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
You are right. Without the engineers, there would be no refinery and no wealth creation.
What of the accountants who work for the oil company? Do they create wealth?
The problem with having our mfg. in China Indonesia and malaysia is that China is an enemy and Indo. and Malay. are not too far behind being strong Muzzie states.
A lot of leftist class warfare ideology is based on the horrible nature of a manufacturing economy. If you are paying attention to economic development worldwide, you will see that manufacturing for export does not get people where they want to go. So, our wealth is not solely in the goods we own, but also in our lifestyle. So, what is Bush negotiating that we sell India and China instead of the Kyoto treaty? And what are we working on bringing to Iraq? Electricity, clean water, and sewer systems. And what are we transfering to Africa? Transparent governmental institutions. We will have to get the latter into New Orleans, too, for it to prosper. I think that you will see that there are lots of jobs in these sectors for people who are not college grads.
Apples and oranges. How many people have been held up at the 'counter' on an assembly line? Dealing with the public is pleasant?--not in most jobs, there is a minimum of an a$$hole a day, and those jobs pay minimum wage in my town.
Tweaking the sentence to include dentist/doctor/lawyer for wage comparisons does diddley-squat on my credibility meter, too.
Permit me to counter with this:
If your source for even one most basic item essential for the national defense is a potential enemy, you are bent over in the bathhouse with your skivvies around your ankles. It is only a matter of time.
If one looks at issues of Popular Mechanics from the 1930's, ads for home workshops (mills and lathes--metal not wood) abound, as well as plans for "build your own bulldozer" and similar items. That was the generation that fought WWII in the factories as well as on the battlefields.
What are we going to do now? throw CDs at them?
Don't let the dollar value barometer fool you either. Just because they produce cheap items does not mean they are not important items, especially when a plastic box full of $1 DVDs, (a whole season!-prerecorded!) sells for $79.95 at WalMart, about the same at an imported SKS rifle used to. In a crunch, what will be worth more?
Good point.
Either people are free to choose where they work or they are slaves. Having the government force people back into factories either by taxes or by law is both wasteful and wrong. We need fewer laws and taxes not more, and we need more freedom not less.
Retirement?
I do rue, however the loss of capability of the average American who used to posess a wide variety of mechanical skills, who knew how to change spark plugs, lube a chassis, drive a nail, and had a host of basic skills to draw on.
Those same farm skills were good prep for just about any trade--still are.
I do see that slipping away. Life isn't a video game, computers are great tools, but they will not take the treatment that the tools needed to build shelter for them will. And computer skills will not build that shelter either, at least not yet.
When we lose the ability to pass on basic mechanical skills, we are doomed to the dustbin of history.
It is nice to design technology, but the nation that builds it owns it, and we are building less. Don't confuse what we charge for what we build for what we build, either, which is what the article did.
Interesting tagline, care to explain it further?
That my friend, is a question people in their 50s have been asking themselves, in some form or another, for generations. As a 40ish year old, I am making that change a little early...but will probably still have to make another change in a decade or so...if I don't, I will consider it miraculous.
My husband did the same thing around 40 a few years ago.
My mother just made a huge career change...and she is 64. She loves it, and finds it invigorating.
In an ever changing world...It's all in your attitude. Stay flexible and never settle in too deep.
Are you saying the US mines, drills, grows or manufactures less than in the past? Perhaps you have some links to back up your assertion?
This is the same fuss we had 10,000 years ago when we changed from hunting to farming. Our Creator seems to smile on the successful, and it makes sense that Abel's harvest went over better than Cain's road kill. The lesson then as now is to simply accept reality and we're all better off.
We're not "building less", we're building more now than ever before. We're just not building the same thing the previous generation did. It's those never-learner's that try to build the same thing over and over-- they're the ones that end up in "the dustbin of history."
Reminds me of when Kennedy was President. He toured Kentucky and Pennsylvania coal fields and said the Third World countries can do this type of labor. He went on to visit Pittsburg and said that raw steel product manufacturing should also be done by Third World countries and we shouldn't have to put up with the pollution.
If you are not asking yourself EVERY SINGLE DAY if you could be laid off you are in trouble already. As I said, my mother started a whole new career at 63. She loves it. It makes her feel young. Change is not necessarily a bad thing. Hard yes. Bad no.
Our manufacturing infrastructure is practically gone?
It suddenly occurred to me that I was 55 when my engineering job got outsourced. It was the best thing that ever happened to me. The solution is less government aid, not more.
That question required even more thought. (Hey, whatchu tryin' to do, make me think...or make my head hurt? ;^) ) But, back to the question, I don't think accounts are participants in the creation of wealth. Without engineers, the refinery for oil would not exist, so an essential step in the manufacturing process halts the production of products from a raw material. On the other hand, at no point does production cease if accountants are taken out of the equation. Granted, they do provide a service, but that service has no direct bearing on the product at any stage from its raw inception point to its final faze before moving to the consumer. Before the advent of mass production, the only persons who did accounting were the tax collectors of potentates. Did mining/oil drilling, farming, or manufacturing exist before mass production? Yes, though on a far smaller scale, but the only persons who needed to keep track of transactions were the immediate buyer and seller. So, I see wealth creation as being existent prior to the need for accounting and if the former existed without the latter, then those who do accounting are not directly involved in the creation of wealth. You may see things differently, and if you do, please post your reasons as I am open to new concepts.
You might want to think again on that. This is the same debate that farmers and factory workers had a century ago. Farmer: "We don't need machines because we can't eat them." Mechanic: "With my machine you can produce 100 times as much food." There are still countries in the world where farmers don't use machines, and the people starve.
A factory without accountants goes out of business and makes nothing but debt. When you buy a car, you might think it's made out of mostly steel, or maybe rubber and plastic. As it turns out, GM's largest single supplier is insurance. So what you're really driving around in is a big hunk of insurance with some steel, rubber, and plastic mixed in.
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