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Wednesday, November 30, 2016

Yes, the Rust Belt demands an answer. But does anyone know what it is? [feedly]

Yes, the Rust Belt demands an answer. But does anyone know what it is?
http://jaredbernsteinblog.com/yes-the-rust-belt-demands-an-answer-but-does-anyone-know-what-it-is/

This WaPo piece by James Hohmann makes a strong point that one hears a good deal these days: the Hillary Clinton campaign failed to provide hope that her administration could bring good jobs back to key swing states like Ohio, while the Trump campaign succeeded in hammering that message home.

The piece focuses on a foresightful memo written in May by David Betras, a Democrat operative in Ohio, warning that Ms. Clinton was getting beat on the jobs message:

"More than two decades after its enactment, NAFTA remains a red flag for area voters who rightly or wrongly blame trade for the devastating job losses that took place at Packard Electric, GM, GE, numerous steel companies, as well as the firms that supplied those major employers," Betras…tried to explain to the Clinton high command. "Thousands of workers in Ohio … continue to qualify for Trade Readjustment Act assistance because their jobs are being shipped overseas."

"Look, I'm as progressive as anybody, okay? But people in the heartland thought the Democratic Party cared more about where someone else went to the restroom than whether they had a good-paying job," he complained. "'Stronger together' doesn't get anyone a job."

"The messages can't be about 'job retraining.' These folks have heard it a million times and, frankly, they think it's complete and total bulls**t," he continued."Talk about policies that will incentivize companies to repatriate manufacturing jobs. Talk about infrastructure … The workers we're talking about don't want to run computers; they want to run back hoes, dig ditches (and) sling concrete block. … Somewhere along the line we forgot that not everyone wants to be white collar."

Like I said, that's a perfectly smart, defensible rap that in hindsight looks awfully prophetic. But something very big and very important is missing from Betras' warning and Hohmann's analysis: neither Democrats nor Republicans really know what to do to help these workers and their communities.

Trump was either devious or smart enough–choose your adjective–to pretend he had/has a solution and to successfully sell a nostalgic vision to these voters. Frankly, I'm not sure many believed him as much as they didn't see much reason for going with her and figured they'd give him a chance. If he fails to deliver, as I suspect he will, they'll throw him out when they get the chance.

Hillary Clinton was a lot more fundamentally honest about this issue of bringing the factory jobs back to the swing states in the Rust Belt. Instead, she told a more complicated story about reshaping globalization through better trade deals and investing in advanced manufacturing, and yes, retraining workers. Precisely the stuff Betras correctly said would not resonate.

But as long as we're being honest, we must admit that neither side has a strong, convincing plan to restore high-value added jobs to the many communities that have lost much of their manufacturing base.

We're much better, as Democrats, at policies that help the poor. Higher minimum wages and strong work supports like the Earned Income and Child Tax Credits can combine to make what would be a $15,000 job a $30,000 job (e.g., raise the minimum from $7.25 to $12 and add $5K of refundable tax credits; sprinkle liberally [sic] with affordable health care).

But when it comes to pushing back on the impact of globalization–to "repatriating manufacturing jobs" as Betras called for–we're at much more of a loss.

This must change, and not just for political reasons (though that should be a strong motivator for politicos), but for policy reasons.

The deeply flawed premise through which elites have long operated is that trade is a net plus for everyone as long as the winners compensate the losers. But in the real world, the winners both fail to do so and use their winnings to buy tax and deregulatory policies that further screw the losers.

I've studied this problem for years and don't have anything like a complete answer. I do know that we must start by lowering our economically large, persistent, and distortionary trade deficit, especially to the extent that it is pumped up by other countries manipulating savings and exchange rates. Also, Betras is right about a robust infrastructure program, but that's a temporary fix.

But I would strongly urge my colleagues in the progressive policy analytic community (and the foundations that support them) to move this problem–the loss of good, middle-class jobs in significant swaths of the nation–to the top of their agendas. We've gone too long without an answer to this one, and the consequences are not at all pretty.


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