'American Deindustrialization' Is a Dangerous Myth
Oct 30, 2023
auto_awesome
The podcast explores the myth of American deindustrialization and highlights evidence that the decline in manufacturing employment is not true. It suggests that making it easier to import goods and allowing for a more permissive immigration regime can address labor shortage in the industry. The podcast also discusses the necessity of continuous transition for economic progress, the declining significance of manufacturing in the US economy, and the true reasons behind factory closures. It emphasizes the importance of economic diversity and understanding economic shifts.
American manufacturing is thriving, accounting for a greater share of global manufacturing output than Japan, Germany, and South Korea combined.
To enhance manufacturing employment, it is essential to remove trade barriers and have a more permissive immigration regime.
Deep dives
Manufacturing is still a dominant force in the United States
Contrary to the belief that manufacturing employment is in decline in the United States, American manufacturing is thriving. The United States accounts for a greater share of global manufacturing output than Japan, Germany, and South Korea combined. Although manufacturing employment has declined, it is largely due to increased productivity. Americans are able to produce more with fewer people, making them incredibly efficient manufacturers. Moreover, the United States exports high-tech goods, such as machinery and aerospace equipment, to other manufacturing powers like China, Germany, and Japan.
Barriers to trade hinder manufacturing employment
To enhance manufacturing employment in the United States, it is essential to remove barriers to trade. Placing tariffs, such as on steel, does not result in a manufacturing renaissance. Steel is a crucial input for various industries, including auto manufacturing, machinery production, and construction. Impeding the availability of affordable steel undermines the competitiveness of American industries. Additionally, a more permissive immigration regime can address the labor shortage in manufacturing. By erecting barriers to goods and people, the United States is hindering the growth of its manufacturing sector.
Manufacturing decline is part of economic advancement
The decline in manufacturing employment is not unique to the United States but is a worldwide phenomenon seen in advanced industrialized countries like Germany, Japan, South Korea, and Australia. As economies advance, they transition from manufacturing to a more service-oriented and knowledge-based economy. New and better jobs replace old ones, leading to economic progress. While manufacturing jobs may pay slightly less than average, this is a result of constantly introducing new and improved jobs. Economic diversity, consisting of strong manufacturing and other sectors, contributes to resilience and stability in the face of economic fluctuations.
By any relevant measure, the U.S. manufacturing sector is a dynamo. Retreating from globalized supply chains can threaten that success. Colin Grabow details the evidence.