Should We Subsidize Manufacturing?

Aug 15, 2017

n the auto-industry bailout of 2009, the United States loaned around eighty billion dollars to G.M. and Chrysler, saving an estimated one and a half million jobs. Since then, $70.5 billion has been repaid—meaning that, in a back-of-the-envelope sense, the federal government managed to save the auto industry at a cost of just six thousand two hundred dollars per worker. One of the architects of this unusually efficient intervention was an investment banker and union negotiator named Ron Bloom. In 2011, Bloom joined Barack Obama’s newly created Office of Manufacturing Policy. He drafted position papers and helped launch a program linking universities with manufacturers. But he was otherwise marooned in his basement office, powerless to influence more consequential policies on infrastructure, education, trade, and China.

“Maybe because of the auto bailout and the mood it created,” Bloom tells Louis Uchitelle, in “Making It: Why Manufacturing Still Matters” (New Press), “there was a little bit of a boomlet in public concern about the importance of manufacturing.” The boomlet didn’t last. It collided, Bloom explains, with a hidden consensus in the White House: “The argument was that manufacturing is dying anyway; let it go.”

To what degree have Democrats given up on the idea of “saving” American manufacturing? Democratic politicians still wear hardhats and visit factories, but they never promise to make manufacturing “great again.” The Trump Administration, on the other hand, has committed itself to the theory that a resurgent manufacturing sector can solve the crises of working-class Americans. The contrast was especially vivid earlier this month, when Terry Gou, the chairman of the Taiwanese electronics giant Foxconn, appeared at the White House to announce plans to open a ten-billion-dollar liquid-crystal-display factory in Wisconsin. Foxconn, which builds the iPhone and other products, promises to hire three thousand workers by 2020, and says it may eventually employ as many as thirteen thousand; the deal includes a three-billion-dollar incentives package and was negotiated by Jared Kushner, House Speaker Paul Ryan, and Wisconsin’s Governor Scott Walker, among others. Donald Trump took credit for the deal, too: “If I didn’t get elected, he definitely would not be spending ten billion dollars,” he said, of Gou.

More from the New Yorker.