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Santorum Is Right About Manufacturing

Much as I dislike any sort of interference with market allocation of investments, I have come to the reluctant conclusion that Rick Santorum is right to propose special tax breaks for manufacturing, and hereby retract my January 15 criticism of his plan.

There are four issues to consider:

1) Americans urgently need to save more as the Boomer generation retires. The only way to increase savings without shutting off domestic spending is to export and save the proceeds, and to export, America needs to manufacture more;

2) Americans are terrified of investing in manufacturing as emerging Asia establishes its competence in everything from cell phones to computer aircraft;

3) National security; and

4) A disturbingly large percentage of America's workforce has been sidelined by the loss of America's monopoly position as the world's main destination for investment.

 

The last is the most devastating.

 

Just 40% of working-age Americans without a high-school diploma, and 55% with a high-school diploma but no college, presently are working – against 72% with at least a four-year degree. Nothing like this has happened before, and its consequences are catastrophic.

This is killing American families. More than half of all children born to mothers under 30 are born outside of marriage, As the New York Times reported on Feb. 16, "One group still largely resists the trend: college graduates, who overwhelmingly marry before having children. That is turning family structure into a new class divide, with the economic and social rewards of marriage increasingly reserved for people with the most education."

Charles Murray's book Coming Apart has already attracted national controversy. I can't attest to the accuracy of his conclusions, but he clearly is on to something.

If there are few jobs available for Americans without a college diploma, we will have a permanent, growing underclass. Apart from the dreadful human cost, the cost of the overloaded safety net will make it impossible to shrink the budget deficit.

Santorum's emphasis on jobs for people like his coal-miner grandfather has to strike a chord under these circumstances. Much as I admire Mitt Romney, and continue to believe that he will be the Republican candidate in November, sometimes he seems to think that the U.S. economy is a Harvard Business School case study. At the moment it is the scene of a vast human disaster.