Replies

While Mr. Uchitelle first began whining about manufacturing being "downsized," it actually grew by 5.3 percent a year from 1992 through 2000.

So much whining and so few facts- some how the US survived that 'giant sucking sound'.

Ok, U.S. manufacturing is under no threat? Go out and see how many things in the stores or home improvement warehouses you can buy that have "Made in the USA" written on them. This is one way an American can personally separate fact from propaganda.

http://www.freerepublic.com/perl/bump-list

Hey Panama,

Welcome home!!!

Have you returned or are you new here in Panama?

Thank you for the post.

My very best wishes,

Gatun

So much whining and so few facts- some how the US survived that 'giant sucking sound'.

Good point. Argentina is also surviving despite all this whining.

A cancer patient lying in his hospital bed half dismembered, with tubes poking out all over has still survived.
For now.

Some recent frauds:

The End of History
The End of the Business Cycle
The End of US Manufacturing

Uh, you shouldn't believe everything you read...My area is becoming a ghost town...There is no manufacturing construction going on...Most all industrial construction has stopped...No new power plants...

For the most part, roads are being patched, not repaired...

There is however a considerable amount of commercial construction going on...People are using their credit cards...

Isn't it interesting how people can manipulate numbers to make them mean whatever they want them to mean??? You sound like a politician...

If you print this version it'll be easier on your eyes.

fyi

It helps to keep in mind a few simple points. First, manufacturing is extremely cyclical. The manufacturing component of the U.S. industrial production index fell by 5.5 percent a year in 1974-75, then rose by 6.6 percent a year for the next four years. In 1980-82, manufacturing fell by 3.1 percent annually for three years, then rose by 4.8 percent a year for six years. Manufacturing then dropped 2 percent in 1991. What happened next?

While Mr. Uchitelle first began whining about manufacturing being "downsized," it actually grew by 5.3 percent a year from 1992 through 2000. Manufacturing then fell 4.1 percent in 2001 (the bottom of his "trend") but rose at a 6.1 percent pace during the first three quarters of last year. What has been unusual about U.S. manufacturing was not the inevitable recession in 2001 but the unusually long and strong expansion for the preceding eight years. About half of the unusually strong gains came from the manufacture of high-tech equipment, which is a lot more valuable than T-shirts.

Unfortunately Mr. Reynolds does not cite where he gets his index data so it is not possible to demonstrate what is wrong with it, other than it does not reflect what the Dept of Commerce BEA data shows, which is that manufacturing has declined some 27% by dollar volume over the last 15 years. We all know many companies have moved offshore and taken jobs with them. While Manufacturing has improved slightly over the last 2 months, clearly it by no means makes up for its losses over the last 15 years.

Mr. Reynolds argues "About half of the unusually strong gains came from the manufacture of high-tech equipment, which is a lot more valuable than T-shirts." Well, I've shown below the electronics equipment contribution to manufacturing, and while it is a contribution, it by no means makes up half, nor has manufacturing had strong gains.

Here is the Dept of Commerce BEA data from which most analysts, companies and economists get their data. Unlike Mr. Reynolds who has not 'shown hs work', I've provided links and tables so you can verify for yourself.

From GDP by Industry in Current Dollars As a Percentage of GDP: at http://www.bea.doc.gov/bea/dn2/gposhr.htm:

I have extracted the manufacturing share of GDP for 1987 through 2001, along with the electronic equipment portion of manufacturing:

Line                                                      1987     1988     1989     1990     1991     1992     1993 
 1        Gross domestic product......................... 100.0    100.0    100.0    100.0    100.0    100.0    100.0                                                                                                                                                                                                                                                    
12      Manufacturing....................................  18.7     19.2     18.5     17.9     17.4     17.1     17.0 
20          Electronic and other electric equipment......   1.8      1.9      1.9      1.8      1.9      1.7      1.8  
 
 
Line                                                      1994     1995     1996     1997     1998     1999     2000     2001
 1        Gross domestic product......................... 100.0    100.0    100.0    100.0    100.0    100.0    100.0    100.0                                                                                                          
12      Manufacturing....................................  17.3     17.4     16.8     16.6     16.3     16.0     15.5     14.1
20          Electronic and other electric equipment......   2.0      2.0      2.0      2.0      1.8      1.7      1.6      1.4

For all of manufacturing, for 1988 through 2001 there has been a decline of 27% (I trust no one will argue 2002 data, when published, will make up for those losses).

26.56 percent = 19.2 - 14.1 / 19.2 x 100

Sometimes the BEA's Real GDP chained data is used in similar calculations. These calculations are invalid because of how chained data is produced and tabulated. Here is the BEA's warnining note on such calculations.

Note.--Chained (1996) dollar series are calculated as the product of the chain-type quantity index and the 1996 current-dollar value of the corresponding series, divided by 100. Because the formula for the chain-type quantity indexes uses weights of more than one period, the corresponding chained-dollar estimates are usually not additive.

That note comes from the BEA's Real Gross Domestic Product by Industry in Chained (1996) Dollars in which the aggregates in a chained dollar series are not additive, which means that the components don't add up to the total GDP, which means that each component is not represented in its proper proportion or share of the total GDP, which ultimately means one can not compute manufacturing's percent of 2001 GDP as:

16.2 ~ 16.17 = 1,490.3 (from col 2001 line 12) / 9,214.5 (from col 2001 line 1)

That math, normally valid, is invalid with chained data. That's why the BEA provides tables with GDP share computed such as Gross Domestic Product by Industry in Current Dollars As a Percentage of Gross Domestic Product

Manufacturing's decline is about 27% from 1988 to 2001.

Mr. Reynolds also argues "Efforts to stir up "public agitation" about China are based on lies. China accounts for only 18 percent of our imports of merchandise. Chinese imports seem bigger because they are concentrated in clothing and consumer goods, which are far more visible than more costly industrial supplies and equipment." Again, he cites no tables or reports on which he bases his conclusion. Below are the Trade Departments data on our top 10 trading partners and the 3 largets by volume Canada, Mexico, and China, and the three largest by deficit, China, Canada, and Mexico.

For the 1st half or 2003 thru June, our 1st largest deficit is $53B with China, averaging $10B/month, on the 3rd largest volume of $79B: For June alone, see the U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES - June 2003

Deficits were recorded, in billions of dollars, with China $10.0 ($9.9), Western Europe $8.0 ($8.3), Japan
$5.4 ($4.5), OPEC $4.0 ($4.4), Canada $3.8 ($3.8), Mexico $3.4 ($3.4), Taiwan $1.1
($1.4), Korea $1.0 ($0.9), Brazil $0.6 ($0.5), and Argentina $0.1 ($0.1).

Further, our total trade balance deficit with China is the largest (see U.S. Trade Balances by Country and Go to 'C' fo4r China and Canada data and 'M' for Mexico data:

Trade with China : 2003

NOTE: All figures are in millions of U.S. dollars

MONTH	EXPORTS	IMPORTS	BALANCE
January	1,988.30	11,409.60	-9,421.30
February	2,053.60	9,633.00	-7,579.40
March	2,424.50	10,094.10	-7,669.60
April	2,089.50	11,540.90	-9,451.40
May	2,013.10	11,875.00	-9,861.90
June	2,122.10	12,111.60	-9,989.50
TOTAL	12,691.10	66,664.30	-53,973.20

Trade with Canada : 2003

NOTE: All figures are in millions of U.S. dollars

MONTH	EXPORTS	IMPORTS	BALANCE
January	12,859.00	17,809.00	-4,950.00
February	13,248.00	17,593.00	-4,345.00
March	15,114.00	20,262.00	-5,148.00
April	14,633.00	18,443.00	-3,810.00
May	15,401.00	19,248.00	-3,847.00
June	14,795.00	18,585.00	-3,790.00
TOTAL	86,050.00	111,940.00	-25,890.00

Trade with Mexico : 2003

NOTE: All figures are in millions of U.S. dollars

MONTH	EXPORTS	IMPORTS	BALANCE
January	7,825.70	10,842.70	-3,017.00
February	7,065.50	10,965.80	-3,900.30
March	7,810.40	11,734.60	-3,924.20
April	7,849.30	11,193.50	-3,344.20
May	8,078.20	11,500.40	-3,422.20
June	7,959.30	11,382.70	-3,423.40
TOTAL	46,588.50	67,619.60	-21,031.10

Further, our top 10 trading partnbers can be found at Top Ten Countries with which the U.S. Trades - June 2003

and by checking the trade balance by country, our June 2003 deficit with Canada is $26B, and with Mexico is $21B, but with China ouir deficit is largest at $53B, even though the total trade is 3rd. i.e. We trade more with Canada and Mexico, but China buys far less from us than we import from them, resulting in our largest trade deficit being with China.

Top Ten Countries with which the U.S. Trades

For the month of June 2003

The values given are for Imports and Exports added together.
These Countries represent 68.77% of U.S. Imports, and 66.36% of U.S. Exports in goods.

                                                   Year To Date
                                    Total in         Total in
                                    Billions         Billions
 Country Name                       of U.S. $        of U.S. $

 CANADA                                 33.38           197.70
 MEXICO                                 19.34           114.21
 CHINA                                  14.23            79.36
 JAPAN                                  14.14            84.15
 FEDERAL REPUBLIC OF GERMANY             8.08            48.02
 UNITED KINGDOM                          6.46            38.12
 KOREA, REPUBLIC OF                      5.21            29.22
 TAIWAN                                  4.18            23.02
 FRANCE                                  3.93            22.96
 MALAYSIA                                3.06            16.72

Mr Reynolds closes with "If the rhetoric gets too annoying, ask the authors for a few facts. They just hate that" having himself provided only rhetoric and no facts. Above is what verifiable facts look like.

Let's not confuse Willie Green and the chorus of FR doom and gloomers with the facts.

Manufacturing Gloom is Manufactured August 28, 2003

http://www.rushlimbaugh.com/home/daily/site_082803/content/stack_c.guest.html

Are Turkmenistan and Cuba the most powerful nations in the world? You'd have to say so to buy these continuing stories on America's loss of manufacturing jobs and manufacturing equaling greatness. Those who talk about companies "decamping" or "exporting jobs" to China and India ignore the facts. Alan Reynolds gives us some great statistics on this, including one that manufacturing actually grew after NAFTA! So much for the "giant sucking sound" predicted by Ross Perot. I was right on NAFTA - as was Bill Clinton whose stand on this issue I supported.

Manufacturing is cyclical. But that didn't stop a New York Times columnist from focusing on the first downturn after NAFTA as if that were the trend. Reynolds' column is headlined "The Hoax of Disappearing Manufacturing," and I urge you to read it for gems such as this: "Increases in productivity from improved machinery and skills are the reason manufacturing employment falls most of the time, as it does in farming, even when output is growing briskly." I know these numbers are hard to follow, but this is an important issue that you must educate yourself on. Besides, when you listen to me read numbers, they're more exciting than most hosts' words.

Listen to Rush...

(...blow apart the myth of America "losing manufacturing jobs" with Reynolds piece)
http://www.rushlimbaugh.com/home/daily/site_082803/content/stack_c.guest.html

Read the Article...

(Townhall: The hoax of disappearing manufacturing - Alan Reynolds)

The hoax of disappearing manufacturing
Alan Reynolds August 28, 2003
http://www.townhall.com/columnists/alanreynolds/ar20030828.shtml

Back in 1995, right in the middle of a nine-year economic boom, Louis Uchitelle co-authored an absurdly downbeat series of New York Times articles on "The Downsizing of America." That series was full of opinion polls, as though popular illusions could substitute for facts. More recently, there has been hope that scandals at The New York Times might have given new editors at least a casual interest in factual accuracy. Apparently not. A couple of weeks ago, the unrepentant Mr. Uchitelle wrote yet another weirdly apocalyptic piece claiming, "Manufacturing is slowly disappearing in the United States."

If you were hoping for some proof this time, be prepared to be disappointed again. Uchitelle says, "Manufacturing's share of real gross domestic product . . . has dropped to between 16 and 17 percent, from 18 to 19 percent in the 1950s. . . . the downward trends are alarming." Similar statistical exercises recently led to an interesting debate between my old friends Bruce Bartlett and Paul Craig Roberts. Yet the National Association of Manufacturers' Web site shows that "manufacturing's share of the U.S. economy, as measured by real GDP, has been stable since the late 1940s.

. . . The overall share remains the same over the business cycle." It is impressive for any private activity to maintain a stable share of GDP, since government spending has risen from about 20 percent of GDP in the early '50s to 30 percent since the '80s. Manufacturing doesn't need protection from foreign countries; it needs protection from domestic governments.

Mr. Uchitelle claims "the essence of a great world power is its edge in producing not services but manufactured products." By that standard, the two greatest world powers are Turkmenistan (with 39.8 percent of GDP attributed to manufacturing in 2000) and Cuba (at 37.2 percent). In China, services have risen from 21.4 percent in 1980 to 33.7 percent by 2002. In Hong Kong, manufacturing declined from 22.4 percent of the economy in 1980 to 5.2 percent in 2001.

Mr. Uchitelle claims "the shrinking manufacturing sector is again a source of public agitation, this time because so many American manufacturers are decamping to China and India." Don't editors check the facts? U.S. direct investment in other countries was worth more than $1.5 trillion last year, according to the July Survey of Current Business. Europe accounts for 52.3 percent of American investment abroad, Mexico for 3.8 percent, and China for seven-tenths of one percent. Any "decamping" to India is statistically invisible.

It helps to keep in mind a few simple points. First, manufacturing is extremely cyclical. The manufacturing component of the U.S. industrial production index fell by 5.5 percent a year in 1974-75, then rose by 6.6 percent a year for the next four years. In 1980-82, manufacturing fell by 3.1 percent annually for three years, then rose by 4.8 percent a year for six years. Manufacturing then dropped 2 percent in 1991. What happened next?

While Mr. Uchitelle first began whining about manufacturing being "downsized," it actually grew by 5.3 percent a year from 1992 through 2000. Manufacturing then fell 4.1 percent in 2001 (the bottom of his "trend") but rose at a 6.1 percent pace during the first three quarters of last year. What has been unusual about U.S. manufacturing was not the inevitable recession in 2001 but the unusually long and strong expansion for the preceding eight years. About half of the unusually strong gains came from the manufacture of high tech equipment, which is a lot more valuable than T-shirts.

The cyclical ups and downs of manufacturing are international, by the way, not national. Manufacturing started falling in August 2000 in Japan and Korea, followed by the U.S. a month later. When manufacturing falls, so do imports.

Increases in productivity from improved machinery and skills are the reason manufacturing employment falls most of the time, as it does in farming, even when output is growing briskly. From 1990 to 2000, manufacturing employment fell by 0.4 percent a year in the U.S., by 1.8 percent a year in Japan, and by 2.5 percent a year in Germany.

Efforts to stir up "public agitation" about China are based on lies. China accounts for only 18 percent of our imports of merchandise. Chinese imports seem bigger because they are concentrated in clothing and consumer goods, which are far more visible than more costly industrial supplies and equipment. Apparel accounts for only about 6 percent of U.S. imports, industrial supplies and equipment for 55 percent. Major industrial countries supply almost 48 percent of U.S. imports of manufactured goods, while all newly industrialized Asian countries account for 9.3 percent.

The level of value-added per Chinese worker in 1999 was only 8 percent of U.S. productivity, according to the International Labor Organization (ILO). It takes a dozen Chinese manufacturing workers to match one American. The ILO says real wages in Chinese manufacturing industries rose 80 percent from 1990 to 1999, or 8.9 percent a year. Roughly comparable figures for productivity show slower gains of 6.8 percent. That means Chinese unit labor costs are rising much faster than in the U.S. -- a trend that ultimately caused a loss of 15 percent of South Korean manufacturing jobs in the '90s (when U.S. manufacturers shed only 3 percent).

Unfortunately, it looks as though indefensible assertions about the alleged long-term disappearance of U.S. manufacturing are going to become a familiar political complaint over the coming year (as well as a promising source of special interest campaign funds). This rerun of the old "downsizing" story will again bore us with many more efforts by bumbling business writers and their slumbering editors to trump up some sort of "public agitation." If the rhetoric gets too annoying, ask the authors for a few facts. They just hate that.

©2003 Creators Syndicate

You mean that millions of jobs really didn't leave the country and unemployment is very low? Here they're saying unemployment is double digit --- a lot of companies closed so it seems it's that high.

Alan Reynolds is a senior fellow with the Cato Institute.

Frankly, the 'fellows' at the Cato Institute have never worked a day in their lives, and are the worst of the Ivory Tower shills for the vampires sucking the industrial life out of the country.

It would be interesting to see a financial breakdown on the principal donors to this organization. It might prove informative to see if their are explicit links to Chinese 'businessmen' and other agents-of-influence. Cato was NOTHING back in the 80's, when all the greatest victories were won. The Heritage Foundation, Hoover Foundation, and American Enterprise Institute were our key think-tanks which were the intellectual bulwark against the communists and their intellectual proxies. Unfortunately, it appears that Heritage has lost focus and is either drifting or has been partially co-opted.

Cato hit-pieces typically do stress a completely and irrationally distorted view of the world.

E.g., Some engineering associates of mine at Boeing are truly alarmed at the sucking sound they hear...not for themselves...but for the country's aerospace manufacturing capability. It is truly being devastated. The 767 retrofit as a airborne tanker to replace the KC-135's is, in fact, a subsidy, a emergency lifeline, to try and keep Boeing alive in the face of the subsidized AirBus competition. The engineers are frightened that even this will not be enough, and that Boeing management is throwing too much assembly to China. Training our next enemy. And throwing too much assembly to Japan...possibly our biggest commercial peer competitor.

The labor rolls at Boeing are collapsing down another 50,000 skilled laborers, and it is not yet being addressed as a truly national crisis. Studies done show that unless the U.S. government intervenes to stop the foreign-subsidy attacks, Boeing will likely cease domestic commercial aircraft production altogether in just ten years...with catastrophic effects on the U.S. industrial base. And it is likely a permanent reversal, due to the 'intellectual capital base' that is eroding...the very seed-corn of our technology, e.g.,:

At the same time, the study authors document a major decrease in the number of scientist and engineer positions in the U.S. aerospace industry, which plummeted by 800 per cent from 1970 to 2000. More cuts are anticipated, they say."

Interesting how Cato's rose-colored prognostications NEVER talk about the aerospace industry, isn't it? I honestly can't trust any of Cato's work product. Clearly agenda-driven, and from all signs...an enemy of the Republic.