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The Truly Good Shape of U.S. Manufacturing
Human Events Online ^ | August 22, 2003 | Bruce Bartlett

Posted on 08/23/2003 4:43:06 PM PDT by E Rocc

In a recent column, I argued that the manufacturing sector of the U.S. economy is in relatively good shape, despite the sharp decline in manufacturing employment. I clearly touched a nerve with this column. Not only did I receive a great many e-mails, but my fellow columnist and mentor Paul Craig Roberts took me to task as well. I can't respond to everything I heard, but following is a response to the most frequent criticisms.

One common complaint is that U.S. companies are simply reselling goods actually manufactured in China. This is just a misunderstanding of how the gross domestic product is constructed. All imports are subtracted from final sales to calculate GDP. Therefore, imports from China or anywhere else can never raise GPD; they always cause it to be lower than if they were produced domestically. GDP measures only actual production on U.S. soil.

The equation goes like this. In 2002, final sales to domestic purchasers equaled $10,866 billion. You add $3.9 billion for the change in inventories nationwide, add $1,014.9 billion for exports, and then subtract $1,438.5 billion for imports. This leaves a net figure of $10,466.2 for GDP. In short, imports reduce GDP and exports increase it.

It is always tempting to think that we can ban imports or tax them in some way and thereby raise domestic output, by forcing consumers and producers to "buy American." The problem is that we import a lot of things we can't produce at all or not enough of domestically, like oil. A lot of imports are industrial supplies and capital goods that are critical inputs into the manufacturing process. Banning them or raising their cost would raise costs for producers, reducing their international competitiveness. It would also invite retaliation by foreign countries. The trade deficit might even rise because exports would fall more than imports fell.

In the end, trade protection has never worked in any country at any time. The long-term effect has always been to impoverish nations that engage in it.

Another criticism I heard is that I used incorrect data to support my point. I looked at total goods production in the U.S., which includes things like mining and agriculture in addition to manufacturing. I did this for 2 reasons. First, the concern I most often hear from people is that Americans no longer make "things." Therefore, I thought that a broader view of goods output was justified.

Second, data just for manufacturing are harder to come by. Goods data are compiled every quarter, while manufacturing data are available only annually and with a lag. The latest data for manufacturing is for 2001, while we have goods data through the 2nd quarter of this year. Furthermore, manufacturing data after 1987 are incompatible with those before because of certain definitional changes.

Nevertheless, looking at manufacturing alone still makes my point. Since 2001 was a recession year, it is reasonable to compare it to the last recession year in 1991. In nominal (money) terms, manufacturing has fallen from 17.4 percent of GDP to 14.1 percent. But in real (inflation adjusted) terms, it is actually up a little, rising from 16 percent to 16.2 percent.

It is critical to use real data to make a valid comparison because prices for many goods such as computers have fallen sharply. Since GDP data are calculated in money rather than volume terms, failing to take account of this fact would give a distorted picture of what is going on. For example, suppose output of some product rose by 10 percent in terms of units, while falling 10 percent in price, due to higher productivity. Using the nominal data would make it appear as if there had been no increase in output. Using real data captures the increase.

Finally, many people wrote to tell me that I could not be right because the factory down the street from them just closed. However, one cannot make national policy by looking at isolated events. It would be like trying to tell what the weather is 1,000 miles away by looking out one's window. To make policy, one must examine comprehensive data that account for new factories and increased output elsewhere, which have offset the closed factories in particular places. The Commerce Department's data is the best there is on this score and far superior to any individual's personal observations.

It is worth remembering that when a plant closes, it is likely to make news, especially if it is the major employer in a small town. The local paper is unlikely to note the opening of a new factory on the other side of the country. Consequently, a parochial perspective can produce a false picture of national trends.

I remain convinced that U.S. manufacturing is fundamentally healthy.

(Excerpt) Read more at humaneventsonline.com ...


TOPICS: Business/Economy
KEYWORDS: brucebartlett; chaineddollars; freetrade; leftwingactivists; manufacturing
A good comeback to the naysayers. While manufacturing has largely decentralized and de-urbanized (the latter due to dumb environmental laws and parasitic politicians), it's very much still there.

-Eric

1 posted on 08/23/2003 4:43:06 PM PDT by E Rocc
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To: E Rocc
Marked for later.
2 posted on 08/23/2003 4:46:52 PM PDT by AntiGuv ()
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To: E Rocc
All imports are subtracted from final sales to calculate GDP. Therefore, imports from China or anywhere else can never raise GPD; they always cause it to be lower than if they were produced domestically.

Maybe I don't understand GDP, but, what if the domestic (re)seller makes a profit? On the other hand, if GDP is purely a measure of domestic production, then why would imports be factored in anyway?

3 posted on 08/23/2003 4:52:06 PM PDT by KayEyeDoubleDee (const tag& thisTagWontChange)
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To: E Rocc
Finally, many people wrote to tell me that I could not be right because the factory down the street from them just closed. However, one cannot make national policy by looking at isolated events. It would be like trying to tell what the weather is 1,000 miles away by looking out one's window.

Something to bear in mind when listening to individual complaints of gloom and doom.

4 posted on 08/23/2003 4:56:01 PM PDT by Agnes Heep
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To: E Rocc
"Nevertheless, looking at manufacturing alone still makes my point. Since 2001 was a recession year, it is reasonable to compare it to the last recession year in 1991. In nominal (money) terms, manufacturing has fallen from 17.4 percent of GDP to 14.1 percent. But in real (inflation adjusted) terms, it is actually up a little, rising from 16 percent to 16.2 percent."

There is that niggling little FACT that folks are just going to have to deal with, eh? Take his two articles now and boil it all down to this paragraph. That's all he really needed to write.

5 posted on 08/23/2003 5:02:33 PM PDT by anniegetyourgun
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To: harpseal
"In the end, trade protection has never worked in any country at any time. The long-term effect has always been to impoverish nations that engage in it."

According to Bartlett, America must have been a dismal failure for its first 200 years.
6 posted on 08/23/2003 5:05:26 PM PDT by LibertyAndJusticeForAll
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To: All
"It is worth remembering that when a plant closes, it is likely to make news, especially if it is the major employer in a small town. The local paper is unlikely to note the opening of a new factory on the other side of the country."

Now this guy is trying to put Willie Green outta business. That is his job, after all.....searching out the most obscure outlets for his depressing stories of RIFs in booming metro areas like Shade, OH.

7 posted on 08/23/2003 5:10:18 PM PDT by anniegetyourgun
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To: E Rocc
In the end, trade protection has never worked in any country at any time. The long-term effect has always been to impoverish nations that engage in it.

The important thing to remember when reading an article is that truth matters.  If you find one whopper in there, you can bet there are more than one.

While the statement above wasn't a direct lie, it is an indirect whopper!

The United States wasn't a protectionist nation before 1992, but it's trade deficits never went much over $100 billion.  None the less it's GDP outstripped every other nation on the planet.  It was the number one economic Giant on the planet, and I mean with a capital G.  Where it's GDP was something like $8 to $10 trillion dollars, it's nearest rival was something like $3-4 trillion.  Were we impoverished in 1992?

Today our trade deficits are three hundred and fifty-percent more than they were around 1992.  Are our citizens wages going up like they used to?  Is our standard of living improving?  Is GDP going up?  The answers are a resounding NO.

Outsourcing has been the hugh and cry of the industrail elites.  They have been so loud in their screaming for it, that other voices are not heard.  I do not share in the enthusiasm for this.  We are selling out our own citizens on the corporate profits auction block.

GDP is down.  Government receipts are down.  Jobs are not plentiful.  The fastest growing jobs sector is still the rock bottom service sector.  Trade deficits are simply enormous.  Outsourcing, illegal immigration, and other factors are too overpowering for this nimnal to make some of the claims he does.

In short, he's full of it.

8 posted on 08/23/2003 5:14:36 PM PDT by DoughtyOne
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To: E Rocc
The problem is that we import a lot of things we can't produce at all or not enough of domestically, like oil.

Looks like Bruce Bartlett is an eco-whacknut surrender monkey to the government bureacracy that places utilization of our vast energy resources off-limits.

9 posted on 08/23/2003 5:15:12 PM PDT by Willie Green (Go Pat Go!!!)
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To: E Rocc; harpseal; Willie Green
A good comeback to naysayers from someone who never worked in a factory and saw it go to China...

I have. several times.

Unemployed since March 14

Bartlett is just another one of those armchair economists who never held a real job, so he plays with numbers on paper, instead of seeing how things are made and where they are now made.

http://www.freerepublic.com/focus/f-news/959787/posts
Lawmaker predicts defeat for 'Buy American' language (Defense Department procurement update)


"But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade." ~ Karl Marx, On the Question of Free Trade, January 9, 1848
http://www.marxists.org/archive/marx/works/1848/01/09ft.htm#marx


"Communists and socialists feel sure that setting up international “free” trade systems which impose regulations chuck full of intrigues, redistribution plans, arbitrary law, and interdependence schemes, will win out against the conservative interests of every free nation. What could be better than to use “free” trade to reverse the advantage of the relatively free, moral, prosperous, and strong nations of the Earth, so that the tyrannical, amoral, poor, and weak nations of the socialist bloc might get the upper hand? What could be a more cunning approach than to market the idea that those who oppose “free” trade are enemies of freedom?"
http://www.newsmax.com/commentarchive.shtml?a=2000/6/27/105655


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10 posted on 08/23/2003 5:15:53 PM PDT by RaceBannon
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To: LibertyAndJusticeForAll
That's such an easy thing to observe. It's so simple even a fool off the street could understand it. None the less, the leading economic giants of our day haven't a clue when it come to this simple concept.

You are absolutely right on.
11 posted on 08/23/2003 5:16:09 PM PDT by DoughtyOne
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To: RaceBannon
My hat's off to you. Nice work.
12 posted on 08/23/2003 5:17:13 PM PDT by DoughtyOne
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To: LibertyAndJusticeForAll
According to you, the Founding Fathers would have approved of the UAW leeching off the rest of us so that Chevy could continue to produce the Vega.
13 posted on 08/23/2003 5:19:22 PM PDT by 1rudeboy
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To: 1rudeboy
Ok, so we were actually stymied from 1781-1992 before NAFTA and GATT. Good thing we got rid of that little blip in the radar of our nation's history.

My dad should be getting his pink slip in a few days, weeks, months now.

You see, when Boeing fires workers, and builds planes in China, they also fire Boeing subcontractors. My dad works at a non union shop btw, making machine tools for Boeing. Sure they aren't union workers, but they also aren't willing to work for 50 cents an hour either, go figure that.

So now that the planes are moving to China, it is 10 times easier to move the subcontracting jobs as well. He is 58, and has been a machinist for 30 years. I am sure there is a job out there for him that pays as well.

14 posted on 08/23/2003 5:23:41 PM PDT by dogbyte12 (Let's Outsource CEO's to the Third World)
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To: 1rudeboy
"According to you, the Founding Fathers would have approved of the UAW leeching off the rest of us so that Chevy could continue to produce the Vega."

You are the one equating Unions with "regulating commerce", not me.
The Constitution grants the power to "regulate commerce" to Congress; there is nothing about Unions. That is entirely your misconception and yours alone.
15 posted on 08/23/2003 5:25:18 PM PDT by LibertyAndJusticeForAll
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To: *"Free" Trade
http://www.freerepublic.com/perl/bump-list
16 posted on 08/23/2003 5:37:37 PM PDT by Libertarianize the GOP (Ideas have consequences)
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To: DoughtyOne

Interesting study coming out this week. Average CEO pay of top 365 companies on the Fortune 500 list rose 6% from 2001 to 2002 to an average pay of $3,700,000. However, of the 50 companies who layed off the most workers out of the 365 top companies, their salaries rose 44% to $5,100,000.

If you want to get ahead as a Fortune 500 CEO, you need to layoff workers.

Here is what you also should do to get ahead as a CEO of a Fortune 500. The companies with the 30 most at risk defunded employee pension plans, paid their CEO's 59% more than the median Fortune 500 company. At least somebody is getting paid.

17 posted on 08/23/2003 5:39:02 PM PDT by dogbyte12 (Let's Outsource CEO's to the Third World)
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To: dogbyte12
"However, of the 50 companies who layed off the most workers out of the 365 top companies, their salaries rose 44% to $5,100,000."

Wow, think what they could have saved just outsourcing one CEO. How many Americans could still be employed from just one CEO's salary?
18 posted on 08/23/2003 5:45:32 PM PDT by LibertyAndJusticeForAll
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To: dogbyte12
You can bet we'll see that line graph in DNC ads next year.
19 posted on 08/23/2003 5:49:55 PM PDT by GraniteStateConservative (Willie Green for President...)
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To: E Rocc
Manufacturing as a Share of GDP (percent)
YEAR
NOMINAL
REAL
1987
18.7
17.1
1988
19.2
17.6
1989
18.5
16.9
1990
17.9
16.4
1991
17.4
16.0
1992
17.1
15.8
1993
17.0
15.9
1994
17.3
16.4
1995
17.4
17.0
1996
16.8
16.8
1997
16.6
17.0
1998
16.3
17.0
1999
16.0
17.1
2000
15.5
17.2
2001
14.1
16.2

Source: Department of Commerce
20 posted on 08/23/2003 5:52:59 PM PDT by gitmo (Press any key to continue ... NOT THAT KEY YOU FOOL!)
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To: GraniteStateConservative
Fortunately, the democrats are so pathetic, that they are going to lose. Remember, the economy was only just barely starting to drop when Al Gore couldn't win on a peace and prosperity platform. Clinton is an aberation. The dems are hopeless.
21 posted on 08/23/2003 5:57:12 PM PDT by dogbyte12 (Let's Outsource CEO's to the Third World)
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To: E Rocc
In the end, trade protection has never worked in any country at any time. The long-term effect has always been to impoverish nations that engage in it.

Unfortunately the lessons of history are lost on many posters in this forum.

22 posted on 08/23/2003 6:15:17 PM PDT by Jorge
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To: E Rocc
So in the shell game of 'how great it is' just where did those 3+ million American jobs go?
23 posted on 08/23/2003 6:27:05 PM PDT by ex-snook (American jobs need BALANCED Trade. We buy from you. You buy from us.)
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To: E Rocc
While manufacturing has largely decentralized and de-urbanized (the latter due to dumb environmental laws and parasitic politicians), it's very much still there

Enlighten us as to your manufacturing experience and knowledge that would lead you to say that. I'm a 25 year veteran, and I haven't seen it this bad, well, ever.

If you mean by "decentralized" that it went overseas in search of squat labor, then yeah, that happened. But it ain't a good thing.

24 posted on 08/23/2003 6:32:33 PM PDT by Regulator
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To: dogbyte12
I am sure there is a job out there for him that pays as well

Oh, you know, he'll just get "reskilled" as the Commerce Department geniuses call it. Creative Destruction and all that.

25 posted on 08/23/2003 6:35:32 PM PDT by Regulator
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To: Regulator

26 posted on 08/23/2003 6:37:16 PM PDT by dogbyte12 (Let's Outsource CEO's to the Third World)
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To: anniegetyourgun
There is that niggling little FACT that folks are just going to have to deal with, eh? Take his two articles now and boil it all down to this paragraph. That's all he really needed to write.

Such a short article probably wouldn't have made the writer's editor too happy, though.

27 posted on 08/23/2003 6:54:32 PM PDT by Mind-numbed Robot (Not all things that need to be done need to be done by the government.)
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To: DoughtyOne
In 1970, most women were able to stay at home. Do they have that choice now? Did NAFTA, GATT, or the WTO increase the ability of men to support families?

Any family oriented conservative patriotic american should use that as a benchmark as to how our policies are working. What's the scorecard on that account?

28 posted on 08/23/2003 6:59:11 PM PDT by dogbyte12 (Let's Outsource CEO's to the Third World)
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To: E Rocc
Long ago when I was a kid wondering about how robotics would affect life, I thought of an extreme situation wherein a robot system could be built that would basically handle production of all goods and services. In this Utopia - I then wondered what would people worth - and the only thing I could think of was Art. People would trade and barter on artistic creations, because machines couldn't do that. That was the nice part of the vision.

The other part of that vision was the inevitability of changing the basic tenets of our capitalist society concerning "Ya don't work - ya don't eat". Because otherwise, whoever owned that robot system was going to be a gazillionaire - and everybody else was going to starve. It just wasn't realistic to expect that several billion people would all have jobs designing new robot elements - or maintaining them.

Well that robot system is partially here already. Part of it is called India, and other parts are called China, Russia, Malaysia and Mexico. And true to this very simple model - those who are using that robot system to produce goods and services are raking in the big bucks - "productivity" is soaring (how many American manager "workers" does it take to squeeze a few drops of oil on a Chinese ankle shackle swivel), and American workers are being put out to pasture with the advice to uptrain into designing the next Internet, or artificial neural network to get their next job...or to check over at Walmart.

Well, I don't mean to wring my hands and do nothing. I'm headed to South America to follow the industries that left here - so for all you people ready to flame me - hold your fire - I'm just trying to go with the Flow as I see it.
29 posted on 08/23/2003 7:27:03 PM PDT by ctonious
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To: dogbyte12
Hey bud, gotta keep those moms outta the home. Can you imagine tens of millons of little home-schooled patriots, ones who barely knew who MLK was and knew everything about our founding fathers and the founding documents.

MLK and Rosa parks have nearly completely replaced our founding fathers in school.

Your comments were dead on target. The subject is hardly ever raised any more in the quest for more corporate profits. If we could put the children to work, it would be the perfect system for the corps.
30 posted on 08/23/2003 7:57:57 PM PDT by DoughtyOne
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To: E Rocc
It would also invite retaliation by foreign countries. The trade deficit might even rise because exports would fall more than imports fell.

So if we raise our average tariffs on Chinese exports to the USA where our greatest one or onecauurent account deficit exists to say 30% what are the Chinese going to do to retaliate? Will they raise their average tariffs on US goods to 71% from the current 70%. With India for example will they go fromn the second highest tariffs on the planet to the highes? Big Fat Deal. Will this have any significant effect on our exports to these nations? No, the consumers in thses nations could maybe have bought some American products if there were no tariffs on American products but this autor is making a nonsensical assertion that does not reflect the current tariff situation. When the Japanese planes were leaving Pearl Harbor were people worried about defending this nation because the Japanese would retaliate?

Then the author is ebullient over the percentage rise of amnufacturing versus teh restr of teh economy. since engineering, IT services, and other services that are being offshored are not part of the manufacturing sector of teh economy he is merely taking as good news for manufacturing what is actually bad news for other sectors.

It is critical to use real data to make a valid comparison because prices for many goods such as computers have fallen sharply. Since GDP data are calculated in money rather than volume terms, failing to take account of this fact would give a distorted picture of what is going on. For example, suppose output of some product rose by 10 percent in terms of units, while falling 10 percent in price, due to higher productivity. Using the nominal data would make it appear as if there had been no increase in output. Using real data captures the increase.Now a little statistical review of what he is not actually taking about when he makes the unsupported conclusion about manufacturing.

Finally, many people wrote to tell me that I could not be right because the factory down the street from them just closed. However, one cannot make national policy by looking at isolated events. It would be like trying to tell what the weather is 1,000 miles away by looking out one's window. To make policy, one must examine comprehensive data that account for new factories and increased output elsewhere, which have offset the closed factories in particular places. The Commerce Department's data is the best there is on this score and far superior to any individual's personal observations.

Here I must agree with his conclusion so far but I would add the following caveat. One must use sound statistical methodology in interpreting those numbers and drawing conclusions from them. Unfortunately the author of this piece either knowingly or inknowingly does not employ the rigor in mathematics required. a percentage is by definition a ratio. Now anyone who had a sixth grade education at least during the run of the Beverly Hillbillies learned that a ratio has a numerator and a denominator and the ratio of manufacturing to the rest of teh econmy does not in itself indicate teh health of the sector only the health of relative to other sectors of the economy.

31 posted on 08/23/2003 8:44:15 PM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: E Rocc; AntiGuv; Tauzero; All
Nevertheless, looking at manufacturing alone still makes my point. Since 2001 was a recession year, it is reasonable to compare it to the last recession year in 1991. In nominal (money) terms, manufacturing has fallen from 17.4 percent of GDP to 14.1 percent. But in real (inflation adjusted) terms, it is actually up a little, rising from 16 percent to 16.2 percent.

It is critical to use real data to make a valid comparison because prices for many goods such as computers have fallen sharply. Since GDP data are calculated in money rather than volume terms, failing to take account of this fact would give a distorted picture of what is going on. For example, suppose output of some product rose by 10 percent in terms of units, while falling 10 percent in price, due to higher productivity. Using the nominal data would make it appear as if there had been no increase in output. Using real data captures the increase.

Mr. Bartlett has likely made a significant, though common mistake here in his manipulation of the BEA's real data.

While he doesn't cite exactly where he got his BEA 'real data', I assume because he calls it 'real' and describes the price vs volume advantages of real data, I suspect he is using the BEA's Real Gross Domestic Product by Industry in Chained (1996) Dollars.

If so, his mistake is that aggregates in a chained dollar series are not additive, which means that the components don't add up to the total GDP, which means that each component is not represented in its proper proportion or share of the total GDP, which ultimately means Mr. Bartlett can not compute manufacturing's percent of 2001 GDP as:

16.2 ~ 16.17 = 1,490.3 (from col 2001 line 12) / 9,214.5 (from col 2001 line 1)
That math, normally valid, is invalid with chained data. That's why the BEA provides tables with GDP share computed such as Gross Domestic Product by Industry in Current Dollars As a Percentage of Gross Domestic Product

Therein, are the only correct percentages that manufacturing has fallen from 17.4 percent [in 1991] of GDP to 14.1 percent [in 2001] and as also quoted from Paul Craig Roberts critique of Bruce Bartlett Trade nothink.

Lest anyone be concerned that the BEA's computations of GDP share don't adjust for inflation, they do. Inflation is the same percentage for GDP as it is for a component of GDP and so computing manufacturing share of GDP as

MFG share of GDP = (MFG component * inflation pct) / (GDP * inflation pct)
is correct because the inflation percentages (whatever they are) cancel out anyway.

Bottom line - Manufacturing's share of GDP has fallen consistently each year from 19.2 percent in 1988 to 14.1 percent in 2001, a decline of 27 percent over the 14 year period is correct as Roberts stated.

32 posted on 08/23/2003 9:23:57 PM PDT by Starwind
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To: LibertyAndJusticeForAll
Ok, let me rephrase that . . . "According to you, the Founding Fathers would have approved of charging all of us money so that some plant in N. Carolina could continue to make crap furniture."
33 posted on 08/23/2003 10:01:20 PM PDT by 1rudeboy
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To: dogbyte12
No, we weren't "stymied" before NAFTA kicked-in. But then, we weren't "stymied" after it kicked-in, either. And can you point me in the direction of this Boeing plant in China that builds planes? Not components, mind you, but planes. This plant is the Moby Dick of the paleo-protectionist movement.
34 posted on 08/23/2003 10:05:58 PM PDT by 1rudeboy
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To: 1rudeboy
Before, during and after the Founding Fathers, America has had some form of Protectionist trade policies. Not to charge all of us money, but to protect our interests, which include our businesses, our national sovereignty and our way of life.
The "crap furniture" is from China and it is being dumped on the market causing 100 year old American furniture companies to layoff Americans and close plants.
Communist China has tariffs, devalues the Yuan by 40%, uses slave-labor and is intent on using economics as a weapon according to 2 of their top Generals.
I'm sure you have read harpseal's list. Tariffs are just one of the many ideas to improve our trade policies.
35 posted on 08/23/2003 10:26:31 PM PDT by LibertyAndJusticeForAll
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To: LibertyAndJusticeForAll
A agree with some of harpseal's proposals, but he's living in a dream world. As for protectionist trade policies, they exist now. We are merely arguing about degree.

But the bottom line is that the Founding Fathers saw tariffs as revenue-producers. Setting aside the national-security exception that even Adam Smith recognizes, there is no way that one can argue with a straight face that a tariff should be imposed on say, imported malted milk balls, and add that the Founding Fathers would approve of it because candy-manufacturing jobs are at stake.

As for American furniture, my experience that most of it is crap (except for Amish-made). So is Chinese, for that matter. The best furniture (price and quality), in my opinion, comes from Scandanavia and E. Europe, and maybe the Czech and Slovak Republics. Canada is in the process of giving-up the ghost.

There remains some excellent, but expensive, American furniture.

36 posted on 08/23/2003 10:54:59 PM PDT by 1rudeboy
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To: 1rudeboy
"But the bottom line is that the Founding Fathers saw tariffs as revenue-producers."

No, "revenue-producers" was not the "bottom line" for the Founding Fathers. Steve Farrell explains this more eloquently and clearly.

"The Boston Tea Party: A Reality Check for "Free" Traders"
http://www.newsmax.com/commentarchive.shtml?a=2000/4/11/095631

[... This was done because the emergence of national sovereignty, and a representative government – one free to devise its own trade policy in a mixed world of friends and enemies (a better definition of free trade) – was a more weighty matter than money.

Freedom, lest we forget, includes the liberty to say no to enemies, or to say yes to measures which would protect our liberty and our self sufficiency. If you are dependent on another, and that person hates you and is fixed in his determination to destroy you, how then are you free? Like those controlled by debt, those caught dependent in the presence of enemies will learn first hand a hard lesson about blind trust in theory over reality.

National freedom of choice (or Sovereignty) includes the freedom to choose to sacrifice ourselves economically, if in the long run, that sacrifice makes our liberty more secure. Losing one’s "fortune," spoke John Hancock regarding the Tea Protest, was worth it, "in so good a cause."

Risking "lives and property," added a resolution, is a "risk" we are willing to take. The risk they collectively took did cost lives and property, but it was worth it.

Today, however, the legacy of sacrifice, has been replaced by a generation of spoiled brats, whose psychological fixture is but on one thing; self-interest, and not the enlightened self interest that Adam Smith spoke of, mind you, but the consuming and debasing self interest of Sodom and Gomorrah, Late Rome, and Revolutionary France.

And so, to justify their extreme liberty, they lie, or conveniently misinform themselves about the sources of American Liberty which were founded on Freedom of Trade between states of common history, law, tradition and morality, and of caution, restraint and protection with all others. ...]
37 posted on 08/24/2003 6:45:45 AM PDT by LibertyAndJusticeForAll
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To: 1rudeboy
Good news for you. India is about to lose those IT jobs they are taking from American companies. You see, those pesky Indian engineers require $700 a month of $8,400 a year in salary. China is offering engineers at $500 a month or $6,000 a year. China is going to pull in $27 billion in IT services by 2007.

American Engineers are surely going to not stand still. Why college and masters degree loans aren't that much. Surely they can tighten their belts and offer themselves for hire at $475 a month!

These are very well paid people in China. $3 an hour for educated people. China is now going to start massively teaching english in school, so they can get more white collar jobs. You don't like it, take $3 an hour and compete with them!

38 posted on 08/24/2003 7:11:24 AM PDT by dogbyte12
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To: Regulator
While manufacturing has largely decentralized and de-urbanized (the latter due to dumb environmental laws and parasitic politicians), it's very much still there Enlighten us as to your manufacturing experience and knowledge that would lead you to say that. I'm a 25 year veteran, and I haven't seen it this bad, well, ever.

If you mean by "decentralized" that it went overseas in search of squat labor, then yeah, that happened. But it ain't a good thing.

Nearly twenty years here and one of the projects I was working on was the plant I worked at getting moved to Mexico. The corporation probably lost money on that deal. They were hand assembling parts that we made on machines (one operator versus eleven) because they couldn't keep the machines running. I pointed out to a corporate guy that his labor costs were higher than the ones at our plant. He scoffed...until I ran the numbers for him.

American manufacturing has definite advantages over the rest of the world, though our educational system appears to be interested in diminishing them. One of the big ones is the independent minded nature of American workers. They come up with "sideways" solutions to problems foreign workers don't. This has been the experience of both the Japanese and European automakers with US plants.

By "decentralization" I meant smaller operations less likely to be in major cities. That's due to CERCLA, due to union "radius rules" where if you move a certain distance or less you have to retain the union, and due to the nature of many big city (Democratic) governments. Rural workers will also work a little cheaper than their city counterparts, but are less attuned to modern manufacturing priorities. Another tradeoff.

The whole idea of moving plants around is a function of corporations being run by lawyers and accountants. It's quite easy to move an office or a call center or even a store. Not so a manufacturing facility, as anyone with a production, engineering, or maintenance background knows. I've seen tremendous efficiency losses hit several companies who were going after the "economy of consolidation" that exists in theory but is elusive in real life. As these stories pile up, the lesson will be learned by prudent managers. Also watch companies that are run by engineers....ISG locally is a good example. By all current logic, LTV Cleveland East should never have restarted. They are up and running now, and expanding, and word has it doing quite well.

-Eric

39 posted on 08/24/2003 8:30:31 AM PDT by E Rocc ("Dry counties" are a Protestant version of "sharia")
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To: LibertyAndJusticeForAll
Other than the obvious ones, there are a number of things that must be acknowledged before one can go about claiming that the Founding Fathers believed that tariffs were the first step in regulating commerce. The Boston Tea Party is a good example (interesting link, by the way) of how relevant events are pulled-together to draw an irrelevant conclusion. Consider that the Boston Tea Party involved an import (tea) that:

1. was being forced down the colonists' throats,
2. the colonists were excessively taxed by the government doing the importing, and that
3. the colonists' response was to outlaw its consumption.

In other words, the colonists did not "protect" tea in order to raise revenue or protect jobs. The attempt by current-era protectionists to seize-upon what was essentially an common uprising as an example of enlightened economic policy falls short. To highlight this shortcoming, one must merely ask themselves: what is the current state of our domestic tea industry?

Apart from the matter of falsely "appropriating" the motives of the Founding Fathers in order to support various protectionist claims is the problem of finding justification in the language of the Constitution itself. Sure, Congress has the power to levy tariffs and regulate trade. But the Senate also has the authority to ratify a Treaty reducing tariffs or unregulating trade. Article II, Section 2. Yet another problem with the protectionists' selective interpretation.

Furthermore, if the actions of the Founding Fathers (and the actions of the fledgling Republic) exclusively are to be viewed through the prism of protectionism, how does one explain the Barbary War, which occurred shortly after the Revolution itself? Clearly, the U.S. was protecting its interest in free-trade by force. No free-trader dares therefore to claim that military action is the first step to unrestricted trade. Moreover, the Barbary pirates, it could be argued, were the ones "protecting" their domestic industry (essentially toll-based transport), although I find it unlikely that one or more of the pirates themselves were claiming that they needed to do so in order to protect their high-paying jobs.

So this is the crux of your dilemna. You are attempting to make a rational argument based on an appeal to emotion. Witness the howls of "it's for our national security," or "the Founding Fathers wouldn't approve," every time the free-market adversely affects a special-interest. Witness how many times the national-security argument then is subordinated to other factors.

Finally, I suggest that your best claim is not to the national-security exception to free-trade, but rather the fledgling-industry exception. Adam Smith understood that a newcomer to the market might need protection from its well-established rivals until it gets on-its-feet. The entire United States was a "fledgling-industry" during this period. The problem that Milton Friedman and others have pointed-out, and that current-era protectionists (maybe deliberately) overlook, is that the "until" never comes.

40 posted on 08/24/2003 8:31:45 AM PDT by 1rudeboy
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To: ex-snook
So in the shell game of 'how great it is' just where did those 3+ million American jobs go?
Keep in mind that if a manufacturing plant has two assistants in accounting, they are "maufacturing" employees. If one goes to work for a CPA firm that contracts to work with the corporation, he's now a "service sector" employee.

-Eric

41 posted on 08/24/2003 8:33:12 AM PDT by E Rocc ("Dry counties" are a Protestant version of "sharia")
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To: dogbyte12
Gosh, can you imagine what will happen if all those Indians and Chinese learn English and get engineering degrees? They might actually try to come here and become free-market capitalists and put fat, lazy, socialists out of work.
42 posted on 08/24/2003 8:35:47 AM PDT by 1rudeboy
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To: 1rudeboy
I never said tariffs were a "first step", but one of many possible choices. Getting rid of OPIC to underwrite the risks of doing business in 3rd world countries with our tax money would be a better first step.
National Security should never be subordinated to other factors. Our trade policy with Communist China is downright suicidal in the long term. That is not based on emotion, but based on current policies and trends.
I was attempting to draw on our own 200 year history of regulating commerce to our benefit. Even Reagan used tariffs to save Harley-Davidson. Common sense and logic are found in abundance in harpseal's list.

The Boston Tea Party article referenced a previous article:
"Free Trade: The Golden Calf of the Republican Party"
http://www.newsmax.com/commentarchive.shtml?a=2000/3/13/083321
[We must look back to our roots, where men like George Washington supported economic measures against the threat of tyranny, because first, “war was a last resort,” and second, he hoped that “starving their trade and manufactures” would bring “their attention to our rights and privileges."]
This was the point of the Boston Tea Party. We have never had a domestic tea industry. England had The East India Company and that was the target.
I do not believe that I have falsely appropriated the motives of the Founding Fathers. I think that you have when you claim that tariffs were just to collect tax revenue.
The "fledgling industry" argument is valid, but national security is stronger and a reality (all emotions aside). From Lieberman to Kissinger to Duncan Hunter, the losses in manufacturing are seen as a threat to our national security.
Have you seen the articles about how the rest of the world views us? Despite our sacrifices and generosity toward building freedom throughout the globe in the last century we are mostly despised. I think now we should look to our own sovereignty, economy and borders.
43 posted on 08/24/2003 9:36:45 AM PDT by LibertyAndJusticeForAll
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To: dogbyte12
In 1970, most women were able to stay at home. Do they have that choice now? Did NAFTA, GATT, or the WTO increase the ability of men to support families?

I've brought this point up many times when debating the Free Traitor lot here and never got a cogent response back. Most in the newer generations are apparently unaware that prior to the mid/late-70s the vast majority of working age men in America could raise a family, buy a house and afford all the basic necessities of life without needing their wives to work. To do this today one must be earning at least 80K--well above the median income level.

Yet that's how it was before our government decided to go down the grossly misnamed "Free Trade" path and sellout out the livelihoods of millions of its own citizens. And I'm sure it's no accident that most Young Americans are unaware that in fact the TRUE standard of living and quality of life was a heck of lot better before these disastrous trade agreements and the dawn of One World Socialism. We can't go talking about that because it might get some folks to start asking a lot of questions.

Any family oriented conservative patriotic American should use that as a benchmark as to how our policies are working. What's the scorecard on that account?

Right On and the scorecard for "Free Trade" is a dismal failure.

44 posted on 08/24/2003 10:27:06 AM PDT by WRhine
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To: E Rocc
It is still pretty much there?!

Nope. It is still pretty much disappearing. We have seen a hugh increase in the number of companies inquiring and making the move to set up shop in Mainland China.

American companies have generally been the late comers to set up production in China but will soon have the same presence there as the European countries, Taiwan, Singapore, Austraila.

In a recent column, I argued that the manufacturing sector of the U.S. economy is in relatively good shape

They are overregulated, heavily taxed and hated. That is good shape? The writer of this column is really blind or is a public opinion plant.

45 posted on 08/24/2003 10:38:19 AM PDT by BJungNan
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To: Starwind
Excellent rebuttal
46 posted on 08/24/2003 10:15:14 PM PDT by Tauzero (My reserve bank chairman can beat up your reserve bank chairman)
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