Max powers-
First, you didn't say he needed more manufacturing, the other fellow did.
No one is suggesting that we earn a living sewing together blue jeans, but if manufacturing is not increased in the US, what productive output are we going to have to balance trade? We can't all be stockbrokers and airline pilots. And it is hard to export service output.
Without exportable goods or commodities, we are in trouble. The US has been artificially carried for years by exporting financial products, whether that it Treasury debt or securitzed debt. The rest of the world's insatiable demand for these products is ending now, and the US will need to find a trade-balancing export. Now, much of what the US exports is intellectual property, such as software and entertainment. Those sectors, however, are not large enough to sustain the kind of trade imbalances that we have been running to date.
You mention that you want to see increased tech sector output, which I agree with. Is that sector large enough to carry the day on trade? Maybe.
I do believe that some lower-level manufacturing work will need to return to the US, because of wage-deflation the issue of low technical competency in the US.
I know a Russian software engineer and a Mexican electrical engineer, and both say that their companies are having a hard time finding US citizens with the necessary qualifications.
The only other solution to the trade deficit is for the US to drastically reduce imported goods and consume mainly domestically produced goods. (Personally, I can live with whichever way we go.)
But even if we do it that way, we will need to bring manufacturing jobs back to the US, since we don't have the facilities to manufacture a lot of the day-to-day consumer goods like microwave ovens or computer parts.
If we DON'T increase either our manufacturing or have some other exportable good or service, why should other nations continue to give us their productive output?
Productive output is what gives a nation's currency its value. If the nation produces very little, there is little to buy with that currency and the currency loses value. Look at Iceland. The demand for their financial products (which used to be VERY high) went to zero almost overnight, leaving only aluminum smelting, fish, and wool as output. And that was reflected in the exchange rate of their currency, which has taken a terrible beating.
Americans may not LIKE the message that many of us will have to return to the factories and leave the service economy, but that is likely the case.
How do you think that China wound up with almost $2 trillion in US financial assets? They did so to keep their exports cheap and build their manufacturing base. That cash has been building up in their accounts now for a long time. Why do they need any more dollars? The only reason they do is so that they can land their economy gently instead of having the US's sharp consumer pullback crash their production completely.
Here's what IS going to happen:
Prepare for very lean times for quite a while. This will be independent of who you elect, and independent of what policies they enact. That factor will only determine relative wealth among Americans. But we blew most of our wealth in the dotcom debacle and the housing bubble. Total US debt is unsustainable at this level and now must be paid off or defaulted on. So either we live lean and pay it off, or we default and live lean because no one will lend to us.
It's checkmate for consumerism.
With regard to the politics:
Bush did an awful job regulating the financial sector. Clinton did just as bad a job. The repeal of glass-steagall occurred on his watch, which was a major element in deregulating the financial sector. Additionally, Clinton and Bush also both failed to do anything about the growing derivatives monster. Bush has less excuse though, because it was obviously becoming a bigger problem.
Any attempt to make one party or other the perpetrator here is laughable - most of congress is bought and paid for by large companies. Until these large banking interests financially implode, they can continue to push for the legislation they want.
