In his address before Congress, President Donald Trump touted his success in persuading major companies to move jobs back to America, but his jawboning has delivered a punch much smaller than he advertises and that pales in comparison to the task of significantly improving on President Barack Obama's record as a jobs creator.
The succession of deals announced to create or return jobs to America sounds impressive — for example United Technologies, Fiat Chrysler and other top-line companies have jumped on board — but the challenge is too large to be accomplished by simply cajoling CEOs.
The Obama recovery accomplished 2.1 percent annual economic growth and averaged about 185,000 new jobs each month. Mr. Trump would have to create at least 100,000 more jobs each month to bring growth up to 3 percent to 4 percent and substantially improve living standards for ordinary working Americans.
Generally, company announcements include many jobs that were planned before Mr. Trump's surprise election. For example, Lockheed Martin CEO Marillyn Hewson promised 1,800 jobs at its Fort Worth factory after meeting with the persuasive president, but those include some 1,000 that were announced in 2015.
Most deals announced only create 1,000 to 2,000 jobs. Calculating generously, Mr. Trump would need 50 new deals each month — a Herculean task — to hit his growth goals.
Even if Mr. Trump found the time for so much jawboning and enlisted Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, the administration would quickly run out of large corporations that could afford to placate the president's demands.
In fairness, Mr. Trump is countering foreign-government practices that sway multinationals to manufacture abroad even when U.S. locations may make good economic sense.
For example, China tightly regulates foreign investment and requires most American companies to take joint-venture partners. Often, these deals entail shifting production and R&D to access the Chinese market.
Federal Reserve Chairwoman Janet Yellen spoke at the Executives' Club of Chicago on Friday, where she signaled the central bank is likely to raise short-term interest rates at its March meeting.
Volkswagen must restructure to accommodate the next generation of automation and mass produced electric vehicles. Thanks to German law, the union and the government of Lower Saxony combine to hold a majority of seats on the company board, creating a decided preference for German over U.S. and other foreign locations.
Still the scale of the problem remains huge, and Congress must join the president in recognizing that other countries have done a lot to become more competitive.
Notably, Mexico has negotiated an extensive network of free-trade agreements, and foreign auto makers can make cars and parts there for sale duty-free throughout North America, Europe and Japan — that is not something automakers can do in the United States. Given the dependence of the U.S. industry on components from Mexico, it is not at all clear that the United States would come out the winner in a trade war.
U.S. corporate tax rates are much higher than elsewhere, and business regulations have grown more burdensome in recent years. And comprehensive free-trade agreements that accomplish fair market access, currency reform and balanced trade are sorely needed to motivate scores more businesses to keep manufacturing, R&D and administrative activities here without presidential attention.
Tax and regulatory reform face barriers posed by divisions within the Republican Party in Congress, opposition from Democrats and the bureaucratic requirements of legislation that slow rule changes. And his new trade policy document emphasizes logging individual company complaints against foreign governments instead, for example, of taking on China to accomplish comprehensive compliance with its WTO commitments.
Unfortunately, the impulse to rely on individual deals runs deep in the new administration — after all that's how Messrs. Trump, Mnuchin and Ross made their fortunes. As businessmen, they were great at exploiting the system — including controversial records of lobbying for protection and outsourcing jobs. Now they must try their hands at accomplishing radical systemic reform and need cooperation from Congress and foreign governments, where leaders have ideas of their own and can't be fired by Mr. Trump.
Presidential blustering can motivate negotiating partners to offer some quick, token results, but it won't work well for making the really big deals America needs to prosper again.
Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. Twitter: @pmorici1.