Thursday, December 24, 2009

Factory Floor

Via Arnold Kling, comes this astonishing set of stats about the state of American manufacturing. Manufacturing's Death Greatly Exaggerated
But here’s where the news about the manufacturing sector gets a little better. According to the Federal Reserve, the dollar value of U.S. manufacturing output in November was $2.72 trillion (in 2000 dollars), which translates to $234,220 of manufacturing output for each of that sector’s 11.6 million workers, setting an all-time record high for U.S. manufacturing output per worker (see chart below). Workers today produce twice as much manufacturing output as their counterparts did in the early 1990s, and three times as much as in the early 1980s, thanks to innovation and advances in technology that have made today’s workers the most productive in history. So at the same time that manufacturing employment has been declining to record low levels, manufacturing output keeps increasing over time, and the amount of output that each manufacturing worker produces keeps rising almost every month to new record high levels.

And here’s some more good news. For the year 2008, the Federal Reserve estimates that the value of U.S. manufacturing output was about $3.7 trillion (in 2008 dollars), and the nearby chart shows how the U.S. manufacturing sector compares to the entire Gross Domestic Product of the world’s five largest non-U.S. economies in 2008 (data here): Japan ($4.9 trillion), China ($4.3 trillion), Germany ($3.7 trillion), France ($2.9 trillion), and the United Kingdom ($2.7 trillion). Amazingly, if the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world’s third-largest economy.

Read that again. Manufacturing employment is famously decreasing, something we hear about endlessly. The supposed ill effects of this are literally the starting point for any Democrat's discussion of free trade and "industrial policy." Yet there are still 11 million+ manufacturing workers in the US, who average $234,222 in output. That's not a "hollowing out," that's a radical increase in productivity. Not only that, the American manufacturing sector - by itself - is the third largest economy in the world. This is the same manufacturing sector that we've been told over and over again has been "hollowed out" by rapacious Reagan-style capitalism. Add that to the list of politically convenient lies (the earth is warming! Bush shredded the Constitution! 47 million uninsured!) that has driven much of the discourse in American public life this decade.

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