Manufacturing: what's really going on

[beej]

https://www.nationalreview.com/the-morning-jolt/whats-really-going-on-with-u-s-manufacturing/

Interesting article about the progression of economies, from hunter gatherer, to agriculture, to manufacturing, to services oriented.


the desire to create manufacturing jobs for the mere goal of job creation, itself, leads to stagnation.

So if manufacturing's employment share stopped declining in 2010, and the number of manufacturing workers has actually been increasing since 2010, why aren't we seeing a manufacturing boom? Because 2010 is also the year that manufacturing labor productivity stopped increasing:A U.S. manufacturing worker in 2010 was twice as productive as a U.S. manufacturing worker in 1990. A U.S. manufacturing worker in 2025 is slightly less productive than a U.S. manufacturing worker in 2010.


This is an example of why targeting job growth is not a very good economic policy. There are all sorts of ways to create jobs that don't make people better off. There's the famous example of Milton Friedman surveying a construction site in China and being told by the authorities that the workers were using shovels instead of machinery so that more people could have jobs. Friedman suggested that if they really wanted to create jobs, they should give them spoons instead of shovels.

But Why Has Manufacturing's Share of Employment Fallen?

At the same time as U.S. manufacturing's employment share has fallen, China has become the world's largest manufacturer. The Chinese Communist Party has engaged in industrial policy to encourage manufacturing. It's tempting to believe that if not for the plotting of a foreign dictatorship, U.S. manufacturing would still be what it was. The real story, though, has a lot more to do with what naturally happens to the structures of economies as they develop.

As long as modern economics has existed, economists have been thinking about stages of development. In his Lectures on Jurisprudence, Adam Smith divided economic development into four stages: the age of hunters, the age of shepherds, the age of agriculture, and the age of commerce. It was conjectural history when Smith wrote it, but we now know it lines up pretty well with what modern anthropologists say about humans' advancement from hunter-gatherer bands to nation-states.

Smith was sensitive to the fact that Britain, where he lived, was one of the countries furthest along that development path in the late 1700s when he was writing, and that other countries weren't as far along. Even though different places have different cultures and different economies, Smith thought they would all generally follow the four stages, albeit at different speeds.

This same pattern of thought informs economists today. And there's good empirical evidence to support the idea that countries pass through similar stages as they become richer. The industrial revolution, occurring after Smith's death, added a new stage, and then deindustrialization and the transition to services in the richest countries added another.

Rather than Smith's four stages, one of the descriptions economists use today of development has three stages, and their names emphasize that they occur in roughly the same order everywhere in the world: Primary (agriculture), secondary (industry), and tertiary (services).

Like Britain in the 1700s, the U.S. today is one of the countries furthest along this path of development, with services making up a large share of employment and output. Countries such as India are currently in the process of moving from agriculture to industry. Countries such as Ethiopia are still mostly agricultural.

[Smit]

Good analysis. Does this change your thoughts of the "bring back manufacturing" strategies by applying tariffs as motivation?

[beej]

Good analysis. Does this change your thoughts of the "bring back manufacturing" strategies by applying tariffs as motivation?

I read opinions like a juror in a court case and I've changed my views on things before as evidence is presented. both sides have their spin and this is certainly a good point. But it leaves me wondering if there is a progression from hunter to services economy, what comes after that? do we cycle back to hunter-gatherers? If that's the case, I would fight tooth and nail to keep that from happening. Or is there some new progression that we haven't thought about. Also is there room for growth in a services economy? I've still got questions.

[neurosis]

Or is there some new progression that we haven't thought about. Also is there room for growth in a services economy? I've still got questions.

My argument against the tariffs this entire time, is that we don't know what's going to happen, yet we're going to pay dearly to find out.

Good article. 

[Smit]

I read opinions like a juror in a court case and I've changed my views on things before as evidence is presented. both sides have their spin and this is certainly a good point. But it leaves me wondering if there is a progression from hunter to services economy, what comes after that? do we cycle back to hunter-gatherers? If that's the case, I would fight tooth and nail to keep that from happening. Or is there some new progression that we haven't thought about. Also is there room for growth in a services economy? I've still got questions.

Good for you. Considering ideas that go against your confirmation bias is tough to do.

When I was going to college there weren't many classes that really made me see things differently but Economics 101 really changed the way I viewed the world.

What's next? I've got my ideas but we'll see.

I don't think following the path we're on right now is going to lead to any kind of promised land.

[beej]

I don't think following the path we're on right now is going to lead to any kind of promised land.

maybe we are already in the promised land and we are just lack the gratitude and humility to see it. The first tool shop that I worked at paid matched double what I paid in to the 401k. If I paid in $1000, they paid in $2000. I wish I would have been more grateful and recognized how good that was when I was younger.

[Smit]

maybe we are already in the promised land and we are just lack the gratitude and humility to see it. The first tool shop that I worked at paid matched double what I paid in to the 401k. If I paid in $1000, they paid in $2000. I wish I would have been more grateful and recognized how good that was when I was younger.

We've had a good, long run of it. If we're at the top now how many different way to go are there?

[beej]

We've had a good, long run of it. If we're at the top now how many different way to go are there?

that is the root question of conservatives and progressives, I suppose. A conservative says let's try and maintain this. And a progressive says it can be better. All of a sudden, (and this what I keep saying with how the parties are changing) a republican is trying to upend current trade policies, and democrats are saying leave it like it was. Conservatives were formally the ones afraid of change. Now democrats are afraid of change. Personally, I'm feeling more and more detached from the political processes and feeling more like a neutral observer, than I have in the past.

[neurosis]

Personally, I'm feeling more and more detached from the political processes and feeling more like a neutral observer, than I have in the past.

Welcome to the fence. 

[Smit]

that is the root question of conservatives and progressives, I suppose. A conservative says let's try and maintain this. And a progressive says it can be better. All of a sudden, (and this what I keep saying with how the parties are changing) a republican is trying to upend current trade policies, and democrats are saying leave it like it was. Conservatives were formally the ones afraid of change. Now democrats are afraid of change. Personally, I'm feeling more and more detached from the political processes and feeling more like a neutral observer, than I have in the past.

Everything is conservative/progressive isn't it? 

There are a whole lot of people you're disenfranchising but whatever.

Ya know, if the choice was "leave it like it was" or watch Elon Musk go in there with a bunch of fuckheads who don't take the time to understand what they're even doing hack mindlessly away at the federal government then yeah, I'll take the "leave it like it was" choice.

If the choice was "leave it like it was" or watch Trump sling tariffs around like it's a bludgeoning weapon to use against anybody who doesn't kiss his ass, then yeah, I'll take the "leave it like it was" choice.

But rather than either of those options, is it crazy to hope somebody will take the time to understand what they're doing before they start hacking away? If that happened there might be a different answer than "leave it like it was."

Is it crazy to hope the President will have a rational, coherent economic policy with some kind of end goal that's realistic? If that happened there might be a different answer than "leave it like it was."

:edit: One more thing. You are using the word "conservative" completely wrong. Look it up in the dictionary, there is nothing conservative about what is going on in the Republican party now and in recent history.

[Del.]

I surrender to the super genius who took Economics 101.

[CNCAppsJames]

Despite what those ignorant of the realities of global economic policy think, we (the USA) get the short end of the stick. That is a fact. Disagree all you want, the realities do not match up with your fantasies.

The products we export to other nations are taxed (read tariffs on THEIR end) more heavily by the importing nation than their exported products to are when we import them. In simpler terms; We export an item to Country X and the import tariff is say $10 on the product. We have a trade agreement with Country X to import their products. Currently there is a $5 tarrif on the product. There is an imbalance in that trade agreement. I am not OK with an highly disproportional imbalance. I'm ok with a few percentage points because I certainly do not want to destroy another nation's ability to manufacture goods as has happened here and if a few percent here or there keeps their manufacturing base thriving then all the better for all of us. Where there is equity, there can be competition. When there is competition products get better.

Bottom line, the tariff imbalance is not equitable for us. It needs to be.

We did not get where we find ourselves in a single POTUS Administration. We've allowed our manufacturing base to erode over the course of 3-4 decades. The problem will not be solved in a quarter. It probably will not be completely solved in a single POTUS term. But we HAVE to move in that direction or we may as well just mail it in and be subservient to the tyrants and dictators of the world. When other nations manufacture what we need for daily life, they can cut us off at any moment. I'm not OK with that. Remember COVID? China was pretty much thew only country making a large portion of the PPD in the world. They withheld from us... because they could. There's a lot of nations that hate us, and no matter what we do/don't do they will continue to hate us. They envy our position. They want our position. When the chance to stick it to us arises, they will. I do not want to be in a position where another nation can stick it to us.

[beej]

:edit: One more thing. You are using the word "conservative" completely wrong. Look it up in the dictionary, there is nothing conservative about what is going on in the Republican party now and in recent history.

If you re-read my post, that is exactly what I meant. So I don't think that I was using it wrong. sometimes you look for an argument where there isn't one.

[Del.]

If you re-read my post, that is exactly what I meant. So I don't think that I was using it wrong. sometimes you look for an argument where there isn't one.

Good luck. I'm pulling for you. Beware that you're going up against an economic 101 intellectual that changed his economic views. Or was it Socialism 101?

[Smit]

If you re-read my post, that is exactly what I meant. So I don't think that I was using it wrong. sometimes you look for an argument where there isn't one.

Look, I can't know what you meant. I only know what you say.

Wondering out loud.... if you're a super dumbass it must appear like you're surrounded by super geniuses.