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Mon August 6, 2012

'American Dream,' Betrayed By Bad Economic Policy

Originally published on Tue October 9, 2012 7:33 am

A lot is at stake in the current election, but no matter who wins, the victor will stay committed to policies that cripple the middle class. That's according to Pulitzer Prize-winning reporters Donald Barlett and James Steele, who've been covering the middle class for decades.

In their new book, The Betrayal of the American Dream, Barlett and Steele criticize a government obsessed with free trade and indifferent toward companies that outsource jobs.

"Everyone loves Apple. Apple makes nothing in this country anymore," Barlett tells NPR's Steve Inskeep as an example. "But then, look over here on the other side and you have Intel, and their plants are massive, and they are good-paying jobs. They continue to invest in this country. And what we need in this country now are more Intels and fewer Apples."

For models of how to boost manufacturing and job growth in the U.S., Barlett and Steele look abroad. "Germany has had a fairly good record in recent years," Steele says. When the global financial meltdown happened, Germany adopted a policy that subsidized companies in order to help them keep employees on the rolls. "It's one of the reasons the German unemployment rate is much lower than in this country," he says.

But are those German jobs good ones? The New York Times reported last year that German wages are relatively low, leaving many people unable to pay their bills. "There's no doubt that this is true with some parts of the German workforce," Steele says. But he points out that German factory workers do considerably better than their American counterpoints in terms of wages and benefits.

Barlett and Steele write that they'd like German-style government support for American companies that preserve jobs. They also recommend tariffs on countries that do business differently than the U.S. "One of the real ironies in this time in history is that we will go to a shooting war at the drop of a hat," Barlett says. "But suggest a trade policy that might result in a trade war and everybody runs screaming. That's nonsense."

"We're not suggesting putting up walls around the United States," Steele adds. "But when an industry is threatened, when there's some bit of unfair competition, we need to respond, and we have never done that in any kind of systematic way. Every other country out there knows that, and as a result of that, they can continue to thumb their nose at our attempts to open those markets."

U.S. exports have been rising in recent years, but that hasn't had a big impact on our trade deficit; they're still outpaced by imports. Barlett and Steele say the media is responsible for incorrect perceptions that the trade deficit is shrinking. "What you have to look at, though, is what the trend is," Steele says. "And the trend is, year in and year out, that the trade deficit — in other words, how imports overwhelm exports — that trend has been going on now for three decades."

Steele says most Americans don't realize that other countries don't have the kind of trade deficit that the U.S. does, and he links that deficit to the unemployment situation. "That has led to the elimination of all kinds of jobs, and they've not been replaced by jobs paying commensurate pay."

But what about people who say that it's too late; good manufacturing jobs are gone and they'll never come back? "We're realists," Steele says. "We don't think the likelihood of bringing many of those jobs back is possible. We think the best hope is to try to deal with the manufacturing we have left ... that will ultimately be very good for working Americans everywhere."

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Transcript

STEVE INSKEEP, HOST:

Americans face a big choice in this fall's election, but two investigative journalists argue that the result may not change much for America's middle class. Pulitzer Prize-winning reporters Donald L. Bartlett and James B. Steele have written a book they call "The Betrayal of the American Dream." They argue that the U.S. government is committed to free trade and indifferent about companies outsourcing jobs. Donald Bartlett says that's even true of widely-admired companies like Apple.

DONALD BARTLETT: Everyone loves Apple. Apple makes nothing in this country anymore. But then look over here on the other side and you have Intel, and their plants are massive, and they are good-paying jobs. They continue to invest in this country. And what we need in this country now are more Intels and fewer Apples.

INSKEEP: So Bartlett and Steele have been thinking about how to boost manufacturing and job growth in the United States. What country do you think has a policy to create the kind of jobs that Americans would feel good about?

JAMES STEELE: Well, Germany has had a fairly good record in recent years, and when the whole worldwide global meltdown occurred, the Germans adopted a program. The idea of it was, rather than Company X laying off 50 percent of its workforce or 25 percent of its workforce, let's provide them the wherewithal to keep those people on staff, with benefits, with the idea that once the economy does recover, you've got these trained people.

INSKEEP: Wait a minute. You're saying the government is subsidizing the employer to not fire people?

STEELE: Yes. Exactly. It's one of the reasons the German unemployment rate is much lower than in this country.

INSKEEP: And are the Germans really doing that much better when it comes to preserving good jobs? I knew, because I have your book, that you might bring up Germany, and I brought along an article from August of last year from the New York Times that points out that there are a lot of Germans who are working jobs that they can't even pay the bills from because German wages for many people are relatively low.

STEELE: We saw that article and there's no doubt that this is true with some parts of the German workforce, but if you look at manufacturing earnings, and Germany versus the U.S., German manufacturing workers earn substantially more in both wages and benefits than is true in this country.

BARTLETT: So when somebody says, well, the Germans - some people over there can't buy what they need on the basis of their jobs, you can multiply that tenfold in this country.

INSKEEP: You suggested that one thing you would like to have happen would be greater government support of companies that preserve jobs. Would you also bar products from countries that do business differently than the United States or raise tariffs on countries that do business differently than the United States?

BARTLETT: Absolutely raise tariffs. We don't have tariffs. One of the real ironies in this time in history is that we will go to a shooting war at the drop of a hat. Ten years, you know, Iraq, Afghanistan, no problem whatsoever. But suggest a trade policy that might result in a trade war and everybody runs screaming. That's nonsense.

STEELE: They make statements like, well, we can't put up walls around the United States. And we're not suggesting putting up walls around the United States. But when an industry is threatened, when there's some bit of unfair competition, we need to respond, and we have never done that on any kind of systematic way. Every other country out there knows that, and as a result of that, they can continue to thumb their nose at our attempts to open those markets.

INSKEEP: Haven't U.S. exports been climbing dramatically the last several years?

BARTLETT: Ah, one of our...

STEELE: We're fighting to see who gets to answer that.

BARTLETT: Yes. One of our favorite subjects. You know, the news media bears some responsibility for what's happening in this country, because the news media is just a knee-jerk, or no-jerk...

INSKEEP: Or full of jerks? Is that where you're going? I'm sorry.

BARTLETT: No. Every month they will have a story that says - and this one from April is typical: U.S. trade deficit declines as imports fall sharply. The suggestion is that the trade deficit is collapsing. Every month for 25, 30 years now...

STEELE: Decades, really.

BARTLETT: ...that story has been on the front pages of every major newspaper in this country. You would think someone would see a story there and say, well, the trade deficit just keeps getting bigger, it doesn't fall.

INSKEEP: Well, wait a minute. Sometimes - sometimes the trade deficit does goes down. Sometimes even if the trade deficit widens, exports have climbed. Aren't exports going up?

STEELE: What you have to look at, though, is what the trend is, and the trend is, year in and year out, that the trade deficit, in other words how imports overwhelm exports, that trend has been going on now for three decades, and on an annual basis that deficit continues to go up.

BARTLETT: It only goes one direction, and that is up.

STEELE: So just because you will see an increase in exports, unless the imports are factored into that, you don't see how we're losing ground from a trade deficit issue. And the important is, to us, I mean I don't think most people realize that none of our other major trading partners had these trade deficits, and we make the point in the book that that's what's related to jobs; that has led to the elimination of all kinds of jobs, and they've not been replaced by jobs paying commensurate pay.

INSKEEP: One last thing I want to ask about, gentlemen - when you raise the concern of lost manufacturing jobs, lost good jobs in the United States, there are a lot of people who will despair. The jobs are already gone, the mills are already closed. You're talking about something that's already happened, is already happening, and that you can't prevent. What do you say to someone who feels like this is inevitable whether they like it or not?

STEELE: I'll let you what we say, and that is there are some people who are talking about wouldn't it be great to bring manufacturing jobs back. We're realists. We don't think the likelihood of bringing many of those jobs back is possible. We think the best hope is to try to deal with the manufacturing we have left. And by the way, this isn't just - just as we were actually finishing this book, this whole idea of the importance of manufacturing seems to have welled up in the country in a way that we haven't seen in years, and a lot of the discussion is coming from company presidents who are now seeing some of the drawbacks to sending your plants offshore.

I mean, they're operating - they're proceeding on this on the basis of what it's done to their workforces, what it's done to their design process, the fact that the manufacturing is now in many cases separated from the folks who design these products and engineer them - that's turned out for many companies to be a real drawback. So our point is, let's try to save and hold on and enhance what we have left, and that will ultimately be very good for working Americans everywhere.

INSKEEP: The book is called "The Betrayal of the American Dream." The authors are Donald L. Bartlett and James B. Steele. Thanks very much to both of you.

STEELE: Thank you. Nice to be with you.

BARTLETT: Thank you. Transcript provided by NPR, Copyright NPR.

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