How to boost U.S. manufacturing jobs: Fake them

July 25, 2014
Sometimes news coming out of Washington D.C. seems to defy common sense. At least that was my reaction to word about a proposal to call American firms that send production offshore “factoryless goods” producers. The problem is that if this idea gets implemented,  the value of U.S. brand-name products made elsewhere and imported here would be counted as manufacturing “services” imports, not imported goods. In other words, it would inflate figures for goods manufactured in the U.S.

Sometimes news coming out of Washington D.C. seems to defy common sense. At least that was my reaction to word about a proposal to call American firms that send production offshore “factoryless goods” producers.

The problem is that if this idea gets implemented, the value of U.S. brand-name products made elsewhere and imported here would be counted as manufacturing “services” imports, not imported goods. In other words, it would inflate figures for goods manufactured in the U.S. Worse, white-collar workers at firms that have offshored their production would be counted as manufacturing workers.

Fortunately there has been quite a negative reaction to these shenanigans. The folks over at the Naked capitalism site call this an Orwellian statistics fudge to make off-shored production look like U.S. made. The Public Citizen site says the plan is even worse than it seems initially. For example, it's widely known that Foxconn assembles Apple iPhones in China. iPhones would be rebranded as “services” imports rather than imports of manufactured goods under the new scheme. And if Foxconn exported iPhones to other countries, the proposed reclassifications would count the iPhones manufactured in China as U.S. manufactured goods exports.

Yes, you read that right. Stuff assembled in China and sent to Japan would count as U.S. manufactured goods.

All in all, says Public Citizen, the whol idea results in a "fabricated reduction of the U.S. manufacturing trade deficit." 

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