Manufactured Myths and Phony Nostalgia
I wish someone could explain to me what it is that makes a manufacturer better than any other business. President Obama and the Democrats lament the decline of manufacturing in the U.S. as if it is indicative of some great malaise; the result of a horrific political campaign of malfeasance and an obvious manifestation of our self-imposed decline.
Let me pose to you this thought: manufacturing jobs are not and have never been that great. In fact, this nostalgia for the age of great manufacturers is a nostalgia for something that never really existed at all. No, what Obama and the Democrats crave is an economy that is unionized and can be more efficiently organized. Large-scale manufacturers fit that profile – many semi-skilled workers toiling away in repetitive jobs with little in the way of advancement opportunity. Wishing for an economy dominated by companies in this economic sector is like wishing for a return to feudalism, except that feudalism at least actually dominated western economies only a few centuries ago. The age of great union manufacturing jobs never really existed at all.
Yes, there was an age of great economic development, which we often refer to as the “industrial age.” However, no economist would say that the manufacturing jobs that existed at that time were anything but brutal and low-paying. The union movement did indeed helped alleviate that brutality, but labor laws, workplace health and safety laws, and competition for workers each had a far more enduring effect.
As pay and working conditions improved, the incentive to collectivize declined. In the meantime, technology and managerial science allowed for leaps in industrial productivity, reliability, and innovation, lessening the American industrial economy’s reliance on unskilled labor. A rise in the value of labor was the result, especially among those who garnered skills in technology and management.
Those industries that were difficult to convert to a highly-automated, high-productivity, technology-heavy environment -- especially those that still required an abundance of low or semi-skilled workers performing repetitive tasks -- began to migrate to places with an overabundance of labor. Some of this movement took place as an emigration to lower cost “right to work” states (a movement that continues to this day) and some jobs moved overseas to developing nations.
America has many advantages as an industrial base. Though it might not seem so at times, America is politically stable. America is still a free marketplace with investors willing to take risks. Raw materials are widely available here. The nation has good, reliable infrastructure. It has a sound legal system protective of property rights. It has an abundance of motivated and skilled workers, as well as highly-trained managers and support professionals. But its greatest advantage is the American market itself. It is nearly insatiable.
America, however, is not a perfect place to do business. America is litigious. Its government bureaucracy can be mind-numbingly dense, costly, and demanding. Taxes are high here. And labor is expensive. Any decision to relocate industrial operations requires a business to weigh the net advantage of operating in the United States against locating its operations in another country. Technology, infrastructure improvements, and the semi-skilled labor pools in many developing nations make them attractive to U.S. concerns, especially if the products built there are destined for markets outside the U.S.
No doubt, industrial America is game. No country has a workforce willing to work harder or longer than Americans. However, if labor is a major component of a product’s cost, American labor -- with all the associated costs (payroll taxes, unemployment taxes, workers' compensation premiums, health care mandates, and other labor-related regulatory burdens) -- can be very expensive. That's difficult to overcome and a disincentive to invest here. Add to this the burdens associated with organized labor and the disadvantage becomes chronic.
So the next time you hear Obama and the Democrats wail about the loss of manufacturing jobs in the U.S., remember, those jobs were, at best, mediocre. We all have grandparents, aunts and uncles who worked in America’s factories. Few would recommend it. Rather, these relatives were always the first to tell us to do our homework, get good grades in school, and get that college degree so that we could avoid the modest-paying, mobility-sapping, tedious, thankless manufacturing jobs.
This Democratic manufacturing mantra is nostalgia for a myth -- and a wish for a nation of union members toiling away at repetitive tasks and donating to Democrat tickets. Work is work – service, manufacturing, government, or retail. The value of a job has nothing to do with the economic sector in which it is classified and everything to do with the skills brought to bear to create, innovate, and improve.
It’s time we called this Obama obsession with manufacturing jobs what it is: just plain silly. Want to keep manufacturing (or, for that matter, any) jobs in the U.S.? Lower taxes, eliminate regulatory burdens, inhibit litigation, and reduce the labor and benefits burden faced by employers. The way to retain U.S. jobs is to make the U.S. more cost competitive. Yes, it's that simple.
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Apr '11
Re: Manufactured Myths and Phony Nostalgia
Doug Kimball
In fact, this nostalgia for the age of great manufacturers is a nostalgia for something that never really existed at all.
That is what all nostalgia is. The longing for a past that never really existed.
Great Post by the way. I could not agree with you more. No one in the US would want to trade jobs or unemployment with a Chinese factory worker. The future of jobs is to move forward not try to recreate the past.
That being said, one thing that has been pointed out by people like Micky Kaus is that factory jobs though crummy were well paid and easy to do for people with limited special skills, or creativity. In an economy that rewards the ability to innovate many people will find themselves left behind as the grunt work becomes exported to poor parts of the world. Worse yet, creative work while still labor intensive does not require many laborers. Markets will innovate a way out of this I am sure, but that is not a guarantee that things will go well for those untrained laborers or that they will not suffer, chronic unemployment and decreased standards of living.
Aug '11
Re: Manufactured Myths and Phony Nostalgia
Valiuth
Doug Kimball
In fact, this nostalgia for the age of great manufacturers is a nostalgia for something that never really existed at all.
That is what all nostalgia is. The longing for a past that never really existed.
Great Post by the way. I could not agree with you more. No one in the US would want to trade jobs or unemployment with a Chinese factory worker. The future of jobs is to move forward not try to recreate the past.
Markets will innovate a way out of this I am sure, but that is not a guarantee that things will go well for those untrained laborers or that they will not suffer, chronic unemployment and decreased standards of living. · 23 minutes ago
I have faith that 99% of Americans can improve their lot and achieve in a vibrant economy. Talented tradesmen may not make good economists and I'd neve hire an economist to fix my sink. But if opportunity is there, ambition and drive outweigh everything else in the desire to succeed and achieve. Heck, I'm and Ivy League graduate in the ditch digging business.
Mar '11
Re: Manufactured Myths and Phony Nostalgia
Superb post. It is all about wallowing in marxist fantasies about the exploitation of the working class, and the subsequent glorification of unions.
Apr '11
Re: Manufactured Myths and Phony Nostalgia
Doug Kimball
Valiuth
Doug Kimball
In fact, this nostalgia for the age of great manufacturers is a nostalgia for something that never really existed at all.
Markets will innovate a way out of this I am sure, but that is not a guarantee that things will go well for those untrained laborers or that they will not suffer, chronic unemployment and decreased standards of living. · 23 minutes ago
I have faith that 99% of Americans can improve their lot and achieve in a vibrant economy. Talented tradesmen may not make good economists and I'd neve hire an economist to fix my sink. But if opportunity is there, ambition and drive outweigh everything else in the desire to succeed and achieve. Heck, I'm an Ivy League graduate in the ditch digging business. · 22 minutes ago
I think though this transition that we are going through will be hard on many people. I think all economic transitions historically have been hard on people even if many have benefited...
The question is how can peoples fears be eased and what can be done to smooth the transition away from a factory based economy?
Edited on October 30, 2012 at 11:33pmMay '10
Re: Manufactured Myths and Phony Nostalgia
Good stuff, here is more on this, from Russ Roberts and Mike Munger.
Feb '11
Re: Manufactured Myths and Phony Nostalgia
Nothing to say other than this was a well written, excellent post !! Thanks
Aug '10
Re: Manufactured Myths and Phony Nostalgia
You want fries with that ?
Aug '11
Re: Manufactured Myths and Phony Nostalgia
Romney's plan relies on regulatory, not tax, relief to increase US competiveness. A reduction in tax rates that is revenue neutral, if it results in significant simplification, will reduce tax regulatory compliance costs, hence will effectively result in a savings for US business. Of course if these rate reductions incent investors to capture gains, it will also result in increased taxable commercial activity and increase tax receipts. We saw this after the Tax Reform Act of 1986. Energy proposals will be the most important factor for US competitiveness. The US already has an energy cost advantage and this will be amplified under a Romney plan. It is tough to predict the result of other unnamed regulatory changes. I still think the best way to deal with capital gains is to use indices to separate real gains from inflation and tax gains at ordinary rates. Reeling in deficits and revising entitlements will help avert dramatic future economic crises, but other than a better sense of confidence and relief among markets and the populace, will provide little in the way of gains in American economic efficiency.
Feb '11
Re: Manufactured Myths and Phony Nostalgia
Wrong, on many levels.
1) As a former worker at several manufacturing facilities I find it quite tiresome to see people continually assert that people who lament the loss of economic activity to our foreign competitors believe that these were all "great jobs". Plainly they weren't. But you know what they were?
Jobs. Since there are presently tens of millions on food stamps and an unemployment rate that is infamously high I would have thought that this would be a consideration when discussing policy. Apparently not.
2) The democrats care nothing at all about the fate of union members except in the same grubby way they care about welfare recipients- i. e. votes to be purchased without concern for the fate of the voter. I note that the supposed union-loving democrat Bill Clinton quite happily signed NAFTA, which sent vast numbers of union members into the unemployment line and onto the welfare rolls. Of course they remained likely democrat voters, so democrat politicians didn't care.
3) America is politically stable only because of a vast and unaffordable welfare state. It can't last much longer.
What then?
I don't know, but I suspect much ugliness.
Dec '10
Re: Manufactured Myths and Phony Nostalgia
The average IQ is-- by definition-- ab0ut 100. I know, I know: depending how you slice and dice these figures it might be a little higher here in the US, and-- for now-- let's not get into the Bell Curve stuff.
But is it your proposition that the roughly half of our population that lies on the left side of the peak of that bell curve is supposed to raise a family by getting a job in the knowledge economy?
For crying out loud, IT companies already would rather import plane-loads of H1Bs rather than go to the trouble of training a returning vet with experience operating complicated machinery.
Aug '11
Re: Manufactured Myths and Phony Nostalgia
Xennady: Wrong, on many levels.
I don't know, but I suspect much ugliness. · 44 minutes ago
My analysis may be lamentable, but it is not wrong. If America is not competitive, for whatever reason, jobs will move. And technology advances can have a chilling effect on jobs. What are we to do? Have the government mandate the use of abacuses because calculators have ruined the abacus manufacturing industry? Progress can be delayed, but it cannot be stopped. Economic principles cannot be undermined forever.
Nor is it entirely fair to say that Democrats don't really care about workers. They do, they are just daft when it comes to understanding economics, hence their initiatives often have a result that is the opposite of their intended result.
There is some truth in what you write about the welfare/entitlement state. I submit we can only address and correct this problem if the symptoms are diminished and if our economy is strong.
Edited on October 31, 2012 at 12:49amAug '11
Re: Manufactured Myths and Phony Nostalgia
KarlUB:
First of all, there is a moral argument for the sponsorship of vets in our workforce, but there is little in the way of an economic one. The bully pulpit is a good place to make it. H1B visas are another issue. Look into it. It is a damnable way to get people - very difficult and awkward. I know. So this is very much a straw man argument.
Also, we too often ignore the trades as viable places to make a living. You don't need a college degree or a high IQ to frame a house, fix a car, build a road - an yet these trades can provide a good living - a great living if you leverage your skills in a small business. In addition, a two earner family where each makes $15.hr, one with benefits, can provide a modest living for a family in most places in the US. No, it's not a cruise a year, new car every three lifestyle, but it provides a the necessities for an independent middle class existence. Any person with reasonable drive and integrity can move up from there.
Feb '11
Re: Manufactured Myths and Phony Nostalgia
I find this a fascinating post, and while I don't want to be rude or intemperate I must be honest: I take it as an excellent example of the logic that resulted in the US becoming the brokest nation in history.
Too many on the right are unable to approach politics in any way except as politics relates to business. So if a given policy conflicts somehow with the interests of business then that policy must yield.
For example note the business interest lobby for open borders. KarlUB has just noted the H1B racket.
The end result is that Americans face competition in America from foreign nationals, legal and illegal, working here. And we also face competition from outside America, obviously.
Politically, these policies have led to the disaster that is California, plus the leftist lurch imposed on the entire country due to illegal immigration, and the unwillingness of Americans to enter certain fields of study because they believe they will be unable to make a living in them.
But business loves them. Cheap labor, etc.
And the US has slowly become the brokest nation in history, on a path to ruin and revolution. Not good.
Even for business.
Aug '11
Re: Manufactured Myths and Phony Nostalgia
Xennedy:
The US is not the brokest nation in history, its government has the largest debt in history. Its public debt is actually dwarfed by its actual debt, which includes the net present value of unfunded entitlements. But I digress into the details. The US is very rich indeed - rich in assets. However, beginning with Wilson, then FDR, Johnson and now Obama, our forey into statist redistribution schemes, cross generational and progressive current redistributionist schemes, (ie. the welfare state) has resulted in deficits as far as the beancounters can foresee. It's not a hole, it's a crater. It's time to start backfilling.
By the way, the state of California has very, very little to do with H1B visas or even cheap labor. It has everything to do with the redistributionist policies noted above and a complete failure of the federal and state governments to even remotely deal with illegal immigration. Businesses do what they must to remain viable and competitive.
Edited on October 31, 2012 at 3:22pmFeb '11
Re: Manufactured Myths and Phony Nostalgia
Doug Kimball
Economic principles cannot be undermined forever.
There is no economic principle that requires the US government to admit endless millions of unskilled workers into the US economy, vast numbers of whom end up on the dole- but who also provide a source of cheap labor for business.
The end result is more profits for businesses that employ them, but higher costs for everyone thanks to the welfare state.
Doug Kimball
If America is not competitive, for whatever reason, jobs will move.
No doubt. This is a problem for the American government to address, not a wonderful manifestation of economic principles.
But it does not, because it cannot separate the interests of the American people from that of global business.
So we see events such as the emigration of Facebook co-founder Eduardo Saverin to Singapore to avoid paying US taxes while the still- taxpaying Americans are hung on the hook by thew US government to provide defense of that nation free of charge.
This is just stupid.
Aug '11
Re: Manufactured Myths and Phony Nostalgia
Xennedy:
Illegal immigration is a huge problem. We obviously need to stop the inflow and then find a way to deal with the illegals already here. An ancillary problem is the drug trade and the deterioration of Mexico. Perhaps we should give them California back? (Just kidding.)
Feb '11
Re: Manufactured Myths and Phony Nostalgia
Doug Kimball:
It has everything to do with the redistributionist policies noted above and a complete failure of the federal and state governments to even remotely deal with illegal immigration.
True. And just how do you think we ended up with these policies?
My take is that the left's desire for more constituent voters has meshed with the business lobby's desire for lower wages and given us a political disaster.
And too many on the right and in the business community don't even see the connection. They just tell us "family values don't stop at the Rio Grande", and mock the voters of California as imbeciles for electing the people they elect.
True, again. But the US will never be able to backfill when the country is run by people who don't see a difference between economic activity here in the actual, physical United States and economic activity elsewhere on the planet.
Feb '11
Re: Manufactured Myths and Phony Nostalgia
Doug Kimball: Xennedy:
Illegal immigration is a huge problem. We obviously need to stop the inflow and then find a way to deal with the illegals already here. An ancillary problem is the drug trade and the deterioration of Mexico. Perhaps we should give them California back? (Just kidding.)
Actually I suspect that the de facto policy of the Mexican government is a modern day version of the reconquista of Spanish history, with an eventual goal of assimilating the SW to Mexico via demographics.
Of course if they succeed then the remainder of the United States would be in the same situation they think they are in now, which likely wouldn't lead to a stable situation... but I'm rambling far off topic.
Edited on October 31, 2012 at 5:14amApr '11
Re: Manufactured Myths and Phony Nostalgia
Really interesting post, Doug, thanks. This is a topic I have often wondered about. You referred several times to "Obama and the Democrats" romanticizing manufacturing jobs, which is entirely true. I just wanted to point out that this preoccupation is not limited to those on the left.
Dec '10
Re: Manufactured Myths and Phony Nostalgia
I am posting on my phone, so this will be lamentably brief.First, the H1B situation is most certainly a real problem. I have had recruiters tell me, when they're being frank, that they simply will not hire someone from ITT tech, or a similar school, when an H1B can be had. I am surrounded by companies that do this.Second: The simple fact is more people move into our nation on a monthly basis than jobs are created. Simultaneously, decent blue-collar jobs get harder and harder to find.Our nation's trade deficit, then, continues in the red. And the fact is an economy simply cannot consume more than it produces indefinitely. Something has to give. And without a business community that feels existing citizens are owed preferential treatment by virtue of the fact they are citizens, what will give is the American Dream. It will be Brazilification.