A guest post by AAM intern Whitney Stack:

wo former Bush Administration officials got it half-right in the Washington Post today.  They're right that supporting manufacturing is key to America’s economic recovery, but they’re wrong when they contend that it’s fine for U.S-based corporations to ship jobs and investments overseas. Robert M. Two former Bush Administration officials got it half-right in the Washington Post today.  They're right that supporting manufacturing is key to America’s economic recovery, but they’re wrong when they contend that it’s fine for U.S-based corporations to ship jobs and investments overseas. Robert M. Kimmitt, a Bush deputy Treasury secretary and now chairman of a Deloitte effort to promote foreign investment, and Matthew J. Slaughter, on the Bush team of  White House Council of Economic Advisers  and an advisor to Kimmitt’s group, published  a piece entitled “How to jump-start American Manufacturing.” They state: “While there has been a slight uptick in manufacturing jobs in the last seven months, only 11.7 million Americans work in this sector, down from 17.3 million 10 years ago. That's barely 9 percent of total U.S. nonfarm payroll jobs. More Americans now work in the leisure and hospitality industry.” That’s not good news because those leisure and hospitality jobs tend to be relatively low-paid, which does not drive the economy the way family-supporting manufacturing jobs do. Kimmitt and Slaughter are right that manufacturing remains important:

“Manufacturing firms have long accounted for an outsize share of U.S. capital investment, research and development, and exporting. Productivity growth -- the only source of sustainable increases in standards of living -- has long been faster in manufacturing than in services. As we recover from the global financial crisis, America's economy needs to be rebalanced away from consumption demand and toward capital investment and exports. Manufacturing can play a key role in this process.”

They are wrong, however, when they contend exporting jobs “compliments” U.S.-based operations: “Our calculations from U.S. Bureau of Economic Analysis data show that from 1988 to 2007, employment in foreign affiliates rose by 5.3 million jobs -- while U.S. parent companies added nearly as many positions, 4.3 million.” One million fewer U.S. jobs is not “nearly as many” as those added overseas. It is 19 percent of the 5.3 million jobs created overseas. It is 23 percent of the 4.3 million jobs created in the U.S. It is not an insignificant number. And what’s more important is that corporations might have been far less inclined to send 5.3 million jobs overseas if the United States hadn’t given them tax breaks to do it. Many of those American companies that shipped jobs overseas could have afforded to keep them in the U.S. and could have afforded to pay higher U.S. wages if the United States had insisted that countries like China halt the currency manipulation that makes their exports artificially cheap and U.S. exports artificially expensive. In addition, Kimmitt and Slaughter argue that U.S. multinationals benefit from moving jobs overseas into countries with rapidly growing economies. That may be true in some cases, but in others, for example in many cases in China, multinationals are blocked from selling on the Chinese market. The goods they make in China must be exported. Finally, Kimmitt and Slaughter conclude: “At this time of continuing high unemployment and sluggish job growth, policymakers and business leaders alike should encourage investment into and out of the United States. It would help revive American manufacturing and contribute to the nation's economic recovery.” Investments outside the U.S. do not revive manufacturing in America nor do they contribute to economic recovery. They support manufacturing  jobs and manufacturing in foreign nations, increase the U.S. trade deficit, and deprive U.S. workers of good-paying manufacturing jobs. ##