Posted on 09/30/2005 11:54:00 AM PDT by SirLinksalot
The Great jobs switch
Sep 29th 2005
The fall in manufacturing employment in developed economies is a sign of economic progress, not decline
THAT employment in manufacturing, once the engine of growth, is in a long, slow decline in the rich world is a familiar notion. That it is on its way to being virtually wiped out is not. Yet calculations by The Economist suggest that manufacturing now accounts for less than 10% of total jobs in America. Other rich countries are moving in that direction, too, with Britain close behind America, followed by France and Japan, with Germany and Italy lagging behind (see article).
Shrinking employment in any sector sounds like bad news. It isn't. Manufacturing jobs disappear because economies are healthy, not sick.
The decline of manufacturing in rich countries is a more complex story than the piles of Chinese-made goods in shops suggest. Manufacturing output continues to expand in most developed countries—in America, by almost 4% a year on average since 1991. Despite the rise in Chinese exports, America is still the world's biggest manufacturer, producing about twice as much, measured by value, as China.
The continued growth in manufacturing output shows that the fall in jobs has not been caused by mass substitution of Chinese goods for locally made ones. It has happened because rich-world companies have replaced workers with new technology to boost productivity and shifted production from labour-intensive products such as textiles to higher-tech, higher value-added, sectors such as pharmaceuticals. Within firms, low-skilled jobs have moved offshore. Higher-value R&D, design and marketing have stayed at home.
All that is good. Faster productivity growth means higher average incomes. Low rates of unemployment in the countries which have shifted furthest away from manufacturing suggest that most laid-off workers have found new jobs. And consumers have benefited from cheap Chinese imports.
Yet there is a residual belief that making things you can drop on your toe is superior to working in accounting or hairdressing. Manufacturing jobs, it is often said, are better than the Mcjobs typical in the service sector. Yet working conditions in services are often pleasanter and safer than on an assembly line, and average wages in the fastest-growing sectors, such as finance, professional and business services, education and health, are higher than in manufacturing.
A second worry is that services are harder to export, so if developed economies make fewer goods, how will they pay for imports? But rich countries already increasingly pay their way in the world by exporting services. America has a huge trade deficit not because it is not exporting enough, but because American consumers are spending too much.
A new concern is that it is no longer just dirty blue-collar jobs that are being sucked offshore. Poor countries now have easier access to first-world technology. Combined with low wages, it is argued, they can make everything—including high-tech goods—more cheaply. But that's only partly true. China's comparative advantage is in labour-intensive industries; and a basic principle of economics, proven time and again, is that even if a country can make everything more cheaply, it will still gain from specialising in goods in which it has a comparative advantage. Developed economies' comparative advantage is in knowledge-intensive activities, because they have so much skilled labour. For years to come, China will be more likely to assemble the best computers than to design them.
Employment in rich countries will have to shift towards higher skilled jobs to maintain economic growth. Countries that prevent this shift taking place risk being left behind. Rather than block it, governments need to try to ameliorate the pains which change inflicts by, for example, retraining or temporarily helping those workers who lose their jobs.
People always resist change, yet sustained growth relies on a continuous shift in resources to more efficient use. In 1820, for example, 70% of American workers were in agriculture; today 2% are. If all those workers had remained tilling the land, America would now be a lot poorer
--- " and then either get promoted to management, or leave for a management job somewhere else. "---
"Yeah, but you know we saw that here too during the tech boom."
Seems like here, the real tech wizards went into expert and internal consultation jobs and the "less than sharp" technical people moved into management. There were exceptions, but that was the rule
>>>The company that bought my company has all their tech support in India. >>>
I quit using Bank of America due to that very thing. Got tired of dealing with someone who I could barely understand and did not have a concept of what our society was about. It made a difference somehow. I hate to hear about you losing your job. Good luck!
>>>The company that bought my company has all their tech support in India. >>>
I quit using Bank of America due to that very thing. Got tired of dealing with someone who I could barely understand and did not have a concept of what our society was about. It made a difference somehow. I hate to hear about you losing your job. Good luck!
I agree that refining is manufacturing, and so does the original poster. But what about my follow-up question: Do the engineers who design the refinery also create wealth?
(By the way, please feel free to jump in at any time—these are very public conversations.)
May I jump in here and point out that tangibles carry the added value within themselves, i.e., the added value in these tangibles can be sold now or stored for later sale. Services, however, either get sold or they don't.
Two examples: I had a friend who was a medical doctor, his brother had a lucrative distributorship. Essentially, they both made equal money in good times. But there was a problem. Both men were raging alcoholics! When the Dr. was out of the office, he made no money. When his brother was laid up drunk, his managers continued to move product and make dollars.
Another example: I once had an interest in a broadcast facility. There are "x" number of spots that can be sold for cash in a day. If those spots are not sold, you can NEVER recoup the loss because the day is gone after 24 short hours.
Now, if you are talking about "intellectual property" - patents, etc. you have a point except for the fact that the people who are in the lab/factory/production facility are most likely to be the ones who come up with the great ideas. Also, it is arrogant to imagine that foreigners can't and won't develop intellectual property that is the equal of ours.
I guess my problem is I grew up in the 1950's and watched all those documentaries with the solemn-voiced announcers talking about "the arsenal of democracy" and showing sweating workers with sparks flying everywhere and "Rosie the Riveter" types tightening bolts on tanks. We don't have that and I can't see how that bodes well for our national defense. Some folks say that high-tech defense capabilities eliminate all that but I don't buy it. It looks to me like the situation in Iraq is being fought the way all our wars have - hillbillies, college boys, and urban apartment dwellers with rifles are doing the work. May God bless them; I hope we can continue to give them the tools they need.
Economist is a key propaganda center for globalism and extreme freemarketeering
The nation cannot consist of "indespensible leader[s]". For one leader there has to be many regular people/followers. Same way as no army can/should expect every soldier to be a general.
I had to think about that for a while. And after careful consideration, I would have to say yes. My reasoning is that, as I said in my previous post, manufacturing takes raw materials and processes them into a finished product. That process can have many steps. One step in that process is creating the tool(s) to do the actual processing, in this case engineering a refinery, so creation of those tools used in the manufacturing process is one step in the larger manufacturing picture. While the engineering itself is not a direct step in the manufacturing process, it does fall within the ripple effect that is needed to support manufacturing.
And if you allegedly do not, then you are a traitor.
dittos!!
The rest is paper shuffling is right! That's part of the reason for the black underclass problems ... we got rid of the factory jobs that used to mean a breadwinner for the family. So now welfare is the breadwinner. This is part of the New Orleans disaster.
quality assurance or tech writing.
True and that rag has been that way for years. The Economist has always been in the free traitor/globalism faction
truck driving
absolutely correct. the more people who can passively participate in the economy, taking a cut, the closer to failure we are.
Isn't that the theory of mutually assured destruction. You hold all my manufacturing jobs, I hold all your income?
The WWII manufacturing economy produced 303,713 warplanes, thousands of tanks, ships, trucks, artilary, millions of small arms, uniforms, and billions of rounds of amunition with a population of 127,000,000 and most able bodyed men off to war.... That is what I call manufacturing. Our lousy 300,000,000 (with 3/4 of our citizens are worthless) could not duplicate that today no how no way!
Once again you got me on my poor use of the language. The concept I was trying for was to be at least important enough that you could safely make it the next ten years without being laid off or seeing your job or project shipped to others. The latter needs a little skill at determining what management has in the works. But someone with all those years of experience behind them should be in that position, or should have at least indebted the company sufficiently that they will find a job for you somewhere. In addition by this time one should also have a goodly amount of cash invested to lead into a certain level of retirement.
Free market does not have concept of moral obligation. Only material gain.
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