Monthly Archives: October 2011

On an Economic Solution: Essay for October 15, 2011

If anybody can tell me what is going on with the Occupy Wall Street crowd, as Ross Perot once said, “I am all ears.” Are these people really victims of an economic malaise or a rabble encouraged by the unseen hand of conflicting sources?

It matters not to me. Whether they know it or not, whether they are tools or not, they are card carrying members of the Lost Generation. Their economic future is in the hands of someone else. Their choices are limited and their futures are in doubt. Surely, they are doing nothing to improve their economic situation by squatting in a park and mindlessly ranting on television.

Some would have us debate the threshold of wealth as if the taxation of the wealthiest of society would be enough to free us from the shackles of reckless financial management. “Tax the rich; feed the poor, till there are no rich no more.” And if it could not, and it will not: then what? We will still have a lot of people out on the streets, young and old asking the question: Whatever happened to my American Dream?
I could rant on and on about the many issues before us in this great land: the social issues, the personal liberty issues or the foreign policy issues. They pale in comparison to the economic issues.

It must be our solemn quest to restore opportunity to our countryman. This must be goal Number One. If our economy is not functioning, we will be focusing on the wrong debate at the wrong time. Perhaps we can set aside the rhetoric that panders to the primary fringe voters from both parties and focus on the one true issue in this campaign that should rightly dominate our discussions: the faltering economy.
The “fix” is not a simple one. Nor can it be simply stated. It calls for a concerted effort between government, business and education. It must start now. Time is catastrophically short. The overall fix is long term but it is one that will begin to yield results immediately.

There are three legs to the stool we must address immediately and well.

First, there is the business component. Simply stated, we must retain a manufacturing base that leans towards high technology and high value added activity. We must dispense with the image of manufacturing as a dirty and menial job. Modern plants of today demand highly skilled workforces who often work in office or laboratory-like conditions.

Secondly, we must revise our system of education. It must align itself with the manufacturing sector. We need to focus our efforts on the four pillars of science, technology, engineering and math, the so-called STEM subjects. These disciplines will serve to support the expansion and further development of the manufacturing sector.

Finally, there is a role for government. It was less than 30 years ago that the federal tax code was revised to give the United States the lowest corporate tax rate in the industrialized world. It worked. Direct investment soared. The economy soared. Over time the rest of the world followed suit in lowering rates while our rates crept back up to where they are now. America is number one in having the highest corporate tax rate in the world. It is a dubious distinction. Direct investment, both foreign and domestic, is shrinking. Additionally, our regulatory burden is unnecessarily high. It is ambiguous. It is prohibitive. Our regulations must be focused on the common good of society not bureaucracy. The last meaningful review of regulations took place during the Clinton Administration. Our agencies have remained unchecked throughout the last decade.

Andrew Liveris is the Chairman of Dow Chemical. He heads up the Advanced Manufacturing Partnership initiative under the Obama Administration. He leans a little towards the left but makes eminent sense in his book, “Make It in America.” His recommended path is clear. First, make it easier for businesses to remain or locate in the United States. Second, remake the manufacturing sector into an advanced, high-value added industry. Third, create an economy that can sustain itself through long term job creation and economic growth. Fourth, prepare the next generation’s workforce for the challenge of a changing economy. And, fifth, improve America’s global competitiveness for the near and long term. I concur.

Amid the cacophony of the choruses from left and right there must be a way forward that both parties can agree upon. It is of no use to rearrange the deck chairs on the Titanic. To carry the metaphor, we have already struck the iceberg. It is time to save the ship.

Press on.

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On Lessons from a Stimulated Economy: Radio Essay for October 8, 2011

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On Lessons from a Stimulated Economy

We can’t get temporary help these days. It’s not that the help isn’t any good, it’s just that they disappear to competitive job offers before we can even get them to interview. It is quite a job market- in Singapore.

I find myself in Singapore this week and the flagging world economy is not in evidence here. The unemployment rate is a mere 1.7%. The malls are full and the lines for taxis are long. The real estate market is robust. Everywhere I turn I see an optimistic outlook. As the saying goes, the national bird is the building crane.

Would that this optimism find its’ way to Massachusetts: to Palmer or Ludlow or Milford. It has not but it could be so. To think otherwise is to abandon hope that the dynamo of the world economy is out of gas. There is no better asset to a community than a true manufacturing base. Manufacturing returns two dollars to the community for each dollar spent. That is four times better than the return from retail. The US economy is still the 800 lb. gorilla on the world stage but it is under attack mostly from within.
Here is the rub. Our institutions are failing us. Our high schools are not providing competent graduates to feed the thirst created by manufacturing. Yes, I said manufacturing. You can not be a successful assembly line worker in this country if you cannot add value in the form of reading blueprints or interpreting work instructions. Those are openers. By the way, the workforces in other countries have those skill sets without remediation. Corporations should not have to provide the education that secondary schools have failed to provide. It is far easier and more cost effective to look towards other places to get these simple tasks done. They look abroad to places like Singapore where nearly every able bodied person who wants to work does so. It is an insurance policy on stable productive output.

Take machining, for example. Our aging manufacturing workforce has no replacements in the pipeline. In our region, everyone is fishing from the same pond when it comes to filling vacancies as the demographic of the workforce ages. Expansion becomes a moot point if you struggle to hire qualified replacements. The vocational schools are not producing skilled graduates because there are simply no entrants. A career in machining can be a lucrative one and one that is creative. You can earn a solid living and support a family on its wages. Over the next 5-10 years, machine shops in Massachusetts will face difficult decisions about remaining in business. Their communities will absorb yet another blow. Death by a thousand cuts.

We can talk about the other factors that the government should consider when tinkering with the economy but what can be more important to building the employment numbers than having qualified people to participate in the growth? Not everyone needs to or should go to college. What they need is an education that is appropriate for their ambition. And that ambition should be nurtured without prejudice through exposure to all sorts of career opportunities as they proceed through school.

The good news is that we have a pipeline already established through the vocational-technical schools. The infrastructure is in place but the pipeline is not fully primed. We can jumpstart that process by opening the programs to adults interested in job enhancement or retraining. We can do that in the evening or we can do that side-by-side with daytime students. There is a frequent outcry from our citizenry to expand the footprints of community colleges into the suburban landscape. This is well and good but let us not forget the vital role that our vo-techs can immediately play in providing assets right now to our fragile manufacturing capability.

So I spend another day in a country that has found a way to provide the proper educational mix to support its industry and national objectives. We in Massachusetts have the tools at hand to mimic this successful model. We should do it now before the erosion of our manufacturing base becomes a self-fulfilling prophesy.

Press on.

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