11 ms·

Advanced economies must still make things, but there's no rule that says that those things have to be made by people. In inflation-adjusted dollar value terms,

Advanced economies must still make things, but there's no rule that says that those things have to be made by people. In inflation-adjusted dollar value terms, the value of US manufacturing has never been higher. In employment terms, it's never been lower. While there are those who blame outsourcing for that, the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad. For example, look at this video of a MillTurn M60: https://www.youtube.com/watch?v=81UjjSH2iFw https://www.youtube.com/watch?v=81UjjSH2iFw. This one machine replaces an entire shop floor of lathes and mills... and all their operators, too.

sokoloff 11y ago
Yes, but someone is still loading the parts, changing and indexing the tool bits, doing inbound material inspection, final part inspection, packing, CNC programming, CNC maintenance, and other jobs associated. Sure, it's now 10 people instead of 50, but that's still better from a job creation standpoint than 1 (if we did all that work out of country and only did inbound inspection and logistics). Automation is installed for two primary reasons: [labor] cost or repeatability. I agree that it's not just outsourcing as a cause, but rather a natural response to ongoing cost reduction in manufacturing.
- xyzzy123 11y ago
  Right but "fortunately" we can do that with marginal labour, which is more or less what we observe. The great thing about globalisation is that it does seem to be a standard of living equaliser. The bad part is that it's a long way to the bottom if you live in the west.
  - cubano 11y ago
    Exactly what type of labor isn't "marginal" then? Banking? Investment advice? Construction? Software development? Whom exactly decides whos work is marginal? Do "marginal" employees somehow deserve to be displaced by greedy upper management whom already make historically larger salaries as compared to them? I guess I simply do not like that term and the negative profile and connotations it implies.
    - Artistry121 11y ago
      In economics marginal simply means "another small unit of".
      - cubano 11y ago
        Does that answer my question about what type of work/labour is defined as "marginal" in the OP?
        logfromblammo 11y ago
        The marginal employee is the last one in a list ordered by a particular characteristic. The marginal unit of production is the last one you can produced, or the theoretical one that you could produce next. It is like the least significant bit of a large number. Flipping it doesn't have a very large impact. I presume ancestor post meant "the minimally skilled laborer", which is an unskilled laborer plus the minimal amount of training. Since companies rarely train on their own dime anymore, I presume those businesses are hiring folks with a CNC machine maintenance and repair certificate from ITT Tech. That person is easily replaced. The point is that "skilled machinist" or "machine operator" used to be a job that would give a room filled with people a middle class lifestyle. A machine shop channeled disposable income to 50 median guys, plus the owner, whereas the CNC shop now supports 9 cheap schmucks, one median dude, and 0.1 of an expensive nerd, plus the owner. The character of the business has changed to reduce labor costs, and has increased barrier to entry (CNC costs more than manual lathe, for instance) to reduce competition. The Ford maxim still applies. You have to pay your workforce enough to buy the products that they make for you. Trade always balances. If you spend less money, there is less out there in the world for you to earn back.
        crpatino 11y ago
        > The Ford maxim still applies. You have to pay your workforce enough to buy the products that they make for you. Which is why it's very hard to get access to high-quality manufactured goods at any price point. By directly screwing the bottom third of the workforce, the economy crappyfied itself and screwed all but the very, very top of their members. Now wonder the retro fashion is all over the place now.
- SomeCollegeBro 11y ago
  I agree. I write software for CNC machines, mostly sensor monitoring as well as tool lifetime and offset data exchanging. Most of our customers order our software for precision as well as to reduce human error.
bluetomcat 11y ago
The anomaly we observe today is caused by the fact that the profit from efficiency gains in production has been reaped almost entirely by the upper entrepreneurial class. Even if a house can be built much faster and more efficiently, it isn't more affordable to the average working man.
- dantheman 11y ago
  What is considered a house has changed significantly, our expectation have grown both in size and amenities. Additionally, land use restrictions and migration have caused disproportionate demand in certain areas drastically increasing the cost.
  - crdoconnor 11y ago
    This is wrong. The drastic increase in land prices has been driven by untaxing land (e.g. prop 13), allowing the stream of rents derived from land monopolization to be privatized. That, combined with rock bottom interest rates (driving down mortgage requirements) and opening property markets to wealthy foreigners has driven up the cost of property in coastal cities precipitously. If interest rates and property taxes were jacked up, property prices would fall once again just as precipitously as they rose.
    - vostok 11y ago
      I agree with most of your comment. I never understood the idea behind prop 13. A naive interpretation seems to be that it lowers taxes on the one item where dead weight loss is very low. This is in addition to the argument that it's a plain handout to the rentier class. >That, combined with rock bottom interest rates (driving down mortgage requirements) Do changes in interest rates affect underwriting requirements? I have to admit that I don't know anything about mortgages, but they always looked like volatility products to me. I do agree that the fall in interest rates has caused property prices to increase. This seems to be related to the fall in return on capital so it's unclear to me how rates might be "jacked up" and why that might be desirable.
danmaz74 11y ago
> the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad Source?
- crdoconnor 11y ago
  >the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad The reason why this lie is so commonly repeated is that technology makes a better scapegoat than the American elites for declining standards of living. You can't jab a pitchfork into technology. You can jab a pitchfork into the American elites who formulate trade policy that ships jobs overseas. This misdirection and the anger it fomented is largely responsible for the sudden rise of Donald Trump.
  - TheOtherHobbes 11y ago
    ...Who plans to get rich by selling pitchforks, but has no intention of allowing them to be used - except possibly to remove his competitors. I'd guess that only around 10% of the US population - 20% at best - has any practical understanding of how the US economy and political system actually works. It's the easiest thing in the world to move blame towards immigrants, high rents, automation, Google, and just about any other target far removed from the actual architects of declining general living standards.
    - crdoconnor 11y ago
      We'll see. Trump has said that he will prevent TTIP/TPP and put a 40% tax on Chinese imports, but who knows if he will follow through. I certainly don't think that he'd be at all bothered by the economic fallout of those things.
      - logfromblammo 11y ago
        If Trump really wanted to make America great again, he'd drop all import tariffs, put a 40% tax on American exports, and throw some chum in the water. When the acquisition-merger frenzy dies down, the last corporations standing would not be ones that you would want to encounter in a dark alley. And, apparently, they would all be software development houses, agribusinesses, LEO launches, and pizza delivery chains. Americans would no longer do anything that they are not objectively best at doing in the global marketplace. They could not afford to even try anything else. But whatever. Let's just try the Hawley-Smoot tactic all over again, and see if it turns out differently this time.
anigbrowl 11y ago
If they're not made by people, then the profits from the manufacture will flow to owners of capital. When enough people can't find gainful employment with meaningful prospects of economic advancement, then you have a political problem. Yea yeah basic income, get back to me when capital owners are willing to pay much higher taxes to fund it.
- billmalarky 11y ago
  >Yea yeah basic income, get back to me when capital owners are willing to pay much higher taxes to fund it. They'll have to if they want the demand side of the market economy to continue to exist.
- bcheung 11y ago
  You can have basic income without income or business tax. Thomas Paine's Agrarian Justice proposed just such a system. https://www.ssa.gov/history/paine4.html https://www.ssa.gov/history/paine4.html
rsync 11y ago
"Advanced economies must still make things, but there's no rule that says that those things have to be made by people." There is indeed such a rule, although perhaps it is currently unnamed or not elucidated clearly/consistently. The economy is made up of people and those people come from families and those people and their families are at different levels of maturity and capability. You don't take a 5yo child to an R-rated movie. You don't take a 10yo out drinking. Similarly: You do not take an unskilled J6P from a broken, or barely functional family background and just slot them into a STEM fast track and expect a robotics programmer to pop out the other side - even if it's all subsidized and paid for. You do not take a family/clan/social group right out of (relative) poverty and unsophistication and plop them right into sunnyvale and instruct them all to go get technical jobs and start living like good upper middle class folks. Running an economy that has people in it (the only kind I know of) without ladder rungs on the bottom is as silly as running a grade school with only 5th and 6th grade. No amount of subsidies or social welfare or coaching or lunch programs are going to let you slot a 6yo into 5th grade. In the same way, we have people and families and groups in any society that just aren't ready to walk into the googleplex and start coding. They aren't ready socially, they aren't ready economically and they aren't ready intellectually - and I mean this on a multi-generational scale. They need more than one lifetime to make this leap and the way they do that is within an economy that has decent, meaningful work for everyone. If you take those bottom rungs away you should absolutely expect the same kind of chaos and dysfunction as you would find in an elementary school with only the 5th and 6th grade.
- azernik 11y ago
  Let me start with, I agree 100%. And then comes the "but". The public policy prescription often made in order to achieve this goal is to bring manufacturing back. Unfortunately (?) in advanced economies manufacturing is no longer a steady source of plentiful blue-collar jobs. I think that's what the parent comment was getting at with "there's no rule" - if you encourage the manufacturing sector, there's no rule that makes it create jobs when economic imperatives drive it to greater automation. Jobs that are available to people without much education, savings, or assorted social capital are absolutely necessary to the stability of our society. I just don't think manufacturing can get us those in a country with developed-country living standards. EDIT: Fixed lots of phone-keyboard typos.
marshray 11y ago
Do you see the rubber pads on the floor and the dirty chair in front of the operators console? Surely it cuts down on the number of operators required compared to mid-20th century production methods, but these machines still require dedicated people to set the up and supervise. One positive difference is that an experience machine operator may now have a career path open didn't exist in years past: he could move up to the role of a CNC machining programmer.

sokoloff 11y ago

Yes, but someone is still loading the parts, changing and indexing the tool bits, doing inbound material inspection, final part inspection, packing, CNC programming, CNC maintenance, and other jobs associated. Sure, it's now 10 people instead of 50, but that's still better from a job creation standpoint than 1 (if we did all that work out of country and only did inbound inspection and logistics). Automation is installed for two primary reasons: [labor] cost or repeatability. I agree that it's not just outsourcing as a cause, but rather a natural response to ongoing cost reduction in manufacturing.

xyzzy123 11y ago
Right but "fortunately" we can do that with marginal labour, which is more or less what we observe. The great thing about globalisation is that it does seem to be a standard of living equaliser. The bad part is that it's a long way to the bottom if you live in the west.
- cubano 11y ago
  Exactly what type of labor isn't "marginal" then? Banking? Investment advice? Construction? Software development? Whom exactly decides whos work is marginal? Do "marginal" employees somehow deserve to be displaced by greedy upper management whom already make historically larger salaries as compared to them? I guess I simply do not like that term and the negative profile and connotations it implies.
  - Artistry121 11y ago
    In economics marginal simply means "another small unit of".
    - cubano 11y ago
      Does that answer my question about what type of work/labour is defined as "marginal" in the OP?
      - logfromblammo 11y ago
        The marginal employee is the last one in a list ordered by a particular characteristic. The marginal unit of production is the last one you can produced, or the theoretical one that you could produce next. It is like the least significant bit of a large number. Flipping it doesn't have a very large impact. I presume ancestor post meant "the minimally skilled laborer", which is an unskilled laborer plus the minimal amount of training. Since companies rarely train on their own dime anymore, I presume those businesses are hiring folks with a CNC machine maintenance and repair certificate from ITT Tech. That person is easily replaced. The point is that "skilled machinist" or "machine operator" used to be a job that would give a room filled with people a middle class lifestyle. A machine shop channeled disposable income to 50 median guys, plus the owner, whereas the CNC shop now supports 9 cheap schmucks, one median dude, and 0.1 of an expensive nerd, plus the owner. The character of the business has changed to reduce labor costs, and has increased barrier to entry (CNC costs more than manual lathe, for instance) to reduce competition. The Ford maxim still applies. You have to pay your workforce enough to buy the products that they make for you. Trade always balances. If you spend less money, there is less out there in the world for you to earn back.
        crpatino 11y ago
        > The Ford maxim still applies. You have to pay your workforce enough to buy the products that they make for you. Which is why it's very hard to get access to high-quality manufactured goods at any price point. By directly screwing the bottom third of the workforce, the economy crappyfied itself and screwed all but the very, very top of their members. Now wonder the retro fashion is all over the place now.
SomeCollegeBro 11y ago
I agree. I write software for CNC machines, mostly sensor monitoring as well as tool lifetime and offset data exchanging. Most of our customers order our software for precision as well as to reduce human error.

bluetomcat 11y ago

The anomaly we observe today is caused by the fact that the profit from efficiency gains in production has been reaped almost entirely by the upper entrepreneurial class. Even if a house can be built much faster and more efficiently, it isn't more affordable to the average working man.

dantheman 11y ago
What is considered a house has changed significantly, our expectation have grown both in size and amenities. Additionally, land use restrictions and migration have caused disproportionate demand in certain areas drastically increasing the cost.
- crdoconnor 11y ago
  This is wrong. The drastic increase in land prices has been driven by untaxing land (e.g. prop 13), allowing the stream of rents derived from land monopolization to be privatized. That, combined with rock bottom interest rates (driving down mortgage requirements) and opening property markets to wealthy foreigners has driven up the cost of property in coastal cities precipitously. If interest rates and property taxes were jacked up, property prices would fall once again just as precipitously as they rose.
  - vostok 11y ago
    I agree with most of your comment. I never understood the idea behind prop 13. A naive interpretation seems to be that it lowers taxes on the one item where dead weight loss is very low. This is in addition to the argument that it's a plain handout to the rentier class. >That, combined with rock bottom interest rates (driving down mortgage requirements) Do changes in interest rates affect underwriting requirements? I have to admit that I don't know anything about mortgages, but they always looked like volatility products to me. I do agree that the fall in interest rates has caused property prices to increase. This seems to be related to the fall in return on capital so it's unclear to me how rates might be "jacked up" and why that might be desirable.

danmaz74 11y ago

> the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad Source?

crdoconnor 11y ago
>the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad The reason why this lie is so commonly repeated is that technology makes a better scapegoat than the American elites for declining standards of living. You can't jab a pitchfork into technology. You can jab a pitchfork into the American elites who formulate trade policy that ships jobs overseas. This misdirection and the anger it fomented is largely responsible for the sudden rise of Donald Trump.
- TheOtherHobbes 11y ago
  ...Who plans to get rich by selling pitchforks, but has no intention of allowing them to be used - except possibly to remove his competitors. I'd guess that only around 10% of the US population - 20% at best - has any practical understanding of how the US economy and political system actually works. It's the easiest thing in the world to move blame towards immigrants, high rents, automation, Google, and just about any other target far removed from the actual architects of declining general living standards.
  - crdoconnor 11y ago
    We'll see. Trump has said that he will prevent TTIP/TPP and put a 40% tax on Chinese imports, but who knows if he will follow through. I certainly don't think that he'd be at all bothered by the economic fallout of those things.
    - logfromblammo 11y ago
      If Trump really wanted to make America great again, he'd drop all import tariffs, put a 40% tax on American exports, and throw some chum in the water. When the acquisition-merger frenzy dies down, the last corporations standing would not be ones that you would want to encounter in a dark alley. And, apparently, they would all be software development houses, agribusinesses, LEO launches, and pizza delivery chains. Americans would no longer do anything that they are not objectively best at doing in the global marketplace. They could not afford to even try anything else. But whatever. Let's just try the Hawley-Smoot tactic all over again, and see if it turns out differently this time.

anigbrowl 11y ago

If they're not made by people, then the profits from the manufacture will flow to owners of capital. When enough people can't find gainful employment with meaningful prospects of economic advancement, then you have a political problem. Yea yeah basic income, get back to me when capital owners are willing to pay much higher taxes to fund it.

billmalarky 11y ago
>Yea yeah basic income, get back to me when capital owners are willing to pay much higher taxes to fund it. They'll have to if they want the demand side of the market economy to continue to exist.
bcheung 11y ago
You can have basic income without income or business tax. Thomas Paine's Agrarian Justice proposed just such a system. https://www.ssa.gov/history/paine4.html https://www.ssa.gov/history/paine4.html

rsync 11y ago

"Advanced economies must still make things, but there's no rule that says that those things have to be made by people." There is indeed such a rule, although perhaps it is currently unnamed or not elucidated clearly/consistently. The economy is made up of people and those people come from families and those people and their families are at different levels of maturity and capability. You don't take a 5yo child to an R-rated movie. You don't take a 10yo out drinking. Similarly: You do not take an unskilled J6P from a broken, or barely functional family background and just slot them into a STEM fast track and expect a robotics programmer to pop out the other side - even if it's all subsidized and paid for. You do not take a family/clan/social group right out of (relative) poverty and unsophistication and plop them right into sunnyvale and instruct them all to go get technical jobs and start living like good upper middle class folks. Running an economy that has people in it (the only kind I know of) without ladder rungs on the bottom is as silly as running a grade school with only 5th and 6th grade. No amount of subsidies or social welfare or coaching or lunch programs are going to let you slot a 6yo into 5th grade. In the same way, we have people and families and groups in any society that just aren't ready to walk into the googleplex and start coding. They aren't ready socially, they aren't ready economically and they aren't ready intellectually - and I mean this on a multi-generational scale. They need more than one lifetime to make this leap and the way they do that is within an economy that has decent, meaningful work for everyone. If you take those bottom rungs away you should absolutely expect the same kind of chaos and dysfunction as you would find in an elementary school with only the 5th and 6th grade.

azernik 11y ago
Let me start with, I agree 100%. And then comes the "but". The public policy prescription often made in order to achieve this goal is to bring manufacturing back. Unfortunately (?) in advanced economies manufacturing is no longer a steady source of plentiful blue-collar jobs. I think that's what the parent comment was getting at with "there's no rule" - if you encourage the manufacturing sector, there's no rule that makes it create jobs when economic imperatives drive it to greater automation. Jobs that are available to people without much education, savings, or assorted social capital are absolutely necessary to the stability of our society. I just don't think manufacturing can get us those in a country with developed-country living standards. EDIT: Fixed lots of phone-keyboard typos.

marshray 11y ago

Do you see the rubber pads on the floor and the dirty chair in front of the operators console? Surely it cuts down on the number of operators required compared to mid-20th century production methods, but these machines still require dedicated people to set the up and supervise. One positive difference is that an experience machine operator may now have a career path open didn't exist in years past: he could move up to the role of a CNC machining programmer.