Comments on: The sensible hunt for manufacturing jobs A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: TFF Sat, 14 Jul 2012 17:44:38 +0000 “It hasn’t done this because keeping banks well capitalized is a higher priority for them than downstream, secondary effects like facilitating bank lending.”

A few years ago, I might have agreed. Now? The banks’ balance sheets are healthy enough that getting the economy going again is a greater priority.

By: mw1 Fri, 13 Jul 2012 19:47:15 +0000 Felix, you should hear an agitated Russ Roberts struggling against a harmless Barry Eichengreen to understand this basic inapplicability of the comp adv argument to a situation with 8% unemployment.  /eichengreen_on.html
The reflexive conservative responses here are frighteningly obtuse. Why is that?

By: Curmudgeon Fri, 13 Jul 2012 19:31:38 +0000 Fifth, point taken. I still shake my head when I remember the year (I believe it was 2006) when GM sold the most cars ever, and lost $10 billion.

By: FifthDecade Fri, 13 Jul 2012 12:39:56 +0000 I think when most people say “we need more manufacturing” what they really mean is “we need more exports” because only by exporting more will the Trade Deficit go away. That’s why people look at places like Germany and China, because they have a net Trade surplus. So when people pick on some aspect of Germany they don’t like and suggest that’s the sole ingredient that HAS to be copied so you’d better not do that, at best they are disingenous, at worst, fools. Of course they’re playing a manipulative form of politics, which nearly always comes down to self-interest based around fear and ignorance.

Curmudgeon so easily forgets Ford’s 11 years of no profits before they and GM and Chrysler had to run to Washington in their Executive Jets claiming they’d run out of money and needed a handout. The US already has run “Manufacturing Welfare Programs”.

By: rootless_e Thu, 12 Jul 2012 22:55:12 +0000 Economics without the concept of supply chains is really hopeless.

Contrary to neoclassical economics, money cannot manufacture objects.

By: Brett__ Thu, 12 Jul 2012 21:45:48 +0000 “There’s no particular reason why that should be the case: when manufacturers in China and Germany become more efficient, that’s their sign to employ more people, rather than fewer.”

They do? The only reason Germany has as many people in manufacturing as it does (and it’s still a small part of their economy – 24.6% in industry versus the US’s 20.3%) is because of their labor laws. Whenever the economy downturns, their labor unions get wage cuts instead of fired employees.

China’s not a great example, either. They only had so much manufacturing because labor was super-cheap, and is still quite cheap compared to the US. Even then, Foxconn just bought a ton of machines for their factories, so don’t be surprised if they lay off tens of thousands of people in the next couple of years.

By: thispaceforsale Thu, 12 Jul 2012 21:36:38 +0000 What about the skillset sources needed for some of these jobs? Thomas Thwaites’ Toaster Project is worth a read.
What happens when the masters and journeymen all retire?

By: Curmudgeon Thu, 12 Jul 2012 20:21:17 +0000 This is a current article posted on 2/us-autos-europe-idUSBRE86B1BF20120712. It describes in part about how Opel is seeking concessions from its German workers in return for not closing an (unneeded) plant for another five years. Surely you’re not recommending that the US start a manufacturing welfare program such as this?

By: Gordon2352 Thu, 12 Jul 2012 20:20:50 +0000 The fundamental problem of equating manufacturing with service jobs in the US is that we cannot survive on a service economy, which is a major reason the US economy is collapsing.

For example, to dramatically simplify the problem, Hawaii can survive as a service economy, but the US economy as a whole cannot. The US does not, unlike Hawaii, have anything that cannot be reproduced cheaper and better somewhere else.

To compensate for the loss of external revenue, the US liberalized its “free trade” policies to the point where no one living here could afford to do so, except those recipients of that excessive flow of profits — the wealthy class.

If you care to understand what Adam Smith really said about free trade, you would know this is not free trade at all, but EXACTLY the sort of conditions and people he warned us against in his “Wealth of Nations” (1776). In fact, on the face of it, this CANNOT be free trade because real free trade requires both parties to benefit. The last time I looked, we are getting totally screwed by this version of free trade.

We mortgaged the “American Dream” by going further and further into debt each year, until the underlying real estate debt burden became so large and inflated that it could no longer be sustained. Thus the US real estate market crashed in 2007, soon taking the rest of the global economy with it. ALL of it aided and accommodated by our virtually unregulated banking system, which is basically back to where we were during the Roaring 20s right now.

We have only a fraction of the once much vaunted “Made in USA” labels that shipped all over the world with pride in our country, thus bringing in revenue to support everything else. It would be a MASSIVE mistake to even talk about the US in terms of an export economy at this point.

Increasing mechanization, and the “Great Enabler” of “free trade”, which is anything but free, PLUS the paradigm shift of the internet, which allowed/encouraged global investing with virtually no risk in “real time” is what cost the US manufacturing jobs that can never be replaced — and increasingly, service jobs, as well.

The ugly truth is we are being bled to death by our own wealthy-controlled government that now cares more for “globalization” than for its own nation.

This is NOT sustainable, nor is it ANY kind of economics. It is just “good old fashioned greed”, pure and simple. Anyone who says this is economics is either a fool or a liar, or both.

“Globalization” exists only in the fevered imagination of the wealthy, who are so blinded by their greed they cannot see that they are sowing the seeds of their own destruction.

Unfortunately, they are about to take the rest of us with them because most people are either too stupid, disinterested in anything that does not involve the latest sex scandal, or the pursuit of “more equality” that never existed anyhow to pay attention to what really matters.

By: realist50 Thu, 12 Jul 2012 19:34:22 +0000 “When manufacturers in China and Germany become more efficient, that’s their sign to employ more people, rather than fewer.”

Felix, that’s factually incorrect on a macro level for Germany. I can’t locate data to prove or disprove that point for China, so it may or may not be correct there.

This international comparison of manufacturing employment for 1990 to 2009 includes Germany – 012/tables/12s1353.pdf . Note that all 11 listed developed countries are showing the same trend of declining manufacturing employment and hours over time, including Germany. There is some difference in the magnitude and timing of the decline, but the trend is downward across the board. Also, note that the trends are similar for an endpoint of either 2005 or 2008, so it’s a secular trend, not the cyclical impact of the recent recession.

Information for China is tougher to locate – I could not find anything up-to-date. I do see widely cited figures from an Alliance Capital Management study saying that Chinese manufacturing employment dropped by 16 million between 1995 and 2002, even as output increased. The world lost 22 million manufacturing jobs during that time frame according to the same study. Note that of the 11 developed countries on the Census chart above, only Canada increased manufacturing employment from 1995 to 2002, so that’s good evidence that developed world manufacturing employment is falling secularly independent of anything happening in China. China may impact the pace of that decline, but not the direction. I’ll add that the amount of labor used in China is a decision made within the context of Chinese wages and health and safety laws, so manufacturing processes that simply throw a lot of labor at the production process can make sense in China. We wouldn’t view these sorts of manufacturing jobs as “good” jobs in the U.S., which is fair based on wages and work conditions. The corollary, however, is that if we built these products in the U.S. we’d do so with vastly more automated processes that use far less labor, and we would then increase automation and decrease labor over time.

Ultimately, getting upset over falling manufacturing employment is just as off-base as getting upset over falling agricultural employment would have been 100 years ago. Manufacturing output has grown and will continue to grow, but productivity has grown faster and will continue to grow faster, so employment will fall over time. That’s ultimately a great thing. It means that we can produce more with fewer people. The issue is helping people transition to other fields, not railing against a trend that is a continuation of what’s been happening since people rose above subsistence farming and that is the reason why we have a great standard of living today.