[Homestead] American manufacturing
genegerue at ruralize.com
Sat Apr 19 18:41:57 EDT 2008
This is a few years old but seems dependable in concept:
Why Are We Losing Manufacturing Jobs?
Federal Reserve Bank of Cleveland. Economic Commentary, Jul 2004 by
Fisher, Eric O' N
In the last 50 years, the share of employment in manufacturing has
declined in the United States. The main reason for this phenomenon is
labor-saving technological progress. Variation among state tax polices
and international economic conditions have played only minor roles.
The source of future prosperity will be technological advances in a
Rapid technological progress in manufacturing has led to higher wages
and rising standards of living for over two centuries, but in the last
50 years it has also reduced the need for manufacturing labor. The
primary source of American prosperity is no longer manufacturing; ours
is now an increasingly service-oriented economy in which innovations
in high-tech sectors and other professional services are the most
important sources of future prosperity
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The United States has the highest long-term underlying rate of
economic growth in the world. A conservative estimate is that the
standard of living of the average American doubles every 30 years. But
an economy undergoing rapid technological progress is one in which
some sectors are booming and others are senescent. For example, water
transport was a primary source of prosperity for Ohio for several
generations after the opening of the Erie Canal. The advent of a
national network of railroads at the end of the nineteenth century
signaled the end of a way of life for many whose livelihood depended
upon inland water transportation. But there can be no doubt that
knitting together a national market-first by rail and then by road-
gave a tremendous boost to the economic growth that our country
enjoyed in the last century.
We are now at a similar crossroads in economic history. Manufacturing-
the transformation of tangible substances into more refined
commodities-is no longer a primary source of prosperity. The
percentage of people employed in manufacturing in the United States
has declined steadily since the 1960s, from 25 percent then to less
than 12.5 percent today. And the United States is not the only country
to have experienced a relative decline in manufacturing employment;
the same trend has been part of the economic history of almost every
advanced economy in the last two generations.
The declining need for workers in a sector that has traditionally
provided good jobs has naturally generated concern and calls for
appropriate public policy. Blame for the decline is most often placed
on "globalization" in general, or the outsourcing of jobs to other
countries in particular. Some see the shifting of jobs from one state
to another and conclude that variation in economic policies (for
example, taxes) is the problem. Deal with these issues, people
imagine, and we will be able to preserve manufacturing jobs.
But factors such as globalization and state policies account for only
the tiniest portion of the change. A clue to the true source of the
shift in manufacturing employment is the fact that all developed
countries are witnessing the same trend. What that trend tells us is
that the primary cause of the decline in manufacturing employment in
advanced economies is the inexorable march of technological progress.
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