Why U.S. Manufacturing Won't Die

WSJ ^ | July 3, 2003 | CLARE ANSBERRY

[AZLiberty]

Economies change. At the founding of the country and as late as the beginning of the last century, almost everybody worked in agriculture. As agricultural productivity improved, people were freed up to work in manufacturing.

Less than 50 years, almost everybody worked in manufacturing. As manufacturing productivity improved, both through automation and through trade, people were freed up to work in service industries -- from flipping hamburgers to computer software to making movies.

Fifty years from now, people will look back and marvel at how many people used to work in what we now call services, most of which will be automated by then. We don't know what people will be doing for a living in fifty years, but we do know that people will always have needs and that other people will find it in their interest to satisfy those needs.

Preventing free trade may benefit some individuals or groups, but facilitating free trade will bring greater benefits to more people. To compete we will have to actually educate our children -- and ourselves, as adults -- but that is a problem to be solved not by building up trade barriers but by breaking down mental barriers.

[Archangelsk]

No, but thanks for playing, troll.

[Bluntpoint]

Free trade prevents me from buying a $1200.00 microwave and $600 tennis shoes.

[templar]

There's been huge growth in service sector jobs.

Service sector jobs are, typically, a step dopwnwards, for the last century, not a move to better and higher paying jobs. Government jobs soak up excess workers and keep them off of the unemployment roles. There are more people working for government than for the manufacturing industry.

[harpseal]

Thanks for the article. The chart says it all. For centuries, productivity increases have been freeing up employees to take better higher paying jobs, and it lowers costs, too, except where the government implements subsidies or price supports.

Given OPIC by the American government and currency controls by China the governments of these nations have implemented subsidies for Chinese manufacturing.

[harpseal]

Demand will also escalate for basic goods like washing machines, cars and telephones in parts of the world where many people have never had them before. That will keep global assembly lines humming, as well as fueling demand for ever-more automated systems to operate them more efficiently.

I fail to see how a worker making $7/week or month will be able to afford a washing machine in the near future. Presuming the wage 30 times higher and a savings rate of 1$/week in 100 weeks they will be able to save $100. However such a savings rate is vastly higher than one may expect. Look for rates more like $.10/week. The lower paid worker is barely managing to subsist. For them a luxury might be some occaisional protien or more than a one room hovel without running water and electricity. More likely they are living in a Chinese dormatory and any privacy is a luxury.

[harpseal]

Free trade prevents me from buying a $1200.00 microwave and $600 tennis shoes.

Bullsh$t. There is no such thing as free trade what we have is subsidies to foreign government from the American taxpayer. As to the $1200 microwave oven the cost mostly lowered when they were being producued in the USA. It was competition within the American market that lowered costs.

Now when we come to tennis shoes. The wholesale cost differential was on the order of magnituude of 10% for foreign manufacture. The $100 tennis shoes do not cost significantly more to make than a $2 pair of tennis shoes it is all the advertising and marketing.

Do not talk about things you are ignorant of.

[harpseal]

Like the CEO of Boeing said, "Americans are not entitled to their standard of living".

Niether is the CEO of Boeing. If the USA has a substantial reduction in the standard of living here people such as he might well be facing having to live in a walled guarded compound travel in armored limosines and still face continual fear that someone will manage to take them out. Where on this planet does he expect to live?

[harpseal]

Preventing free trade may benefit some individuals or groups, but facilitating free trade will bring greater benefits to more people. To compete we will have to actually educate our children -- and ourselves, as adults -- but that is a problem to be solved not by building up trade barriers but by breaking down mental barriers.

First, we are not in a free trade envirornment. free trade would mean that US produced goods and services would be allowed to freely compete in foreign markets as well as foreign goods and services being allowed to compete in american markets. Further, government subsidies for offshore investing would not exist.

As to trade barriers the USA developed as the foremost manufacturing economy with trade barriers in place that is behind protective tarriffs for manufacturing. That is historical fact. Unless and until you can prove your case I would suggest you not comment about that of which you lack knowledge.

[aMorePerfectUnion]

Call it the "USA Tax

... there are of course other USA taxes...

Union wages that are inflated
Benefits for everything from daycare to non-married spousal benefits
The ubiquitous LAWYER TAX that affects all businesses
Minimum wage laws that drive up everyone's wages

It's all well and good to gripe about jobs moving overseas, but there are financial reasons for it happening. Those reasons must change and likely won't. This change includes the gov't subsidizing these moves.

There are whole industries that will either move overseas to be competitive, or will go under by refusing to support American jobs. In either case, the jobs will be gone. If you currently find employment in one of those industries, change now while you can.

ampu

[Walkin Man]

In fact, U.S. manufacturers are increasingly worried about a serious projected shortage in skilled machinists and other factory workers.

No, kidding? You would have to be an idiot to pursue any kind of factory or machinist work in the USA today. Unless you speak Chinese and are willing to work for 46 cents an hour, of course!

Now that the free traders are well on the way to wiping out manufacturing in America, they are doing the same to the IT field. The WSJ is full of it!

[MissAmericanPie]

The CEO said this while justifying Boeing outsourcing jobs to India or China. So here is the deal, if you are rich you must pay half of what you make to the Fed because you wouldn't have been able to make that money if you were not living in the USofA where men have sacrificed and died for your freedom to make that much money. Besides it's your duty foisted on you by the government telling you what you owe others for your good fortune.

If this crappola applies to individuals, it should apply to corporations also. Corporations should not be allowed to outsource jobs because if they had not gotten their start in the USofA they would not have been successful. This is what corporations owe the Americans that have fought and died for their freedom, growth and prosperity.

[TejasRose]

I know several who are out of work. At least one very highly skilled one (tool & die maker) that has left the trade permantly because of the lack of jobs in the U.S.

Yes, I know several machinists out of work too and also a very highly skilled tool & die maker -- my husband. The plant where he had worked for 22-1/2 years closed a little over a year ago, and after much searching for a similar type job, he recently went to work at a local grocery store. He is making about 1/4 of what he was earing just over a year ago. I guess he's lucky to find a job at all. One of the jobs he applied for over the last year was for an airport screener. Do you think his veteran status (Vietnam veteran, two high security clearances, communications expert) got him anywhere? Guess not. I assume 54 years old is over-the-hill!!

[riri]

I fail to see how a worker making $7/week or month will be able to afford a washing machine in the near future

I think, and I could be wrong, the washing machine miraculously will not cost the $500 it costs here.

I used to live in Europe. I would buy Kellogs Nutri Grain bars. I would pay $2.00 for a box of them. I come home and a box of Nutri Grain bars can set me back $3.69.

[Bluntpoint]

Do not talk about things you are ignorant of.

I know you are a cutey!

[harpseal]

Given the current artificial lowering the Chinese currency that washing machine would cost more in Chinese Yuan than the $200 US price.

Now if teh currencies were allowed to float the price might be somewhat comparable not necessarily exactly the same as temporary currency fluctuations up or down may inflate the price in one economy and deflate it in another.

[harpseal]

Regarding your post about the economic reasons for jobs aka capital investment flowing overseas. Unless the USA produces goods and services to back our currency given the current flow of capital we can expect very few Americans to be able to afford any of teh imported goods now coming into the USA and a much lower standard of living. Should that occur the political stability which has been one of the American economy's primary advantages will evaporate.

Violence results from major economic dislocations.

[harpseal]

The CEO said this while justifying Boeing outsourcing jobs to India or China. So here is the deal, if you are rich you must pay half of what you make to the Fed because you wouldn't have been able to make that money if you were not living in the USofA where men have sacrificed and died for your freedom to make that much money. Besides it's your duty foisted on you by the government telling you what you owe others for your good fortune.

If this crappola applies to individuals, it should apply to corporations also. Corporations should not be allowed to outsource jobs because if they had not gotten their start in the USofA they would not have been successful. This is what corporations owe the Americans that have fought and died for their freedom, growth and prosperity.

The problem is there are not politicians willing to do what is necessary to maintain the underlying health of the American economy. I really have nothing against the "rich." What I have a problem with are government policies that are designed to destroy American jobs, be they manufacturing, IT, or picking vegtables. There used to be a very big market for migrant workers to pick tomatoes in the USA then people developed a tomato harvesting machine. Capital investment increased American productivity. i want to see more capital investment in the USA.

[MissAmericanPie]

I don't have anything against the rich either. But this is the justification given by liberal politicians for stealing the wealth of the rich. If it works as a burgular tool for the left to strip mine the wealthy individual, we should demand that it work as well for corporations whose pockets they are in.

[Cronos]

The advertising and marketing costs. Now that is interesting. we pay so much for flavoured water (think COke, Pepsi) and over priced shoes. where does the money go? to an athlete or actor etc. why does it go to them? because we think that a product must be good as Mr. x has endorsed it. Nike, Adidas etc. make shoes that MAY be high performance but most of their customers use it for nothing more strenuous than walking a bit.

If we buy into the idea that we MUST have things (i.e. a materialistic lifestyle) and yet we'd like to pay less for it then we're only going to force companies to outsource where they can get the same quality for less or better quality for the same price. The profits go to the companies, i.e. the shareholders who reward companies that layoff workers here and ship manufacturing to China. Don't blame the companies, blame the shareholders, blame us. "We've seen the enemy, and it is us." Now, who said that?