The epic mistake about manufacturing that’s cost Americans millions of jobs

[Storebought]

Lengthy article argues that the millions of jobs lost in US manufacturing since 2000 wasn't due to automation, or industrial obsolescence, but intentional public policy:

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The growth in productivity in the manufacturing sector from 2000 despite the immense job losses was due to the more powerful computers and electronic components, a tiny segment of manufacturing in general. The rest of US manufacturing cratered, as a share of the economy, in employment numbers, and in output.

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Automation was not a factor in the job losses:

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So what caused the US manufacturing sector to implode during the 2000s? Mostly, unmatched competition from China:

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Why is this a big deal?

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The jobs that economic theory said would replace the ones lost in manufacturing either pay a fraction of the wages, have no benefits, or do not exist at all. The erosion may have destroyed the prospects of the (once) working classes, and destroyed a part of the US social fabric, but outsourcing has made post-graduate educated workers in management, finance, and law, very, very rich.

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In general, this article comes the closest to my own thoughts on the matter. In particular, it explains how the incongruous notions that "US manufacturing is highly automated and specialized" could coincide with the fact that the US has to import its robots from Japan and specialized machine tools from Germany and Korea.

[○∙◄☻¥tπ[╪AV┼cVê└]

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China got quite a return on their investment of strongly supporting Clinton's reelection.

[136or142]

From the article:

"Many economists are aware of the computer industry’s outsize contributions to sector statistics. But few realize that the figures showing vast increases in manufacturing output have been dominated by a single small industry, according to Houseman."

1.If the 'vast increases in manufacturing output have come from a single industry' then how can that industry be small?  Simple math would suggest that's impossible.  

Overall industry (including computer industry): 1,000,000
Computer industry: 100

Only computer industry grows, but grows vastly, to say, 500

Overall industry: 1,000,400
Computer industry: 500

If the computer industry is 'small' its growth alone can not lead to 'vast growth in manufacturing'

You can play with these (obviously made up) numbers, increase, computer industry from, say, 10,000 to 50,000 and it still gives the same essential result.

Maybe she was misquoted and actually said 'the vast increase in manufacturing output (have come from) a single small industry." That is mathematically consistent I.e. There have been little increase in output, and what little there has been has come from mostly (vastly) one sector.  As quoted though, that's not what she said.

2.If what is quoted is accurate, then what she's basically saying is along the lines of "if you exclude 100% of manufacturing industries, the U.S has no manufacturing."

[Storebought]

From the article:

"Many economists are aware of the computer industry’s outsize contributions to sector statistics. But few realize that the figures showing vast increases in manufacturing output have been dominated by a single small industry, according to Houseman."

1.If the 'vast increases in manufacturing output have come from a single industry' then how can that industry be small?  Simple math would suggest that's impossible.  

Overall industry (including computer industry): 1,000,000
Computer industry: 100

Only computer industry grows, but grows vastly, to say, 500

Overall industry: 1,000,400
Computer industry: 500

If the computer industry is 'small' its growth alone can not lead to 'vast growth in manufacturing'

You can play with these (obviously made up) numbers, increase, computer industry from, say, 10,000 to 50,000 and it still gives the same essential result.

Maybe she was misquoted and actually said 'the vast increase in manufacturing output (have come from) a single small industry." That is mathematically consistent I.e. There have been little increase in output, and what little there has been has come from mostly (vastly) one sector.  As quoted though, that's not what she said.

2.If what is quoted is accurate, then what she's basically saying is along the lines of "if you exclude 100% of manufacturing industries, the U.S has no manufacturing."

I think you are hanging on the word 'output.'

The argument in this article, and in others, is that output growth (not employment) in manufacturing can be attributed mostly to the unusual performance of computer production rather than to the accomplishments of the manufacturing sector more broadly:

The technical paper can be found here.

Mind you, employment numbers in every manufacturing sector imploded during the 2000s, especially in computers and electronics. It was the way that US employment and output data are typically treated by economists that gave improved CPUs undue prominence as manufacture-value-added.

The authors don't agree, though, that the manufacturing decline was due to China entering the WTO. In their conclusion they reject the idea that Trump-type tariffs will be enough to reviving it.

[Storebought]

Strange that the U.S. trade deficit started its big increase before China joined the WTO. It started after the second quarter of 1997. What happened that year? The beginning of the Asian economic crisis -- which spread to other developing countries like Russia, Brazil, and Argentina. That contributed to a 44% rise in the trade weighted dollar index from 1996 to 2002. Then in 2001, a recession began in the U.S. which started job losses across the economy (not just manufacturing), except housing. Prior to this, there were decades of hysteria over the U.S. trade deficit with Japan. If you take Japan together with China, their percent contribution to the trade deficit was actually unchanged from 1994 to 2014.

Could it be because China (which was a relatively "small" and isolated economy in the late 1990s) could take advantage of the turmoil in the rest of East Asia since its economy was less exposed to shock? But that implies China's government could do more to depress its currency than its afflicted neighbors -- and one long-standing complaint with China is that they manipulate their currency too much.

As for the highlighted part -- the supply chains between China, Japan, and Korea are so entwined that that would be a reasonable interpretation (but then you wonder why trade-by-value-add hasn't been adopted). But that just makes US manufacturing with respect to East Asia look even worse.

[136or142]

From the article:

"Many economists are aware of the computer industry’s outsize contributions to sector statistics. But few realize that the figures showing vast increases in manufacturing output have been dominated by a single small industry, according to Houseman."

1.If the 'vast increases in manufacturing output have come from a single industry' then how can that industry be small?  Simple math would suggest that's impossible.  

Overall industry (including computer industry): 1,000,000
Computer industry: 100

Only computer industry grows, but grows vastly, to say, 500

Overall industry: 1,000,400
Computer industry: 500

If the computer industry is 'small' its growth alone can not lead to 'vast growth in manufacturing'

You can play with these (obviously made up) numbers, increase, computer industry from, say, 10,000 to 50,000 and it still gives the same essential result.

Maybe she was misquoted and actually said 'the vast increase in manufacturing output (have come from) a single small industry." That is mathematically consistent I.e. There have been little increase in output, and what little there has been has come from mostly (vastly) one sector.  As quoted though, that's not what she said.

2.If what is quoted is accurate, then what she's basically saying is along the lines of "if you exclude 100% of manufacturing industries, the U.S has no manufacturing."

I think you are hanging on the word 'output.'

The argument in this article, and in others, is that output growth (not employment) in manufacturing can be attributed mostly to the unusual performance of computer production rather than to the accomplishments of the manufacturing sector more broadly:

The technical paper can be found here.

Mind you, employment numbers in every manufacturing sector imploded during the 2000s, especially in computers and electronics. It was the way that US employment and output data are typically treated by economists that gave improved CPUs undue prominence as manufacture-value-added.

The authors don't agree, though, that the manufacturing decline was due to China entering the WTO. In their conclusion they reject the idea that Trump-type tariffs will be enough to reviving it.

Yes, I understand that.  There are a number of things in this article (and the paper) that will likely be ripped into.  That doesn't make them wrong, but they will certainly be heavily scrutinized.

This is anecdotal and I know that's not necessarily indicative of much of anything, but, for instance, I don't know if these things count as manufacturing or not, we have a large forestry sector in British Columbia.  The number of people it takes to cut trees has been cut significantly in the last 30 or so years and the number of people it takes to do the primary processing of wood has been cut even more I believe (turning them into 2 by 4's for instance) in both cases due to improved technology. 

I guess part of the point about the computer industry is that it shows that in U.S manufacturing being concentrated, the different types of manufacturing jobs have been reduced.  That's one of the costs of specialization, it reduces the variety of the industries available so, presumably the variety of the types of jobs available.  Even comparative advantage obviously suggests that while all industry sectors can survive that the amount of jobs in some of them will be reduced significantly.

This is, of course, part of the reason why many economists believe that true free trade requires not just freedom of movement for capital and goods and services but also for labor.  Good luck getting that to happen.