Nick Smith, February 22, 2004

The American economy is in an enormous transition. It may be even larger and more significant than the shift from an agricultural to a manufacturing society in the 19th century, or the shift from a manufacturing to a service society in the 20th century. Changes in technology here in the U.S., particularly information technology, are expanding the productive capacity around the world. We and other countries produce a greater output with fewer workers than just a few years ago, and this trend will accelerate.

From my meeting in China last month, it is clear that they - along with other large countries like Russia, India, and Indonesia - are moving from central planning to the market process for organizing resources. This is increasing the productivity of hundreds of millions of workers. Rapid increases in machinery, equipment, and buildings will increase in these economies and will continue to raise productivity. This means the U.S. and other countries around the world will produce a lot more goods and services. Market capitalism will make many people in poor countries wealthier. There is potential for a vast increase in the market for our exports, but there will also be increasing competition.

Unfortunately, changes in the economy will disrupt millions of lives. It is likely that hundreds of thousands of people in the United States, and thousands in Michigan, will have to change jobs. While manufacturing output in the U.S. has not declined, even as a percentage of Gross Domestic Product, the number of workers involved in manufacturing is falling. This threatens the way of life for many of my constituents. Breadwinners for families in places like Jackson, Hillsdale, Adrian, and Battle Creek, face job losses. It is hard to lose a job that you’ve had for many years and harder to go back into the job market at the age of 50. It will require effort from family, church, community, and government, to make this traumatic experience bearable.

I do not agree with economists that say outsourcing is an acceptable or desirable form of free trade. Instead, I think it’s a sign of some mistaken policies in the United States. Workers need to understand that ultimately they have to be competitive, but government has to move aggressively to make sure our business and industry are not at a disadvantage. That means reducing taxes, eliminating overzealous regulations, cutting down on frivolous lawsuits, and moderating health care expenditures for business. Government needs to structure research and trade policy more selfishly to make sure the benefits accrue to American companies and American workers to the greatest extent possible.

Most of all, business and labor need to work together to expand markets. We have to aggressively reduce the myriad barriers to our exports all over the world, fight foreign subsidies that make our exports uncompetitive, and insist that American jobs become the first consideration in our trade negotiations. Far too often, we’ve settled for far too little at the negotiating table.

The outlook for our economy, and that of the world economy, is one of bountiful goods and services. But we must also be aware of the personal costs that will accompany this move and act to assist those who will be forced to make large life-style changes as we try to keep the American standard of living the best in the world.

Congressman Nick Smith, a Republican, represents Michigan's 7th Congressional District in the U.S. House of Representatives.