Day By Day

Monday, February 21, 2011

American Manufacturing

Most Americans are strongly convinced that America's manufacturing sector is in steep decline, largely because businesses are shipping production overseas. Nothing could be farther from the truth. Jeff Jacoby explains:

There’s just one problem with all the gloom and doom about American manufacturing. It’s wrong.
Americans make more “stuff’’ than any other nation on earth, and by a wide margin. According to the United Nations’ comprehensive database of international economic data, America’s manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China’s output of $1.48 trillion by nearly 46 percent. China’s industries may be booming, but the United States still accounted for 20 percent of the world’s manufacturing output in 2009 — only a hair below its 1990 share of 21 percent.

In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians — combined.

American manufacturing output hits a new high almost every year. US industries are powerhouses of production: Measured in constant dollars, America’s manufacturing output today is more than double what it was in the early 1970s.
So why all the gloom and doom?

The reason is that manufacturing jobs are disappearing, but that is not due to globalization. Rather it is a result of productivity gains resulting from technological innovation. American manufacturers these days can produce more stuff with fewer workers than they did in the past. Moreover they are producing far more sophisticated things than they were in the past. The old, obsolete labor intensive factories are gone or going, but they are being replaced by high-tech production facilities.
A vast amount of “stuff’’ is still made in the USA, albeit not the inexpensive consumer goods that fill the shelves in Target or Walgreens. American factories make fighter jets and air conditioners, automobiles and pharmaceuticals, industrial lathes and semiconductors. Not the sort of things on your weekly shopping list? Maybe not. But that doesn’t change economic reality. They may have “clos[ed] down the textile mill across the railroad tracks.’’ But America’s manufacturing glory is far from a thing of the past.
This is an important distinction that has to be made clear before the public can have a rational and informed discussion on the state of the American economy. Too bad that unscrupulous politicians choose to obscure and distort, rather than to clarify, the real issues at stake.

Read the whole piece here.

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