Goodbye, Production (and Maybe Innovation)

The New York Times ^ | December 24, 2006 | Louis Uchitelle

[A. Pole]

AMERICAN manufacturers no longer make subway cars. They are imported now, and the skills required to make them are disappearing in the United States. Similarly, imports are an ever-bigger source of refrigerators, household furnishings, auto and aircraft parts, machine tools and a host of everyday consumer products much in demand in America, but increasingly not made here.

[...]

the experts shifted the emphasis from production to design and innovation. Let others produce what Americans think up.

[...]

But over the long run, can invention and design be separated from production? That question is rarely asked today. The debate instead centers on the loss of well-paying factory jobs and on the swelling trade deficit in manufactured goods. When the linkage does come up, the answer is surprisingly affirmative: Yes, invention and production are intertwined.

"Most innovation does not come from some disembodied laboratory," said Stephen S. Cohen, co-director of the Berkeley Roundtable on the International Economy at the University of California, Berkeley. "In order to innovate in what you make, you have to be pretty good at making it — and we are losing that ability."

[...]

Franklin J. Vargo, the association’s vice president for international economic affairs, sounds even more concerned than Mr. Cohen. "If manufacturing production declines in the United States," he said, "at some point we will go below critical mass and then the center of innovation will shift outside the country and that will really begin a decline in our living standards."

[...]

"It is hard to imagine," Mr. Tonelson said, "how an international economy can remain successful if it jettisons its most technologically advanced components."

[...]

[narby]

It would really hurt you alot to spend a few more bucks, out of those hundreds, to have your widgets made in the USA.

Yes it would. It would make our product more expensive than the competition, reduce, or eliminate our sales, and cost me my job.

Building our widget in China reduces the cost to Americans to buy our product, while raising the economic status of China, that will eventually lead to their workers becoming as expensive as ours, and production will return here. In the end, everybody wins. We get stuff for less (a form of wealth in itself). The Chinese become wealthier and more dependent on trade with us and makes them less likely to go to war against us.

Capitalism is a good thing, even across borders. Read some Thomas Sowell or Walter Williams on this issue. They're brighter than both of us put together about this.

[Alberta's Child]

The underlying theme of this article clearly illustrates the basic paradox of a modern economy -- in which our standard of living (by almost any measure) is highest when we have the ability to import large quantities of manufactured goods from overseas.

For example . . . People living in this country purchase far more refrigerators, televisions, etc. today than they ever would have been able to buy if these things were all made in the U.S.

The basic question we face is which we value more: our high standard of living or our ability to export goods and services to other countries. Because quite frankly, we can't have both.

[SauronOfMordor]

The bottom line is who makes the lion share of the profit, the owners of the ideas or the manufactures of other peoples ideas. I think there is strong evidence of the former.

When other people make your ideas, soon they won't be your ideas. Good luck retaining control of your intellectual property

[durasell]

AMERICAN manufacturers no longer make subway cars. They are imported now, and the skills required to make them are disappearing in the United States.





Why the new subway cars suck and resemble airport shuttles.

[RightWhale]

The underlying theme of this article clearly illustrates the basic paradox of a modern economy

Something is no doubt at work here, but our philosophizing has not kept up with our economic creations. We appear to have built something by intuition that works, and is robust, and is unrelated to what they bore us with in Econ 101. I suspect the secret is in the 14th Amendment, but it is hidden and appears only in the body of subsequent law where it is taken as a natural given. It is not natural at all IMHO except as we created it and we are sometimes supposed to be a part of nature.

[Alberta's Child]

American manufacturers no longer make subway cars.

This is a terrible example to use in an article of this sort -- and the New York Times ought to know this better than anyone simply because they can see first-hand evidence of it right outside their offices in Manhattan.

Any U.S. company that decided to manufacture subway cars would probably be out of business in a hurry, since there haven't been too many new subways built in this country in the last few decades -- and the number of new subway cars purchased for replacement by existing transit agencies is far too small to establish the economies of scale needed for a traditional assemby-line manufacturing operation.

[durasell]

This is a terrible example to use in an article of this sort -- and the New York Times ought to know this better than anyone simply because they can see first-hand evidence of it right outside their offices in Manhattan.




Uh, for 8 million people the NYT is their hometown paper and those people ride the crappy imported subways.

[lucysmom]

People living in this country purchase far more refrigerators, televisions, etc. today than they ever would have been able to buy if these things were all made in the U.S.

We need to purchase more refrigerators and televisions today because the new ones don't last as long as those built in the past.

[1rudeboy]

That's not the only reason, and I suspect you know that.

[Alberta's Child]

Already American society is re-organizing to cope with a declining standard of living. Young people are taking longer to leave home, if they ever do. Out of financial necessity, it will become common for multiple generations to live in the same house, reverting to the historical pre-World War II norm.

There's no evidence to support your underlying point here. Sure -- younger people are taking longer to leave home. But I attribute this primarily to our failure to make them accountable and responsible at a young age. For example, college (and now even graduate school) has become little more than a mechanism for deferring the onset of adulthood in this country.

At the other end of the spectrum you have the exact opposite occurring (and this is also a reason why younger people may have lower expectations in terms of their living standards) -- in which our tax system is structured so that our elderly enjoy a better standard of living in retirement (often including multiple homes) than they ever had while working.

Both of these factors (immaturity in young adults and unrealistic expectations in older adults) are major reasons why the U.S. has become increasingly uncompetitive in the global economy.

[stevestras]

Quite a few subway cars are made in the USA by Kawasaki, a Japenese company.

[durasell]

I miss the Redbirds.

[lucysmom]

Of course not. I finaly got rid of my 40 year old refrigerator (the thing just wouldn't die) because I wanted one with a bigger freezer. Its replacement didn't last a decade.

[Alberta's Child]

The Chinese have zero respect for intellectual property.

That's exactly why China will be a Third World sh!t-hole for a long time -- and has basically consigned itself to be the world's slave labor camp.

China will never be an economic power as long as they don't have even the most rudimentary legal and financial systems in place that are needed for a modern economy to flourish.

[1rudeboy]

I'd say the primary reason is because of our Freon/CFC regulations, but I agree that "planned obsolescence" is a scourge on our society.

[Alberta's Child]

That works both ways, though -- and your underlying assumption may not even be true.

1. If every refrigerator purchased in the U.S. were made in the U.S., what would the guy who makes refrigerators for a living do once every household and office building in the country had a refrigerator?

2. The assumption that durable goods don't last as long as they used to may be correct, but you've overlooked the fact that we now replace things we used to repair. New appliances are so cheap these days that I don't even think a business that repairs household appliances is a viable commercial venture anymore.

[lucysmom]

There's no evidence to support your underlying point here. Sure -- younger people are taking longer to leave home. But I attribute this primarily to our failure to make them accountable and responsible at a young age. For example, college (and now even graduate school) has become little more than a mechanism for deferring the onset of adulthood in this country.

When I began working, minimum wage was $1.25 and rent on a 1 bedroom cottage was $65.00 a month. A young person could have an entry level job and live on his own. Today the same cottage rents for $1,200.

[SamAdams76]

We are wealthier than we've ever been before.

It's amazing isn't it? The more we (collectively) whine about jobs going overseas, the richer we get. And the unemployment rate continues to hover around all-time lows of about 6% despite having women in the workforce and many holding multiple jobs. No matter how loud the doom-and-gloomers bray about "factory" jobs going overseas, the fears are constantly belied by the fact that Americans are richer than ever and that the American standard of living is higher than it ever was in all of recorded history.

Most Americans would rather have their sons and daughters in white collar jobs as opposed to slaving away on a factory floor. Even people who still work factory jobs aspire higher for their children by sending them to college and lecturing them that if they don't do well in school, that they will "end up like me, in some dead-end factory job."

Take the iPod for example. Made in China but designed in the USA. Guess where all the iPod profits are? Here in the good old USA. Steve Jobs and his minions are going to be drinking Starbucks coffee for the rest of their lives.

Working in a factory has about as much appeal as busting rocks for most kids growing up today. Ask them what they want to do when they grow up and they will tell you they want to design video games or make music or produce movies, etc. I doubt that any of them will say "I want to punch a time clock and work in the factories like my daddy and granddaddy did."

[lucysmom]

1. If every refrigerator purchased in the U.S. were made in the U.S., what would the guy who makes refrigerators for a living do once every household and office building in the country had a refrigerator?

That's like saying if new homes last as long as they used to, builders would be out of work.

[durasell]

Today it's an "all or nothing" game. You either design the iPod or the latest bottle for "premium water," collect a mid-six figure salary or work three different patchwork jobs.