The powerful "manufacturing is in decline" meme won't go away soon, but it should.
It apparently isn't enough that the Institute for Supply Management's Manufacturing Index has read "expansion" in 48 of the past 50 months. It has become an article of faith among reporters and opportunistic politicians that American manufacturing has been, and continues to be, in a long-term decline.
The fact is that government reports also show the exact opposite. Why apparently no one, including the sector's supporters, has done, or at least published, the simple math involved to debunk the myth of "deindustrialization" is indeed a mystery.
There has been support by anecdote. For example, on August 6, Joel Kotkin, a presidential fellow in Urban Futures at Chapman University, wrote an op-ed piece for the Wall Street Journal ("The Myth of Deindustrialization"; link requires subscription). His column led as follows:
It's been a quarter-century since author John Naisbitt blithely described manufacturing as a "declining sport" that Americans could easily offshore to Asia. Since then obituaries for U.S. manufacturing, both mournful and enraged, have been written many times.
The reports of death are premature. Many of the most vibrant economic regions in this country -- from the deep South to the Pacific Northwest -- are still making and transporting real goods. The success of America's "material boys" suggests that the old economy and its blue-collar workers -- so often patronized and pitied -- can still more than hold their own in today's global economy.
Mr. Kotkin then cited several examples around the country (Dubuque, Iowa; Houston; Seattle; Charleston, SC, and others) where manufacturing is vibrant and prospering.
But what about the big picture? Reporters and others will usually note that manufacturing's contribution to the economy has fallen from about 25% of Gross Domestic Product (GDP) in the mid-1960s to just over 12% -- as if that ends the "deindustrialization" argument.
It does. The deindustrialization argument disintegrates -- if you remember that the entire 2007 economy is over 3-1/2 times bigger than the economy of 1965.
Specifically, look at this chart (based on data obtained here at the Bureau of Economic Analysis for GDP and components, and from here for GDP growth):
As you can see, the real value of manufacturing output grew at an average rate of about 1% a year from 1965 until 1982, the bottom of the post-Carter Era recession. From that year on, through the remaining Reagan years, Bush 41, Clinton, and first few years of Bush 43, the sector grew at average rate of about 1.5% a year.
What about the rest of the Bush 43 era? After all, in 2003 and 2004, some commentators (examples here and here) attempted to paint the manufacturing sector as near death. Those reports are, to say the least, exaggerated. In the past three years, manufacturing growth has averaged over 2.3%.
Okay, what about the decline in total manufacturing jobs? Well, that's a result of productivity, and calls for a history lesson.
As shown here, in 1945, 16% of American workers were involved in agriculture. By 2000, that percentage had shrunk to 1.9%. Yet, as with manufacturing, and despite steep, long-term, productivity-driven drops in the prices of agricultural commodities, the sector's GDP has grown consistently in real terms -- but again, just not as fast as other sectors in the economy.
When's the last time you read somebody bemoaning the "de-agrification of America"? And who will say that it would be a bad thing if, over the next few decades, we're able to get ever more value out of manufacturing with fewer people as long as overall unemployment stays low?
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
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We know the libs answer for the myth of "deindustrialization".
August 18, 2007 - 13:52 ET by SportPolitics" Bush made McDonald's a manufacturing job!"
Yeah, so the whole lib meme falls apart if industrial capacity has actually been rising. I don't expect the truth on this to EVER be known. We won't get any sort of real facts and figures in the MSM. When something closes, they will scream from the rooftops. If anything opens, they won't have a clue, but 3 or 6 months later they will whine about pollution and urbanized sprawl.
In an article the other day, an officer from the Savanna/Spingfield area armory was quoted as saying 3 times the bullets have been manufactured since 2001 and the Iraq war, with the military spending instead of 200 million something, over 600 million something on them. "Manufacturers ramped up production" said the article. Of course they never told us who makes the bullets, and it would never be counted as industrial work like Rosie the Riveter was. " It's evil" today.
On the mythology of losing manufacturing jobs
August 18, 2007 - 19:31 ET by UnsaneSadly, as you can see elsewhere on NB, this isn't a myth restricted to the Left.
Many "conservative" posters truly believe the United States is being impoverished by the demise of such things as the U.S. auto industry (never mind that manufacturing continues elsewhere because other countries outsource to THIS COUNTRY) and that in order to save the country, we need to become a massive protectionist autarky.
Res tantum valet quantum vendi potest.
The Answer is Franklin Economics
August 18, 2007 - 13:47 ET by Lame CherryBenjamin Franklin in his perfect unfinished memoir explains in layman's terms the basis for propserous economics. It requires 3 supports.
First it requires individual ownership of free enterprise of people who create raw wealth. This is farmers and ranchers growing crops and livestock, loggers harvesting renewable trees, miners extracting wealth, fisheries and now added technology and information.
When one couples that with manufacturing and the mercantile (businesses selling people products), you have the Republic the founders created based on Adam Smith's economic formula.
Americans when allowed to prosper in their own free lust for wealth are the best at it in the world. I have long maintained and urged a GOP leader like Fred Thompson to simply state, "My economic policy for America is to provide the environment where every American can through their work will become a millionaire".
All without fake inflation in prices rising, but all in Franklin's reward of wealth created through work. In this way when Americans have a huge majority who are wealthy, they can all afford health, schooling and the lusts of life without government over taxation and welfare.
Let Americans produce as Franklin advocated and the problems solve themselves.
Franklin explained that money supply in cycles can be increased to create more wealth, but you can not do what the Rothschild and Rockefeller cartels do in printing American money for inflation and fractal lending to Americans who own the money already. Americans must take the ownership of their money back, create a sound treasury dollar for American trade and that will solve inflation and the povertization of Americans. The cartels will benefit as they will have more genuine wealth like America used to have in industrial and agrarian output than this idiotic paper inflation which only raises prices.
PBS did a series a dozen years ago which showed Greenland had more oil than the Middle East. That is American oil and it is time America drills it and Alaska to drop world oil prices and bring to an end this globalist communist system now socializing the world into ruin, so they can seize power.
I was ignored by Mitt Romney in a plan in bringing American industry home with a Kennedy space type plan, which instead would have American industry who invested in mining the vast stores of ocean mineral wealth would not be charged income tax as long as the money was invested in America or it's banks. Workers at these jobs would not pay income tax either. The end result would be a boom so huge to the American economy that we would be a nation flooded in wealth.
Think of it instead of this mongrel USA/Mexico/Canada that the Rockefellers are trying to create was instead the Americanization of Mexico in our creating enterprise zones on the Mexican border run by America for their workers coupled with Canadian raw resources and American immigration into Canada........North America would have 3 prosperous nations trading and a huge suckling piglet brood of Asia buying our ocean generated wealth and technology.
Seriously with Franklin economics Americans would for the most part all be millionaires and America would be talking of multi trillion dollar surpluses. This would provide security and the economic stick to keep enemy states at bay as the US would be so huge it would crush any nation economically in a moment. That certainly is a better way to deal with foreign policy than blowing up nations.
In conclusion, I want to stress though in all this wealth the greatest feature of the founders in Franklin and Jefferson. Jefferson understood that people tied to the land are moral people who govern themselves. Franklin also understood that God was the great self governing factor in citizens. All the money in the world will not solve problems as our whorish children online are proving. People must have a moral base and Judeo Christian principles were what the founders laid as the American foundation in a system of laws.
Have the citizen govern themselves in looking with hope to God and a spiritual caring for each other and this governance will then be unleashed onto the drive of competition and production which by God's grace Americans excell at.
Remove the regulations. Make corporations reinvest in their self interest in America and unleash the production of harvesting ocean wealth for world markets and the entire Franklin economics boom will blossom again.
As a futurist, this step will fund the technology to the next "manifest destiny" to capture American dreams in space. The moon is a treasure of wealth to exploit and Mars awaits to be teraformed from the icey moons of Jupiter.
This is all timeless and will give people that hope which is missing now in Americans need to be productive and not sitting around. We as a people must initiate and fight for this.
I would very much like Mr. Sheppard as an economist to feature this discussion and drive it so that Rush Limbaugh, Laura, Hannity would take up the discussion in educating Americans who will then like Ronald Reagan understand Milton Friedman's wonderful economic plans and give us the completion which Ronald Reagan attempted.
This IS what Fred Thompson should be elected upon and every Republican running for Congress. People can understand a president who wants to give them the opportunity to all be millionaires and solving their own problems. This is tried, proven and prosperous.
I hope Newsbusters will debate this and drive this debate for our American security and future. Thank you.
*HIC IACET ARTORIVS REX QVONDAM REXQVE FVTVRVS
LC
August 19, 2007 - 20:53 ET by Noel SheppardLC,
Interesting stuff. The question is how this works in an entitlement world where $1.8 trillion are spent each year by the federal government on "Human Resources," i.e. Medicare, Social Security, etc. In 2007, this comprises 2/3 of all spending and rising. Imagine that.
As such, how would Franklin and Jefferson's economic constructs fit into our current mixture of capitalism and socialism? How would they, who were so opposed to taxation, view our current condition? And, how do we apply principles created before such taxation and socialism to the mess we have today? ns
What many people don't
August 18, 2007 - 16:00 ET by ckc1227What many people don't realize is even China is losing manufacturing jobs.
but gang....
August 20, 2007 - 02:09 ET by PKSay we buy a machine tool for $200,000 in the united states and pay an operator $20 per hour and run the thing 4,000 hours per year.
just how can we compete with the same machine costing $120,000 in mexico (an awful lot of OSHA safety features that don't have to be installed + no 8% sales tax ) and pay the operators $2 per hour running the machine about 5,000 hours a year.
just as soon as our people devise a new process or tool that makes the same part faster and cheaper the "furriners" buy it within a couple of years and beat our shop people to death with it.
with the currently instyle management system of grading success of managers operating on the quarterly system just how do you show progress when it takes a year to build a building and another six months to install a large machine to do the work. off shore does not have that problem and so a great deal of "elephant work" goes overseas.
about the only place that our people do well is in the adherance to specification as to materials and workmanship.
with 40 years experience in this stuff (been retired for about 10 years) i find it miraculous that we are advancing in the manufacturing sector.
C