned corporations, subsi­dies, tariffs, and barely enforced intellectual prop­erty rights, the United States needs to respond in kind to protect its interests.

Beyond Tax Breaks and STEM:
Putting the Traded Sector First

For the United States to hold its own in global rivalries requires an industrial policy that places the U.S. traded sector at the center of federal, state, and local policies in a variety of fields, from infrastructure to energy policy as well as education policy. The traded sector consists of goods and services that can be sold outside of the region in which they are produced. The nontraded sector is the opposite—goods and services that must be consumed where they are produced, like haircuts. Christina D. Romer, the former head of the Council of Economic Ad­visers in the Obama administration, dismissed “manu­facturing policy” as nostalgia driven by “sentiment,” declaring, “American consumers value health care and haircuts as much as washing machines and hair dryers.”27

But there is a big difference in terms of the trajectory of American economic development. Unlike the local hair salon, the market for washing machines is potentially national or global; a factory that makes parts for washing machines in a city, state, or region draws money into the local area from sales far away. Moreover, manufacturing has one of the highest multiplier effects of any sector—mean­ing that one manufacturing job in a community is likely to generate numerous other direct, indirect, and induced jobs, both locally and elsewhere.28

The traded sector may represent a small part of the labor force, but its importance is far greater than the number of direct employees. Among the 32 million U.S. jobs that were created between 1990 and 2008, only 779,000 were created in the tradable sector, according to economist Michael Spence. More than 31 million were created in the non-tradable sector of goods and services like government, health care, retail, accommodation and food service, and construction.29 But manu­facturing jobs generally pay more, enjoy higher productivity growth, provide higher levels of value added per employee, and overall define the global competitiveness of the U.S. economy.30

Nor can intellectual property payments, like royalties to tech compa­nies, compensate for the loss of national and global market share in manufacturing and other goods industries. In 2019, before the Covid-19 pandemic, U.S. goods exports were worth $1.67 trillion, in comparison with $875.8 billion in service exports. Even smaller were information and communications technology (ICT) exports, which added up to only $42.2 billion in 2017, while in 2019 charges for the use of intellectual property were worth only $114.05 billion.31

These realities suggest that, like other countries, we should give priority to traded sector firms—both small traded sector firms that are capable of major growth, as well as existing large firms in traded indus­tries. This emphasis should not be confused with a bias against small businesses. In a flourishing biological ecosystem, large trees provide shelter under which smaller trees and bushes can grow and support a variety of organisms. In the same way, large firms in a region can provide a healthy environment for local firms of all sizes, in addition to providing a consumer for their goods and services.

The Case for Strategic Trade

Most of the growth in global consumption in the future will take place outside of U.S. borders. Simply protecting America’s large but still limited market for traded sector goods and services would be self-defeating, especially if the price of American protectionism is foreign retaliation that locks U.S. exports out of foreign markets.

At the same time, the United States cannot simply let trading part­ners dominate global markets while driving American producers out of major traded sector markets in the United States itself. Simply adopting unilateral free trade and allowing other countries to target U.S. industries for destruction can no longer be an acceptable option.

If both mindless protectionism and ideology-driven free trade must be rejected, what is the alternative? The answer is strategic trade. After all, most major nations, and blocs like the EU, insist on having their own shares of global industries important for national security or their spillover economic effects, like steel, silicon chips, automotive and aerospace production, pharmaceutical manufacturing, and others. They understand the dangers of overdependence on foreign suppliers or offshore production and recognize that simply mouthing free market homilies is not enough. Indeed, as two Harvard researchers have sug­gested, “Believing in the power of markets does not preclude the judicious use of appropriate government policies.”32

Far from being un-American, all of these industrial policy tech­niques have precedents in the United States from the administration of George Washington until the late twentieth century. In 1794, Congress author­ized the construction of federal arsenals to ensure that U.S. military weapons and supplies would be made in America. Following the War of 1812, the country established five federal arsenals, located at Springfield and Watertown, Massachusetts, Watervliet, New York, Frankford, Pennsylvania, and Harpers Ferry, Virginia. These and other federal arse­nals, by training workers and diffusing technologies, helped to jump-start civilian manufacturing across the United States.

Similarly, during World War II and the Cold War, Congress scat­tered U.S. defense production plants across the American land mass. The so-called “Gun Belt” helped to spark the transformation of the South and West from impoverished commodity-producing hin­terlands into today’s dynamic “Sunbelt.” In the current era, if we want to avoid all-out trade wars and the creation of autarkic regional trading blocs, we must balance the need for transnational economic integration with the need to nurture our own critical indus­tries. This in turn requires us to think of strategic industrial sectors and supply chains as the equivalents of traditional military services.

Decentralizing Traded Sector Industries

In addition to reshoring some strategic sectors and preventing others from being eliminated by offshoring and foreign competition, the U.S. government should also encourage the decentralization of high-value-added, traded sector supply chains so that every American region can benefit from the ability to export advanced goods and services to markets in the United States and abroad.

This does not mean trying to recreate Silicon Valley in its familiar form everywhere in the country. Instead, we need to get beyond the prejudice that only “new economy” jobs matter and embrace the bless­ings of our industrial heritage, resource base, and huge land mass.

The old industrial regions have distinct advantages in a reshoring economy: a concentration of necessary skills, a central location for shipping products, low housing costs, and for the most part, business-friendly administrations. In contrast, the high property prices, taxes, and onerous regulatory environments of the Northeast and West Coast make these areas relatively unattractive for new investment. Unlike in previous recessions, most Heartland states—notably all the Great Lakes states, outside Illinois—have recovered faster than California or most north­eastern states from the pandemic, with lower unemployment and better job creation.33

A program for revitalizing the American economy must include every region, but the central role may be played by what we call the New American Heartland.34 The continental United States is divid­ed naturally into three parts. One is the strip of land east of the Appalachian mountains, and another lies west of the Rockies and Sierras. The third portion is the huge region that consists of the Great Plains and the funnel-shaped drainage area of the Mississippi River. For nearly two centuries after the American Revolution, the division between the free yeoman-farming North and the slave-plantation South bisected the North American core. American industrial capital­ism flourished be­tween the Northeast and the Great Lakes, joined by the Erie Canal and later by the St. Lawrence Seaway, while the cot­ton‑exporting South languished as an agricultural backwater.

This pattern was transformed following World War II, spurred by New Deal rural modernization and later by wartime defense plant and infrastructure construction, the civil rights movement, and corporate relocation of manufacturing to anti-union, right-to-work states in the South and Southwest. Today, the old American Heartland, consisting of the Midwest, has been replaced by a much larger New American Heart­land, incorporating Texas and Florida and the South along with parts of the Great Plains. Along the vertical axis of the New American Heartland, from the Great Lakes to the Gulf of Mexico, runs what is increasingly a single manufacturing belt, including Japanese and Ger­man auto­mobile industry transplants in the Ozarks and Appalachia. The top exports of Texas by freight volume now include aircraft engines and computer parts, along with petroleum products. The manufacturing belt in the expanded American Heartland, which in­cludes the South and Texas, continues into the industrialized north and center of Mexico.

The infrastructure modernization currently being contemplated should consider this new industrial Heartland. The infrastructure needed to connect Heartland factories with foreign consumers is not as fashionable as the windmills and high voltage lines of the “Green New Deal,” but it is more important to America’s future.

Ports and inland waterways. Nine-tenths of global trade is trans­ported by ship. This means that producers in the American Heartland must be connected to foreign consumers via the Gulf of Mexico and the Great Lakes by way of the Saint Lawrence Seaway. While nine out of the ten largest container ports in the world are found in Asia, Houston, the world’s fifteenth largest container port in tonnage, along with other Gulf ports (like New Orleans and Mobile) and Atlantic ports (including New York and Savannah) may grow in importance thanks to the expansion of the Panama Canal. Increased global shipping will put strains on America’s inland waterway system, making imperative the modernization of the more than twelve thou­sand miles of inland water­ways, in addition to Gulf and Atlantic intracoastal waterways.

Rail. Despite fantasies about high-speed passenger rail, the U.S. railroad system will remain focused on freight transportation, and rail congestion is a major bottleneck to U.S. economic growth. A quarter of freight rail traffic passes through Chicago, North America’s most sig­nificant railroad hub, through which a freight train sometimes takes more than a day to pass.

Highways. A major, long recognized flaw of the existing Heartland transportation system—both rail and surface—is the lack of adequate north-south freight corridors. Most major rail networks and highways run east to west, yet the future of economic and demographic growth requires North American trade corridors aligned on a north-south axis as well.

Telecommunications. What telegraphy was in the railroad era and telephony was in the trucking era, 5G Wi-Fi networks and more exotic telecommunications platforms may be in the age of autonomous vehi­cles, drones, robot factories, and machine-to-machine (M2M) communication. Unlike in the past, when America’s continental infra­structure was safe from foreign attack and sabotage, the webs and grids of the New American Heartland must be built or rebuilt to be invulnerable to enemy sabotage, terrorism, or criminal hacking and extortion.

With state-of-the-art infrastructure in place, the New American Heartland can benefit from its greatest assets—a temperate climate and cheap land for factories, power plants, and logistics hubs, as well as hospitals and biotech facilities, and inexpensive housing. In his second annual message to Congress, President Abraham Lincoln spoke with a Midwesterner’s pride of “The great interior region bounded east by the Alleghanies, north by the British dominions, west by the Rocky Mountains, and south by the line along which the culture of corn and cotton meets. . . . A glance at the map shows that, territorially speaking, it is the great body of the Republic. The other parts are but marginal borders to it.” He predicted that if the Union were held together, the vast continental interior could become “the Egypt of the West.” A successful national strategy to revitalize American manufacturing in the new American Heartland can make Lincoln’s prophecy come true in the twenty-first century.

The Training Imperative: Workforce Policy in the Service of Industrial Policy

The human side of infrastructure is similarly important. For a genera­tion, we have deemphasized basic skills training in favor of a single-minded emphasis on four-year colleges. Even there, the emphasis on engineering and technical skills has been far less than what is seen in competitors like China. Only 5 percent of American college students major in engineering, compared with 33 percent in China. As of 2016, China graduated 4.7 million STEM students versus 568,000 in the United States, as well as six times as many students with engineering and computer science bachelor’s degrees.35

The problems may be even more profound on the factory floor. Arvind Kaushal, leader of the manufacturing practice at Booz & Com­pany, estimates that as many as 600,000 new manufacturing jobs expected to be generated this decade cannot be filled. Part of the problem is an aging workforce: The portion of the skilled manufacturing workforce over the age of fifty-five has doubled in the last ten years, Kaushal says, to 20 percent of active workers. And there is not a deep bench—50 percent of the active workers are above the age of forty-five. The current shortage of welders, now at 240,000, could grow to 340,000 by 2024.36

Much of the problem stems from a perceived lack of choices among young people and a failure to market opportunities to the new generation. “We have told young people that you essentially have two choices in life,” says Diane Auer Jones, now vice president at the Career Education Corp., either get a four-year degree or face a life “on Skid Row.” Even among those who manage to finish, more than 40 percent of recent graduates are underemployed, meaning that they’re working in jobs that don’t require their degree, the Federal Reserve Bank of New York reports.37

For many, trade school offers a third, and more practical, option. Tuition and fees for in-state students to attend a community or technical college in Washington State, for example, come to less than half the cost of a four-year public university. After graduating, they also often do better financially than those who attend a four-year college. In Virginia, Colorado, and Texas, where earnings are tracked, students with certain technically-oriented credentials (short of bache­lor’s degrees) earn an average of $2,000 to $11,000 more per year than bachelor’s degree–holders, the American Institutes for Research found.38

Boosting such opportunities is particularly critical at a time when concern about rising inequality has grown, as has concern over racial inequalities. When nonwage benefits are counted, manufacturing work­ers earn 13 percent more in hourly compensation than comparable workers elsewhere in the private sector.39 In 2016, manufacturing still accounted for more than one-fifth of all blue collar work paying more than $15 an hour, twice its share of the overall workforce.40

Reshoring is also not about old white men, but young people and growing minority populations. To make reshoring work in the United States will require an increasingly diverse workforce. Today, barely 58 percent of all working-class Americans are white; according to a 2016 Economic Policy Institute study, people of color will constitute the majority of the working class by 2032.41

Even in rural communities, immigrants and minorities account for an increasing percentage of the labor force. WCCO Belting, based in rural Wahpeton, North Dakota, has seen a surge of orders from in­dustrial and agricultural clients, in part due to Covid concerns, adding jobs to a two-hundred-person plant where fourteen languages are spoken and half the employees are female, notes company president Thomas Shorma.

At Retrax, another North Dakota manufacturer, about 12 percent of the company’s workforce is composed of refugees, and the share contin­ues to rise. The company has made small changes, such as installing foot‑washing stations and adjusting shifts to accommodate the Muslim holiday Ramadan. “In my opinion, it’s simple, easy changes,” says the company’s human resources manager Larissa Campbell. She attributes the addition of refugees to the community as a key factor in helping the company grow.42

Of course, even with large-scale reshoring—the Reshoring Initia­tive’s Harry Moser estimates we could bring up to 20 to 30 percent of produc­tion back—not all the old jobs will return. Due to automation and other process improvements, many industries will likely employ smaller num­bers of workers, though in technically more demanding and potentially better-paying jobs, as the sectors become more com­petitive.43

American citizens, whatever their background, should be the primary beneficiaries of this shift. But this also means a shift in immigration policies. We cannot expect Americans to learn difficult skills as long as employers are allowed to discriminate against American workers and permanent residents in favor of guest workers, like those brought in under H-1B programs, willing to work for lower wages with fewer benefits and rights. These programs essentially allow companies to exploit labor arbitrage by hiring foreign workers for short-term exclu­sive contracts. In one particularly egregious example, in 2015, Disney laid off 250 of its IT workers—while requiring some of them to train their replacements coming from India. When some of the workers sued, they lost because under U.S. law this practice is perfectly legal.44

In 2018, three-quarters of the tech workforce in the San Francisco Bay Area was foreign-born.45 Many of these digital workers, dubbed “technocoolies” by some in India, come to America as “non-visa immigrants,” meaning that they cannot qualify for a green card, no matter how long they stay in the United States—unless their employer, out of charity, decides to sponsor them. All of this creates an easily frightened, subservient workforce.46 These workers can be expelled from the United States if they complain or quit in protest, as opposed to American citizens and legal immigrants with full economic rights, who generally command higher wages.47

Reviving Our Industrial Legacy

Reshoring, particularly of manufacturing, is critical and creates poten­tial for significant economic gains from advanced technology in a wide array of industries.>48 It is a mistake to think that apps are the future while everything else is the past. Robots, drones, satellite data, biotechnology, and information technology also should be used to revolutionize “old” industries—those that are labor-intensive and based on old methods—making them more efficient and profitable. Apart from completely obsolete industries, there are no industries of the past, only industries that have not been modernized yet.

We also have to move past the ideological globalism of the Ameri­can establishment. The view from BlackRock and Apple is very differ­ent from the view on Main Street or in the Rust Belt, and among our increasingly diverse working class. Their voices and concerns have been largely ignored, one reason for Trump’s unexpected triumph in 2016 and surprising gains among minorities in 2020.49

Improving prospects for the middle and working classes, however, could be made more difficult by progressives’ embrace of a rapid and forced transition from fossil fuels to “green” energy, defined in a way that excludes zero-carbon nuclear energy. To the extent that anthropogenic global warming is viewed as a threat, rather than as a long-term nuisance that can be managed by adaptation, the emphasis should be on less cumbersome interventions, like a modest carbon tax, expanding remote work, and restoring our nuclear power industry. It is difficult to see how an industrial revival can take place without reliable energy like natural gas and nuclear—not unreliable, intermittent energy like that provided by solar and wind, which has to be clumsily backed up by other sources when the sun does not shine and the wind does not blow. Yet such an industrial revival will be necessary if firms are to exit notoriously high-carbon supply chains in China, which now emits more greenhouse gases than the United States and the EU combined.50

Under any circumstances, restoring our “industrial commons” will not be easy for businesses or consumers. This undertaking cannot sur­vive partisanship that prioritizes exploiting divisions over rebuild­ing the economy.

Fortunately, as we have seen with the response to the production of critical medical supplies, there is a broad-based bipartisan coalition to support manufacturing and the recovery of supply chains in critical, strategic markets, including medical goods, communications equipment, and the strategic metals that these technologies depend on.51 Support for such actions can be found among both liberals and conservatives.

To make America more productive and Americans more secure, we have to look beyond the memes of a corporate establishment that has, for all intents and purposes, abandoned our national interest in pursuit of short-term profits, foreign favor, and public relations ap­proval. What America needs is not richer tech oligarchs or more virtue-signaling by Wall Street financiers, but policies that focus on boosting dynamic traded sector production and jobs in our communities, restoring Ameri­ca’s lead in the productive economy.

This article originally appeared in American Affairs Volume V, Number 4 (Winter 2021): 35–52.

1 Ana Swanson, “Coronavirus Spurs U.S. Efforts to End China’s Chokehold on Drugs,” New York Times, March 11, 2020; Karen M. Sutter, Michael D. Sutherland, and Andres B. Schwarzenberg, “Covid-19: China Medical Supply Chains and Broader Trade Issues,” Congressional Research Service, December 23, 2020; Phil Stewart and Mike Stone, “U.S. Military Comes to Grips with Over-Reliance on Chinese Imports,” Reuters, October 2, 2018.

2 Andrea Shalal, Alexandra Alper, and Patricia Zengerle, “U.S. Mulls Paying Companies, Tax Breaks to Pull Supply Chains from China,” Reuters, May 18, 2020.

3 Gary P. Pisano and Willy C. Shih, Producing Prosperity: Why America Needs a Manufacturing Renaissance (Boston: Harvard Business Review Press, 2012), 2.

4 Mike Colias, “Ford Expected to Slash Vehicle Production over Chip Shortage,” Wall Street Journal, February 4, 2021.

5 Bob Davis, “Can America’s Solar Power Industry Compete with China’s? One Firm Tries,” Wall Street Journal, June 21, 2021; Scott Patterson and Amrith Ramkumar, “America’s Battery-Powered Car Hopes Ride on Lithium. One Producer Paves the Way,” Wall Street Journal, March 9, 2021.

6 Eric Schaal, “The Companies Offshoring Jobs at a Record Pace under Trump,” CheatSheet, April 21, 2018.

7 David Adler and Dan Breznitz, “Reshoring Supply Chains: A Practical Policy Agenda,” American Affairs 4, no. 2 (Summer 2020): 6–17.

8 Adler and Breznitz, American Affairs; Robert E. Scott and Zane Mokhiber, “Growing China Trade Deficit Cost 3.7 Million American Jobs between 2001 and 2018,” Economic Policy Institute, January 30, 2020.

9 Henry Kressel and David P. Goldman, “Innovation Is Not Enough,” Newsweek, April 22, 2021.

10 Arthur Herman, “Bringing the Factories Home,” Wall Street Journal, July 19, 2020.

11 Stewart and Stone, Reuters.

12 Anne Case and Angus Deaton, “Mortality and Morbidity in the 21st Century,” Brookings Institution, March 23, 2017.

13 Sherry Linkon and John Russo, “Economic Nationalism and the Half-Life of Deindustrialization,” Working-Class Perspectives, October 30, 2017.

14 Beth Baltzan, “Covid-19 and the End of Laissez-Faire Globalization,” Groundwork Collaborative, July 22, 2021.

15 Robert Kuttner, “Economic Nationalism Becomes Mainstream—and Sensible,” American Prospect, June 15, 2021.

16 Zachary Stieber, “Cuomo: Medical Supplies That China Produces Should Be Made in US,” Epoch Times, April 1, 2020. Evan Bayh, “Dems Must Embrace ‘America First’ Trade Policy to Win in Fall,” RealClear Politics, May 22, 2020.

17 Sabrina Rodriguez, “What a Biden Presidency Would Mean for Trade,” Politico, April 17, 2020; Alex Leary and Paul Ziobro, “Biden Calls for $50 Billion to Boost U.S. Chip Industry,” Wall Street Journal, March 31, 2021.

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22 Rachel Abbey McCafferty, “Little Tikes Growing after Shifting Production from China to US,” Plastics News, August 27, 2013.

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25 Matt Leonard, “AmCham: 71% of Businesses Have No Plans to Leave China Despite Souring Trade Relations,” Supply Chain Dive, September 14, 2020.

26 Mark Solomon, “North American Supply Chain Reshoring Will Not Happen,” American Shipper, June 16, 2021.

27 Christina D. Romer, “Do Manufacturers Need Special Treatment?,” New York Times, February 4, 2012.

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29 Michael Spence and Sandile Hlatshwayo, “Demand and Defective Growth Patterns: The Role of the Tradable and Non-Tradable Sectors in an Open Economy,” American Economic Review: Papers & Proceedings 104/5 (2014): 272–77.

30 Michael Spence, “Growth in the Post-Crisis World” (lecture, International Monetary Fund, [n.d.]), 54; M. E. Porter, “The Economic Performance of Regions,” Regional Studies 37 (2003): 549–78; Josh Bivens, “Updated Employment Multipliers for the U.S. Economy,” Economic Policy Institute, January 23, 2019; Michael Spence, “Globalization and Unemployment: The Downside of Integrating Markets,” Foreign Affairs, June 2, 2011. Bob Tita, “How to Revitalize U.S. Manufacturing,” Wall Street Journal, June 7, 2016; Sandile Hlatshwayo and Michael Spence, “Demand and Defective Growth Patterns: The Role of the Tradable and Non-Tradable Sectors in an Open Economy,” American Economic Review 104, no. 5 (2014): 272–77; “Multi-Factor Productivity Statistics, Output Per Hour, Manufacturing Sector” (naics 311-339), Bureau of Labor Statistics, accessed July 20, 2021; M Manufacturing Institute, MAPI, and National Association of Manufacturers, Facts about Manufacturing (November 2012).

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34 Michael Lind and Joel Kotkin, “The New American Heartland: Renewing the Middle Class by Revitalizing Middle America,” Urban Reform Institute, May 2017.

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36 Samuel Hammond, “Workforce Investment,” Moving the Chains (American Compass, June 2020), 50.

37 Christopher O’Dea, “The New Math for Manufacturers,” Korn/Ferry, 2013; “Addressing a Welder Shortage in the Construction Industry,” Tradesmen International, June 3, 2019.

38The Labor Market for Recent College Graduates,” Federal Reserve Bank of New York, May 21, 2021.

39 Jon Marcus, “More People with Bachelor’s Degrees Go Back to School to Learn Skilled Trades,” Hechinger Report, November 20, 2020; Kristyn Pilgrim, “Trade School vs. College Degree Salaries: Who Makes More?,” College Finance, May 29, 2020; Mark Schneider, “Higher Education Pays: But a Lot More for Some Graduates Than for Others,” American Institutes for Research, September, 2013.

40 Mishel, “Yes, Manufacturing Still Provides a Pay Advantage, but Staffing Firm Outsourcing Is Eroding It.”

41 Austen Hufford and Nora Naughton, “Wage Gains at Factories Fall Behind Growth in Fast Food,” Wall Street Journal, June 22, 2021.

42 Valerie Wilson, “People of Color Will Be a Majority of the American Working Class in 2032,” Economic Policy Institute, June 9, 2016.

43 Dan Niepow, “Grand Forks Companies Tout New American Workforces,” Grand Forks Herald, January 18, 2019.

44 Thomas Baumgartner, Yogesh Malik, and Asutosh Padhi, “Reimagining Industrial Supply Chains,” McKinsey & Company, August 11, 2020.

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48 Youyou Zhou, “Most H-1B Workers Are Paid Less, but It Depends on the Type of Job,” Associated Press, April 18, 2017.

49 Wilson, Economic Policy Institute; Jenny Wang, “Corporate America Stands against Injustices—Except Those ‘Made in China,’” Hill, June 13, 2020.

50 Nathaniel Taplin, “China’s 2060 Climate Change Gambit,” Wall Street Journal, September 24, 2020; Robert Rapier, “China Emits More Carbon Dioxide Than the U.S. and EU Combined,” Forbes, July 1, 2018; Lina Saigol, “Getting Out of China Will Cost Firms $1 Trillion, Says BofA,” MarketWatch, August 21, 2020.

51 Francisco Rodriguez, “Have Collapses in Infrastructure Spending Led to Cross‑Country Divergence in Per Capita GDP?,” DESA Working Paper no. 52, July 2007.

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