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Helping exports, manufacturing good for U.S. and Pennsylvania

Lost among competing news stories and chatter about mid-term elections, the Gulf oil spill and ongoing debates over energy, immigration and deficit spending is President Barack Obama's pledge to double U.S. exports in five years.

At first, it seems like an unreasonable goal. But for many reasons, focusing on increasing exports is just what the U.S. should be doing.

First, focusing on exports implies focusing on manufacturing. Exports are things, not services. So, boosting exports might mean expanding markets for existing products, but it also might involve revitalizing manufacturing in the United States.

And boosting manufacturing could improve the fortunes of the middle class in America, which has seen its standard of living stagnate or slipping over the past several decades.

Boosting exports might also mean that the U.S. economy would become slightly less dependent on consumer spending. For years, the domestic economy has been driven by consumer spending, which accounted for about two thirds of all U.S. economic activity. But the recession has caused that spending to pull back, and will not soon return to levels seen prior to the 2008 financial crisis.

The financial sector of the economy, including commercial banking, investment banking and insurance, had grown in recent years to represent an outsized percentage of profits of the nation's Gross Domestic Product. The increased profits brought high wages and million-dollar bonuses, which attracted many of America's best and brightest.

If financial sector wages were to come down and manufacturing wages were to go up, it would redirect America's top talent to jobs where they make things, instead of to jobs where they shuffle papers and invent new ways to place risky bets.

In recent years, many Americans spent money they did not have — using credit card debt or by borrowing money against the ever-increasing values of their homes. But that source of consumer spending has mostly dried up.

So, developing comprehensive government policies to boost exports and, by extension, aid manufacturing, makes sense on many levels.

Germany is seen as the star of the European economy and its economy is driven by manufacturing and exports.

A former head of the U.S. Federal Reserve, Paul Volcker, commented recently that Germany valued engineering and making things, while America valued financial engineering of complicated schemes to make only money, not tangible things.

Most Americans, outside of those on Wall Street, see the folly in this.

It's also true that most Americans support efforts to rebuild manufacturing in the United States. A recent poll found 86 percent backing government support for manufacturing.

A comprehensive plan would include government support for manufacturing job creation and for bringing manufacturing jobs back from overseas. It also should address corporate tax rates, which U.S. business interests complain are the second-highest in the world.

But supporting boosting exports also involves foreign currency valuation, mostly what most observers believe is China's deliberate attempt to keep its currency artificially undervalued to boost exports. But when it comes to pressuring China to reform its policy on currency, the United States has very little leverage — because our deficit spending is mostly financed by China. Few debtors are in a position to force their bankers to do anything.

But efforts to boost U.S. manufacturing and increase exports would be smart, and something supported by most Americans. So, if Obama and the rest of Washington want to do something that would unite most Americans rather than divide them, they should start a discussion about how to put America back to work again — making things, not just making money by placing bets from a computer on Wall Street.

And renewed efforts to bolster manufacturing would probably mean good things for Pennsylvania, where manufacturing still employs 573,000 people, and accounts for just over 10 percent of the state's non-farm economic activity. And since manufacturing jobs tend to be higher paying than service-sector jobs, the impact on revitalizing the middle class would be good too. And that benefit would ripple throughout the economy.

It's time for Obama and Congress to shift the emphasis to manufacturing and exports. Time to get America working again, making things.

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