Why I Am Disappointed In Mitt Romney.

Despite what you might think if you have read my posts, I had high hopes for a Romney candidacy.  Before the debates started, I had expected Mitt Romney to share creative ideas for boosting job growth; after all, he was a successful business executive, and knows from the inside just what incentives exist that encourage businesses to send jobs overseas.  Sadly, after the first debate, it was clear the Mitt Romney would utter nothing but approved right wing talking points, and that’s too bad.  I had expected a Joseph Kennedy a la the SEC; what we got was a hand puppet with a nice hairdo.

Did the reference to Joe Kennedy lose you?  Joseph Kennedy Sr. was a banker and stock manipulator in the years before the Crash of 1929.  Franklin Roosevelt appointed him head of the new SEC and with his leadership, the SEC crafted revolutionary regulations that ended the wildcat era of stock market trading.  These rules, coupled with the separation of investment banking from commercial banking, restored investor faith in markets and led to five decades of stability for American investors.   With Mitt Romney, I expected that he would provide an insider’s view of how to incentivize job growth – or at least stop the outsourcing of good jobs.  Unfortunately, his primary policy suggestions are to lower taxes (he also suggests reducing regulations and ramping up oil and gas production).  Some of his tax ideas may be good one (for example, lowering corporate tax rates).   But his suggestions don’t produce jobs.* 

So what will produce jobs?

I don’t have a direct answer, but what I have are a few general ideas – take a look and see what you think. 

Let’s start by agreeing that Free Trade agreements have not produced jobs.  They have opened up markets, but opening markets does necessarily lead to a net job gain.  For example, NAFTA allowed US agricultural companies to sell goods in Mexico, but the additional sales of US grain produced few jobs (agriculture is very highly mechanized).  At the same time, we have outsourced factory jobs to Mexico (less and less over time).  Sadly, peasant agriculture in Mexico has lost ground, forcing peasants to cross our border to look for jobs here.  The net result is the loss of middle class factory jobs and more competition among non skilled workers for the crumbs.

The US remains the world’s most attractive market for consumer goods.  That’s right, if you make something worth buying, the place to sell it is right here.  If you provide a high value business service, the place you want to sell your service is here.  That gives us tremendous leverage if we want to use it.  For companies that leave the US (or that are legitimately housed overseas) we can extract job or tax concessions as the price of selling their goods and services.  We can also use tax policy to encourage employers to keep jobs here.  As to which tax and trade policies will do this, I don’t know, but we ought to try something.  I bet Mitt would know just what to try, but so far he’s said nothing – and if he did, he’d lose support from the corporate sector and from his billionaires.

If you want to have a business sector, you need critical mass.  Much has been said about the recent success of US manufacturing.  But to have a manufacturing sector, you need to have a large enough subset of suppliers, skilled craftsmen, and a home market for what the factories make, to allow the sector to flourish.   And there is no single manufacturing sector, in fact, each subset is different from the others.  Thus wood furniture requires entirely different materials and skills from that required to build automobiles, and making cars is different from making smart phones.  It may be too late to re-establish what we once had, but we need ought to salvage what we can, as well as encourage new ventures.  We have a particular advantage with wood - since we have the raw materials, and since wood is a less amenable to robotics.    We also have advantages with leather –again because we raise the raw material (hides from livestock).  Rural areas can benefit from the furniture and leather goods making that once provides good local jobs.  These are in decline, but especially with wood furniture making, we ought to try to reinvigorate this.

Corporations are not people.  The Supreme Court may treat corporations as if they were voluntary associations of persons, but they don’t behave like they are.  Corporate boards of directors are usually beholden to the CEO and power is skewed toward on or a few holders of many shares.  Corporations remain a creation – limited by law and charter, so… if corporations are not simple free associations of persons, we can consider limiting their rights in ways that support job creation.  For example, we could extract concessions for any non US corporations that want to do business here.  To do this, we’d need buy-in from both parties and new laws.  (And who knows what the Supreme Court would say.)

Are there any other ideas?  Sure, but these are enough to suggest a topic worth exploring.

By the way, Romney wants us to use trade sanctions against China and wants to label them as a currency manipulator – and here I agree with him in spirit.  But he pretends that Obama has done nothing to challenge China in these matters. He knows better.  The Obama administration has made careful but quiet moves against the Chinese – but anything we do must be tempered by reality, and the reality is that  China can fuck with our currency (by dumping our debt – they would hurt themselves too, but it could be done). China also holds reserves of key minerals that we no longer produce, and need for our high tech industries.  And then there are the numerous areas where we need China to cooperate in foreign policy.  I suspect Mitt is clueless on this too. 

*Regarding regulations, in fact if we reduce key regulations, we may produce more jobs.  For example, we can reduce safety requirements; end minimum wage laws, remove pollution requirements and so forth.  But in doing so, we increase workplace accidents and risk re-polluting our air and water – air and water that took decades to clean up.   And with the end of wage and hours laws, we begin a wage race to the bottom.