March 13, 2016
Manufacturing Production, Manufacturing Jobs and Snake-Oil
The Department of Commerce data have just been released, and 2015 was another record year for manufacturing production in the United States, as I expect will be the case for Indiana when those numbers come out. Simply put, when you adjust for inflation, American manufacturing firms are making more goods altogether than at any other time in history. This is not some slick statistical artifice. We made more cars here in Indiana and across the US in 2015 than in any other year in history.
American manufacturing has never been stronger, yet the airwaves are cluttered with snake oil purveyors who tell us otherwise. They rely on widespread fear and anger, with which I understand. But, these demagogues also prey on our ignorance, for which there is no excuse.
Employment in American manufacturing has been growing since 2010, the longest period of growth since the 1994-2000 stretch, right after NAFTA. While these small periods of growth tell us something about the effects of international trade, they are only transient. Indiana has been losing manufacturing employment for a half century and the nation as a whole has for 40 years.
The readily knowable fact is that for the past half century American manufacturing production has been booming, while manufacturing employment has been in decline. The reason for this is that Americans businesses are very good at manufacturing, thus able to produce more with far fewer workers. It is really that simple.
Trade also has grown, and our imports minus exports now account for 3 percent of GDP. My research, published in 2014, says that about 13 percent of lost jobs over the past decade are due to this widening trade gap. Most economists calculate a much smaller figure, but there’s no need to quibble on the big picture. The huge loss of manufacturing jobs at a time when manufacturing production is at record levels cannot be explained away by a 3 percent trade gap.
I write these things not simply because facts and truth matter, but because demagogues in both parties wish to convince voters that globalization is a proximal cause of their own woes. That is an attractive falsehood. It appeals to ignorance and cowardice, of which we should be collectively embarrassed. The illusion of damage from free trade also appeals to the eyes. We can see stores full of Chinese made goods and shuttered factories across the Midwest. But, these eyes deceive us. They also tell us the earth is flat.
Our public debate ought to be about what steps we can take to help workers who have lost their jobs, whether to machines or foreign labor. Instead of bashing workers abroad, we should look to our city and county leaders to make our neighborhoods and schools stronger. Our problems and our solutions are domestic, and have always been thus.
These truths are unappealing. It is far more popular to sell false cures for globalization that pander to the fears and insecurities of the most ill-informed and myopic among us. I know we can do better. I am not sure we deserve to.
About the Author
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