Can the US thrive without manufacturing?

[ccbatson]

Weak, or open? The fact is, that rational thought compels us to conclude the latter.

[Stosh]

Weak, or open? The fact is, that rational thought compels us to conclude the latter.

I'd suppose then that you would have had to first have that rational thought to conclude anything of the sort.

[Detroitej72]

The rational thought compels us to think they were jedi mind tricked. Anyone who arbitraraly changes positions because they listened to an entertainer probably wasn't really all that commited to that position in the first place.

[Det_ard]

JohnLodge, when you posed the question about "thriving without manufacturing" were you thinking in terms of manufacturing workers or manufacturing output? The reason I ask is that the number of manufacturing workers has steadily decreased even as the value of our manufacturing output has risen, in real terms.

This parallels what happened with the shift from agricultural jobs to industrial jobs a century or so ago. We produce record amounts of food with fewer and fewer workers. Has it impoverished our country? No. Will a similar shift in industrial jobs have the same result? I think so.

Now, if you were asking about our future if we no longer do any manufacturing then that may be a different matter, but perhaps not. There are countries that prosper yet lack a strong internal sector in commodities, agriculture or industry.

In any case, the common complaint by some that "we don't make anything any more in the US" is so far from being accurate as to be useless as a starting point for discussion.

Manufacturing: More Output With Fewer Workers


Don Boudreaux in the Pittsburgh Tribune-Review:

Many of you protectionists hyperventilate about America's alleged loss of manufacturing prowess. Are you aware that your worries on this front arise solely because you confuse manufacturing jobs with manufacturing output? Manufacturing jobs, as a percentage of all jobs in America, are indeed declining [[see top chart above). And you hysterically interpret this fact as somehow proving that foreign producers are undermining America's economy.

But are you aware that America's manufacturing output today is near its all-time high [[see middle chart above)? Are you aware also that America is by far the world's largest exporter of manufactured goods?

Are you aware that the reason manufacturing jobs are declining as a share of all jobs has far more to do with increased productivity of American industry -- that is, increased strength of American industry -- than it has to do with increased foreign trade [[see bottom chart above)? Manufacturing jobs are being lost to technology and improved efficiencies. Do you think that this trend is undesirable?

MP: The middle chart above shows U.S. Manufacturing Output [[Gross Value) from The Federal Reserve, and U.S. Manufacturing Payroll Employment from the BLS [[via Economagic), monthly from 1972 through March 2009. In the last 37 years, manufacturing output in real dollars has more than doubled, while manufacturing employment has dropped by about 35%, resulting in an almost tripling of the amount of manufacturing output per manufacturing worker in the U.S., from less than $80,000 in 1972 to almost $240,000 per worker today [[bottom chart).

http://mjperry.blogspot.com/2009/04/...ith-fewer.html

[MoparDan]

When I was working and had to deal with an assortment of consultants brought in by executive management, we had a number of sayings about them. The one that immediately comes to mind is that a consultant is a person who borrows your watch to tell you what time it is, and then charges you $500/hour for it.

I think this sums up consulting perfectly!
http://www.demotivators.com/consulting.html

[Detroitej72]

I wonder who on here is the lone yes vote?

[firstandten]

"Are you aware that the reason manufacturing jobs are declining as a share of all jobs has far more to do with increased productivity of American industry -- that is, increased strength of American industry -- than it has to do with increased foreign trade [[see bottom chart above)? Manufacturing jobs are being lost to technology and improved efficiencies. Do you think that this trend is undesirable? "




Could the increased efficiencies also be due to American companies off-shoring and a shifting of manufacturing plants to low cost countries ?

[Det_ard]

I don't think that off-shore manufacturing activity is captured in the data series used above "US Manufacturing Output". The efficiency improvement is probably due to investments in capital equipment, technology and advanced design and manufacturing techiques.

[ccbatson]

It is soooo simple, excise burdensome organized labor, burdensome corporate taxation, and lower costs...then you become competitive. Outsourcing would plummet.

[Redford Kid]

The solution will take a little more than any one simple mind can come up with, perhaps a national effort of experts, exercising their thoughts for the good of all the people is in order. Inclusive of minority opinion like the one expressed above.

[Flanders]

It is soooo simple, excise burdensome organized labor, burdensome corporate taxation, and lower costs...then you become competitive. Outsourcing would plummet.

As usual you omit paying peasant wages, no health benefits, no pensions, lax pollution controls, and non-existent workplace safety and health regulations, not to mention that the US' leaky and loophole pitted federal tax code enables most businesses, both foreign and domestic, to avoid or drastically reduce paying those"burdensome" US corporate taxes.

Not that I am very surprised that you did, of course.

[Johnlodge]

I'm more than a little skeptic about Det_ard's graphs. Apparently, when manufacturing output was super low, you could find American made products all over, but now that's its way way way higher, everything you see says Made in China? Ehhh. Plus the guy who wrote that article sounds like he has a major agenda, look at how he writes.

[Detroitej72]

It is soooo simple, excise burdensome organized labor, burdensome corporate taxation, and lower costs...then you become competitive. Outsourcing would plummet.

Tell me, Prof. Bats, if the burdensome tax rates were the root cause, why do companies move to Communist China? You do realise they pay a good deal of taxes, don't you?

As far as "burdensome labor", I think its safe to say you and the cult of Randian Thought favor a return to fuedalism, as you are oppose to the power of barganing for your wages.

[Flanders]

Tell me, Prof. Bats, if the burdensome tax rates were the root cause, why do companies move to Communist China? You do realise they pay a good deal of taxes, don't you?

As far as "burdensome labor", I think its safe to say you and the cult of Randian Thought favor a return to fuedalism, as you are oppose to the power of barganing for your wages.

There are millions in the US who agree with him, and they do not care where or who produces/provides the goods and services that they consume, because they feel relatively financially secure through their type of profession and/or perhaps through inherited wealth. They have little sympathy towards those who are or have been victimized by technology, automation, obsolescence, offshoring and outsourcing, expecting them to survive [[or not) by prayer, charity, and/or family. The RW's current buzzword of "personal responsibility" is all encompassing, and is all they really have to state.Everything else, such as socialism, terrorism, tax cuts, privatization, blah, blah, blah...is just so unnecessarily superfluous.

[Johnlodge]

http://www.youtube.com/watch?v=JUpidCc7wwY

[Jimaz]

I love that How It's Made show on The Discovery Channel. Its never-ending stream of manufactured products gives a real sense of how much our modern lives have become dependent on manufacturing.

It's unnerving that we're so blithely handing over the keys to so much of our manufacturing to other countries. It's unnerving because it's risky, just like the risky mortgage schemes that unhinged the financial sector. Is a similar disaster about to recur in the manufacturing sector? [[I'm not thinking just of the automotive sector.)

[ccbatson]

Great point...even communist China is less burdensome when it comes to taxation...Anyone else see that as a problem?

[Gistok]

It is soooo simple, excise burdensome organized labor, burdensome corporate taxation, and lower costs...then you become competitive. Outsourcing would plummet.

Didn't you forget "burdensome company health care costs" cc?

I wonder what the health care industry in this country would look like without the legacy of organized labor obtaining health care benefits for their workers.... oh that's right... we'd all be in the Poor House....

[lilpup]

I don't think that off-shore manufacturing activity is captured in the data series used above "US Manufacturing Output". The efficiency improvement is probably due to investments in capital equipment, technology and advanced design and manufacturing techiques.

This would be a valid argument only if we still had manufacturing in all the sectors we used to. We haven't just lost jobs, we've lost entire product sectors.

I'm also rather dubious of measures that use nothing but dollar value vs worker.

[GOAT]

Who are the shit-sticks who voted yes?

Because sorry to say but our asses have already ben handed to us in the "IT" department by India. They graduate more BA, MBA's per year than all of Canada and USA are enrolled currently. Plus where do you think those IT jobs go?

[lilpup]

Goat, you can't assume everyone who participates here is from the area, or even the state.

Now that more registration information is required maybe we can have Lowell generate the demographics of those who post here [[tho' there's nothing to prevent lying when registering).

I suspect we've picked up more out-of-state members and guest readers this past year with the attention the autos have received.

[mjs]

I don't see how its dubious to use dollars produced to show we are manufacturing more value or why losing industries won't harm the slope of the graph. Its not a graph of manufacturing output per worker; its manufacturing output and manufacturing jobs on the same graph. If we lose an industry, both lines should suffer. However, I did notice that the numbers weren't adjusted for inflation so thats at least part of the gain.

To me, it shows that we became more efficient and/or we moved our resources from low end products such as 25 cent toys to higher end products such as prefab housing. When you have a labor cost disadvantage, the rational thing to do is move to products where the labor is a lower percent of the production cost. Thats why the steel industry moved from products such as rebar and rods into higher end products such as hoods and pipelines.

There is another thing that really strikes me because I've generally blamed the loss of jobs on NAFTA and blamed NAFTA on Clinton. Manufacturing output had its steepest improvement from 1992 to 2000, a period when manufacturing jobs remained relatively stable. Then, after 2000, output growth returned to previous levels during a period that job growth became negative. So, while its obvious that the worst trade-off was after 2000, its still unclear whether trying to save the low end manufacturing jobs would have increased or decreased output growth or even whether NAFTA can account for both trends.

[ccbatson]

Thank you Gistok, you are correct, so...here goes:

Burdensome company health care costs mandated by organized labor/union contracts......much better. Uh oh, didn't weaken the message, did it? Actually made it stronger...oh well.

[ccbatson]

Healthy? IF that is the intention, it isn't, and will not work out as they intend. Not only that, it will drag everything and everyone else down with them.

The road to hell is paved with good intentions.

[Flanders]

Healthy? IF that is the intention, it isn't, and will not work out as they intend. Not only that, it will drag everything and everyone else down with them.

The road to hell is paved with good intentions.

Since when have you ever expressed any concern for "everything and everyone else"???

All that you really indicate that you care about is capitalism, privatization, "individual" property rights, and defense spending. If the US ever were to become the utopian objectivist republic that you envision, 75% of its population would likely become unemployed, imprisoned, impoverished, incapacitated, or deceased as a result.