It makes the world’s savers reluctant to be exposed to the U.S. dollar.Posted on 10/05/2009 4:25:24 AM PDT by expat_panama
The United States has been hollowed out. It no longer manufactures goods. Once the factory of the world, the U.S. now manufactures debt. The high wage manufacturing jobs have been out-sourced to low wage economies. The demise of U.S. manufacturing is at the core of the decline of America, its chronic trade deficits and growing international indebtedness. It makes the world’s savers reluctant to be exposed to the U.S. dollar.
There is one problem with this widely held view: It is factually wrong.
The value of U.S. manufacturing output in real terms (adjusted for inflation) was a little more than $3 trillion in 2008. That is up from $1.2 trillion in 1972. If the U.S. manufacturing sector was a separate country, it would be the world’s 5th largest economy (behind the rest of the U.S., Japan, China and Germany). The U.S. remains the world’s largest manufacturer. Full stop.
Although international comparisons are fraught with measuring problems, it appears that the U.S. share of world manufacturing is roughly the same as the combined total of the BRICs (Brazil, India and Russia account for a combined 11-12% share).
The data also suggests that the impressive rise of Chinese manufacturing has come at the expense of Japan and other East Asian countries more than the United States, which the UN data suggests actually saw a small rise of its global share in recent years.
China has largely injected itself into the production chain at the labor intensive stages, so that television or electronic good that may have been made in Japan or Taiwan or South Korea now says made in China.
[snip]
(Excerpt) Read more at realclearmarkets.com ...
Of course, there are still a lot of people that would like to use it against free trade, which has had nothing to do with it. 
Interesting take on the decline of Manufacturing Jobs.
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All true. Eventually, about fifty million workers will be able to produce all the manufactured goods the world needs, and fifty million farmers will produce all the food.
When that happens, what will everyone else do?
GDP counts government spending as production. So lower manufacturing as a percentage of GDP is misleading since government spending has grown enormously since ‘46.
ANYTHING to encourage personal savings and capital investment staying in the USA would go a LONG way to reversing this situation, whether by a drastically simplified income tax that rewards personal savings and capital investment, a 4-6% no-deductions flat income tax, or the FairTax replacement for the income tax.
They will work a lot less and have a lot more. Just as you work a lot less than your grandparents and have a lot more than they did.
The dollar value is not adjusted for inflation, is it?
Much of our manufacturing tech has been sold and shipped overseas with nary a thought for consequence. Recall rare-earth magnets used in guidance systems?
Manufacturing employment is an important indicator of the economy’s health as it provides opportunity for those without MBA degrees to support their families and put their minds into a productive process. I’d like to see this number also adjusted for non-food manufacturing, because much more of our food is processed today than ever before. This is not to suggest restrictive trade policy but perhaps saner tax, enviro and reg policies which might help struggling small manufacturers who would like to keep things close to home.
Actually, I don’t, unless you look at new tech.
OK, if I read rather than scan...
Your post showed a percentage that came out level. The BEA didn't seem to show percent output numbers, do you have a link to the numbers?
Deficit spending has accounted for on average about 3% of GDP (until Obama), so it should not affect the mfg % by more than a small factor.
When my Dad was born half the nation worked on farms and everyone said farm employment was economic health. Now farm labor is half a percent. Simply deciding to like farms or to love factories doesn't make sense. It may be true love but it won't feed the family.
The actual concern here would be what happened to all those people who lost their jobs and their economic input.
That is not the thrust of my question.
Let me rephrase: if we all get rich, how will we prevent the Devil from finding work for idle hands?
In the past, grim necessity kept most people to the straight and narrow. How will this work in an affluent society?
I’ll look, but I might have to get back later (fixing to leave for work). My chart was based on % of GDP so it does not show how great the increase in GDP has been (especially during the last eight years.)
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