Great OpEd Feb 28, 2017, in the Washington Post by David Ignatius
What caused the loss of manufacturing jobs in the US? As also discussed elsewhere on this blog, Ignatius lays the blame on automation. The government will find it difficult to deal with that problem! I mean: do we want to roll back the progress of modern times? An interesting aspect, however, is the comparison with other industrial nations like Germany, where they seem to have less of a problem with the loss of manufacturing jobs. How did they do it?
David Ignatius writes:
…Manufacturing employment has indeed declined in America over the past decade, but the major reason is automation, not trade. Robots, not foreign workers, are taking most of the disappearing American jobs. Rather than helping displaced blue-collar workers, Trump’s promises of restoring lost jobs could leave them unprepared for the much bigger wave of automation and job loss that’s ahead.
The most persuasive numbers were gathered in 2015 by Michael J. Hicks and Srikant Devaraj at Ball State University. They showed that manufacturing has actually experienced something of a revival in the United States. Despite the Great Recession, manufacturing grew by 17.6 percent, or about 2.2 percent a year, from 2006 to 2013. That was only slightly slower than the overall economy.
But even as manufacturing output was growing, jobs were shrinking. The decade from 2000 to 2010 saw “the largest decline in manufacturing employment in U.S. history,” the Ball State economists concluded. What killed those jobs? For the most part, it wasn’t trade, but productivity gains from automation. Over the decade, the report notes, productivity gains accounted for 87.8 percent of lost manufacturing jobs, while trade was responsible for just 13.4 percent.
Robotics allows manufacturers to create more output with fewer people. That’s not a conspiracy imposed by Bannon’s global elite. It’s simply a fact of economic life and progress. And it’s not just blue-collar workers who are suffering. Smarter machines kill jobs in finance, law and, yes, even journalism.
To see how Trump is mislabeling the causes of workers’ anger, take a look at job losses in various industries. In motor-vehicle manufacturing, 85.5 percent of job losses came from productivity gains; in steel and other primary metals, 76.7 percent; in paper products, 93.2 percent; in textiles, 97.6 percent.
Trump proposes that we “buy American.” But in a world of globalized supply chains, what is an American car? Does a Toyota Camry made in Kentucky count? Is a Ford F-150 assembled in Kansas City American even if some of its parts were made in Mexico? The interdependence of global manufacturing is part of why Ford and Toyota stay healthy and profitable, for workers and shareholders both. How does Trump propose to unthread this subtly woven quilt? …