Production Work Is Not The Future, And We Shouldn’t Try

The US is a world leader in technology, space, information, biotech, and innovation in general. That’s more than good enough.

Factories Are Not the Future

The Wall Street Journal article The Firm Is Not the Future inspired my leaderboard.

Politicians of all stripes promise to restore manufacturing to its historic place as a source of good jobs for Americans. They accuse trading partners like China, Germany and Mexico of unfairly stealing those jobs. They accuse the corporations of taking those jobs away. They blame unions for hindering the growth of manufacturing companies. Democrats blame Republicans. Republicans blame the Democrats. Voters are enjoying the good years in our rearview mirror when most Americans had high-paying, stable manufacturing jobs.

The facts tell a different story. According to the Bureau of Labor Statistics, the share of non-agricultural employment has fallen from about 32% in 1947 to about 8% by the end of 2023. Business Association. But you have to look hard to see the effect. However, that effect pales in comparison to the long, slow, irreversible decline in manufacturing’s importance as a source of US jobs.

Has the decline in productivity been the disaster portrayed by various politicians? Not at all. Adjusted gross domestic product per capita has increased from $15,000 in 1947 to $66,000 in 2023. Real per capita income has risen at the same rate. So it is not true that our success depends on more people working in the manufacturing sector—on the contrary. Technology has greatly increased labor productivity in manufacturing. Automakers here and abroad need far fewer workers now than they did in 2000 to make better cars than before. That’s a powerful force that cuts jobs in the auto industry—and in many other industries as well.

The wrong answer is to pine for a mythical golden age that never came. Pittsburgh is now a thriving center for education, research and health services. It didn’t get there by trying to bring back the 1950s.

Chart Details

• Manufacturing jobs rose to 19.460 million in the third quarter of 1979.
• Manufacturing jobs are now 12.955 million, down 33.4 percent.
• Real GDP was $7.03 trillion in the third quarter of 1979.
• Real GDP is now $22.2 trillion, up 215.8 percent.

Why the Economic Effects of Taxes (Including Fees) Matter

The Tax Foundation suggests Why the Economic Effects of Taxes (Including Fees) Matter

Fees have negative consequences. Yes, they divert business to protected domestic producers, but they create losses for consumers and unprotected large-scale businesses. For example, the recent steel and aluminum tariffs led to an annual increase in production of $2.8 billion for protected firms but led to a larger total of $3.4 billion in lost production for low industries. In some areas, estimates have shown that while tariffs may save jobs in protected industries, they do so at a very high cost (for example, about $650,000 per steel job saved). Those are important factors that policymakers should have in mind when deciding whether to impose tariffs.

When it comes to tariffs, for example, nearly all of the new tax money introduced under the Trump administration was used to bail out farmers and ag producers who have been hurt by retaliatory tariffs. We also modeled the estimated effects of Trump’s new tariffs and tax proposals and compared the trade-offs of each tax policy change for economic output.

Trump Tariff Synopsis

• Trump imposes tariffs on China.
• US consumers and foreign sellers paid the price.
• China retaliated. US farmers were hurt by China’s response. As a result
• Trump gave all the money raised by the tariffs to farmers.
• And we paid $650,000 for every metal job saved.

It worked so well that Trump is going to put 60 percent tariffs on China. All trade with China will stop and the result will be a huge rise in prices.

How does any of that make sense?

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I propose a new slogan: “You can get better, but you can’t pay more!”