Posted on 10/05/2009 4:25:24 AM PDT by expat_panama
The United States has been hollowed out. It no longer manufactures goods. Once the factory of the world, the U.S. now manufactures debt. The high wage manufacturing jobs have been out-sourced to low wage economies. The demise of U.S. manufacturing is at the core of the decline of America, its chronic trade deficits and growing international indebtedness. It makes the worlds savers reluctant to be exposed to the U.S. dollar.
There is one problem with this widely held view: It is factually wrong.
The value of U.S. manufacturing output in real terms (adjusted for inflation) was a little more than $3 trillion in 2008. That is up from $1.2 trillion in 1972. If the U.S. manufacturing sector was a separate country, it would be the worlds 5th largest economy (behind the rest of the U.S., Japan, China and Germany). The U.S. remains the worlds largest manufacturer. Full stop.
Although international comparisons are fraught with measuring problems, it appears that the U.S. share of world manufacturing is roughly the same as the combined total of the BRICs (Brazil, India and Russia account for a combined 11-12% share).
The data also suggests that the impressive rise of Chinese manufacturing has come at the expense of Japan and other East Asian countries more than the United States, which the UN data suggests actually saw a small rise of its global share in recent years.
China has largely injected itself into the production chain at the labor intensive stages, so that television or electronic good that may have been made in Japan or Taiwan or South Korea now says made in China.
[snip]
(Excerpt) Read more at realclearmarkets.com ...
You bet-- my workday just finished and I can take my time now.
The article said that manufacturing output has grown nicely over the decades and you pointed out that we have a big trade deficit with China. Now, some people would say that both can't be true, but I showing that high output comes with economic booms that come with trade deficits. The bad news is when people decide they hate trade deficits so much that they're willing to vote for some clown (like Obama) that raises tariffs and wrecks the economy.
I’m not an economist but I am a bit of a history buff. FDR and the “New Deal” didn’t end the Great Depression, WWII didn’t end the Great Depression. What ended it was that at the end of the war we were basically the only major country with factories that weren’t bombed flat.
Anywhere in the world if you wanted to buy manufactured goods they almost had to be purchased from American factories.
We got spoiled, wages and profits increased and as the world was slowly catching up we acted as if the situation would last forever. The world caught up. To keep our standard of living we started living on credit. The bills have finally come due I don’t see a pretty picture from here.
I can see the American standard of living collasping as we find ourselves taxed to death just to maintain infrastucture that was put in place when we could afford it.
I see you were originally arguing that free trade policies weren’t to blame for the loss of manufacturing jobs as evidenced by the increase in overall US manufacturing output compared to the total number of manufacturing workers. IOW, job losses have resulted from technological advances which have replaced workers. I think that technology has certainly increased the productivity of the US manufacturing employee but I disagree that this is the only reason we have seen an increase in productivity, IOW, I disagree with the premise that outsourcing and offshoring have not contributed to manufacturing sector job losses. I think there is a bit of truth to both sides of the argument but it is completely false to assert that one or the other is is the exclusive cause.
Well said....all true. When I was young we had decent factory jobs for the lower to middle class. When these jobs were sent abroad what are these guys going to do? Become mortgage brokers pushing sub prime mortgages?
You might as well write the inauguration speech of the second Obama term; you know, the one that lasts twenty years?
People need productive things to do. It is our nature. Trading stocks is not productive labor. Practicing law as it is done today is not productive labor.
Remember that John Galt built things.
So did the Hank Reardon of Atlas Shrugged
Henry Rearden Henry (also known as "Hank") is one of the central characters in Atlas Shrugged. Like many of Rand's capitalist characters, he is a self-made man who started as an ordinary worker, showed talent, founded Rearden Steel and made it the most important steel company of the US
Men need productive and masculine things to do.
Most men don't do well in offices
Women dominate this kind of service economy and have not suffered as much in this recession
A lot more men have been layed off or let go due to lack of work
You may be thinking of someone else. I leave blame to experienced professional blamers.
Let's go with facts, like how import taxes are lower now than they were in '72. Now, lots of people say lower taxes are bad for us, but even though over the past 37 years fewer people work for factory owners, US manufacturing output about tripled, household real incomes are up 80%, and last July's unemployment rate was the same as it was in July '72. So lower import taxes did not shut down manufacturing, did not bring on unemployment and did not hurt incomes.
Now that Obama's raised import taxes, 5 million people lost jobs, factory output is down, and incomes have fallen. No matter who you blame, it's a fact that higher import taxes hasn't help us.
Americans are a hell of a lot better off now than we were 50 years ago.
I absolutely, positively, unequivocally disagree with that. America has gone to hell.
who’s the baby in your bunch?
"No matter who you blame, it's a fact that higher import taxes hasn't help us." what has helped us even less was ousourcing our manufacturing base.
Whoa, we know this is important stuff that's easy to get exited about, but flying off the handle gets in the way.
What are you saying, that the US shipped it's manufacturing base overseas and that the US doesn't make anything anymore?
A.) I’m not excited
B.) we’re both on the same team in the end so this is just a friendly disagreement about the conclusions you and others have drawn regarding the state of US manufacturing.
C.) I’ve spent more than enough of my time stating my opinion on this matter and; as such, I’m disinclined to restate my position.
No thanks, one still hasn’t gotten his mind around the fact that our trade deficit is falling because we are in a recession, and the other thinks we don’t manufacture anything anymore because he went to Wal-Mart.
You and your theories that bear no relation to reality....
Yes our trade deficit is down partly due to recession.
Also because of GWBush’s zero regulation of Wall Street which I’m sure you favored. And free traitor policies I know you favor. Our debt based economy finally hit the wall and consumers are too tapped out to buy Chinese crap like they used to. Plus are spending less on energy which means less energy imports
These people are masters of ill-logic. Sure US manufacturing is up over the last 20 years but not enough to cover what American consumers are buying. Otherwise there would be no trade deficit.....
We ran trade surpluses prior to 1982
Also in 1982 we were not relying on energy imports so much
We manufactured so much that was in demand abroad that imports were less. Resulting in trade surpluses which is the best position to be in. The Japs and Koreans always run trade surpluses. same for China. Then you have Canada and Australia that run trade surpluses because they export so much energy and commodities and mined materials. They are raw materials suppliers
Oh, really? Got some proof? Or just "theories with no basis in reality?"
What do you care? You and idiot todd like trade deficits...or say they don’t matter
WIKIPEDIA
http://en.wikipedia.org/wiki/Balance_of_trade#United_States_trade_deficit
United States trade deficit
The United States of America has held a trade deficit starting late in the 1960s. It was this very deficit that forced the United States in 1971 off the gold standard. Its trade deficit has been increasing at a large rate since 1997 [34] (See chart) and increased by 49.8 billion dollars between 2005 and 2006, setting a record high of 817.3 billion dollars, up from 767.5 billion dollars the previous year.[35]
It is worth noting on the graph that the deficit slackened during recessions and grew during periods of expansion. Also of note, many economists calculate trade deficits and/or current account deficits as a percentage of GDP. The US last had a trade surplus in 1991, a recession year. Every year there has been a major reduction in economic growth, it is followed by a reduction in the US trade deficit.[23] The investor Warren Buffett has proposed a tool called Import Certificates as a solution to the United States’ problem.[36]
You said we had trade surpluses prior to 1982. So when was the last trade surplus, and how many years did it run, Wikipedia genius?
Hey, Toddster . . . our ADHD child is off his meds again.
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