

US Manufacturing Is Not Dead - mechanical_fish
http://www.fivethirtyeight.com/2010/02/us-manufacturing-is-not-dead.html

======
jerf
Secondary conclusion: As long as manufacturing productivity continues to
improve, increasing our manufacturing may lead to American prosperity, but it
won't save the economy, in that it won't produce jobs.

Long-term, I've actually not been concerned about American manufacturing for a
while now. Why is overseas manufacturing cheap? Primarily, cheap labor. When
does that cease to be an advantage? When labor is no longer a significant cost
in manufacturing. We're getting there pretty quickly, and IMHO robotics has
only recently (i.e., last two or three years) taken off, which should be able
to continue the increased-productivity-per-human trend for a while yet.

Bad time to become an assembly line worker. Good time to get into robotics for
manufacturing, probably.

I had a contract job in a tool & die facility a couple of years ago. It wasn't
a factory, it was a "build-to-order" facility that had a wide variety of
equipment in various places and they needed better tracking of their jobs and
such. I didn't mention this to anyone, but I was struck by how much work was
being done that could be automated in the near future. Tens of jobs dedicated
solely to moving things around, which robots are going to be able to take over
in the 5 year timeframe. Another tens of jobs that involve placing a metal
part _just so_ in a press and pushing two buttons (two so you have to use both
hands). QA can't be replaced with robots entirely, but it could be helped. The
bulk of the people on the floor were not doing things that required human
judgment, even for human-class vision or human-class pathfinding. The future
is basically now.

~~~
ugh
We get richer as labour gets more automated and cheaper. So it’s not a bad
thing. It shouldn’t be.

The big problem is that we don’t have work for bigger and bigger parts of the
population. They are poor not because society as a whole got poorer, they are
poor because they don’t have anything the labour market wants because it can
be had cheaper now.

I think it’s about time we recognize that. We have to make it possible for
everyone to live ok lives, even without having a job. We are rich enough. We
didn’t get any poorer as a whole. We should be able to afford that.

How to do that is anyone’s guess (I’m betting on some sort of ‘basic income’),
but it’s about time to start. We can’t think about work and earning money with
our 19th and 20th century goggles on.

~~~
jerf
We gotta be really careful about how we do it. Were I single and not willingly
in the scenario where I am going the extra mile to have and provide for a
family (that best-case scenario for society), I might very well decide to just
take your "basic income" and call it a day, but if society is going to have
that "basic income" it's only going to happen if people like you and me and
anybody else hanging around on HN don't rationally choose to take the option,
if given. (I hate to pander to the audience, but the HN community really is
set up around being a community of producers, so I'm not just trying to pander
here.) And _forcing_ me to work to provide for those others, the easiest
obvious answer, would be slavery, full stop. There's enormous moral hazard in
that idea. It also makes it very easy for a person born into a family who has
chosen that option to not be around any person who can teach them the culture
or the mental toolkit necessary to make the transition to producer, which
would make "being poor" a one-way ticket for a family, on average. (Arguably a
problem we already have in the inner cities, which in a way gets worse the
more comfortable the "basic income" becomes.)

Mind you, I don't disagree. As a futurist looking out across the next thirty
years I too see an increasing number of people who through essentially no
fault of their own will basically have no _marketable_ skills; they'll have
skills, just not marketable ones. Somehow we've got to deal with it. But it's
going to be _enormously_ tricky; all the easy answers are wrong. All the
politically acceptable answers both liberal and conservative are also wrong. I
don't have a clue what the right answer is, either.

~~~
ugh
You would take, say, $1200 (a very high estimate) and call it a day? You can
live, it doesn’t even have to be a bad life, but it’s not really all that
much. I doubt many would find that to be enough. I wouldn’t. And I’m not even
all that ambitious.

I think a basic income can create very strong incentives to make at least some
additional money compared to traditional social security. There is no need to
find a job that pays at least $1300 in order to make it worthwhile, for one
(you get to keep your basic income no matter how much you make – minus taxes,
so this is in a way not always true).

I would even think that something like a basic income is especially nice if
you want to become self-employed.

(There would be higher taxes, probably much higher in the US, a little higher
in Europe, but I – being one of those liberal Europeans – have no problem with
that.)

I’m still kind of on the fence when it comes to basic income, though. I think
finding the right way to do it (how to pay for it, how to organize it, what
kinds of social security systems to slim down or abolish, etc. etc.) would be
very hard indeed.

~~~
jerf
"You would take, say, $1200 (a very high estimate) and call it a day?"

$1200 what? You're missing a time element there. I assume "per month". I've
lived on less than that before, with some comfort, _and_ I was working, too!
If I get to assume health care (not unreasonable in the world we're
hypothesizing) _and_ don't forget that I'm not working and I'm not worrying
about working either, then yeah, that sounds like a pretty good deal for a
single guy with no family.

And by the time we kick this into gear, society may well be able to afford
more than that. We're not talking today's society (which already has
unsustainable levels of social obligation), we're talking a 20-30 year minimum
future society. Or at least I am, since I'm actually talking about the real
possibility, not a hypothetical parallel universe where it exists today.

~~~
ugh
Per month. (Health care was assumed. I’m from Germany, you are already insured
if you are unemployed. I don’t know any better.)

------
richcollins
_Secondly, there have been calls for a US industrial policy -- that is, for
Washington to essentially "pick winners and losers" by promoting some
industries that they feel have a high probability of success. Asian countries
have been doing this for years with remarkable success and it is a policy
which we clearly need to copy._

The market is pretty good at picking winners. Washington likes to take money
away from the winners and give it to the incumbent losers that bribe
lawmakers.

~~~
teeja
Winners like Goldman and Enron?

The government can help by protecting productive concerns from the thieves and
pirates. Those "winners" can go to hell.

~~~
jdminhbg
I'm not sure how you saw this sentence: "Washington likes to take money away
from the winners and give it to the incumbent losers that bribe lawmakers."
and thought that Goldman was an example of the former rather than the latter.

~~~
aaronwall
"and thought that Goldman was an example of the former"

Clearly you didn't see where the AIG bailout money went to at the time,
courtesy of then U.S. Treasury secretary Hank Paulson, former CEO of Goldman
Sachs.

------
_delirium
I'm not sure this actually refutes a relationship between offshoring and
manufacturing employment. It's possible it's _purely_ a result of automation
getting better, and would have happened identically with no major shifts of
trade. But given that the increase in offshoring makes labor-intensive
industries much cheaper to locate elsewhere, it's also possible that market
forces have accelerated the U.S.'s shift to less-labor-intensive industries.
That is, we haven't just automated existing industries as technology has
gotten better, but have actively stopped manufacturing certain things that are
hard to automate, even though there's still demand for them, because we can't
compete with cheap labor. We then put our resources into manufacturing easier-
to-automate things instead, which keeps total output high.

If you break down the _total_ manufacturing data and look at labor-intensive
sub-sectors, you don't see the same upward trend in output. US textile
manufacturing, for example, has totally collapsed, not just in employment but
also in output.

------
hga
In a nutshell, manufacturing != manufacturing employment and the trade deficit
just doesn't seem to be linked to the latter.

------
bokonist
The methodology used by the Industrial Production Index is extremely
problematic. Any index that uses Fisher price indexes introduces huge amounts
of subjectivity. For instance, the decision to use an "overlap method" rather
than a "direct comparison method" is subjective (
<http://en.wikipedia.org/wiki/Fisher_index> ). Choosing one method rather than
the other can dramatically alter the resulting index. The result is that the
index ends up replicating the assumptions and opinions of the index creators.

------
rw
Where are the corrections for population growth? I think the OP's claim might
be true, but their case is not watertight.

A quote: "The real issue is manufacturing employment, which is dropping like a
stone. And the reason for the drop is an increase in productivity." ...Really?
Maybe it's only _part_ of the reason? Macroeconomic phenomena are complex. 538
should be better than this! Give me nuanced analysis, with intellectually-
honest qualifiers.

------
randombit
It's worth considering that industrial index he cites includes some things
that most people might not consider manufacturing per-se, including
construction, mining, and utilities. According to
[http://www.federalreserve.gov/releases/g17/Current/default.h...](http://www.federalreserve.gov/releases/g17/Current/default.htm)
the only sectors in the index that have seen growth over 2% compared to 2002
levels are utilities (electric and gas) and business equipment (which seems to
consist of "industrial and other", "transit", and "information processing").
Unfortunately there is no breakdown among them.

------
mch929
Worthless without context. What I'd really like to see is the change in US
manufacturing as a percent of world manufacturing over time, and the
trajectory of US manufacturing in comparison to the level of manufacturing in
China.

~~~
MikeCapone
Krugman: "He was driven mad by Lester Thurow and Robert Reich in particular,
both of whom had written books touting a theory that he believed to be
nonsense: that America was competing in a global marketplace with other
countries in much the same way that corporations competed with one another. In
fact, Krugman argued, in a series of contemptuous articles in Foreign Affairs
and elsewhere, countries were not at all like corporations. While another
country’s success might injure our pride, it would not likely injure our
wallets. Quite the opposite: it would be more likely to provide us with a
bigger market for our products and send our consumers cheaper, better-made
goods to buy. A trade surplus might be a sign of weakness, a trade deficit a
sign of strength. And, anyway, a nation’s standard of living was determined
almost entirely by its productivity—trade was just not that important."

[http://www.newyorker.com/reporting/2010/03/01/100301fa_fact_...](http://www.newyorker.com/reporting/2010/03/01/100301fa_fact_macfarquhar?currentPage=all)

~~~
bokonist
Krugman is wrong. In many circumstances, countries are competing with each
other. For instance, imagine Kuwait produces oil, and Japan produces
automobiles. Kuwait trades oil to country America for automobiles. Now imagine
Japan enters the market and makes automobiles that are much better and cheaper
than America's. Kuwait will now start buying automobiles from Kuwait instead
of America. America will find the price of oil skyrocketing and it's standard
of living collapsing, unless it can produce automobiles that match the quality
and price of Japan's automobiles.

~~~
Darmani
No, America just winds up also buying much better and cheaper automobiles.

~~~
bokonist
No, because in my example America has no source of foreign exchange it cannot
buy autos from Japan, it has nothing to offer Japan in return (it's a
simplified example, but it shows an underlying dynamic that can and does
exist).

EDIT: to clarify, there are also examples where increased foreign industry
will benefit America. For instance, if Kuwait doubles its productivity, oil
imports to the U.S. will be much cheaper. But my point still stands that this
is not also the case. Increased productivity from other countries can be
positive or negative to America, depending on the specific situation.

~~~
chipsy
Right. To be a participant in a global marketplace means having specialties
you can trade on. This is why a common strategy of the emerging economies of
the world, past and present, is to heavily protect and subsidize infant
industries so that they aren't crushed by foreign competitors. As they
establish themselves, the barriers can be gradually lowered until the industry
is competitive on the open market.

Free-trade policies tend to be most beneficial to the market incumbents; but I
would note that even when a foreign company simply comes in and exploits cheap
labor, the workers will get better wages, and even if that doesn't directly
benefit their own lives, it can give their children a better lifestyle and
education.

------
patrickgzill
Ever notice it is the guys with indoors, non-science desk jobs who are always
pushing science, engineering, and manufacturing on your kids, but not theirs?

------
ww520
We need more engineers to be politician instead of lawyers. Engineers build
and lawyers redistribute.

------
scotty79
Is no Chinese! Is dang robots tha took'ar'jobs!

