Sunday, March 1, 2009

Disappearing U.S. Manufacturing?

It's common knowledge that manufacturing in the United States has been in decline for decades, right? The nearby chart should put the kibosh on that urban myth.

What's really been going on all these many years is that thanks to technological advances, we need less and less labor every year to produce real stuff. That's a good thing. It isn't jobs we want or need; it's real output. We could generate millions of new jobs tomorrow by outlawing the use of tractors in farming. Do you think that would be a good idea? Me neither.

BHO's rhetoric about "creating or saving jobs" and keeping jobs here at home through further distortions in the tax code just doesn't ring true. The "change" we really need is to move beyond the "jobs" rhetoric, no matter how much it appeals to obsolete labor in Detroit.

People hoeing the corn became obsolete during the 20th century. And its a good thing they did. It's time to move beyond the populist rhetoric and recognize that the world moves on. I'm glad I don't have to be out in the field hoeing the corn to stay alive; how about you?


Ethan Lavallee said...

you could argue that a huge amount of jobs have been created because of this same technology. The only problem is that the current workforce isnt trained or able to do the work. It then gets shipped overseas to the able people that can because that cost less than retraining thousands of people.

Matt Ramey said...

I think the major reason for the jobs being shipped overseas is because the labor is cheaper. This is obviously good for the U.S. because Americans are benefiting from the (in turn) cheaper goods. The jobs that may be displaced (e.g. Detroit jobs) are often unskilled labor. These laborers will be temporarily out of work, but they will eventually either find another unskilled job in another industry or become trained and find a job in a skilled industry.

DLK said...

It's certainly true that businesses will gravitate toward using the cheapest labor suitable for the purpose, whether that's overseas or here at home.

It's also true that consumers benefit from the use of cheaper labor. But laborers displaced by either cheaper labor or advancing technology take little comfort in these facts.

The most interesting thing about the chart in this post is that U.S. manufacturing has not declined over the years as a percentage of GDP; it has remained about the same. The decline in labor used for American manufacturing is due to advancing technology. What's to be done for that? Laborers simply must move on; we will not return to hoeing the corn.