Skip to comments.Why an American ‘manufacturing renaissance’ wouldn’t create many manufacturing jobs
Posted on 02/04/2013 2:28:44 PM PST by neverdem
Get ready to hear a lot more about technological unemployment. The theory holds that automation, especially of the digital variety, is happening more quickly than entrepreneurs and human capital can adjust. And it’s why, says Andrew McAfee, co-author of Race Against the Machines, a boom in US manufacturing wouldn’t bring a boom in job creation:
– Manufacturing employment has been on a steady downward trend in the U.S. since 1980 (it increased some after the end of the Great Recession, but this boost appears to be leveling out).
– Manufacturing jobs have also been trending downward in Japan and Germany since at least 1990 and, as I wrote earlier, in China since 1996.
– Manufacturing employment decline is a global phenomenon. As a Bloomberg story summarized: “Some 22 million manufacturing jobs were lost globally between 1995 and 2002 as industrial output soared 30 percent. … It seems that devilish productivity is wreaking havoc with jobs both at home and abroad.”
Nor does McAfree buy the theory that even if manufacturing employment declines because of automation, the drop will be offset elsewhere in the economy. If goods can be produced more cheaply, it will free up purchasing power for other things, right?
Fair enough, but what if those other companies are also automating? One of the most striking phenomena of recent years is the encroachment of automation into tasks, skills and abilities that used to belong to people alone. As we document in Race Against the Machine, this includes driving cars, responding accurately to natural language questions, understanding and producing human speech, writing prose, reviewing documents and many others. Some combination of these will be valuable in every industry.
Previous waves of automation, like the mechanization of agriculture and the advent of electric power to factories, have not resulted in large-scale unemployment or impoverishment of the average worker. But the historical pattern isn’t giving me a lot of comfort these days, simply because we’ve never before seen automation encroach so broadly and deeply, while also improving so quickly at the same time.
Liberal arguments? Manufacturing itself does operate in cycles and cannot trend downward infinitely unless the entire world suddenly turns Luddite. Even automated manufacturing requires a vibrant repair and maintenance industry; factory machines are not self-repairing organisms that can be back to good working order after a night of sleep. (Never mind the fact that automation was the beginning of the Industrial Revolution to begin with.)
What seems to be ignored here is the importance of manufacturing to national security, never mind the unfriendliness of liberals to manufacturing since the end of WWII what with piling on the regulations and taxation (which kills new start-up businesses within a year for the most part in the USA).
Problem is, if you service (repair or maintain) a machine, your job is not counted as a “manufacturing job,” unless by odd chance you actually work for the manufacturer itself.
We can act now to make America into the first 100% ownership driven society.
Every man a CEO, a Board Room in every garage, the New Contract with America, a Fair Contract for Americans, ....... a gazillion other slogans.
When there's only one job left, it need not be the janitor who turns out the lights ~ it can be the Chairman Of The Board!
Thank you for posting this. The future is not going to be won by the country with the cheapest labor, or the country which has the most factories. It also isn’t going to be won by the country with the best service-oriented economy. It will be won by the country which most readily adapts culturally and economically (in terms of the nature of currency, primarily) to the very deep changes occurring in pretty much every aspect of life.
We are heading to a point where marginal costs of production approach zero, where a relatively miniscule amount of man-hours can provide everything that we need. This is, in general, an extremely positive development, that will occur over the next handful of decades. But getting from here to there will require massive change. These changes will not be pleasant, if history serves as any guide.
I find this question fascinating, since it requires questioning almost everything we think we know about society and economics. For example, cities teeming with people made sense when they were the hub of manufacturing. Now, they are archaic ecosystems financed by transfer payments, debt, and the white collar versions of ditch digging and filling (business services whose role is primarily for lobbying, or for adhering to the labyrinth of regulations). Over time, this will change. But not easily and not without serious problems.
And that is just one simple example. The changes over the next few decades will call into question everything from the fractional reserve system, to the purpose of education, to the role of nations themselves.
Hearing people call for the return of “manufacturing” is somewhat akin to calling for the return to a life in the trees. When the old system dies, as it is in the process of doing, it will be replaced by something fundamentally unrecognizable. The only question now involves the somewhat painful path from a to b.
Find ways to,lower the costs of jobs, and those jobs will come.
Manufacturing is effectively taxed like a VAT tax which hurts it a great deal.
Did they factor the jobs in intercountry shipping and export shipping as well?
Did they factor the fact that the jobs would have an internal multiplier effect?
Or that instead of say having 10 low skilled factory workers you may have 4 high skilled technitians who need 2 babysitters and other peripheral service jobs are created to support them, etc etc...
Calvin Coolidge explains a major part of it. The growth of government can only end in a downward spiral.
Obama-Kare does the exact opposite - It is a job killer, not a job creator.
As the full costs of Obama-Kare fall on employers they will be forced to seek ways to reduce the number of employees for which they must provide a medical plan.
Some of the most obvious things they will do:
- Small companies will freeze employment below the minimum requiring health plan participation
- Hold employee hours below the minimum by using part time employees
- Pay overtime instead of keeping higher numbers of employees
- Move factories out of the USA
The Labor Force Participation Rate will continue to drop.
The media will call it "Unexpected".
It simply COSTS to much to manufacture in this country!
If we do NOT re-impose tariffs; then every bit of our ‘money’ will bleed out to the world as surely as water runs down hill.
What we need is higher labor costs and more immigration.
Most jobs in manufacturing, as it was understood for most of the last century, were dull, repetitive time-and-motion actions, that required little mental involvement, besides not getting yourself mangled in the machinery. Those jobs are properly taken over by robotic substitutes, and the individuals formerly employed at this kind of labor are free to learn a whole new skill set.
It is presumed that to learn this skill set, the individual has basic comprehension of language and some analytical capability when confronted with a new task like programming the computers that operate the robotic machinery, or putting into operation the sometimes very complicated business of delivering the product to its intended user.
And this is just what seems to put a burr under the saddle of most of the union bosses. Once people get smart enough to learn how to do these new kinds of jobs, they have much less need of any kind of union representation, and in a most excellent show of preservation of self-interest, they stay away from organized labor in droves.
Alarmist cranks have been preaching this baloney since the 1700's.
They always ignore that someone will have to design and build the automation. And the raw materials for that automation will have to be dug out of the ground by someone. And the automation that reduces the number of jobs needed to dig the raw materials out of the ground will have to be designed by someone else and built by yet someone else again.
And so on.
We're seeing job losses now because the government is making it too expensive to hire. Investment in automation always cuts jobs where the automation is applied. That's its purpose. But in the 400 years since the Industrial Revolution began, more people have always found better work.
It's somewhat counter-intuitive, but you might call it the "growing pie" effect.
It worked very well till Obama was elected. But that's a different story.
Only the government spends money "on your behalf."
What we need is what we’re getting. It won’t be easy, but the most ingenuous will survive these economic and other corrections, rebuild and produce.
Worry not—our Chinese Masters will plenty of work for all of us! They know how to put lots of folks to work doing manual labor. Look to see electric fences on the Canadian Border to keep Americans from coming over. Maybe the same on the Mexican Border to keep us out! All will work 10 hour days for a handful of rice—no unions, and a noose for any who shirk. They will have revolutionary songs to sing and Free Matching Uniforms! The only good thing: The Liberals will be the first to go to the camps.
So what did you mean by “our money?”