Lecture explores global economic myths

President of Manzella Trade Communications John Manzella gave a lecture titled “Global Economic Myths and Realities and their Impact on Policy and Business” on Wednesday Nov. 7 to mark the third lecture in the 2012 All-College Hour lecture series.

In addition to running his own company, Manzella is also a world-recognized speaker on global trends, international business, China and contemporary economic realities. His presentation for Geneseo students and professors focused on common myths regarding our global economic situation.

Manzella started the lecture by acknowledging that one of the most common myths is that the economy and unemployment should improve soon. According to Manzella, “The unemployment rate is likely to remain high for the next 10 years.”

He said that he attributes this trend to low consumer confidence, which means that people are currently saving more money, keeping lower credit card balances and paying off debts. Manzella said that while this is all helpful for our economy in the long run, it’s not beneficial in the short run because consumer spending needs to increase in order to boost our economy.

“To return to pre-recession employment levels by 2020, we must create 21 million jobs this decade,” Manzella said.

He then showed a graph demonstrating how, in October 2012, there were 12.9 million people unemployed, an unemployment rate of 7.9 percent, excluding discouraged workers. Manzella said that when the labor market eventually improves, those discouraged individuals will re-enter the labor force. This, he said, will actually increase the unemployment rate for a period of time.

Another myth Manzella addressed was the belief that the U.S. manufacturing sector is becoming “hollowed out.”

“From 1979-2011 U.S. manufacturing value-added output more than tripled, from $545 billion to more than $1.84 trillion,” Manzella said.

He also said that, while it may seem that this would increase employment, this is not the case.

“U.S. innovation, technology and productivity empower fewer workers to produce much more in less time,” Manzella said.

Another myth that Manzella aimed to debunk was the idea that most U.S. operations are shifting to China, which he said is not true.

“Each year, Chinese labor costs rise 18 percent and currency increases could boost this to 25 percent,” Manzella said.

According to Manzella, as the cost gap between American and Chinese labor decreases, manufacturing will “backshore,” or return to the U.S., in states like Montana, North Dakota and South Carolina.

One of the final myths Manzella discussed referred to the idea that with an “elevated unemployment rate,” skilled labor is “abundant.”

“In 2011, 600,000 manufacturing jobs went unfilled and in 2005, 81 percent of surveyed manufacturers faced a shortage of qualified workers,” Manzella said.

He said this is due to companies becoming increasingly competitive and requiring employees with “deeper skill sets, the ability to think critically, solve complex problems and manipulate complex technology.”