U.S. Manufacturing Revival Needed

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Barack Obama and his Republican challengers don't agree about much, but they do agree manufacturing matters and resurrecting America's factories will be at the center of the fall presidential campaign.

America's economy can't be turned around and middle class prosperity saved, without it.

Since 2000, the U.S. economy has grown only 1.6% annually -- not its 3% potential, as defined by productivity and population growth -- and it has not created a single new job. But for an alarming increase in prime-working-age adults choosing not to look for work, unemployment would be 13 percent.

Economists agree weak demand for U.S.-made products are the cause. Dependence on foreign oil and manufacturing are at the center of this mess.

The trade deficit is nearly $600 billion or about 3.8% of GDP. Each dollar that goes abroad to pay for imports but does not return to purchase U.S. exports is lost demand and lost jobs. Eliminate the trade deficit and GDP would increase $1 trillion, and 10 million new jobs would be created.

Currently, oil accounts for 45 percent of the trade deficit, and manufactured goods from China, Germany and Japan the rest.

Oil imports are about 9 million barrels a day and gasoline consumption is about the same. Increased domestic production from the Gulf, Alaska and other offshore deposits could cut imports in half, and genuinely exploiting fuel efficiency opportunities and better use of natural gas for transportation in cities and heating could do much of the rest.

There are so many bogus arguments offered on manufacturing.

Improvements in productivity have certainly cut manufacturing employment in Europe, the United States and China, but improvements in productivity occur in all sectors, every year. That's the very essence of progress.

Agricultural productivity has improved dramatically in the 20th Century but Americans did not give up farming.

If the United States redressed three quarters of its $650 billion deficit in manufacturers, someone would have to make that stuff, even if at higher levels of efficiency than in the past. The U.S. economy would be 5% larger and policymakers would be worrying about a shortage of workers.

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