- The Washington Times - Sunday, September 28, 2003

Ronald Reagan used to refer to America as a “shining city on a hill.” Listening to President Bush’s opponents these days, one would surmise that they want to build a wall around that city, fill it with trial lawyers and then complain about the economy that results. No issue better illustrates the fallacy of their arguments than their complaints about the loss of manufacturing jobs.

We need to understand the manufacturing sector of our economy is basically healthy. As a percentage of the overall GNP, manufacturing continues to be strong. But much of that strength comes from increased productivity, which often has come at the expense of jobs. Building more high-wage manufacturing jobs back into the economy can only happen if new sources of products are created. Reversing productivity gains would be foolhardy.

There is no sinister plot against manufacturing jobs. We are doing it to ourselves.

Dozens of major manufacturing firms have been forced into bankruptcy and many forced completely out of business by asbestos suits stemming from products made decades ago. With those bankruptcies and closings have gone thousands of good jobs, and others are in jeopardy. Efforts of the Bush administration and tort reformers on Capitol Hill to stop this job loss have been blocked by trial lawyers who have profiteered on the destruction of American employers. Furthermore, the threat of additional suits has stemmed investment in even more companies that are the new asbestos targets. And, reduced investment stops the formation of new manufacturing jobs.

A sensible reform would protect really ill victims of asbestos, give industry a clear idea of its potential liability and set up a fund for covering expenses. The result will be an improved climate for creation of more manufacturing jobs in our economy.

Our own export control policy is an American job killer. Some of our most successful and innovative industries are unable to sell their goods in world markets because export control procedures either block the products from being sold or create such a procedural nightmare that our companies cannot successfully compete.

Export controls supposedly protect American technology from getting into the wrong hands. The problem is that much of what we are protecting already is widely available from other global sources. So by denying world markets access to U.S. goods, we undermine key American industries. What were once our jobs end up moving offshore and our balance of payments gets worse. Thousands of manufacturing workers in the aerospace industry have been sacrificed to illogical export controls.

A sensible reform would revise export controls policy so we protected those items that are truly unique American security assets and allowed other products to move freely into world commerce.

Our regulatory climate works against retention of manufacturing jobs. A modern society needs regulations which assure safety and standards, but outdated, overlapping and omnipresent regulations now often keep American industry from staying at the forefront of product development. Research and risk are discouraged, timely access to markets is retarded and the general business atmosphere fails to encourage investment and expansion. The cost is paid in new jobs not being produced.

One of our most profitable, innovative and internationally competitive industries has been our manufacture of pharmaceuticals. Yet, this is an industry under heavy regulatory control. Some of that regulationisentirely proper,butsomeis anachronistic, not at all in keeping with the information technology advances of recent years. Our failure to modernize the regulatory situation for the drug companies, coupled with politicalattacksthat threaten their research budgets, is undermining their competitive positions and raising their costs. Manufacturing jobs have already gone abroad and more are threatened.

Sensible regulatory reform has been regularly proposed in the Congress and some has even been enacted. But much more deregulation and re-regulation based on modern science must be done to protect and grow manufacturing jobs.

We should stop kidding ourselves about the villains in manufacturing job loss. The problem is not so much our inability to compete but our unwillingness to do what it takes to compete. Free markets work best when free-floating currencies allow fair competition, and we should be working toward that end. Free markets should be fair and we should pursue fairness in internationalforums. But,most important, we need to develop a policy framework that permits industry to grow, encourages it to develop and market new and unique products globally and replaces litigation and regulation with employment opportunity.

The city on the hill does not need a wall. It needs an economy based in confidence and competence which produces rather than destroys manufacturing jobs.

FormerRep. Robert S. Walker is chairman of Wexler & Walker Public Policy Associates.

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