There’s a kernel of good sense in Richard Florida’s observations about the perverse effects of federal housing policy:
The old government-backed system had a rationale of sorts in the old industrial order, providing a “geographic Keynesianism” which spurred consumption of durable goods coming off of U.S. assembly lines – everything from cars to refrigerators, washer-dryers, air-conditioners, and TVs. But little of that is produced in the U.S. anymore – it’s now a subsidy to offshore manufacturers. And the economy is far less manufacturing-intensive and far more knowledge-driven.
but IMO it’s vastly over-stated and over-stated in a way that obscures the real conundrum that faces us. It’s simply untrue that we don’t produce refrigerators, washing machines, and so on in the United States. We produce billions of dollars of them. Sub-Zero refrigerators and Wolf ranges, for example, are made in the U. S. A.
But we don’t produce commodity-priced products. We produce the high-end stuff, we do so without employing nearly as many people in manufacturing as we did a generation ago, and there’s a good reason for it. It’s very difficult for American manufacturers to compete with overseas competitors who have something approaching a zero cost of labor. The functions of many of these devices have been well-established and fixed for decades, they require a certain amount of material, the material is traded in a world market.
Strengthening unions and raising wage rates won’t solve this problem as intimated by Simon Johnson:
We can argue about proximate causes, including the relative roles of new technology and globalization, but there is no question that unionized jobs, well-paying assembly line work and prosperous small-business niches have all tended to disappear.
Quite true. But the converse isn’t true. The only way we could have more highly unionized jobs that provided well-paying assembling line work would be to start putting up barriers to the products of countries that had lower costs of production than ours or, like the Germans and Japanese, show marked preference for products made here. That might result in more Americans having high-paying manufacturing jobs but it would also result in fewer Americans having refrigerators, televisions, and cellphones. It’s hard for me to imagine a president going before a joint session of Congress and pitching that.
Given the rhetoric of the last couple of decades it’s also hard for me to imagine a president proposing policies that would encourage the sale of stuff that we do manufacture here: the target market is the rich.
Simply put we can have policies that benefit American consumers in an egalitarian fashion or we can have policies that help American workers. Having both would be pretty darned hard.