-Eric
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?
Something to bear in mind when listening to individual complaints of gloom and doom.
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.
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.
Looks like Bruce Bartlett is an eco-whacknut surrender monkey to the government bureacracy that places utilization of our vast energy resources off-limits.
|
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
|
Unfortunately the lessons of history are lost on many posters in this forum.
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.
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.
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.
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.