
A mistake about manufacturing costing Americans millions of jobs - jweir
https://qz.com/1269172/the-epic-mistake-about-manufacturing-thats-cost-americans-millions-of-jobs
======
azernik
The article doesn't explain the quality adjustment problem well:

> The problem is, the processor released in 2017 is superior to that sold in
> 2016 in many tangible ways. But how do you account for the fact that a 2017
> processor provides users with more value? In general, statisticians assume
> the difference in value between the two models is just the difference in
> their prices. If, say, the 2017 processor costs twice as much as the 2016
> one does, then selling one 2017 processor counts as selling two of the 2016
> versions in the statisticians’ books.

This makes it sound like the problem is prices rising from year-to-year. The
real issue is that the comparison is made with the price of the 2016 processor
_in 2017_. See "methods of quality adjustment" in
[https://www.bls.gov/ppi/qualityadjustment.pdf](https://www.bls.gov/ppi/qualityadjustment.pdf)

So basically - let's say in 2016 a new CPU costs $200. Then in 2017 Intel
releases a new model, prices it also at $200, and sells the old model at $100.
The quality adjustment algorithm will see that _right now_ , the new one is
selling for twice as much as the old one, and assume that there's been a 2x
jump in value per item.

[EDIT: One way of thinking about this is: the method treats clearance prices
for last year's model as _deflation_ in this particular market, and adjusts
for it.]

~~~
whack
I was thinking about this as well, and it doesn't seem like an easy problem to
solve.

Subjectively, we know that the reason 2017 processors cost 2x as much as a
2016 processor, is because of improvements in process technology and
architectural design. There might be incremental improvements in the
manufacturing process, but not enough to say that _" manufacturing
capabilities have doubled compared to last year"_.

The obvious solution here would be to compare the price of a 2017 processor in
2017, to the price of a 2016 processor in 2016. But that would give hopelessly
cynical answers in other circumstances.

For instance, consider a factory for paperclips that produced 10M units in
2016, and due to various improvements, 20M units in 2017. The paperclips in
both years are mostly identical to one another. But for various market
reasons, the price of each paperclip has fallen by 50%. Possibly due to the
enlarged supply from factories all over the country doubling their production.

In such a situation, if you rated the factory's output using the alternative
metric suggested above, you would think that the factory hasn't made any
improvements at all in the last year. When in reality, it has doubled its
production capabilities and efficiency.

There just doesn't seem to be a purely quantitative to compare the
manufacturing capabilities of factories that produce qualitatively different
products year over year. This seems to make moot any single metric that rates
aggregative manufacturing capabilities across multiple years.

------
jackcosgrove
The fact that rapid productivity increases due to the computer industry began
in the late 1970s is a flashing red light to me.

The late 1970s is when productivity and wages began to diverge. Much ink has
been spilled about this, as it corresponded with the emergence of neoliberal
economics by Reagan and Thatcher.

Maybe wages and productivity began to diverge not because labor was capturing
less value due to political developments, but because we have been
overestimating the productivity of industry in aggregate due to the rapid
productivity growth in one sector, computers, skewing the aggregate.

It seems like a statistical misattribution of this scale could be applied to
many other phenomena.

~~~
mc32
It's a bit surprising that statisticians and others who study the economy
would miss this nuance. If Piper Jaffrey and others can pour into Apple's
suppliers to divine whether Apple will meets iPhone shipment expectations, one
would think professional economists would peer similarly into the nuts and
bolts of the industries they profess to know about.

There was a time the US had an interest in the getting the rest of the work to
"Globalize" to stem the Soviet tide. We won, it's over, but the American
worker is still getting shafted by the industrialists who loved cheap
outsourced labor. Clinton, Bush and Obama either were completely complicit in
this or lacked the wherewithal to fight it.

Maybe Kanye along with others can get Americans reluctant to side with current
American policies to see the advantages to bringing things back state side
--or at least stemming the hemorrhage.

It's not like China or Mexico or anyone else thinks "Oh, those poor Americans
who get laid off, who will think of them". Nope, everyone is out for
themselves --despite what Globalists say.

~~~
simonh
The problem for Clinton, Bush and Obama is that if you put up protectionist
firewalls against cheaper goods from foreign counties with cheaper labour two
things happen. Firstly yes you stimulate employment in local manufacturing,
but by definition all of the consumers buying those locally made goods are
paying more for them.

You might have a million more manufacturing jobs, but hundreds of millions of
people are paying through the nose for it. Meanwhile you may not actually make
any significant difference to overall employment. Most of those million people
now in manufacturing will have moved from jobs in other sectors, increasing
costs in those sectors too. Meanwhile none of this does anything for America’s
exports, because foreigners can still buy the same goods from your cheaper
foreign competitors. In fact it can hurt exports if the goods you’re
manufacturing are inputs to existing American exporters. Take steel, if
American car exporters now have to buy more expensive locally made steel, the
price of their cars goes up hurting car exports as well as shafting American
car buyers.

~~~
dcow
The massive elephant sitting in the corner is that it's more expensive to pay
for American workers because we have laws and regulations that protect them
and ensure they have a decent quality of life. So now it becomes an ethical
problem and we all know what to do when we encounter a difficult one of those:
shift liability to a corporate entity and chalk up the negative ethical
aspects as economics. ( _I 'm_ not the one exploiting foreign labor, that's
mega corp.)

The greatest feature of globalization is that it distances consumers from the
source of the goods they consume. This might be "good" for the consumers in
the short term, but it's absolutely not good for their s/economy/quality of
life/ in the long run.

What's the effect of instant gratification global capitalism? The American
economy now has to compete with the foreign economy. If workers in the foreign
country experience a lower quality of life in order to sustain American
consumers, then the American worker gets shafted because they have to lower
their quality of life to compete. If they won't or can't (because we consider
those conditions too inhumane for our own workers) then they have to find new
work.

Globalism is the great equalizer.

EDIT: I'm not necessarily saying this is bad for the world (except that human
rights and quality of life regress to the mean), and one can also argue that
the freed up resources might be put to more.. sophisticated.. uses. I don't
know...

I'm responding to the parent: the only way globalizing an economy is good for
a strong country (one sitting above the mean) is if you define good in a
strictly economic sense like "lowest prices for the consumer" (which is the
premise of the parent's argument). It's easy for an economist to do that in
isolation because that's the name of the game. A government, however, is not
tasked with driving down prices for consumers (that's a market's job) but
rather is responsible for roughly maintaining quality of life for its citizens
and with protecting its workers, among many other things. Allowing the economy
to run unchecked at a global scale essentially equates to selling out the
workers. It's not just about who's consumers get the lowest price at the end
of the day.

~~~
burfog
Yes, as long as you take "protect them and ensure they have a decent quality
of life" to not include employment!

We're telling grown adults what they can't do, supposedly for their own good.

That quote from C. S. Lewis applies:

“Of all tyrannies, a tyranny sincerely exercised for the good of its victims
may be the most oppressive. It would be better to live under robber barons
than under omnipotent moral busybodies. The robber baron's cruelty may
sometimes sleep, his cupidity may at some point be satiated; but those who
torment us for our own good will torment us without end for they do so with
the approval of their own conscience.”

~~~
dcow
So we should let grown adults bypass our own ethical frameworks for minimum
wage and worker protection and allow them to exploit foreign labor markets at
the expense of local workers just because they're grown adults? Excuse me if I
don't find that very compelling.

Look I generally agree with your C.S. Lewis quote, seriously.

But if it's tyrannical to maintain a baseline for workers, then we should
abolish minimum wage and all worker protection laws and just let the adults go
at it (I'm sure they'll eventually tap in cheap children too). Point being
we've already agreed that workers need protection so you're arguing against
the status quo (and calling it a tyranny nonetheless).

~~~
jstanley
Workers are not exploited. If they have a better option they'll take it. If
they don't have a better option, then you're not exploiting them, you're
offering the best option available to them.

> we should abolish minimum wage

Certainly.

> we've already agreed that workers need protection

Actually, not all of us have agreed that.

> you're arguing against the status quo (and calling it a tyranny nonetheless)

Just because something is the way things are doesn't make it not a tyranny.

~~~
jgh
> Workers are not exploited. If they have a better option they'll take it

You're arguing against things that workers put in place themselves a century
or more ago. 8 Hour workdays. Weekends. No child labour. Minimum wage. Workers
have already fought these battles, are you suggesting we should go back to
square one and do it over again for the hell of it?

------
forapurpose
Does anyone know anything about the institute that produced this report, the
Upjohn Institute? I've never heard of them, which doesn't man a lot but it
means something.

[https://www.upjohn.org/](https://www.upjohn.org/)

Also, does anyone know anything about Houseman, the (principle?) researcher?

IME, there are many small organizations that produce reports to grind some
small axe. It doesn't mean Upjohn is one of them, but it's important to know
who you are listening to.

EDIT: It looks like a local research organization located in Kalamazoo,
Michigan. They say they date back to the Great Depression. The Board of
Trustees often gives a good introductory picture of an organization; in this
case, I see a mix of academic and business leaders local to Kalamazoo:

[https://www.upjohn.org/about-us/board-of-
trustees](https://www.upjohn.org/about-us/board-of-trustees)

Also, you can find Houseman's and other researcher's official bios here. They
look like real economists, fwiw:

[https://www.upjohn.org/about-us/research-staff](https://www.upjohn.org/about-
us/research-staff)

(Ironically, many in this discussion are citing research by economists to
claim that economists are unreliable.)

~~~
phonon
The W. E. Upjohn Institute for Employment Research has been around since 1932
[1]. They have a staff of around 100 employees[1], and assets of over 192
million dollars[2].

Susan Houseman has a very distinguished CV[3], and you can read her full paper
and presentation here.[4][5]

Here is a video of her speaking on the topic.[6]

[1][https://en.wikipedia.org/wiki/W._E._Upjohn_Institute_for_Emp...](https://en.wikipedia.org/wiki/W._E._Upjohn_Institute_for_Employment_Research)

[2][http://www.upjohn.org/sites/default/files/pdf/Upjohn-
Institu...](http://www.upjohn.org/sites/default/files/pdf/Upjohn-Institute-
Financial-Report-2016-Final.pdf)

[3][https://www.upjohn.org/sites/default/files/housemancurrentcv...](https://www.upjohn.org/sites/default/files/housemancurrentcv_Jan2018.pdf)

[4][http://research.upjohn.org/cgi/viewcontent.cgi?article=1268&...](http://research.upjohn.org/cgi/viewcontent.cgi?article=1268&context=empl_research)

[5][http://research.upjohn.org/cgi/viewcontent.cgi?article=1054&...](http://research.upjohn.org/cgi/viewcontent.cgi?article=1054&context=presentations)

[6][https://www.c-span.org/video/?439645-1/manufacturing-
jobs](https://www.c-span.org/video/?439645-1/manufacturing-jobs)

------
manofstick
Another economic number I ponder over is inflation, and the economists method
of revaluation of goods called the hedonic quality adjustment [1].

If you follow the example on the link provided, they show how upgrading an old
tv that cost $250 to a new one that cost $1250 actually was had a negative
inflation effect due to the extra features that the new TV had.

From one perspective I can understand their point, but when the "new normal"
of tv ownership basically demanded those features, so they weren't really
extra benefits for the end user in the long run (and then became standard
features where the prices did plummet back to the original $250, one again
reading down the inflation figures).

Look if like to think that economist are smarter than that, but given the
original article...

[1] [https://www.bls.gov/cpi/quality-adjustment/questions-and-
ans...](https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm)

~~~
SilasX
There's an epically bad version of that error that I keep re-linking because
it was such a central economic policy maker and such a clear version of the
error[1]: essentially, yeah, food is more expensive, but iPads are faster, so
it cancels out.

Even if you accept the core logic, they went about it in an absurdly naive
way: a 50% faster chip does not make the iPad 50% better; very little of that
went to relieve a true bottleneck and so doesn't translate into observably
higher usefulness. Now, if iPads were _so much better_ that they actually
freed up owners from significant household tasks that actually translated into
e.g. greater free time or ease of earning, _that_ would make sense. But the
chip simply being faster isn't good enough.

Incidentally, do they ever readjust inflation _upward_ when products get
worse? Like, when packaging is flimsier or paper cups harder to grip? Somehow
I doubt it.

[1] [https://www.reuters.com/article/us-usa-fed-dudley-ipad-
idUST...](https://www.reuters.com/article/us-usa-fed-dudley-ipad-
idUSTRE72A4D520110311)

~~~
ThrustVectoring
Or more relevantly, when ecological standards make household products worse.
Removing phosphates from detergents, low-flow showerheads that are less
relaxing, low-flow toilets that clog more often, high efficiency washers that
break down more often, etc.

------
organicmultiloc
There is some deep history here that has been barely reported on at all by any
journalist, anywhere. It happened in many industries, in many political
groups.

Rumsfeld et al started this bigtime in the 80s, selling and giving tech and IP
to several asian countries for diplomatic favors. We were not consulted as to
why at the time, just forced to make ourselves highly available for several
Chinese government partners that were very interested in some of our advances,
particularly in networking and manufacturing.

This song and dance apparently accelerated in the G W years, but by then all
half our company had shut down and I had abandoned tech for the second time.

~~~
forapurpose
The assumption behind the parent is economic nationalism, which is a false
model of economics. Economic development in other countries benefits the U.S.
greatly; economics and trade are not zero-sum, but mutually beneficial. Would
you rather sell (and buy) goods in a town of poor people, or in a town of
wealthy ones? Would the U.S. rather sell and buy goods in a world of other
wealthy countries, or in a world of poor ones? If China didn't develop
economically, it wouldn't be huge market for U.S. goods today, and wouldn't
produce so much that the U.S. needs.

Nationalism also ignores two fundamental moral issues: First, it is an
unequivocal moral good for people rise out of extreme poverty, as has happened
in China (and elsewhere). Second, there is no moral difference between the
welfare of a human being in China and one in the U.S. or any other country;
there is no reason the American deserves to be more wealthy. Everyone should
have opportunity and a fair shot to earn what they can; if you don't make
more, should you get special welfare because of your nationality?

~~~
joejerryronnie
This is all well and good in the global altruistic humanist sense, but if I
just lost my job in Indiana because the company shuttered our plant and
outsourced manufacturing to China, I'm voting for Trump. As they say, "All
politics is local".

~~~
nicoburns
Of course ironically it has been the US pushing globalism and free trade on
the rest of the world (with similar impacts on industries elsewhere it seems).

~~~
forapurpose
> the US pushing globalism and free trade on the rest of the world

No, the rest of the world has been pushing it too, with exceptional results,
and still follows that path with the U.S. being the odd country out.

If this one study is correct, it only reflects on one aspect of a much larger
issue. Trade has brought immense benefits to the world, lifting billions out
of abject poverty; whatever it's drawbacks and imperfections, it's very hard
to say it's anything but the greatest economic success in human history.
Globalism is built on the foundation of universal human rights, probably the
most important factor in the overall welfare of humans. If the people who
happen to be on the other side of an arbitrary, invisible line don't have
rights, then neither do you.

~~~
dcow
So economic prosperity is equivalent to universal human rights? If we raise
the world's average income by enslaving the bottom 5% of the population in a
sovereignty that does not defend human rights am I supposed to look the other
way? Sorry if this is hyperbole but I think you get my point.

~~~
forapurpose
Certain economic needs - food, shelter, health care, education, etc. - are
human rights.

I'm not sure what else you are referring to. Who said it's ok to enslave
people? Or that the economic rights were the only ones that mattered?

> am I supposed to look the other way?

Absolutely not; it's wrong to look the other way. I shouldn't either.

~~~
dcow
Perhaps you _are_ missing my point. Your argument is that globalization is
universally good for the world because it equalizes global economy. I am
suggesting that's only true if the world also shares the same understanding of
fundamental human rights. If we equalize global economy by trading with or
including a country that does not treat workers humanely, how do we resolve
that?

~~~
forapurpose
> If we equalize global economy by trading with or including a country that
> does not treat workers humanely, how do we resolve that?

I agree that's a very important question.

First I think we need to stop talking in absolutes. I'm not saying
globalization is "universally" good; I'm saying there are great benefits;
there are also real problems, including the one you point out. Nothing in the
world is perfect; if we only move forward on things when they are perfect, we
live in caves - which are pretty imperfect themselves. The question is not
perfection but how can we do better?

Post-WWII globalization has created the greatest benefit to common people in
the history of humanity. After thousands of years, hundreds of millions of
people in China have been lifted from desperate poverty to 'middle-class'[0]
prosperity. The same has been repeated in India, Brazil, South Korea, and many
other places in the world. People in the West also are immensely wealthier,
live longer (and have more freedom). Also, specific to the question you
raised, human rights have spread at a rate also unprecedented in the history
of humanity; look at the explosion of democracies and of liberty. While there
are problems, the benefits are overwhelming IMHO.

There also is a moral component: People generally believe in freedom, and
economic freedom, to trade with whom you like without government stopping you,
is an important one.

But I do take the problems seriously:

* Impact on individuals: This is the fundamental problem, IMHO: Capital can move much faster than individuals; a factory can move to another country much faster than the workers can find new, equivalent jobs - for most, moving to another country is practically impossible - especially if half the town is now unemployed. Therefore, trade provides a _net_ benefit, but the impact on individuals is disparate to a great degree. We need to protect those individuals, by giving them time to adjust (require a warning or continuing salary for X time, perhaps based on the impact on the local job market), by compensating them for the change (taxing the benefits of moving capital and giving some back to the people making the biggest sacrifice), and by means of the latter taxes, also raise the cost of such changes to the point where it's economically viable not just for the company and future employees, but for those left behind.

* Human rights: To not trade - to lock billions into extreme poverty (often defined as less than $1/day), starving, with no education, medical care, etc. - seems the opposite of concern for human rights. Money is essential to "life ... and the pursuit of happiness". As for liberty, there's long been the theory, often born out, that when a middle class grows in a country, they demand political rights. That's been true in many countries, including parts of China (Taiwan and Hong Kong), S. Korea, Brazil, Chile, etc. But to rely on it just happening is insufficient; we need to do more, including writing human rights into our agreements, leading on the issue (which the current US administration has abandoned), and pressuring others into expanding them.

* Labor practices: I think these need to be written into trade agreements, though I don't know what's already been done - I think it's widely assumed to be nothing, but I've never read anything by someone who actually knows what's in the agreements. However, it's a false assumption that labor costs are the prime cause of manufacturing moving, based on at least some economists I've read. Manufacturing was big in mid-20th century West and has been declining since; Americans now have much better paying, safer, more comfortable jobs than working in factories. That's a good thing; we need to do much better, but not by going backwards. Manufacturing is often done in China because that's where the expertise and other resources are concentrated (from infrastructure to bankers to talent to suppliers etc.), the same reason SV is home to the IT industry.

[0] I won't bother to define it here; I hope you get my point.

~~~
dcow
Thank you for the dialog. So I think it's fair to say we have not properly
addressed the local fallout of globalism in the US (by doing any of the things
you suggest) which is likely in part why we're seeing a call for protectionist
stances on international trade, and very possibly the reason Trump is sitting
in office.

Similar to you, I'd be curious what people are doing to underwrite human
rights via trade deals so we globally don't regress to the mean, but that's a
topic for another time. If underwriting human rights became expensive or a
requirement in certain states in theory it impacts the free market...

~~~
forapurpose
On a slight tangent: Human rights create wealth too, a very happy fact of
life. Free, politically secure people, who feel they control their destiny
are, not too surprisingly, the most productive. All the most productive,
wealthiest nations are free.

One thing you say that I don't quite agree with:

> very possibly the reason Trump is sitting in office

Think of all the ways the theory doesn't apply: Most voters making less than
$50K chose Clinton[0]; minority voters, who also lost jobs and who have higher
unemployment than white voters, overwhelming chose Clinton; Trump's and the
GOP's policies overwhelmingly favor the wealthy and big business, including
cutting health care and other government services to the working class, and
shifting relatively more of the tax burden onto them.

To the extent working class white voters supported Trump, they did so against
economic self-interest. But that's long been true of many such voters;
remember the book 'What's the matter with Kansas?' (or whatever it was called
- a f*ng obnoxious, ignorant, arrogant title that reveals the problem with
Dems: 'customers aren't buying our product, what's the matter with them?').
The question is, why?

[0] Based on a HN comment that cited some stats; I didn't check them myself,
so take with salt. But I remember reading similar research after the election.

------
burkemw3
I didn't expect there was much electronics manufacturing in the US at all, let
alone it has been driving manufacturing "growth". I honestly expected a solid
chunk of design happened in the US, then the fab happened elsewhere. This
article got me to do a bit more reading (yay!). So, I'm sharing a bit of that,
as a starting point for anyone else that wants to dig in more.

This commerce.gov report [0] taught me a few pieces of the puzzle. I
especially like the graphics on pages 5 and 7, showing major semiconductor
manufacturing and lots of output from Cali, Oregon, and Texas.

This wiki page [1] shows lists semiconductor fab plants. The ones I recognize
(as my own proxy for size) are Intel, TI, Broadcom, Seagate, former Fairchild,
and NXP/Freescale.

[0]:
[https://www.commerce.gov/sites/commerce.gov/files/migrated/r...](https://www.commerce.gov/sites/commerce.gov/files/migrated/reports/made-
in-america-computer-and-electronic-products.pdf) [1]:
[https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat...](https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants)

~~~
amluto
Sometimes I wonder how well attribution of added value works. If a US plant
imports a laptop, a laptop manual, and a box, puts them all together to make a
laptop in a box, and sells the laptop to Best Buy for 20% more than what it
cost them to get the pieces manufactured abroad, did they really just
manufacture 20% of the wholesale price of a laptop? If so, their productivity
is high, but it has nothing to do with automation.

~~~
starky
This is one area of manufacturing that I am sorely lacking on knowledge in.
However, isn't value added calculated on the COGS? That is, they take all the
inputs, and then add labour, raw materials, property, etc. to get the total
cost?

~~~
amluto
I’m not sure. I do suspect that a naive calculation of COGS gives essentially
arbitrary results. Consider a hypothetical phone assembled in the USA. Maybe
COGS is quite low. Then the maker shifts profits to Ireland by selling its IP
to an Irish subsidiary and licensing it back at ruinous rates. Did COGS go up?

For factory productivity numbers, I assume that labor is not subtracted from
value. If one person at $50/hr builds $51/hr of widgets completely from
scratch, their productivity is $51/hr, not $1/hr.

------
confounded
While I very much enjoyed the narrative of plucky Houseman and her cross-
tabulation-of-truth battling against elites, smug in their complacent
certainty, I’m also skeptical of it.

I spent most of this century in the UK, and the narrative there was always
that these jobs have gone away, they are not coming back, that’s why things
say ‘Made in China’ on them. This seemed to be the conclusion of other EU
countries too. Germany was very deliberate in its approach to manufacturing
for export.

I find it very hard to believe that the US alone could come to a radically
different conclusion than the rest of the world about the largest economic
trend of recent times, because no-one had examined numbers.

The surprising thing is that as a politician you can say what you like, and
journalists have neither the ability or interest to examine it before
spreading. This seems to be what happened with the automation narrative.

~~~
jedberg
> I spent most of this century in the UK

As a side note, I love this phrasing. I mean, it's only 17 or 18 years
depending on how accurate you are with when a century starts, but it just
_sounds_ so long.

I'm going to start saying that I've lived in the Bay Area since before the
turn of the century, because it sounds cool.

~~~
foota
Why stop there? It was also the beginning of the new millenia.

~~~
jedberg
Yeah but "since the turn of the century" is a much more common phrase than
"since the turn of the millennia".

------
tzs
> By 2016, real manufacturing output, sans computers, was lower than it was in
> 2007

Maybe I just overlooked it, but I didn't see any mention of the big recession
that happened on the 2007 end of that interval. A lot of industries that were
hit hard in that took a very long time to recover (some still have not).

Because of that, articles that do comparisons from 2007 or thereabouts
probably should include a short note explaining when whatever they are looking
at recovered from that recession.

------
ChuckMcM
This is a pretty interesting article. It reminds me yet again that
understanding how the data is collected and interpreted is as important, if
not more important, than the data since the post processed data can drive
invalid conclusions.

Similar economic metrics that have undergone fairly large changes for both
practical and political reasons are the unemployment rate and the cost of
living.

In all of these cases if you can get the core data and the methodology (as Dr.
Houseman did) and it is yet another reason to make _all_ of the data available
rather than just to governors on the Federal Reserve board.

------
kelnos
If we work hard to bring all these manufacturing jobs back, won't this just
increase the cost of goods by a great deal, and make people upset because of
that? Sure, shipping goods from overseas isn't free, but it still seems like
US workers will not accept wages that will keep prices as low as they are now.
And I don't blame them; I imagine the salary of your average factory worker in
a developing country wouldn't get you very far even in areas in the US with a
pretty low cost of living.

Then again, I guess it's better to have a job but be unable to afford the the
latest and greatest toys, than it is to just not have a job at all.

~~~
dizzystar
I"m not really sure. I'm not an expert on all of this, but I've sourced from
the US and China, so this is my take.

The problem is that we (the public and various business owners) are still
living under the assumption that it's the year 2000, when you could land from
China for $3 and sell something for $30. This isn't true in the "New China,"
where wages are catching up to the US. That $20 item you are buying on eBay
has a COL of $15.

There are three major issues:

1- China has a TON of engineers. This isn't so true in the US. This means that
China can get from spec to market in short order. In the US, spec to market is
much slower.

2- Supply chain. In China, the manufacturer, design team, broker, sales,
printer, and so on are all in one building.

The US supply chain is incredibly convoluted, featuring 5 layers of people
who's sole job is to prevent the buyer from contacting the factory directly.

3- China still has an unfair advantage. When you buy a product, a large chunk
of that cost is shipping ("free shipping" is up to $7 that you don't see).

This is doubly bad for the supplier, as they have to work out the shipping
price for China -> US and US -> customer.

Ever heard of e-packets? It's actually cheaper to use USPS ship from China ->
customer than it is to ship a package US -> customer, even if the customer
lives across the street.

In short, China has some inherent advantages, but the US also does many things
that give China an unfair advantage. Last but not least, the US supply chain
is a complex web of back-patting that does little more than destroy itself.

There are plenty of options for cheap US manufacturing, it's just that there
is no scale for that, and there are many other small issues. The US has to do
much more work than open up a new factory down the street. If we are talking
about raw per piece production, the US often does it cheaper than China. It's
all the other things that raise the price.

~~~
losteric
> The US supply chain is incredibly convoluted, featuring 5 layers of people
> who's sole job is to prevent the buyer from contacting the factory directly.

Can you expand on this? Who/what would prevent me from directly working with
factories?

~~~
dizzystar
Well, you are dealing with a lot of partners.

Let's say you want to create a unique mug for your company. In general, you
can do this pretty easy by calling a promotional products distributor (you
can't contact the supplier directly), but you are bull-headed and want to do
it yourself.

You decide you want to buy something USA-made. Well, you contact the factory
and you get yelled at for not calling their broker. (I contacted an unnamed
factory in Texas and they were demanding all names and numbers, implying heads
are rolling).

You call the broker. You contact the broker and she tells you that you can't
really order from her, and you have the option of contacting a printer in
Chicago.

You contact the printer in Chicago and now they are upset because you aren't
ever supposed to call that factory, never mind you have a retailer license.

Okay, well... you call their broker, and well, yeah, they can do that, but you
have to use their preferred artist located in NYC.

Got everything wrapped up now? Nah... you have to find someone to do the mold,
and no, the factory doesn't deal with that. You contact someone in Colorado
and you get quoted $15,000 for an injection mold.

So you go back to the broker who is... well, you don't really know who to
contact, but it turns out that the Chicago printer isn't tooled to do anything
but the shapes they are getting from Texas (you don't learn of this for 2
weeks because that broker is too tied up with other things). You call up Texas
broker and she says "yeah, we do custom molds, but you still have to use our
preferred network."

You ask if they can do orange and they say no, they only do red, black, and
blue. Sorry.

You say to hell with it, call China who can do all of this in one phone call.
You figure the cost is about the same (though the mold is only $5,000) and can
get an sample in 2 weeks. They also offer to send you 15 different colors
because they can.

I guess that doesn't explain why this happens. The reason is that there are a
lot of "policing societies" that factories, suppliers, brokers, and
distributors pay good money in order to keep the supply chain in check. There
is no dirtier word than "double dipping," which means you are acting as
supplier and distributor. Once you do that, you end up losing your society
membership and you are basically toast.

There is a bit of inflection point these days. Suppliers / manufacturers are
starting to sell direct. The distributors don't really like that the supplier
/ distributor relationship is breaking down, but it is slowly happening in
some segments.

In sum, there really isn't a such thing as a "middle man." There is a whole
party of people involved in everything that you buy. It's just a matter of how
deep the rabbit hole goes. China smartly chose to streamline the process.

~~~
losteric
Damn, thanks for the overview - I didn't realize manufacturing in America was
so ridiculously convoluted. Do you know if there are regulations protecting
those "partners", or is this just the established norm for doing business?

~~~
dizzystar
It's kind of like a membership to a club. You can see some of the symbols on
various websites.

People and companies pay to be a member of these clubs. Basically, it's saying
that no one is going to step on each other's toes. Not being a member would
make things hard for you to do business.

This obviously isn't universal to all industries. As far as I know there are
no written legal codes, so it's basically an example of self-policing a la
libertarianism, where you pay to play and follow the rules.

------
losvedir
I want to like the article, but the lack of units on the axes are killing me!
With the automation one... what's that mean? 300 what? 300 robots? And
similarly with jobs declining and such. Some of them describe what's going on
in the title, but a lot are sort of handwavy. I'm sure there's real data under
it, but it's not presented very well.

~~~
lopmotr
For some reason, Jounalists, no matter how techincal the thing they're writing
about, uniformly forget the basic graph-drawing rules their math and science
teachers made them follow when they were 13. It might have seemed like
pointless pedantry to their child selves, but then they get it wrong and their
graph becomes an empty emotional gimmick instead of actually informative.

~~~
Gigablah
To be fair, that might not necessarily be the fault of the journalist. Could
be some hapless intern told to conjure up graphics within a few hours.

------
tzs
> There are also observable signs that automation wasn’t to blame. Consider
> the shuttering of some 78,000 manufacturing plants between 2000 and 2014, a
> 22% drop. This is odd given that robots, like humans, have to work
> somewhere.

We need more information to tell if that is odd. Yes, robots, like humans,
have to work somewhere--but robots, unlike humans, don't care _where_ that
somewhere is.

Plants using mostly human labor face more size constraints, I'd expect, than
do plants using mostly robot labor. Adding more humans to a plant means you
need more housing in the nearby communities, more traffic capacity, bigger
schools, and so on. There are limits on how fast communities can add those
things, so you can end up having to have several plants in different
communities.

With a mostly robotic plant, your growth constraints are land, energy
infrastructure, and transportation infrastructure to bring in raw materials
and ship your output.

I'd expect, then, that a company using mostly robot plants would move to have
a smaller number of larger plants for a given level of output than would a
company using mostly human plants.

~~~
touristtam
You are forgetting financial burden (short vs long term) and technological
investment. It kind of reminds me of the state of Chrysler vs Toyota in the
90s.

------
Spooky23
This is why people don’t trust institutions, and is why we shouldn’t treat
economics as science. Smells like willful ignorance to me.

The brain dead obviousness of these shocking new revelations have been
apparent to most people for decades — I wrote a paper about it in high school
in 1992. I live upstate NY, once an economic powerhouse, now an empty shell.
Every sector is dead, from farming to traditional industry.

It was pretty obvious 25 years ago what was happening, and pretty obvious now.
Work went to Mexico. That includes the machinery and tooling. Ten years later,
it went to China. Automation is a thing, but the jobs left years ago and the
upside of automation like mechanical engineering and tools are all being
realized in China.

~~~
api
"This is why people don't trust institutions."

Too bad there's no HN gold. :)

While its possible there is something to it, even if there is it irritates me
to see so many people harp on Cambridge Analytica and Russia and such for why
Trump won. Trump won because he was the only one who really ran on the
collapse of the interior as an issue. I am not convinced Russian trolls or CA
had much to do with it. At the very least I think without the rust belt he
would have lost badly.

~~~
TulliusCicero
Stats show Trump won more based on culture than economics; Clinton won handily
with low income voters.

~~~
purple-again
This statement is not supported by the facts.

[https://ropercenter.cornell.edu/polls/us-elections/how-
group...](https://ropercenter.cornell.edu/polls/us-elections/how-groups-
voted/groups-voted-2016/)

~~~
Avshalom
Hillary A) won the popular vote B) won voters who considered economics an
important issue C) won voters making less than 50000.

... what do you think your link says?

------
xt00
Great article. Interesting that simply pulling the contribution of the
computer sector out of the numbers makes things look terrible for American
manufacturing. Currently China is working hard on being more relevant in the
semiconductor sector and likely they will succeed. So be prepared for a long
term trade war with China is my thinking.. but ultimately automation will
become a bigger thing in China and then their employment will also stagnate,
so will be interesting to see how they deal with finding enough jobs for
everybody as well..

~~~
crdoconnor
Automation was never really a macro-level job killing force anywhere. It both
created and destroyed jobs.

It was mainly a useful scapegoat. The reality was that highly automated
factories were more visible (because they were the ones that _didn 't_ close
and move abroad) and there was no shortage of anecdotes about jobs eliminated.

If you're trying to protect profitable trade deals and austerian government
budgets, a scapegoat is necessary.

The most automated profession in the US has suffered no macro level
disemployment effects: [https://qz.com/962427/what-its-like-to-be-a-modern-
engraver-...](https://qz.com/962427/what-its-like-to-be-a-modern-engraver-the-
most-automated-job-in-the-united-states/)

~~~
maxerickson
People not going into the field (because someone else is working 5x faster)
sure seems like a macro effect.

Or are you explicitly dismissing jobs that are never created?

~~~
crdoconnor
I'm saying that when 90% of all jobs were in farming and those jobs were
automated it didn't mean 90% unemployment. New kinds of job appeared to employ
those people who would have gone to work in the fields.

The whole "oh but this time it's different because AI" argument is a load of
bullshit. The disemployment effect is actually about 10x milder than it was
when we came in off the fields and new kinds of job are created all the time.

~~~
maxerickson
Laborers left farms for better jobs in factories. They weren't pushed out.

~~~
crdoconnor
Small landholders were pushed out by the enclosure movement.

------
awat
The efficiency quandry is really interesting to me. It makes me wonder if
there is a practical limit to the utility of pure efficiency for a society?
Obviously there are huge upsides to efficiency in resource usage etc. but it
seems to harm portions of society at a certain point.

~~~
notabee
What you're left with is social inefficiencies instead of material or process
inefficiencies. It's like trying to fix bad management at a company through
engineering fixes: it just doesn't work. You have to solve the human problem.
Also, the world is limited: you can't balloon out resource usage indefinitely
to appease bad societal patterns. Eventually external factors will intervene
such as resource exhaustion, ecosystem collapse, climate change, etc.

------
evrydayhustling
I disagree that automation was the main opposition narrative about why
manufacturing jobs were declining. The dominant line among folks I knew was
that Americans didn't want to put up with the lifestyle offered by, say,
Foxconn China (which produced a suicides alongside iPhones). That's consistent
with "losing jobs to foreign competition", but hardly and argument for moving
that capacity back to the States.

Note: I personally think there is amazing innovation around production
happening elsewhere in the world, besides low wages. That's something I would
like to see happening more in the USA. But I doubt it is as significant as
cheap labor in moving manufacturing abroad.

------
OrganicMSG
Did anyone sensible think automation was largely responsible for the job loss
in the richer countries? Manufacturing has chased cheap wages globally since
the 1960's.

I always thought the widely accepted narrative was that automation might bring
some bulk manufacturing back to richer countries when it starts to compete
with the cost of a skilled worker in a lower wage economy, after a decades
long policy of outsourcing manufacturing chains, not that richer countries
somehow automated away all the jobs at home.

------
jerkstate
Stripping out computer manufacturing is an interesting take, but the rise of
import of intermediate (partially completed) goods is another major cause of
the decline of manufacturing in the US. Labor, energy, and environmentally
intensive partially completed goods are often manufactured elsewhere now, we
do final assembly here and add the output value to our "manufacturing output"
so that line goes up even though we're doing a lot less of the work here.

------
andrewjl
The US needs a serious industrial policy to counter this. Couple of ideas:

\- A venture fund, similar to In-Q-Tel, focused on investing in cutting edge
manufacturing tech startups. It'll make sense to focus on defense applications
initially, but many of those techniques do get carried over into private
enterprise.

\- Increased grants for fundamental research, and tax write offs for
corporates who expand R&D facilities adjacent to production facilities in the
country.

\- Inevitably any company doing manufacturing today will experience labor
shortages, most experienced staff are now retired. A federal program to re-
train displaced workers to become technicians servicing the robots doing the
assembly, monitoring quality, and doing basic troubleshooting work onsite.

\- Tax writeoffs for companies who provide training for front-line employees
to move into design and engineering roles.

EDIT: Old time manufacturing jobs are gone and not coming back, however they
are loads of opportunities in other areas of manufacturing that will generate
much more value per employee and hence will pay better. Giving companies
incentives to create these jobs, and providing a pathway for individuals with
minimal training to attain the skills necessary to do them will solve the
problem over time. Of course, it's all in the details.

------
MrBuddyCasino
Its really hard to understand. I mean the newspapers were full of outsourcing
stories, and how China was the world's sweatshop. The factories are there,
they produce stuff, they employ massive amounts of people, manufacturing
things that used to be manufactured in the west.

NNT was right, again.

~~~
forapurpose
> manufacturing things that used to be manufactured in the west

That's not how economies and economics work. It's not zero-sum at all. In
fact, the more your neighbor works, the more work you have to do, because now
you have someone to buy your goods and now things you need to be more
productive are more available.

In fact, global economic production increased around 700% in the 20th
century[0]; in the U.S. since 1950 it's grown around 3,000% 1950-2010[1]. By
the zero sum theory, GDP would not have grown at all and we'd all be doing the
same jobs we did in 1900 or 1950, just in different places (which means not a
lot of software development jobs!).

Another benefit is that as worse-paying jobs move to poorer countries, the
wealthier countries get better-paying, higher-skilled jobs.

China has become one of the largest markets for U.S. goods, and IIRC is the
world's largest market for things like smartphones. American companies make a
lot of money selling goods to Chinese people, who without the manufacturing
would not be able to afford them, and U.S. unemployment is below 5%.

The U.S. has problems with income and wealth distribution, but other advanced
economies, which have seen similar transitions from industry, don't have
nearly the same difficulty. As I understand it, it's a product of U.S. law,
tax codes, and government investment, which strongly favors the wealthy. For
example, almost alone among advanced economies, the U.S. does not provide
health care to all its citizens. That's not because China has more
manufacturing jobs!

[0]
[https://en.wikipedia.org/wiki/File:World_GDP_per_capita_20th...](https://en.wikipedia.org/wiki/File:World_GDP_per_capita_20th_century.GIF)

[1]
[https://www.usgovernmentspending.com/usgs_line.php?title=US%...](https://www.usgovernmentspending.com/usgs_line.php?title=US%20Gross%20Domestic%20Product%20GDP%20History&year=1950_2010&sname=US&units=b&bar=0&stack=1&size=m&col=c&spending0=300.2_347.3_367.7_389.7_391.1_426.2_450.1_474.9_482_522.5_543.3_563.3_605.1_638.6_685.8_743.7_815_861.7_942.5_1019.9_1075.9_1167.8_1282.4_1428.5_1548.8_1688.9_1877.6_2086_2356.6_2632.1_2862.5_3211_3345_3638.1_4040.7_4346.7_4590.2_4870.2_5252.6_5657.7_5979.6_6174_6539.3_6878.7_7308.8_7664.1_8100.2_8608.5_9089.2_9660.6_10284.8_10621.8_10977.5_11510.7_12274.9_13093.7_13855.9_14477.6_14718.6_14418.7_14964.4)

~~~
HillaryBriss
> in the U.S. since 1950 it's grown around 3,000% 1950-2010

sure it's clear that the overall pie expands with additional trade. economists
have been selling globalization to the US voter with that idea for a long
time. i don't even think the comment you're replying to was disputing that.

but, more interestingly, such pie expansion does not guarantee that every
group's slice of pie grows too. it hasn't really worked that way in the US.
Joe Stiglitz, in 2011:

 _Most Americans are worse off than they were ten years ago, a dozen years
ago, so it 's actually trickle up economics. All the gains in our economic
growth have gone to those at the top .... we've been getting more unequal
while other countries have been becoming less unequal_

[https://www.wnyc.org/story/121224-stiglitz-american-
inequali...](https://www.wnyc.org/story/121224-stiglitz-american-inequality/)

~~~
forapurpose
Agreed, there are serious problems of distribution and opportunity, as I said
in my last paragraph in the GP.

> economists have been selling globalization to the US voter with that idea
> for a long time

And politicians have too. The argument long has been, as I understand it:
There's a big aggregate benefit and the rising tide will lift all boats.
Obviously that hasn't worked out, which shouldn't be surprising, raising a few
issues:

1\. People need opportunity to participate in the globalized economy.
Opportunity and social mobility have decreased in the U.S. for decades, IIUC.
Just consider access to quality K-12 and higher education, the latter probably
being important for getting into the globalization game, much less the
necessities for survival such as health care.

2\. If people are to vote and work for the country's and world's aggregate
benefit, rather than their particular benefit, then the 'aggregate' needs to
support them in return through social benefits such as unemployment insurance
and guarantees of basic needs such as healthcare, shelter, food, and
education, and through opportunity (see #1). As it is, the beneficiaries are
arguing for aggregate benefit, and then putting the benefits in their
particular pockets and walking away with it.

3\. My hypothesis for the cause is that working people simply didn't have a
seat at the table when these deals were negotiated. Big business insisted that
the particulars of their needs were explicitly addressed in great detail;
consider the global intellectual property regime, for example. Working people
were told that it would just work out somehow, 'a rising tide lifts all
boats'. Strange that wasn't the response to Wall Street's and Hollywood's
demands. Assuming things would just magically sort themselves out for everyone
else was lazy and careless governance.

------
11thEarlOfMar
If it were me, I'd want to know what % of manufactured goods consumed
globally[0] were manufactured in the US over time. If that % has dramatically
dropped over the last, oh, 50 years, I'd say we've exported our manufacturing,
regardless of automation.

[0] Semi equipment, earth moving equipment, networking equipment, aircraft,...
a lot of big, expensive stuff made in the US gets exported, wouldn't want to
leave that out of the picture.

------
pessimizer
I think the real mistake (which isn't a mistake, but an intentional deception)
is that the manufacturing that left the US was in less capital-intensive
industries (i.e. where labor costs were higher), and the lowering of the
number of labor hours per dollar of earnings was intentionally misinterpreted
as an increase in automation as a way to get industry-favored legislation
passed.

------
HillaryBriss
_... according to Houseman’s data, without computers, manufacturing’s real
output expanded at an average rate of only about 0.2% a year in the 2000s. By
2016, real manufacturing output, sans computers, was lower than it was in
2007._

This is a very interesting story that deserves a much wider hearing.

------
Avshalom
So what they're saying is that manufacturing is still going up just in
different fields, and the nobody got hired for the manufacturing that _is_
happening...

I understand the distinction they're trying to draw but I don't know if it's
actually all that _usefully distinct_.

------
digi_owl
Gets a guy thinking about Steve Keen...

[https://en.wikipedia.org/wiki/Steve_Keen](https://en.wikipedia.org/wiki/Steve_Keen)

~~~
dredmorbius
Absolutely one of the more interesting economists these days.

------
ItsMe000001
Good article, my only gripe is that it seems to me that the author had to meet
a word count target and expanded the content by 400% to meet it.

------
lgleason
This article fails the basic sniff test. The US is running net trade deficits
and continuing to take on more debt every year.

As you go about your daily life in the US a significant amount of the
manufactured things you purchase are made overseas. Most electronics, made in
Asia. Cars, if assembled in the US, have a significant amount of foreign
content. Clothes, more often than not overseas. Dishes & kitchen items, mostly
China. Major appliances, unless you are buying a GE (now owned by Haire
Chinese company) or Whirlpool, made in Mexico, Asia or Europe. Furniture, many
choices, especially the ones you assemble, overseas. Lamps, fans, light bulbs,
switches, HVAC system etc....mostly China, Mexico etc.. Bed linens, towels,
mostly overseas. Your luggage, Asia, Mexico or Europe. If you fly on a US
airline on a Boeing plane, it's major overhauls and inspections are being done
in Mexico, China etc..

If automation were the culprit, given the transportation costs, these would be
manufactured in the US by robots.

~~~
dougabug
Did you _read_ the article? The central thesis is that automation is _not_ the
primary culprit for manufacturing job losses.

------
rdlecler1
I don’t buy it. You can lie with statistics and You can also lie with data.
The fact that many many jobs moved to China coupled with the growth of their
own manufacturing industry and it’s clear that globalization is an issue. The
argument is that consumers pay cheaper prices but it doesn’t work that way
with technology. Consumers have the money they are willing to spend and
they’ll get the best item then can with that. Which is more important, my 65”
HDTV or a 55” 1080p that comes with jobs and economic balance.

~~~
wpdev_63
You should go tell walmart that their business model isn't working.

~~~
losteric
It's exploitative, unsustainable, and highly profitable.

------
pm24601
This line at the end is the most frustrating:

> But they still don’t seem to grasp what’s been lost, or why. It’s easy to
> dismiss the disappearance of factory jobs as a past misstep—with a “we’re
> not getting those jobs back” and a sigh. Then again, you can’t know that for
> sure if you never try.

If there is one thing that Obama did that was vital to the US it was saving of
the automotive industry in 2008. He did this in spite of the "learned"
economic experts saying otherwise.

Too bad, he didn't ignore them with the banks and jail the bankers.

~~~
azemetre
The issue with jailing bankers is that nothing they did was illegal. It was
highly immoral but we don't jail people for being immoral (they do in some
countries).

If you want to jail bankers in the future, supporting institutions like
Consumer Financial Protection Bureau and electing politicians that want to
pass more strict laws is the only way to accomplish what you want.

In this diametric political climate we have one party that is gutting the CFPB
by installing leaders that are pro-finance/banking industry and rolling back
protections under the guise of "not being fair."

~~~
pm24601
> The issue with jailing bankers is that nothing they did was illegal.

They were never investigated. Looking back to earlier banking meltdowns,
plenty of crimes were discovered. See for just such an example:
[https://en.wikipedia.org/wiki/Savings_and_loan_crisis](https://en.wikipedia.org/wiki/Savings_and_loan_crisis)

It is a perfectly reasonable to suspect that similar crimes were also
committed.

You could also look at the court cases at :
[http://4closurefraud.org/](http://4closurefraud.org/) Many of the foreclosure
cases involve banks not being able to demonstrate that they actually had
standing to foreclose on houses. For example:
[http://4closurefraud.org/2018/02/09/fl-3rd-dca-reverses-
ruli...](http://4closurefraud.org/2018/02/09/fl-3rd-dca-reverses-ruling-that-
found-hsbc-forged-mortgage-documents/)

------
ComputerGuru
I’m just wondering why we research and policy have been built around “net
numbers minus computer numbers” instead of “non-computer sectors, aggregated.”

What an ass-backwards approach. No wonder the data has been wrong and the
findings have been wrong. You have access to _raw_ data, and you instead
chooose to go to final results that already include some measure of error and
approximate the solution in reverse rather than simply summing up non-tech
industry growth? Really?

------
mi100hael
_> Trade may have been a factor—but it clearly wasn’t the main culprit.
Automation was._

Why can't both be considered? Trump wasn't wrong when he pointed out trade
agreements were shifting labor abroad.

 _> The Economic Policy Institute think tank estimated that as of 2010, the
trade imbalance with Mexico had cost the U.S. about 683,000 net jobs — about
60% of those in manufacturing._

([http://www.latimes.com/business/la-fi-mexico-
jobs-20161212-s...](http://www.latimes.com/business/la-fi-mexico-
jobs-20161212-story.html))

------
dalbasal
_" two kinds of people who lived in America in 2016: people who believed
Donald Trump, and people who believed data."_

This is scientism.

The question around the effects of economic globalisation, trade relations,
the size of china's manufacturing industries, automation and other advances in
manufacturing methods... it's not a decided issue. You can't just put quote an
economist on _" The Long-Term Jobs Killer is Not China. It’s Automation._" and
present this as a "case closed, science has spoken" decree.

~~~
ebalit
I think this line is about repeating the narrative about the trade debate
during the last US election. The author follows by explaining why it was
wrong, showing why data is not always reliable and in a sense rehabilitating
the value of gut feeling.

~~~
dalbasal
That is fine. It is a perfectly reasonable argument. She should make it, and
make a case. But, she started with " _the data /science is in_" as if she's
reporting on an indisputable truth, rather than a plausible narrative. This
puts anyone who disagrees with her in an irrational truth denier category, as
if her position was an authority on par with newton's laws. This is scientism,
and it's harmful when public debate (especially around politically charged
questions) picks up this style of writing/speaking.

------
profalseidol
How come people don't realize that less jobs due to automation should mean
more vacation?

------
branchless
Manufacturing is a waste of time. People don't need real stuff.

Paper wealth is where it's at. Check out the 'growth' in banking:

[https://pbs.twimg.com/media/DceTLZ9UQAAr335.jpg:large](https://pbs.twimg.com/media/DceTLZ9UQAAr335.jpg:large)

"The divergence first emerged in the late 1970s". Hmm.

------
jMyles
Wow - that was a great read. I like how it started by saying,

> Looking back, there were two kinds of people who lived in America in 2016:
> people who believed Donald Trump, and people who believed data.

...only to show that, against the odds, people who believed "data" ended up
being incorrect about some of the most crucial conclusions drawn by the use of
that data.

However, I have this itching feeling that I always have whenever I read an
analysis on this topic, and it's this:

 _Americans don 't want those jobs back_. We really don't.

I think Dave Chappelle said it very well:
[https://www.youtube.com/watch?v=inlDT62oGy8](https://www.youtube.com/watch?v=inlDT62oGy8)

And that leads to an even bigger realization: people (and the body politic)
don't _want jobs at all_. Jobs aren't useful. People generally only want the
resources and independence that come with a job.

We've been sold the idea that the connection between "a job" (ie, something
that someone does for hours a day, 5 days a week, in the tack of a career) and
resource (like food and shelter, ie, the Money) is a natural, wholesome
consequence of a free market.

But then, why don't animals have jobs? Why don't very wealthy people have
jobs? Why don't very poor people have jobs? Why don't indigenous people have
jobs? Why don't well-adjusted hippies (think Rainbow Gathering) have jobs?

I think that we can find a _truly_ free market, with the price signals and
freedom from state intervention that free market fans always cheer, but whose
central models are the Job and the Money. If the internet means anything truly
useful to our species, I think it's best viewed as our chance to finally shed
the Job and the Money.

~~~
will4274
> _Americans don't want those jobs back_. We really don't.

> I think Dave Chappelle said it very well:
> [https://www.youtube.com/watch?v=inlDT62oGy8](https://www.youtube.com/watch?v=inlDT62oGy8)

> "I want to wear Nikes, I don't want to make them"

I don't mean to sound like a dick, but it's very easy for a multimillionaire
speaking to a upper middle class audience or for an upper middle class
software developer on hackernews to agree with this sentiment. I think if you
asked 100 unemployed Americans living in poverty, you might hear a different
answer.

~~~
jMyles
You think that they'd say that, given the choice over whether to be given
Nikes, made entirely by automation, or to have to work to make them, that
they'd choose the work?

I'm not saying that there aren't classes issues in play here. I'm saying that
I wish poor people didn't have to wish to make shoes.

Surely if we can automated all the matter around us to do our will, we can
also shape instill in our economies the basic tendencies toward compassion and
freedom.

~~~
jerkstate
Automation is not a magic wand that means no labor, thought, decisions, or
resources are used in the production of goods.

Automation makes people more productive, given the same inputs, but requires
knowledge to operate.

It will be hundreds or thousands of years before automation is advanced enough
to resemble a magic wand in the way you are describing, where no person is
involved at any step of making shoes.

Even then, there will be two kinds of people: those who are given magic wands
and learn/are taught how to use them and keep them working, and those who need
help obtaining and using magic wands. I don't think I have to tell you that
there will still be a power dynamic.

~~~
jMyles
> It will be hundreds or thousands of years before automation is advanced
> enough

But is there no gradient to be observed during that time? Aren't we already
deep enough into automation to have this discussion?

Did we _have_ to ship those jobs to China? In a more just world, might the
Chinese laborers be spared exposure to benzene sooner than a thousand years?

> Even then, there will be two kinds of people: those who are given magic
> wands and learn/are taught how to use them and keep them working, and those
> who need help obtaining and using magic wands.

There are two kinds of people in this world: people who try to convince
everyone to think of things as simple dichotomies with no middle ground, and
those who do not.

~~~
jerkstate
automation is clearly not sufficiently advanced that no Chinese laborers need
be exposed to benzene to sate the global appetite for cheap sneakers.

the trouble with socialism is eventually you run out of other people's money;
modern socialism tries to get around this problem by positing that there will
eventually be infinite resources thanks to automation, so we should just start
acting like that's already the case.

------
foota
Is stripping away computer manufacturing a legitimate thing to do though?
After all, it is still output.

~~~
purple-again
In this instance yes, it’s core to understanding what really happened in our
economy.

The critical point is how they account for better products year over year. A
faster chip in 2017 is counted as 2 2016 chips because it’s that much better.

A can of soda in 2017 is equal to a can of soda in 2016.

So when you remove this one weird industry that is experiencing tremendous
growth in power, it turns out our manufacturing has been well and truly
gutted.

If you look at manufacturing “value” including computers it doesn’t look so
bad.

If you look at manufacturing units not including computers...you understand
Trump 2016 a little better.

~~~
foota
Yes, but didn't the computer manufacturing industry use up lots of investment
to get there?

------
jdhn
>Since he took office, however, Trump has paid minimal attention to boosting
US manufacturing. Instead, he’s favored counterproductive protectionism and
ignored currency manipulation, preferring the punitive over the constructive.

If those are counterproductive methods to boosting manufacturing, what would
productive methods look like?

~~~
nsnick
I think you need to read your quote again. A productive approach would focus
on currency manipulation instead of protectionism.

~~~
jdhn
Oops, I missed the "ignored" in the second sentence. Good catch, thanks!

------
mrfusion
What was the mistake?

~~~
ars
An increase in the speed of computer was counted as an increase in
manufacturing output.

Once you remove all of that the data looks radically different.

------
siculars
To say that outsourcing manufacturing was a good thing for anyone other than
banksters is to say the sun shines out of my ass. And this is exactly what the
US has allowed to happen over the course of decades. When manufacturing goes
so too goes all the knowhow locked in real people along with all the
innovation those real people could bring to the next generation of
manufacturing. All that potential is now happening elsewhere. Because the US
let it happen elsewhere.

Oh, and in case it wasn’t obvious, that sentiment is partly responsible for
the election of Trump.

~~~
SkyMarshal
Agreed. The article touches on that, and Andy Grove spent the last decade or
so of his life warning about it.

[https://www.theregister.co.uk/2016/03/23/andy_groves_warning...](https://www.theregister.co.uk/2016/03/23/andy_groves_warning_to_silicon_valley/)

------
helpme420
So that 300+ Billion trade deficit with China isn't the cause of a net job
hemorrhage? Really?

~~~
ItsMe000001
May I suggest you try to read more than the first paragraph of a linked
article (or more than just the headline) before commenting?

------
briandear
It’s called competitive advantage.

~~~
Clubber
I mean sure, but what extent does creating competitive advantage become unfair
and immoral? At what point is it a long term liability, both to industry and
civilization as a whole? The US exploded after WWII because Europe and Asia
were in ashes. That sure is a competitive advantage. We could attempt recreate
that competitive advantage by bombing cities and manufacturing centers in
other countries. We could create competitive advantage by invading and
subjugating other resource rich countries. How about slave labor (chattel or
coerced) sold it at pennies on the dollar?

How about Standard Oil artificially lowering regional prices to put all
competition out of business, only to raise the prices once dominance is
attained?

The question is really did China achieve that competitive advantage in unfair
and unscrupulous ways? Should other countries be free to regain competitive
advantage by finding even more unfair and unscrupulous methods? What does the
world look like after walking down that path for another 50 years?

~~~
barry-cotter
> How about Standard Oil artificially lowering regional prices to put all
> competition out of business,

Lowering prices to increase market share is perfectly fine, especiallly when
you have decreasing costs of production.

> only to raise the prices once dominance is attained?

No evidence of any policy of them doing that, or of it happening on any long-
term scale.

------
8bitsrule
No jobs, no homes for millions. No wonder things look so rosy. Like a plane
with no economy class.

But ... will this aggression stand?

------
maxerickson
Doesn't New York make a lot of Yogurt? Do the farmers know they stopped
working?

~~~
Spooky23
Dairy farmers are well aware of how hard they work. They lose about $0.10 for
every dollar they make in New York.

Most of them are just trying to stay solvent until they can sell.

~~~
maxerickson
So is the sector dead or is it frantically losing money? I'm confused.

(I'd sort of guess it matches up with the broader US milk market and produces
more milk than it did in 1992, with the average producer being larger)

~~~
Spooky23
In my county, more than half of the dairy farms that were operating in the
early 90s are gone.

I worked on a farm as a teenager that was fairly large, and was in continuous
operation since the Dutch colonial times. It was literally a going concern
older than the state. It went out of business in 2005, unable to handle the
burdens of rock bottom commodity prices, fuel costs, taxes and regulatory
costs.

------
RickJWagner
Silly me, I thought this would be an article about manufacturing.

Of course it's really poorly written political propaganda. Ugh, a minute lost.

------
quantumofmalice
Meanwhile economists STILL bang on about ricardian free trade while, out the
other side of their mouth, talking gleefully about the fading usefulness, way
of life and, ultimately, existence of the people whose communities were
destroyed by their recommendations.

~~~
tfehring
I don't disagree, but I also don't think it's appropriate to say that
globalization and free trade should be avoided just because they've harmed
those communities - globalization just needs to occur alongside policy changes
that offset the localized harm that it does.

At its current level of globalization, the US is at a point where it stands to
benefit significantly in aggregate from further globalization [0]. The problem
is that the benefits of globalization disproportionately accrue to the
wealthy, both in aggregate and at the US's current level of globalization [1].

IMO, the best approach is to "grow the pie" by promoting globalization and
free trade and then implement distributional policies domestically to ensure
that no one gets screwed over. Most advocates of globalization would likely
say the same. The issue is that in practice, that increase in globalization
has occurred, but domestic policy has been regressive rather than progressive
in terms of its impact on wealth inequality.

[0]
[https://www.imf.org/en/Publications/WP/Issues/2018/03/13/The...](https://www.imf.org/en/Publications/WP/Issues/2018/03/13/The-
Distribution-of-Gains-from-Globalization-45722), page 23 of linked PDF

[1] Same source, page 26

~~~
coldtea
> _I don 't disagree, but I also don't think it's appropriate to say that
> globalization and free trade should be avoided just because they've harmed
> those communities - globalization just needs to occur alongside policy
> changes that offset the localized harm that it does._

Why does it "need to occur"?

For example eating local produce is better for the environment than eating
stuff that has been transported for 1000s of miles, with the respective carbon
footprint. And that's just an example from an environmental perspective.

~~~
slavik81
There is no local produce in winter. The only fruits and vegetables available
would be those that could be be stored for months without spoilage. I'd be
eating potatoes and corn for 8 months of the year.

We could grow just about anything indoors year-round, but it's much better for
both the environment and my wallet to grow crops in places where we don't need
to enclose, light and heat them.

~~~
coldtea
> _There is no local produce in winter_

Depends on the country -- and region of the country. There are countries that
sport different climates and micro-climates. And there is stuff that thrives
during the winter as well. And if it's really needed, we've had greenhouses
for ages.

But that's part of the proposition: don't eat out of season stuff, even if it
means changing the diet in an annual cycle (which, e.g. tons of Italians has
no problem doing -- even if it means no, of much fewer tomatoes in winter).

