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Why politicians and pundits don’t understand manufacturing

This is the excerpt for a featured post.

Originally published April 9, 2017.

I remember one of the Hillary Clinton-Donald Trump debates starting in a strange way.

No, I’m not talking about the tweets, the crassness, the dishonesty, and all of the other things the pundits like to talk about.

I’m talking about something more mundane but that probably helped Donald Trump win the race. Well, it’s mundane for some people. For others it’s incredibly important because it impacts their livelihood.

Trade Agreements and Manufacturing

We had a Republican candidate (Trump) railing against NAFTA, while Hillary Clinton’s husband, Bill Clinton, was the person who signed it into law. Hillary Clinton had to kind of step around the issues because although her husband signed it into law, much of her base didn’t like NAFTA or pretty much any other free trade agreements.

What’s so strange about that? Well, we had a Republican presidential candidate who doesn’t like NAFTA, and a Democrat presidential candidate who liked NAFTA (although she couldn’t currently admit it.)

Most Republicans tend to like NAFTA while Democrats tend to dislike NAFTA. At least, that was the case until recently.

Additionally, Hillary Clinton was in the minority of Democrats who was in favor of the Trans-Pacific Partnership (until for political pressure she had to withdraw her support), while Trump was in a minority of Republicans who opposed the TPP.

NAFTA Vote tally

To complicate things further, when Bill Clinton signed NAFTA into law, he broke with his own party. Most Democrats voted against it, and most Republicans voted for it.

The final vote:

234 YES, 200 NO

Democrats:

156 NO, 102 YES

Republicans:

132 YES, 43 NO

Independent:

1 NO, 0 YES

Fast forward 24 years, and we actually had two presidential candidates who don’t seem to like very many trade agreements.

Trade deals and manufacturing had a very important role in the presidential race.

Trump carried all of the regular Red southern and Midwestern states, and he added a few other traditionally blue states. Then pundits who are based in Washington, D.C. were stunned that he won. (I made sure to include the words “who are based in Washington, D.C.” for a reason. I’ll explain in a few paragraphs.)

The overall national polls technically weren’t off that much. The RealClearPolitics average only underestimated Trump by 1.1 percentage points. It was closer than the 2012 election, actually.

But it definitely underestimated Trump in Wisconsin (by 7.2%), Michigan (by 3.7%), and Pennsylvania (by 2.6%), all three considered upset wins and typically blue states in presidential races.

Manufacturing and the presidential race

The key states that Trump either won or outperformed in are strong manufacturing states, so NAFTA and the TPP were very much on the minds of the voters there.

Here are some of the top manufacturing states in the country:

  1. Indiana, where manufacturing comprises 17.1% of the workforce and 29.5% share of gross product. Trump won 56.5% to 37.5%. Barack Obama won Indiana in 2008.
  2. Wisconsin, where manufacturing comprises 16.4% of the workforce and 25.9% share of gross product. Trump won 47.2% to 46.5% in a state that had not gone to the Republican presidential candidate since 1984.
  3. Michigan, where manufacturing comprises 14% of the workforce and 19.02% share of gross product. Trump won 47.3% to 47% in a state that had not gone to the Republican presidential candidate since 1988. (Obama won in 2008 by about 17%!)
  4. Iowa, where manufacturing comprises 13.7% of the workforce and 18.26% share of gross product. Trump won 51.1% to 41.7% in a state that Obama won in 2008 AND 2012.

In Pennsylvania, manufacturing is not quite as significant, but it still mattered. In Pennsylvania manufacturing comprises 9.71% of the workforce and 12.01% of gross product.

Trump won Pennsylvania 48.2% to 47.5%.

Now, a lot of politicians and political pundits are in Washington, D.C. How much manufacturing do they have there?

Washington, D.C.: 0.13% of the workforce is in manufacturing, accounting for 0.2% share of gross product, less than any of the 50 states.

So the talk of NAFTA and manufacturing may not matter much to you if you’re a government employee, attorney, accountant,  professor or service provider.

But it will matter a lot if you work in a small manufacturing town or work for a manufacturer yourself.

Regardless of what you think of free trade, regardless of your belief in creative destruction, and regardless of your political affiliation…

… don’t overlook manufacturing.

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