Small businesses and Silicon Valley innovation are the keys to re-invigorating U.S. manufacturing. That’s the message of Ro Khanna’s new book, “Entrepreneurial Nation: Why Manufacturing is Still Key to America’s Future.” What are his plans for reviving the economy? Ro Khanna joins us to discuss his job creation ideas and his political aspirations.

Interview Highlights

On How to Keep Manufacturing in the United States

We do that one, by having an educated workforce with the right skills in manufacturing; we have had cuts in vocational education, cuts in community colleges and don't have the right workforce. We do that buy respecting manufacturing and the trades, the labor unions that are still producing skilled workers and saying that these folks have an important role in our society. People say, "Well, manufacturing is repetitive work," I often say well, "Legal work is repetitive work. You cut and paste documents and then submit briefs, there's some creativity to it but a lot of it is repetitive. The same thing goes with manufacturing, is a lot of the work repetitive? Absolutely. But in modern manufacturing, to operate CNC machines, to be innovating with lean manufacturing techniques on an assembly floor requires creativity." So one is just respecting our manufacturers. And finally I think having the right tax and immigration and regulatory policies to attract manufacturers back to the United States.

On Why Solyndra Went Bankrupt

Well China has the silicon crystalline technology, which is the older technology. And the advance in solar was the CIGS technology, which Solyndra and others used. And the hope was that that would give American manufacturing an advantage. Now what happen was the price of the Chinese silicon crystal fell and they ended up dumping a lot of that into the United States against what would be fair trade practices and that put a lot of competitive pressures on American solar companies. Now that's not the only reason Solyndra failed, but its an untold story, which is the Chinese dumping of cheap solar panels. So I don't think they beat us, in the sense that they're technology is still older and there is a new technology in the United States that should be developed but they are competitive on this older technology.

On China's Currency Manipulation

My view is Paul Krugman's view, that we ought to make a demand, we ought to say that first of all, that they are manipulating their currency, label them a currency manipulator, and ask or demand or [achieve] by bilateral negotiation that they have a free-flowing currency. And the reason is not just because it is going help American workers, but also, in my judgment, it's going to be good for the Chinese people. I mean right now you have a communist government that is favoring elite exporters at the expense of their own consumer welfare and consumer access to products in the consumer purchasing power. And so I think a fair trading regime would not only benefit American workers, but allow Chinese consumers to buy products they need.

On Government Investing in the Private Sector

If you go back in American history, all the way back to Alexander Hamilton, who argued to be a world superpower, we need strong investment from government in infrastructure, in universities, and then Abraham Lincoln, with the community college land grants that set up our community colleges; or Herbert Hoover, as Secretary of Commerce, who invested in aviation, and set up our aviation industry. Or even Ronald Reagan, who through SemaTech helped support the semiconductor industry. We see that there has been a bipartisan tradition in this country of government collaboration with the private sector to create growth, of a government responsibility in supporting education and infrastructure. And you look at our own state, there was no secret with Pat Brown, the secret was education and infrastructure — this stuff isn’t rocket science. And one of my favorite quotes in the book is [from] Richard McGregor, who says, “The problem and challenge for America is not that it needs to be more like China, the challenge for America is that it needs to be more like America.”

 

Guests:
Ro Khanna, former U.S. deputy assistant secretary of commerce, attorney and author of "Entrepreneurial Nation: Why Manufacturing is Still Key to America's Future"

  • Guest

    Why do we assume only Americans are capable of “advanced manufacturing” skills? After all, it is American companies like Apple that are teaching workers across the worlds these skills. On top of that, Americans consumers don’t seem to demand goods made here, so why make it here?

  • campfiregirl

    Manufacturing is so broad. We definitely should not give up making stuff in this country. Strategic investment is critical. Thanks Mr. Khama for articulating the issue so well.

  • Conrad

    Isn’t it easier for low-skilled Chinese workers to become high-skilled, than it is for high-skilled American workers to become higher-skilled? That is, it will be easier in the coming decades for Chinese workers to catch up than it will be for American workers to stay far ahead.

    Today American workers are more productive than Chinese workers, but in the coming decades, that difference will decrease. American workers simply won’t be able to stay this far ahead of Chinese workers.

    Of course, this also applies to programmers, scientists, content creators, etc.

    Comments?

    • commonsense1234

      Germany is an advanced manufacturing country and has a huge trade surplus as a result. I think if Germany can do it with their unionized system and all of their regulations, the US can do it, but we have hurt ourselves by not investing in vocational training & community colleges to fill those positions. There are 3M jobs currently available that we don’t have people with those skills to fill.

      Regarding the Chinese, they are having to let their currency appreciate which is undermining their export advantage – which will level the playing field. We also need to take an idea from them – financially support not only our strategic industries, but our small manufacturers which is something China will never do because of their system.

      • Angus

        The USA is run on the plantation model even today. I’d rather work in Germany. The USA doesn’t deserve my skills, frankly.

      • village

        Germany is much smaller country than the U.S. the people can easily get together, combine as Adam Smith said, to form Unions. In the U.S. we are huge, easily divided by corporations; the task is momentous. We just have to keep going, not let go. German corporations too are on the move to outsource jobs especially since the European Community has grown bigger.

      • Guest

        People here don’t have the skills do those 3M jobs? Dubious. Read Peter Capelli’s “Why Good People Can’t find Jobs”. Companies c. 1945-75 used to TRAIN basically-educated Americans (when the small 1920- 1930s cohort was in prime working age & immigration was low). Because of the labor glut from boomers entering the work force & then massive “unauthorized” immigration, companies got used to not spending much on job-specific training, and could demand people spend their own money trying to get more & more specialized skills the companies want. Since many people’s job experience rarely exactly matches the ads, the companies now claim ‘no qualified applicants,’ when they used to take an approximate match & train to make up the skill gap.
        I think Germany unionizes more easily because the government has a basic commitment to maintain the existing workforce as middle class; this includes the idea of limiting (though not totally eliminating) immigration. Few of our elites have that commitment to Americans. Do Americans expect too much in wages & conditions? Replace them with cheaper. If you can pay guest workers (=migrant laborers) so little that they have to support a family in a cheaper country (like Mexico etc.) rather than here even better. Or replace them with more prestigious groups (e.g. hire European PhDs to teach humanities at elite schools rather than American PhDs, even if the American PhD needs food stamps because s/he is only hired to adjunct–yes this actually happens!).

    • village

      we mustn’t pit workers against workers. where ever you are you are a worker. the deal is are you unionized or not. what does it matter to you if you aren’t sharing the pie of profits?

      • Guest

        And how are you supposed to unionize your workforce if & the capitalists can hire an unlimited number of unauthorized immigrants whenever they want? You can’t have unionization & refuse to enforce practical limits on immigration.

    • Guest

      It’s not so important to stay “far ahead” as it is to avoid going backwards, for example to the point when poor Americans have to sleep on the streets because they can’t afford housing, as many had to 150-100 years ago. (Don’t assume it can’t happen in here: India, where labor is dirt-cheap, has a huge population (not just the mentally ill) who sleeps on the street . The only reason they don’t also starve is food aid, as they rarely earn enough to feed themselves).
      My own experience (three higher degrees & still paid wages that barely covered the price of a rent-controlled apartment & food-bank assisted meals) tells me the biggest economic problem in America today is labor supply. There are simply too many folks chasing too few jobs relative to our economic growth rates & our high-tech economic structure. No one wants to face the fact that we cannot maintain a large middle class, a safety net, and take a practically unlimited number of low & medium-skilled immigrants at the same time. (It’s calledto the laws of supply & demand). But even limiting the supply of low-skilIed laborers requires enforcing our current immigration law, which has become anathema to most of our chattering classes. They love our myth of immigration–(we can take everyone & everyone will be better off)–don’t want to admit that taking in unlimited numbers of low-skilled & medium-skilled immigrants no longer makes sense in a high-tech America that wants to maintain a middle class class.

  • guest

    Electric kitchen appliances, manufactured in the US (e.g. Pennsylvania) three decades ago, sell for hundreds of dollars on eBay.

    Used.

  • serban

    Small correction to what you’re guest said: Starbucks is using/has used one of the TWO blender manufacturers who proudly build their products in U.S. : Vitamix and Blendtec. Blendtec is at least as awesome as Vitamix in quality and they firmly stand behind their product.

    • rafael

      I hope you are right. Boeing is made in the U.S. till you see most parts aren’t!

  • David Gjerdrum

    In my view, the most powerful strategic arguments favoring in situ manufacturing in a global market relate to supply chain resilience and innovation capacity.

    * The latter pertains to the ‘shoulders of giant’ view of the design refinement process – if understanding of product construction is not available locally, the capacity to improve is also at risk. Expertise, after all, entails experience.

    * The former is a related argument towards improved capacity, centering on product fit (localization) and reduced vulnerability through distributed (rather than remote) manufacturing.
    This is an ongoing issue that dovetail with energy, economics, education and policy, all poor fodder for election year discourse.

  • Chemist150

    So the discussion goes from small business to “manufacturing”? Please define “small”.
    I’ve been considering starting a website to sell some of my plant collections. I collect particularily rare plants listed as CITES 1 protected plants. To sell these plants outside of state lines, I need permit at $100 a year with a 3 month approval period. I don’t know how well they’d sell, Frankly, I don’t have enough of them to sell to accomidate the license but I would like to have them available because it would attract traffic to my site.
    90% of those online listing similar plants, do not have the permit. However, those 90% are likely to be 100% legally propgated or legally grown from seed as I do.
    Now include registering a busines fee (one time), then the re-occuring fee from the rip off “registered agents”. It forces a small idea to be a big idea and start up home business a ridiculous thouht.

  • The 3D printing revolution creates a reason for manufacturing on shore, by bring custom manufacturing into stores with Point of Sales manufacturing.

    • Manufacturing at Point of Sales (where possible) can eliminate a lot of shipping (and greenhouse gases), and those shipping costs avoided from shipping back from Asia can either lower prices or provide payment for higher labor costs here in the US.

    • Fep

      3D printing can be done in the home, be that home in the USA or not.

  • DoneeBee

    In my career in public education I watched successful vocational programs get dismantled out of a concern that black and brown students were being disproportionately steered to these programs. This has always seemed to me to be a sort of reverse bias against hands-on work that is vital to our society.

  • Tim

    As a small manufacturer I’m on board with Mr Khana’s point, but am concerned about deep cultural problems that boil down to our understanding of what wealth is.

    Here are some huge obstacles to restoring manufacturing:
    • A culture that for centuries has denigrated manual labor. Arthur Miller said something like, the whole object of the middle class is to avoid manual labor.
    • Sophisticated, high-tech manufacturing needs the foundation of simple, more basic manufacturing broadly practiced and taught. A generation ago we knew how to fix our cars and our houses and grow food. These are showing signs of life again, but we have a long way to go.
    • We’re governed by a system of finance capitalism which eschews investment in fixed assets like factories, land, and machinery as well as long-term employment.

    We have a debased understanding of wealth, believing wealth is money and that investment is a productive activity that magically breeds more money. Business leaders used to invest in businesses because they believed in the innate and enduring value of their products, and often because they loved the nature of the work involved. But we no longer value quality, value and beauty in our goods, nor do we understand that productive manual work labor is inherently valuable and the foundation of our economy.

  • Laisseraller

    The big problem is still funding, with banks like Boot Bank which granted $50K in credit then reduce it to zero? Even the small business adminstration was blown away with their action?

  • Chemist150

    I think the expectation to have degrees in subjects is what is destroying the US “innovation”. People are willing to start home businesses and learn the ins and outs of business that way without having a business degree but if one is prohibited by costs to simply start a home business, the spirit is squashed.

    You come out talking about small business and “small” refers to those dealing with $1million or more in revenue and quickly go to talking about Apple, the discussion is lost.

    I have an idea which I think could generate $1 million in revenue after costs but I have pay $20K to an attorney to get the proper patent protection, pay another $20K in engineering and development costs, but I can’t keep a job because the companies in my industry are fleeing the US. One company up and went back to Japan last year after building infrastructure about 6 years ago. Another is closing several facilities and clearing out by mid 2013. The investment money took a right turn from the industry. My safety net is non-existent. Should I gamble the house on an idea that is not guaranteed?

    Where is the entrepreneurial spirit? BITE ME, Obama.

  • I see comments about the skills gap. We have the skills already. We also have thousands of returning Veterans with the same skills and motivation that gave us “The Greatest Generation” after WWII. There is no lack of talent in the United States.

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