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  • From: Gene GeRue <genegerue AT ruralize.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] American manufacturing
  • Date: Sat, 19 Apr 2008 17:41:57 -0500

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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

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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 service-oriented economy.

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.

http://findarticles.com/p/articles/mi_qa5294/is_/ai_n24282194



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