Made in America?

posted by
on February 21, 2012

Consider President Barack Obama’s three favorite words: Made in America — words which he hopes will help propel him to a second term in the White House, come Nov. 6. While the politics of economic patriotism may play well in certain parts of the American heartland, the fundamental economics are a different story. Thanks to complex global supply chains, labels like Made in America, Made in China, or Mexico, or wherever, have become increasingly misleading. Obama is hardly the only politician not to recognize the fundamental economic fact of modern manufacturing life: that workers who make things in the United States couldn’t do so without access to key raw materials and component parts found outside U.S. borders. But if the president’s Republican opponents catch on to the game — which may be possible, if the economically literate Mitt Romney wins the GOP nomination — Obama could end up looking like a man whose economics learning curve remains steep.

Nobody raised questions about the president’s economic literacy last week, when he took his Made in America campaign theme on the road. On Feb. 15, Obama addressed an enthusiastic crowd including some 400 members of the United Auto Workers union who make padlocks for Master Lock. Co. in one of Milwaukee’s most blighted neighborhoods. In his State of the Union address last month, the president had praised the 91-year-old iconic Master Lock — well-known for its Super Bowl commercials showing a tough lock withstanding a bullet — for having moved about 100 jobs back to Milwaukee from China. In Milwaukee last Wednesday, Obama drew cheers when he declared, “It’s time to stop rewarding companies that ship jobs overseas, and start rewarding companies that are creating jobs right here in the United States of America.” Two days later, Obama flew to Boeing’s plant in Everett, Washington, where he boasted that “the world’s most advanced commercial airplane” is made, referring to the new 787 Dreamliner. “And companies like Boeing,” the president added, “are realizing that even when we can’t make things cheaper than China, we can make things better. That’s how we’re going to compete globally.”

When smaller concerns like Master Lock create new jobs, not in China, but in the U.S., Obama explained, the economic benefits extend beyond the corporate bottom lines. “[I]t’s also good up and down the supply chain, because if you’re making this stuff here, that means that there are producers and suppliers in and around the area who have a better chance of selling stuff here.” And when Boeing makes its Dreamliners in Washington State, the entire U.S. economy gets a boost, thanks to “nearly 11,000 small, medium and large supplier businesses,” Obama added. “Boeing has suppliers in all 50 states, providing goods and services like the airplane’s ground-breaking carbon fiber composite aircraft structure from Kansas, advanced jet engines from Ohio, wing components from Oklahoma, and revolutionary electrochromic windows from Alabama.”

To hear the president, the American economy is a self-sufficient island, where the most productive workers in the world make things to sell to envious foreigners. But in today’s world of complex international supply chains, the operating economic realities have left such traditional political rhetoric behind.

To see why, let’s first look at what could be called the political economy of Milwaukee. Read the rest of this article »