Matthew Ricchiazzi, New York State’s leading Tea Party activist, is calling on President Donald Trump to propose a “Rust Belt Recovery Act” just ahead of midterm elections this November.
“We need to fight the trade war with China much more aggressively. To reverse the trade deficit we must have domestic manufacturers of consumer products again,” he explains. “Because of automation technologies, labor savings associated with off-shoring production processes have become nominal.”
Ricchiazzi wants Trump to direct Commerce Secretary Wilbur Ross to “begin on-shoring the production of consumer products in all product categories in which the United States runs a trade deficit and has no domestic producer of scale.”
He envisions a Rust Belt Recovery Act that empowers the Commerce Secretary with new capacities to finance private equity deals that “actively on-shore” the production of consumer goods to the formerly industrial Midwest. Spawning new domestic manufacturers with financing that allows them to invest heavily in property, plant, and equipment will enable those firms to achieve competitive per-unit costs that beat foreign producers.
Mitigating that initial capital intensity can be done with innovative federal financing programs, including long-term private equity placements in new manufacturing ventures in cases where there are no domestic producers in that product category. The Commerce Department would then slowly divest itself of that portfolio of private equities over the course of two or three decades, Ricchiazzi postulates.
Coupling those plant financing programs with increased tariffs on Chinese imports would have catalytic impacts on the construction, transportation, and warehousing industries — while driving the trade deficit to zero, perhaps within ten years.
“China crafted a deliberate economic policy that positioned it as the manufacturer to the world. That should have been our economic development strategy in the last four decades, but it hasn’t been — and the Rust Belt is rightfully angry and resentful,” he explains.