Fix economy with manufacturing jobs

Detroit Free Press

By PETER NAVARRO

As the U.S. economy slides inexorably toward recession, China continues to boom. A major reason for this stunning divergence in fortunes is the ongoing transfer of millions of American manufacturing jobs to China. To restore the health of the American economy, it follows that we must resuscitate our once dominant manufacturing sector and reclaim those jobs.

Unfortunately, the importance of U.S. manufacturing as an anti-recessionary tool has been totally lost on both Washington policymakers and our bumper crop of presidential candidates. This is true even as the Midwest and many other heavy manufacturing pockets of the country continue to endure some of the hardest times in 50 years.

Consider the Federal Reserve. Its recession "solution" is to feverishly cut interest rates and throw open wide the credit spigot. With the dollar hitting fresh lows, this easy money policy has merely debased our currency.

Because monetary policy isn't working, economists on both sides of the party aisle are urging the use of fiscal policy to stimulate the economy. For example, both Larry Summers, a Democrat and former Treasury secretary, and Martin Feldstein, a Republican and former chairman of the Council of Economic Advisers, want an emergency tax cut. This, however, would exacerbate an already chronic federal budget deficit, further devalue the dollar, and likely ignite a simmering inflation.

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