By Kevin D. Williamson
Friday, October 11, 2024
“The Good Old Days of Manufacturing Are Long Gone,”
economist Rebecca Patterson argues
in the pages of the New York Times, casting doubt on the promises of
Kamala Harris and Donald Trump to cultivate a “manufacturing renaissance.” She
could not be more wrong.
These are the good old days of manufacturing. This is, by
any relevant measure, the renaissance.
But Patterson isn’t writing about the relevant measures.
More importantly, Harris and Trump are also talking about the irrelevant
metric, too: manufacturing employment as a share of overall employment. The
error at work is an ancient and enduring one: It is the belief that the purpose
of an automobile factory is not manufacturing cars but manufacturing jobs.
Say it with me: Jobs are a means, not an end.
Have a gander at those relevant metrics, numbers you’d
think the Harris campaign would be trying (erroneously, of course) to claim
credit for. Total manufacturing output in the United States is—right now!—at a record level. Investment in factories
and manufacturing facilities reached an all-time high earlier this year. And
what about all that nefarious globalization that’s supposedly eating our lunch?
In 2023, U.S. firms exported more
durable goods than they had in any year before that, with durable-goods
exports exceeding $1 trillion and total manufacturing exports topping $1.6
trillion. Put another way, U.S. manufacturing exports add up to more than the combined
revenue of Walmart, Amazon, and Apple.
About 10 percent of U.S. workers are employed in
manufacturing, down from about 15 percent throughout the supposed golden age of
factory work in the 1950s. That’s a big decline—and that decline is a good
thing. U.S. manufacturing has thrived because it has grown more efficient,
making U.S. firms remarkably competitive. That has produced a familiar
byproduct of innovative and massive capital investment: fewer jobs (or fewer
jobs than there might have been without technological improvements) but at
higher wages, the same pattern we have seen in any other number of industries
(say, warehousing and logistics or retail) over the years. Productivity goes
up, wages go up, profits go up. It’s a win/win.
To argue that it would be better if we had more
manufacturing jobs (and the politicians would prefer that these be at even
higher wages, of course) is to argue that U.S. firms and the overall U.S.
economy would be better off if key firms in critical sectors had to labor under
more expensive inputs. It is like arguing that the homebuilding industry would
be healthiest if lumber and other building components got more expensive or
that the tire industry would thrive if the price of rubber doubled. We don’t
like to think of labor as just another input, of course, because we don’t like
to think of ourselves as inputs. But that is, as a purely economic matter, what
manufacturing labor is: an input. More expensive inputs make firms less
profitable, less flexible, and less innovative—and that isn’t any better for
assembly-line workers than it is for shareholders. If you really care about the
overall economic health of the country, what you want isn’t necessarily more
jobs but more output.
More is more, and there is no substitute for
abundance.
One particularly idiotic lie that the success of U.S.
manufacturing should put to rest: the nonsensical belief that manufacturing
jobs chase low wages. The world’s manufacturing powerhouses are in the U.S.,
Japan, and Europe, in high-wage economies, not in Haiti or Somalia. Even in
China, where wages remain lower than in the United States or Western Europe,
manufacturing employment has gone along with rising wages rather than
decreasing wages. And which would you rather own: Daimler AG, maker of Mercedes-Benz,
or Dongfeng Motor Group, maker of … this?
And even Dongfeng presumably sends about half its profit to Japan, where
50-percent owner Nissan is headquartered. The notion that middle-income China
is outdoing the rich and prosperous United States in the things that matter is,
to say the least, not obviously true.
Put another way: Would you prefer that your kids go to
work building robots for Boston Dynamics or hitch their wagon to the extortionate
Luddites over at the longshoremen’s union, who are using the freshest ideas
from the 19th century to try to stop the ports from investing in the
sort of thing that Boston Dynamics builds?
Because that’s really the choice.
When it comes to labor economics, we live in a world of
upside-down Malthusianism. It’s a world filled with the superstitious belief
that there is always too much to go around, that there simply
isn’t enough work to be done in the world. That myth dies with the slightest
contact with reality. Of course, there is such a thing as a transaction cost,
and there are disruptions when changes in the methods of production—whether
caused by technological innovation or competition—force workers to change jobs
and adapt to new economic realities. There are things that we can do through
public policy to help defray some of those expenses and to help workers
reorient their efforts ( for example, by replacing or supplementing some
unemployment benefits with relocation benefits for displaced workers moving for
new jobs). But there isn’t any way—short of economic stagnation enforced at
gunpoint—to prevent the necessity of adapting to economic change.
And Americans are pretty good at that. Look around. As
Dominic Pino notes in National
Review, if Canada’s highest-earning province (Alberta) were a U.S.
state, it
would be the poorest U.S. state by income. U.S. GDP per capita is nearly 60
percent higher than that of Germany and about twice the average of the
European Union—because we let markets work, because we let investors work,
because we let innovation work. We’ve got a whole flock of magnificent geese
laying golden eggs, and manufacturing is only one of them.
Only a politician—or a New York Times headline
writer—could look at the facts and say: “What we need is a less efficient
manufacturing sector.”
But Kamala Harris and Donald Trump see things
differently. So here’s a hot tip: Invest
in spoons.
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