19 ms·

A mistake about manufacturing costing Americans millions of jobs

308 points by jweir 8y ago

briandear 8y ago
It’s called competitive advantage.
- savanaly 8y ago
  Did you mean to say comparative advantage?
- api 8y ago
  Having no EPA, OSHA, unions, or worker protection laws is indeed a competitive advantage for manufacturing.
  - pjmlp 8y ago
    Specially for board members.
- Clubber 8y ago
  I mean sure, but what extent does creating competitive advantage become unfair and immoral? At what point is it a long term liability, both to industry and civilization as a whole? The US exploded after WWII because Europe and Asia were in ashes. That sure is a competitive advantage. We could attempt recreate that competitive advantage by bombing cities and manufacturing centers in other countries. We could create competitive advantage by invading and subjugating other resource rich countries. How about slave labor (chattel or coerced) sold it at pennies on the dollar? How about Standard Oil artificially lowering regional prices to put all competition out of business, only to raise the prices once dominance is attained? The question is really did China achieve that competitive advantage in unfair and unscrupulous ways? Should other countries be free to regain competitive advantage by finding even more unfair and unscrupulous methods? What does the world look like after walking down that path for another 50 years?
  - barry-cotter 8y ago
    > How about Standard Oil artificially lowering regional prices to put all competition out of business, Lowering prices to increase market share is perfectly fine, especiallly when you have decreasing costs of production. > only to raise the prices once dominance is attained? No evidence of any policy of them doing that, or of it happening on any long-term scale.
xt00 8y ago
Great article. Interesting that simply pulling the contribution of the computer sector out of the numbers makes things look terrible for American manufacturing. Currently China is working hard on being more relevant in the semiconductor sector and likely they will succeed. So be prepared for a long term trade war with China is my thinking.. but ultimately automation will become a bigger thing in China and then their employment will also stagnate, so will be interesting to see how they deal with finding enough jobs for everybody as well..
- MrBuddyCasino 8y ago
  > automation will become a bigger thing in China Only if the party allows that to happen. They've got strong incentives to keep people employed.
  - Matt3o12_ 8y ago
    Until it becomes cheaper for Apple and other big companies to produce in other countries once again because shipping becomes more expensive then land + electricity + robots + maintenance staff then it costs to do the same in China without automation (or only with the automation allowed by the Party). China's best bet is to have a very strong local economy before this happens and not really heavily on the west -- but they are already on the fast track to do that.
    - MrBuddyCasino 8y ago
      Good point. That may also partly explain China's shopping spree - if they control foreign businesses, they control where to manufacture stuff.
    - nraynaud 8y ago
      Yes they are bound to be the biggest economy in the world by the sheer size of their internal market. Same for India.
- crdoconnor 8y ago
  Automation was never really a macro-level job killing force anywhere. It both created and destroyed jobs. It was mainly a useful scapegoat. The reality was that highly automated factories were more visible (because they were the ones that didn't close and move abroad) and there was no shortage of anecdotes about jobs eliminated. If you're trying to protect profitable trade deals and austerian government budgets, a scapegoat is necessary. The most automated profession in the US has suffered no macro level disemployment effects: https://qz.com/962427/what-its-like-to-be-a-modern-engraver-the-most-automated-job-in-the-united-states/ https://qz.com/962427/what-its-like-to-be-a-modern-engraver-...
helpme420 8y ago
So that 300+ Billion trade deficit with China isn't the cause of a net job hemorrhage? Really?
- ItsMe000001 8y ago
  May I suggest you try to read more than the first paragraph of a linked article (or more than just the headline) before commenting?
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ItsMe000001 8y ago
Good article, my only gripe is that it seems to me that the author had to meet a word count target and expanded the content by 400% to meet it.
Spooky23 8y ago
This is why people don’t trust institutions, and is why we shouldn’t treat economics as science. Smells like willful ignorance to me. The brain dead obviousness of these shocking new revelations have been apparent to most people for decades — I wrote a paper about it in high school in 1992. I live upstate NY, once an economic powerhouse, now an empty shell. Every sector is dead, from farming to traditional industry. It was pretty obvious 25 years ago what was happening, and pretty obvious now. Work went to Mexico. That includes the machinery and tooling. Ten years later, it went to China. Automation is a thing, but the jobs left years ago and the upside of automation like mechanical engineering and tools are all being realized in China.
- api 8y ago
  "This is why people don't trust institutions." Too bad there's no HN gold. :) While its possible there is something to it, even if there is it irritates me to see so many people harp on Cambridge Analytica and Russia and such for why Trump won. Trump won because he was the only one who really ran on the collapse of the interior as an issue. I am not convinced Russian trolls or CA had much to do with it. At the very least I think without the rust belt he would have lost badly.
  - deleted 8y ago
    [deleted]
  - digi_owl 8y ago
    There was another, but he was to old and too male to be allowed to run...
    - ComputerGuru 8y ago
      It was purely political, he’s barely older than Clinton and gender isn’t the reason they picked someone from the in crowd over an outsider.
      - digi_owl 8y ago
MrBuddyCasino 8y ago
Its really hard to understand. I mean the newspapers were full of outsourcing stories, and how China was the world's sweatshop. The factories are there, they produce stuff, they employ massive amounts of people, manufacturing things that used to be manufactured in the west. NNT was right, again.
- jml7c5 8y ago
  NNT?
  - deleted 8y ago
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  - grzm 8y ago
    Nassim Nicholas Taleb https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb
- mistermann 8y ago
  They went from a 3rd world country to 2nd largest economy in < 20 years, their country is full of brand new wealth from skyscrapers to luxury cars to designer goods, and that wealth is also spilling over very flagrantly into numerous other countries, in some cases substantially distorting real estate markets. And the one reads articles that open with "Looking back, there were two kinds of people who lived in America in 2016: people who believed Donald Trump, and people who believed data." As if: a) Non-trump supporters read data b) Jobs disappearing due to automation could enable China to achieve its amazing transformation I can appreciate how leftists can laugh at stereotypical Trump supporters, they can be rather dumb after all, but can't wrap my head around how "Liberals" take themselves seriously, at least those who buy into the mainstream corporatist neo-liberal flavor of it. > Between 2000 and 2010, manufacturing employment plummeted by more than a third. Nearly 6 million American factory workers lost their jobs. The drop was unprecedented—worse than any decade in US manufacturing history. Even during the Great Depression, factory jobs shrunk by only 31%, according to a Information Technology & Innovation Foundation report. Though the sector recovered slightly since then, America’s manufacturing workforce is still more than 26% smaller than it was in 2000. Precisely as Ross Perot told us would happen. https://en.wikipedia.org/wiki/Ross_Perot https://en.wikipedia.org/wiki/Ross_Perot Based on his performance in the popular vote in 1992, Perot was entitled to receive federal election funding for 1996. Perot remained in the public eye after the election and championed opposition to the North American Free Trade Agreement (NAFTA), urging voters to listen for the "giant sucking sound" of American jobs heading south to Mexico should NAFTA be ratified. To those of you who may have the urge to claim Perot wasn't entirely right, China didn't join the WTO until 2001.
quantumofmalice 8y ago
Meanwhile economists STILL bang on about ricardian free trade while, out the other side of their mouth, talking gleefully about the fading usefulness, way of life and, ultimately, existence of the people whose communities were destroyed by their recommendations.
- tfehring 8y ago
  I don't disagree, but I also don't think it's appropriate to say that globalization and free trade should be avoided just because they've harmed those communities - globalization just needs to occur alongside policy changes that offset the localized harm that it does. At its current level of globalization, the US is at a point where it stands to benefit significantly in aggregate from further globalization [0]. The problem is that the benefits of globalization disproportionately accrue to the wealthy, both in aggregate and at the US's current level of globalization [1]. IMO, the best approach is to "grow the pie" by promoting globalization and free trade and then implement distributional policies domestically to ensure that no one gets screwed over. Most advocates of globalization would likely say the same. The issue is that in practice, that increase in globalization has occurred, but domestic policy has been regressive rather than progressive in terms of its impact on wealth inequality. [0] https://www.imf.org/en/Publications/WP/Issues/2018/03/13/The-Distribution-of-Gains-from-Globalization-45722 https://www.imf.org/en/Publications/WP/Issues/2018/03/13/The..., page 23 of linked PDF [1] Same source, page 26
  - cleandreams 8y ago
    This doesn't work, as shown by the last 30 years. It requires not only wiser elites than the ones we've got but also real political power for working people. "Ordinary" middle class working people have much less political representation than they did 40 years ago and there is no improvement in sight.
    - taurath 8y ago
      Campaign finance reform is needed before there can be any significant priority shift in the US from the wealthy elite and corporations to actual people.
ChuckMcM 8y ago
This is a pretty interesting article. It reminds me yet again that understanding how the data is collected and interpreted is as important, if not more important, than the data since the post processed data can drive invalid conclusions. Similar economic metrics that have undergone fairly large changes for both practical and political reasons are the unemployment rate and the cost of living. In all of these cases if you can get the core data and the methodology (as Dr. Houseman did) and it is yet another reason to make all of the data available rather than just to governors on the Federal Reserve board.
maxerickson 8y ago
Doesn't New York make a lot of Yogurt? Do the farmers know they stopped working?
- Spooky23 8y ago
  Dairy farmers are well aware of how hard they work. They lose about $0.10 for every dollar they make in New York. Most of them are just trying to stay solvent until they can sell.
  - mr_spothawk 8y ago
    I don't understand this Dairy reference. where can I learn mo?
    - dugmartin 8y ago
      Here is an article from my local paper in rural Massachusetts that gives more info - http://www.recorder.com/Dairy-farmers-hurt-by-lowest-prices-in-decade-4148749 http://www.recorder.com/Dairy-farmers-hurt-by-lowest-prices-...
      - mr_spothawk 8y ago
        I didn't realize there were federally set minimums. Good grief.
  - maxerickson 8y ago
    So is the sector dead or is it frantically losing money? I'm confused. (I'd sort of guess it matches up with the broader US milk market and produces more milk than it did in 1992, with the average producer being larger)
    - Avshalom 8y ago
      bit of both http://www.dailyitem.com/news/dropping-milk-prices-jeopardize-dairy-operations-in-u-s-and/article_9fc885a0-19eb-11e8-924f-4709a009fb43.html http://www.dailyitem.com/news/dropping-milk-prices-jeopardiz... https://www.motherjones.com/food/2018/03/dairy-glut-pizza-hut-trump-dominos-checkoff-taco-bell/ https://www.motherjones.com/food/2018/03/dairy-glut-pizza-hu...
digi_owl 8y ago
Gets a guy thinking about Steve Keen... https://en.wikipedia.org/wiki/Steve_Keen https://en.wikipedia.org/wiki/Steve_Keen
- dredmorbius 8y ago
  Absolutely one of the more interesting economists these days.
kelnos 8y ago
If we work hard to bring all these manufacturing jobs back, won't this just increase the cost of goods by a great deal, and make people upset because of that? Sure, shipping goods from overseas isn't free, but it still seems like US workers will not accept wages that will keep prices as low as they are now. And I don't blame them; I imagine the salary of your average factory worker in a developing country wouldn't get you very far even in areas in the US with a pretty low cost of living. Then again, I guess it's better to have a job but be unable to afford the the latest and greatest toys, than it is to just not have a job at all.
- pdonis 8y ago
  > If we work hard to bring all these manufacturing jobs back, won't this just increase the cost of goods by a great deal, and make people upset because of that? Yes. That's the fundamental reason those jobs went overseas in the first place: it was too expensive to keep them in the US. > it still seems like US workers will not accept wages that will keep prices as low as they are now I think that's correct. > I guess it's better to have a job but be unable to afford the the latest and greatest toys, than it is to just not have a job at all. The problem is not that the worker won't be able to afford the latest and greatest toys; it's that nobody else will be buying what the worker is producing, because it will cost too much. Which means bringing back those kinds of jobs is simply not a realistic proposal at this point.
  - knuththetruth 8y ago
    Too expensive for whom? If businesses reinvested their profits back into worker’s wages, the marginal rise in these costs could’ve been absorbed. Instead, the channeled them all into executive compensation and created a massive series of political and economic distortions along the way.
- dizzystar 8y ago
  I"m not really sure. I'm not an expert on all of this, but I've sourced from the US and China, so this is my take. The problem is that we (the public and various business owners) are still living under the assumption that it's the year 2000, when you could land from China for $3 and sell something for $30. This isn't true in the "New China," where wages are catching up to the US. That $20 item you are buying on eBay has a COL of $15. There are three major issues: 1- China has a TON of engineers. This isn't so true in the US. This means that China can get from spec to market in short order. In the US, spec to market is much slower. 2- Supply chain. In China, the manufacturer, design team, broker, sales, printer, and so on are all in one building. The US supply chain is incredibly convoluted, featuring 5 layers of people who's sole job is to prevent the buyer from contacting the factory directly. 3- China still has an unfair advantage. When you buy a product, a large chunk of that cost is shipping ("free shipping" is up to $7 that you don't see). This is doubly bad for the supplier, as they have to work out the shipping price for China -> US and US -> customer. Ever heard of e-packets? It's actually cheaper to use USPS ship from China -> customer than it is to ship a package US -> customer, even if the customer lives across the street. In short, China has some inherent advantages, but the US also does many things that give China an unfair advantage. Last but not least, the US supply chain is a complex web of back-patting that does little more than destroy itself. There are plenty of options for cheap US manufacturing, it's just that there is no scale for that, and there are many other small issues. The US has to do much more work than open up a new factory down the street. If we are talking about raw per piece production, the US often does it cheaper than China. It's all the other things that raise the price.
awat 8y ago
The efficiency quandry is really interesting to me. It makes me wonder if there is a practical limit to the utility of pure efficiency for a society? Obviously there are huge upsides to efficiency in resource usage etc. but it seems to harm portions of society at a certain point.
- deleted 8y ago
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- notabee 8y ago
  What you're left with is social inefficiencies instead of material or process inefficiencies. It's like trying to fix bad management at a company through engineering fixes: it just doesn't work. You have to solve the human problem. Also, the world is limited: you can't balloon out resource usage indefinitely to appease bad societal patterns. Eventually external factors will intervene such as resource exhaustion, ecosystem collapse, climate change, etc.
losvedir 8y ago
I want to like the article, but the lack of units on the axes are killing me! With the automation one... what's that mean? 300 what? 300 robots? And similarly with jobs declining and such. Some of them describe what's going on in the title, but a lot are sort of handwavy. I'm sure there's real data under it, but it's not presented very well.
- alejohausner 8y ago
  300, relative to an initial value of 100. This is common practice.
  - djokkataja 8y ago
    An initial value of 100 what? And over what time period? It's common practice to not label graphs correctly or at all, but without labels, graphs don't offer any representation of a model of reality (so the author is free to claim the graph indicates whatever he wants it to indicate). ... So if you click the link below the graph for the source data, the data that was graphed was the number of robots per ten thousand workers in the manufacturing industry in 2016. The report also indicated that the US had the second highest number of robots per 10000 workers in the automotive industry in 2016 after South Korea. Given that the article's main point was that the computer industry distorts the overall growth numbers for US manufacturing, it may be worth pointing out that different industries within the overall manufacturing industry may find different levels of automation appropriate at our current level of technology. Without a clearer picture of the relative representation of different manufacturing industries in each of these countries and what's considered state-of-the-art in terms of automation for each, I don't think the data for this graph can be used to unambiguously support the author's conclusion. Link to the source report: https://ifr.org/downloads/press/Executive_Summary_WR_2017_Industrial_Robots.pdf https://ifr.org/downloads/press/Executive_Summary_WR_2017_In...
    - burfog 8y ago
      100% We start at 100% of the starting value, by definition. We then go from there. So if there were 256 robots, and that increased to 384 robots, the graph would start at 100 and end at 150.
manofstick 8y ago
Another economic number I ponder over is inflation, and the economists method of revaluation of goods called the hedonic quality adjustment [1]. If you follow the example on the link provided, they show how upgrading an old tv that cost $250 to a new one that cost $1250 actually was had a negative inflation effect due to the extra features that the new TV had. From one perspective I can understand their point, but when the "new normal" of tv ownership basically demanded those features, so they weren't really extra benefits for the end user in the long run (and then became standard features where the prices did plummet back to the original $250, one again reading down the inflation figures). Look if like to think that economist are smarter than that, but given the original article... [1] https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...
- SilasX 8y ago
  There's an epically bad version of that error that I keep re-linking because it was such a central economic policy maker and such a clear version of the error[1]: essentially, yeah, food is more expensive, but iPads are faster, so it cancels out. Even if you accept the core logic, they went about it in an absurdly naive way: a 50% faster chip does not make the iPad 50% better; very little of that went to relieve a true bottleneck and so doesn't translate into observably higher usefulness. Now, if iPads were so much better that they actually freed up owners from significant household tasks that actually translated into e.g. greater free time or ease of earning, that would make sense. But the chip simply being faster isn't good enough. Incidentally, do they ever readjust inflation upward when products get worse? Like, when packaging is flimsier or paper cups harder to grip? Somehow I doubt it. [1] https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUSTRE72A4D520110311 https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...
  - ThrustVectoring 8y ago
    Or more relevantly, when ecological standards make household products worse. Removing phosphates from detergents, low-flow showerheads that are less relaxing, low-flow toilets that clog more often, high efficiency washers that break down more often, etc.
pm24601 8y ago
This line at the end is the most frustrating: > But they still don’t seem to grasp what’s been lost, or why. It’s easy to dismiss the disappearance of factory jobs as a past misstep—with a “we’re not getting those jobs back” and a sigh. Then again, you can’t know that for sure if you never try. If there is one thing that Obama did that was vital to the US it was saving of the automotive industry in 2008. He did this in spite of the "learned" economic experts saying otherwise. Too bad, he didn't ignore them with the banks and jail the bankers.
- azemetre 8y ago
  The issue with jailing bankers is that nothing they did was illegal. It was highly immoral but we don't jail people for being immoral (they do in some countries). If you want to jail bankers in the future, supporting institutions like Consumer Financial Protection Bureau and electing politicians that want to pass more strict laws is the only way to accomplish what you want. In this diametric political climate we have one party that is gutting the CFPB by installing leaders that are pro-finance/banking industry and rolling back protections under the guise of "not being fair."
  - pm24601 8y ago
    > The issue with jailing bankers is that nothing they did was illegal. They were never investigated. Looking back to earlier banking meltdowns, plenty of crimes were discovered. See for just such an example: https://en.wikipedia.org/wiki/Savings_and_loan_crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis It is a perfectly reasonable to suspect that similar crimes were also committed. You could also look at the court cases at : http://4closurefraud.org/ http://4closurefraud.org/ Many of the foreclosure cases involve banks not being able to demonstrate that they actually had standing to foreclose on houses. For example: http://4closurefraud.org/2018/02/09/fl-3rd-dca-reverses-ruling-that-found-hsbc-forged-mortgage-documents/ http://4closurefraud.org/2018/02/09/fl-3rd-dca-reverses-ruli...
siculars 8y ago
To say that outsourcing manufacturing was a good thing for anyone other than banksters is to say the sun shines out of my ass. And this is exactly what the US has allowed to happen over the course of decades. When manufacturing goes so too goes all the knowhow locked in real people along with all the innovation those real people could bring to the next generation of manufacturing. All that potential is now happening elsewhere. Because the US let it happen elsewhere. Oh, and in case it wasn’t obvious, that sentiment is partly responsible for the election of Trump.
- SkyMarshal 8y ago
  Agreed. The article touches on that, and Andy Grove spent the last decade or so of his life warning about it. https://www.theregister.co.uk/2016/03/23/andy_groves_warning_to_silicon_valley/ https://www.theregister.co.uk/2016/03/23/andy_groves_warning...
organicmultiloc 8y ago
There is some deep history here that has been barely reported on at all by any journalist, anywhere. It happened in many industries, in many political groups. Rumsfeld et al started this bigtime in the 80s, selling and giving tech and IP to several asian countries for diplomatic favors. We were not consulted as to why at the time, just forced to make ourselves highly available for several Chinese government partners that were very interested in some of our advances, particularly in networking and manufacturing. This song and dance apparently accelerated in the G W years, but by then all half our company had shut down and I had abandoned tech for the second time.
- mirimir 8y ago
  Yes. That's the basis for this, from the article: > In effect, US policymakers put diplomacy before industrial development at home, offering the massive American consumer market as a carrot to encourage other countries to open up their economies to multinational investment. Then, thanks to the popular narrative that automation was responsible for job losses in manufacturing, American leaders tended to dismiss the threat of foreign competition to a thriving manufacturing industry and minimize its importance to the overall health of the US economy. It started with Nixon's 1972 visit to China. Engineered by Kissinger. However, it's arguable that it helped prevent WWIII, so hey.
  - jackcosgrove 8y ago
    There's a word that describes the transfer of wealth from one country to another to achieve a desireable political outcome. It's called tribute. On a personal level it's called bribery. It could have been the best option at the time, especially with nuclear weapons in the mix. However it's also very convenient that those deciding to pay the tribute or bribe (government bigwigs) did not have to pay out of their own pockets. In fact they were able to skim a portion off for themselves.
    - mirimir 8y ago
      That's a great insight. I had thought of it as a policy decision, one aspect of the post-WWII globalization initiative. Encouraging trade and international connections, to reduce the risk of war. But yes, it also looks like tribute. Edit: > In fact they were able to skim a portion off for themselves. Walmart was represented at those talks :) I've heard that Mao offered 200 million young Chinese women, but Nixon passed, I guess.
jdhn 8y ago
>Since he took office, however, Trump has paid minimal attention to boosting US manufacturing. Instead, he’s favored counterproductive protectionism and ignored currency manipulation, preferring the punitive over the constructive. If those are counterproductive methods to boosting manufacturing, what would productive methods look like?
- nsnick 8y ago
  I think you need to read your quote again. A productive approach would focus on currency manipulation instead of protectionism.
  - jdhn 8y ago
    Oops, I missed the "ignored" in the second sentence. Good catch, thanks!
jMyles 8y ago
Wow - that was a great read. I like how it started by saying, > Looking back, there were two kinds of people who lived in America in 2016: people who believed Donald Trump, and people who believed data. ...only to show that, against the odds, people who believed "data" ended up being incorrect about some of the most crucial conclusions drawn by the use of that data. However, I have this itching feeling that I always have whenever I read an analysis on this topic, and it's this: Americans don't want those jobs back. We really don't. I think Dave Chappelle said it very well: https://www.youtube.com/watch?v=inlDT62oGy8 https://www.youtube.com/watch?v=inlDT62oGy8 And that leads to an even bigger realization: people (and the body politic) don't want jobs at all. Jobs aren't useful. People generally only want the resources and independence that come with a job. We've been sold the idea that the connection between "a job" (ie, something that someone does for hours a day, 5 days a week, in the tack of a career) and resource (like food and shelter, ie, the Money) is a natural, wholesome consequence of a free market. But then, why don't animals have jobs? Why don't very wealthy people have jobs? Why don't very poor people have jobs? Why don't indigenous people have jobs? Why don't well-adjusted hippies (think Rainbow Gathering) have jobs? I think that we can find a truly free market, with the price signals and freedom from state intervention that free market fans always cheer, but whose central models are the Job and the Money. If the internet means anything truly useful to our species, I think it's best viewed as our chance to finally shed the Job and the Money.
- will4274 8y ago
  > _Americans don't want those jobs back_. We really don't. > I think Dave Chappelle said it very well: https://www.youtube.com/watch?v=inlDT62oGy8 https://www.youtube.com/watch?v=inlDT62oGy8 > "I want to wear Nikes, I don't want to make them" I don't mean to sound like a dick, but it's very easy for a multimillionaire speaking to a upper middle class audience or for an upper middle class software developer on hackernews to agree with this sentiment. I think if you asked 100 unemployed Americans living in poverty, you might hear a different answer.
  - jMyles 8y ago
    You think that they'd say that, given the choice over whether to be given Nikes, made entirely by automation, or to have to work to make them, that they'd choose the work? I'm not saying that there aren't classes issues in play here. I'm saying that I wish poor people didn't have to wish to make shoes. Surely if we can automated all the matter around us to do our will, we can also shape instill in our economies the basic tendencies toward compassion and freedom.
confounded 8y ago
While I very much enjoyed the narrative of plucky Houseman and her cross-tabulation-of-truth battling against elites, smug in their complacent certainty, I’m also skeptical of it. I spent most of this century in the UK, and the narrative there was always that these jobs have gone away, they are not coming back, that’s why things say ‘Made in China’ on them. This seemed to be the conclusion of other EU countries too. Germany was very deliberate in its approach to manufacturing for export. I find it very hard to believe that the US alone could come to a radically different conclusion than the rest of the world about the largest economic trend of recent times, because no-one had examined numbers. The surprising thing is that as a politician you can say what you like, and journalists have neither the ability or interest to examine it before spreading. This seems to be what happened with the automation narrative.
- jdietrich 8y ago
  Likewise. Were people really arguing that offshoring was irrelevant to the decline in American manufacturing? I don't follow American politics, but it seems completely absurd that anyone would make such a claim. If true, then it's no wonder that Trump won the election.
  - archgoon 8y ago
    I don't recall this (everything was really due to Automation) being a serious bone of contention by anyone. The articles the article links to are all "This is totally counterintutive, but is it true?", which is basically just clickbait. As far as free trade philosophy was concerned during the election, Trump (and Bernie) got Hillary to back down from supporting the TPP, which seems to support the idea that politicians believed that outsourcing was reducing manufacturing jobs in the US. So as far as American Politics were concerned, everyone, including the free traders, believed that free trade hurt manufacturing jobs at home. It seems that the author is making this entire scenario unnecessarily political and polarizing. "Rogue Economist finds blinding obvious flaw by incompetent elites"; which, given that this is Houseman (one of the economic elites), it's very much kinda not?
- jedberg 8y ago
burkemw3 8y ago
I didn't expect there was much electronics manufacturing in the US at all, let alone it has been driving manufacturing "growth". I honestly expected a solid chunk of design happened in the US, then the fab happened elsewhere. This article got me to do a bit more reading (yay!). So, I'm sharing a bit of that, as a starting point for anyone else that wants to dig in more. This commerce.gov report [0] taught me a few pieces of the puzzle. I especially like the graphics on pages 5 and 7, showing major semiconductor manufacturing and lots of output from Cali, Oregon, and Texas. This wiki page [1] shows lists semiconductor fab plants. The ones I recognize (as my own proxy for size) are Intel, TI, Broadcom, Seagate, former Fairchild, and NXP/Freescale. [0]: https://www.commerce.gov/sites/commerce.gov/files/migrated/reports/made-in-america-computer-and-electronic-products.pdf https://www.commerce.gov/sites/commerce.gov/files/migrated/r... [1]: https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat...
- amluto 8y ago
  Sometimes I wonder how well attribution of added value works. If a US plant imports a laptop, a laptop manual, and a box, puts them all together to make a laptop in a box, and sells the laptop to Best Buy for 20% more than what it cost them to get the pieces manufactured abroad, did they really just manufacture 20% of the wholesale price of a laptop? If so, their productivity is high, but it has nothing to do with automation.
  - deleted 8y ago
    [deleted]
  - starky 8y ago
    This is one area of manufacturing that I am sorely lacking on knowledge in. However, isn't value added calculated on the COGS? That is, they take all the inputs, and then add labour, raw materials, property, etc. to get the total cost?
    - amluto 8y ago
      I’m not sure. I do suspect that a naive calculation of COGS gives essentially arbitrary results. Consider a hypothetical phone assembled in the USA. Maybe COGS is quite low. Then the maker shifts profits to Ireland by selling its IP to an Irish subsidiary and licensing it back at ruinous rates. Did COGS go up? For factory productivity numbers, I assume that labor is not subtracted from value. If one person at $50/hr builds $51/hr of widgets completely from scratch, their productivity is $51/hr, not $1/hr.
tzs 8y ago
> By 2016, real manufacturing output, sans computers, was lower than it was in 2007 Maybe I just overlooked it, but I didn't see any mention of the big recession that happened on the 2007 end of that interval. A lot of industries that were hit hard in that took a very long time to recover (some still have not). Because of that, articles that do comparisons from 2007 or thereabouts probably should include a short note explaining when whatever they are looking at recovered from that recession.
jerkstate 8y ago
Stripping out computer manufacturing is an interesting take, but the rise of import of intermediate (partially completed) goods is another major cause of the decline of manufacturing in the US. Labor, energy, and environmentally intensive partially completed goods are often manufactured elsewhere now, we do final assembly here and add the output value to our "manufacturing output" so that line goes up even though we're doing a lot less of the work here.
tzs 8y ago
> There are also observable signs that automation wasn’t to blame. Consider the shuttering of some 78,000 manufacturing plants between 2000 and 2014, a 22% drop. This is odd given that robots, like humans, have to work somewhere. We need more information to tell if that is odd. Yes, robots, like humans, have to work somewhere--but robots, unlike humans, don't care where that somewhere is. Plants using mostly human labor face more size constraints, I'd expect, than do plants using mostly robot labor. Adding more humans to a plant means you need more housing in the nearby communities, more traffic capacity, bigger schools, and so on. There are limits on how fast communities can add those things, so you can end up having to have several plants in different communities. With a mostly robotic plant, your growth constraints are land, energy infrastructure, and transportation infrastructure to bring in raw materials and ship your output. I'd expect, then, that a company using mostly robot plants would move to have a smaller number of larger plants for a given level of output than would a company using mostly human plants.
- touristtam 8y ago
  You are forgetting financial burden (short vs long term) and technological investment. It kind of reminds me of the state of Chrysler vs Toyota in the 90s.
ComputerGuru 8y ago
I’m just wondering why we research and policy have been built around “net numbers minus computer numbers” instead of “non-computer sectors, aggregated.” What an ass-backwards approach. No wonder the data has been wrong and the findings have been wrong. You have access to raw data, and you instead chooose to go to final results that already include some measure of error and approximate the solution in reverse rather than simply summing up non-tech industry growth? Really?
8bitsrule 8y ago
No jobs, no homes for millions. No wonder things look so rosy. Like a plane with no economy class. But ... will this aggression stand?
Avshalom 8y ago
So what they're saying is that manufacturing is still going up just in different fields, and the nobody got hired for the manufacturing that is happening... I understand the distinction they're trying to draw but I don't know if it's actually all that usefully distinct.
foota 8y ago
Is stripping away computer manufacturing a legitimate thing to do though? After all, it is still output.
- purple-again 8y ago
  In this instance yes, it’s core to understanding what really happened in our economy. The critical point is how they account for better products year over year. A faster chip in 2017 is counted as 2 2016 chips because it’s that much better. A can of soda in 2017 is equal to a can of soda in 2016. So when you remove this one weird industry that is experiencing tremendous growth in power, it turns out our manufacturing has been well and truly gutted. If you look at manufacturing “value” including computers it doesn’t look so bad. If you look at manufacturing units not including computers...you understand Trump 2016 a little better.
  - foota 8y ago
    Yes, but didn't the computer manufacturing industry use up lots of investment to get there?
jackcosgrove 8y ago
The fact that rapid productivity increases due to the computer industry began in the late 1970s is a flashing red light to me. The late 1970s is when productivity and wages began to diverge. Much ink has been spilled about this, as it corresponded with the emergence of neoliberal economics by Reagan and Thatcher. Maybe wages and productivity began to diverge not because labor was capturing less value due to political developments, but because we have been overestimating the productivity of industry in aggregate due to the rapid productivity growth in one sector, computers, skewing the aggregate. It seems like a statistical misattribution of this scale could be applied to many other phenomena.
- mc32 8y ago
  It's a bit surprising that statisticians and others who study the economy would miss this nuance. If Piper Jaffrey and others can pour into Apple's suppliers to divine whether Apple will meets iPhone shipment expectations, one would think professional economists would peer similarly into the nuts and bolts of the industries they profess to know about. There was a time the US had an interest in the getting the rest of the work to "Globalize" to stem the Soviet tide. We won, it's over, but the American worker is still getting shafted by the industrialists who loved cheap outsourced labor. Clinton, Bush and Obama either were completely complicit in this or lacked the wherewithal to fight it. Maybe Kanye along with others can get Americans reluctant to side with current American policies to see the advantages to bringing things back state side --or at least stemming the hemorrhage. It's not like China or Mexico or anyone else thinks "Oh, those poor Americans who get laid off, who will think of them". Nope, everyone is out for themselves --despite what Globalists say.
  - greglindahl 8y ago
    "Comparative Advantage" in economics involves everyone being out for themselves, and that's how businesses choose where to produce or procure things.
  - simonh 8y ago
    The problem for Clinton, Bush and Obama is that if you put up protectionist firewalls against cheaper goods from foreign counties with cheaper labour two things happen. Firstly yes you stimulate employment in local manufacturing, but by definition all of the consumers buying those locally made goods are paying more for them. You might have a million more manufacturing jobs, but hundreds of millions of people are paying through the nose for it. Meanwhile you may not actually make any significant difference to overall employment. Most of those million people now in manufacturing will have moved from jobs in other sectors, increasing costs in those sectors too. Meanwhile none of this does anything for America’s exports, because foreigners can still buy the same goods from your cheaper foreign competitors. In fact it can hurt exports if the goods you’re manufacturing are inputs to existing American exporters. Take steel, if American car exporters now have to buy more expensive locally made steel, the price of their cars goes up hurting car exports as well as shafting American car buyers.
pessimizer 8y ago
I think the real mistake (which isn't a mistake, but an intentional deception) is that the manufacturing that left the US was in less capital-intensive industries (i.e. where labor costs were higher), and the lowering of the number of labor hours per dollar of earnings was intentionally misinterpreted as an increase in automation as a way to get industry-favored legislation passed.
branchless 8y ago
Manufacturing is a waste of time. People don't need real stuff. Paper wealth is where it's at. Check out the 'growth' in banking: https://pbs.twimg.com/media/DceTLZ9UQAAr335.jpg:large https://pbs.twimg.com/media/DceTLZ9UQAAr335.jpg:large "The divergence first emerged in the late 1970s". Hmm.
forapurpose 8y ago
Does anyone know anything about the institute that produced this report, the Upjohn Institute? I've never heard of them, which doesn't man a lot but it means something. https://www.upjohn.org/ https://www.upjohn.org/ Also, does anyone know anything about Houseman, the (principle?) researcher? IME, there are many small organizations that produce reports to grind some small axe. It doesn't mean Upjohn is one of them, but it's important to know who you are listening to. EDIT: It looks like a local research organization located in Kalamazoo, Michigan. They say they date back to the Great Depression. The Board of Trustees often gives a good introductory picture of an organization; in this case, I see a mix of academic and business leaders local to Kalamazoo: https://www.upjohn.org/about-us/board-of-trustees https://www.upjohn.org/about-us/board-of-trustees Also, you can find Houseman's and other researcher's official bios here. They look like real economists, fwiw: https://www.upjohn.org/about-us/research-staff https://www.upjohn.org/about-us/research-staff (Ironically, many in this discussion are citing research by economists to claim that economists are unreliable.)
- phonon 8y ago
  The W. E. Upjohn Institute for Employment Research has been around since 1932 [1]. They have a staff of around 100 employees[1], and assets of over 192 million dollars[2]. Susan Houseman has a very distinguished CV[3], and you can read her full paper and presentation here.[4][5] Here is a video of her speaking on the topic.[6] [1]https://en.wikipedia.org/wiki/W._E._Upjohn_Institute_for_Employment_Research https://en.wikipedia.org/wiki/W._E._Upjohn_Institute_for_Emp... [2]http://www.upjohn.org/sites/default/files/pdf/Upjohn-Institute-Financial-Report-2016-Final.pdf http://www.upjohn.org/sites/default/files/pdf/Upjohn-Institu... [3]https://www.upjohn.org/sites/default/files/housemancurrentcv_Jan2018.pdf https://www.upjohn.org/sites/default/files/housemancurrentcv... [4]http://research.upjohn.org/cgi/viewcontent.cgi?article=1268&context=empl_research http://research.upjohn.org/cgi/viewcontent.cgi?article=1268&... [5]http://research.upjohn.org/cgi/viewcontent.cgi?article=1054&context=presentations http://research.upjohn.org/cgi/viewcontent.cgi?article=1054&... [6]https://www.c-span.org/video/?439645-1/manufacturing-jobs https://www.c-span.org/video/?439645-1/manufacturing-jobs
HillaryBriss 8y ago
... according to Houseman’s data, without computers, manufacturing’s real output expanded at an average rate of only about 0.2% a year in the 2000s. By 2016, real manufacturing output, sans computers, was lower than it was in 2007. This is a very interesting story that deserves a much wider hearing.
andrewjl 8y ago
The US needs a serious industrial policy to counter this. Couple of ideas: - A venture fund, similar to In-Q-Tel, focused on investing in cutting edge manufacturing tech startups. It'll make sense to focus on defense applications initially, but many of those techniques do get carried over into private enterprise. - Increased grants for fundamental research, and tax write offs for corporates who expand R&D facilities adjacent to production facilities in the country. - Inevitably any company doing manufacturing today will experience labor shortages, most experienced staff are now retired. A federal program to re-train displaced workers to become technicians servicing the robots doing the assembly, monitoring quality, and doing basic troubleshooting work onsite. - Tax writeoffs for companies who provide training for front-line employees to move into design and engineering roles. EDIT: Old time manufacturing jobs are gone and not coming back, however they are loads of opportunities in other areas of manufacturing that will generate much more value per employee and hence will pay better. Giving companies incentives to create these jobs, and providing a pathway for individuals with minimal training to attain the skills necessary to do them will solve the problem over time. Of course, it's all in the details.
mrfusion 8y ago
What was the mistake?
- tobinfricke 8y ago
  »“Declining manufacturing employment over the past 30 years has given a lot of people the impression that America’s manufacturing sector is in decline. But that’s actually wrong,” the Vox article explained. “American factories are about twice as efficient today as they were three decades ago. So we’re producing more and more stuff, even as we use fewer and fewer people to do it.”«
- ars 8y ago
  An increase in the speed of computer was counted as an increase in manufacturing output. Once you remove all of that the data looks radically different.
OrganicMSG 8y ago
Did anyone sensible think automation was largely responsible for the job loss in the richer countries? Manufacturing has chased cheap wages globally since the 1960's. I always thought the widely accepted narrative was that automation might bring some bulk manufacturing back to richer countries when it starts to compete with the cost of a skilled worker in a lower wage economy, after a decades long policy of outsourcing manufacturing chains, not that richer countries somehow automated away all the jobs at home.
11thEarlOfMar 8y ago
If it were me, I'd want to know what % of manufactured goods consumed globally[0] were manufactured in the US over time. If that % has dramatically dropped over the last, oh, 50 years, I'd say we've exported our manufacturing, regardless of automation. [0] Semi equipment, earth moving equipment, networking equipment, aircraft,... a lot of big, expensive stuff made in the US gets exported, wouldn't want to leave that out of the picture.
RickJWagner 8y ago
Silly me, I thought this would be an article about manufacturing. Of course it's really poorly written political propaganda. Ugh, a minute lost.
mi100hael 8y ago
> Trade may have been a factor—but it clearly wasn’t the main culprit. Automation was. Why can't both be considered? Trump wasn't wrong when he pointed out trade agreements were shifting labor abroad. > The Economic Policy Institute think tank estimated that as of 2010, the trade imbalance with Mexico had cost the U.S. about 683,000 net jobs — about 60% of those in manufacturing. (http://www.latimes.com/business/la-fi-mexico-jobs-20161212-story.html http://www.latimes.com/business/la-fi-mexico-jobs-20161212-s...)
rdlecler1 8y ago
I don’t buy it. You can lie with statistics and You can also lie with data. The fact that many many jobs moved to China coupled with the growth of their own manufacturing industry and it’s clear that globalization is an issue. The argument is that consumers pay cheaper prices but it doesn’t work that way with technology. Consumers have the money they are willing to spend and they’ll get the best item then can with that. Which is more important, my 65” HDTV or a 55” 1080p that comes with jobs and economic balance.
- wpdev_63 8y ago
  You should go tell walmart that their business model isn't working.
  - losteric 8y ago
    It's exploitative, unsustainable, and highly profitable.
evrydayhustling 8y ago
I disagree that automation was the main opposition narrative about why manufacturing jobs were declining. The dominant line among folks I knew was that Americans didn't want to put up with the lifestyle offered by, say, Foxconn China (which produced a suicides alongside iPhones). That's consistent with "losing jobs to foreign competition", but hardly and argument for moving that capacity back to the States. Note: I personally think there is amazing innovation around production happening elsewhere in the world, besides low wages. That's something I would like to see happening more in the USA. But I doubt it is as significant as cheap labor in moving manufacturing abroad.
azernik 8y ago
The article doesn't explain the quality adjustment problem well: > The problem is, the processor released in 2017 is superior to that sold in 2016 in many tangible ways. But how do you account for the fact that a 2017 processor provides users with more value? In general, statisticians assume the difference in value between the two models is just the difference in their prices. If, say, the 2017 processor costs twice as much as the 2016 one does, then selling one 2017 processor counts as selling two of the 2016 versions in the statisticians’ books. This makes it sound like the problem is prices rising from year-to-year. The real issue is that the comparison is made with the price of the 2016 processor in 2017. See "methods of quality adjustment" in https://www.bls.gov/ppi/qualityadjustment.pdf https://www.bls.gov/ppi/qualityadjustment.pdf So basically - let's say in 2016 a new CPU costs $200. Then in 2017 Intel releases a new model, prices it also at $200, and sells the old model at $100. The quality adjustment algorithm will see that right now, the new one is selling for twice as much as the old one, and assume that there's been a 2x jump in value per item. [EDIT: One way of thinking about this is: the method treats clearance prices for last year's model as deflation in this particular market, and adjusts for it.]
- whack 8y ago
  I was thinking about this as well, and it doesn't seem like an easy problem to solve. Subjectively, we know that the reason 2017 processors cost 2x as much as a 2016 processor, is because of improvements in process technology and architectural design. There might be incremental improvements in the manufacturing process, but not enough to say that "manufacturing capabilities have doubled compared to last year". The obvious solution here would be to compare the price of a 2017 processor in 2017, to the price of a 2016 processor in 2016. But that would give hopelessly cynical answers in other circumstances. For instance, consider a factory for paperclips that produced 10M units in 2016, and due to various improvements, 20M units in 2017. The paperclips in both years are mostly identical to one another. But for various market reasons, the price of each paperclip has fallen by 50%. Possibly due to the enlarged supply from factories all over the country doubling their production. In such a situation, if you rated the factory's output using the alternative metric suggested above, you would think that the factory hasn't made any improvements at all in the last year. When in reality, it has doubled its production capabilities and efficiency. There just doesn't seem to be a purely quantitative to compare the manufacturing capabilities of factories that produce qualitatively different products year over year. This seems to make moot any single metric that rates aggregative manufacturing capabilities across multiple years.
dalbasal 8y ago
"two kinds of people who lived in America in 2016: people who believed Donald Trump, and people who believed data." This is scientism. The question around the effects of economic globalisation, trade relations, the size of china's manufacturing industries, automation and other advances in manufacturing methods... it's not a decided issue. You can't just put quote an economist on "The Long-Term Jobs Killer is Not China. It’s Automation." and present this as a "case closed, science has spoken" decree.
- ebalit 8y ago
  I think this line is about repeating the narrative about the trade debate during the last US election. The author follows by explaining why it was wrong, showing why data is not always reliable and in a sense rehabilitating the value of gut feeling.
  - dalbasal 8y ago
    That is fine. It is a perfectly reasonable argument. She should make it, and make a case. But, she started with "the data/science is in" as if she's reporting on an indisputable truth, rather than a plausible narrative. This puts anyone who disagrees with her in an irrational truth denier category, as if her position was an authority on par with newton's laws. This is scientism, and it's harmful when public debate (especially around politically charged questions) picks up this style of writing/speaking.
deleted 8y ago
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lgleason 8y ago
This article fails the basic sniff test. The US is running net trade deficits and continuing to take on more debt every year. As you go about your daily life in the US a significant amount of the manufactured things you purchase are made overseas. Most electronics, made in Asia. Cars, if assembled in the US, have a significant amount of foreign content. Clothes, more often than not overseas. Dishes & kitchen items, mostly China. Major appliances, unless you are buying a GE (now owned by Haire Chinese company) or Whirlpool, made in Mexico, Asia or Europe. Furniture, many choices, especially the ones you assemble, overseas. Lamps, fans, light bulbs, switches, HVAC system etc....mostly China, Mexico etc.. Bed linens, towels, mostly overseas. Your luggage, Asia, Mexico or Europe. If you fly on a US airline on a Boeing plane, it's major overhauls and inspections are being done in Mexico, China etc.. If automation were the culprit, given the transportation costs, these would be manufactured in the US by robots.
- dougabug 8y ago
  Did you read the article? The central thesis is that automation is not the primary culprit for manufacturing job losses.
profalseidol 8y ago
How come people don't realize that less jobs due to automation should mean more vacation?

308 points by jweir 8y ago

briandear 8y ago

It’s called competitive advantage.

savanaly 8y ago
Did you mean to say comparative advantage?
api 8y ago
Having no EPA, OSHA, unions, or worker protection laws is indeed a competitive advantage for manufacturing.
- pjmlp 8y ago
  Specially for board members.
Clubber 8y ago
I mean sure, but what extent does creating competitive advantage become unfair and immoral? At what point is it a long term liability, both to industry and civilization as a whole? The US exploded after WWII because Europe and Asia were in ashes. That sure is a competitive advantage. We could attempt recreate that competitive advantage by bombing cities and manufacturing centers in other countries. We could create competitive advantage by invading and subjugating other resource rich countries. How about slave labor (chattel or coerced) sold it at pennies on the dollar? How about Standard Oil artificially lowering regional prices to put all competition out of business, only to raise the prices once dominance is attained? The question is really did China achieve that competitive advantage in unfair and unscrupulous ways? Should other countries be free to regain competitive advantage by finding even more unfair and unscrupulous methods? What does the world look like after walking down that path for another 50 years?
- barry-cotter 8y ago
  > How about Standard Oil artificially lowering regional prices to put all competition out of business, Lowering prices to increase market share is perfectly fine, especiallly when you have decreasing costs of production. > only to raise the prices once dominance is attained? No evidence of any policy of them doing that, or of it happening on any long-term scale.

xt00 8y ago

Great article. Interesting that simply pulling the contribution of the computer sector out of the numbers makes things look terrible for American manufacturing. Currently China is working hard on being more relevant in the semiconductor sector and likely they will succeed. So be prepared for a long term trade war with China is my thinking.. but ultimately automation will become a bigger thing in China and then their employment will also stagnate, so will be interesting to see how they deal with finding enough jobs for everybody as well..

MrBuddyCasino 8y ago
> automation will become a bigger thing in China Only if the party allows that to happen. They've got strong incentives to keep people employed.
- Matt3o12_ 8y ago
  Until it becomes cheaper for Apple and other big companies to produce in other countries once again because shipping becomes more expensive then land + electricity + robots + maintenance staff then it costs to do the same in China without automation (or only with the automation allowed by the Party). China's best bet is to have a very strong local economy before this happens and not really heavily on the west -- but they are already on the fast track to do that.
  - MrBuddyCasino 8y ago
    Good point. That may also partly explain China's shopping spree - if they control foreign businesses, they control where to manufacture stuff.
  - nraynaud 8y ago
    Yes they are bound to be the biggest economy in the world by the sheer size of their internal market. Same for India.
crdoconnor 8y ago
Automation was never really a macro-level job killing force anywhere. It both created and destroyed jobs. It was mainly a useful scapegoat. The reality was that highly automated factories were more visible (because they were the ones that didn't close and move abroad) and there was no shortage of anecdotes about jobs eliminated. If you're trying to protect profitable trade deals and austerian government budgets, a scapegoat is necessary. The most automated profession in the US has suffered no macro level disemployment effects: https://qz.com/962427/what-its-like-to-be-a-modern-engraver-the-most-automated-job-in-the-united-states/ https://qz.com/962427/what-its-like-to-be-a-modern-engraver-...

helpme420 8y ago

So that 300+ Billion trade deficit with China isn't the cause of a net job hemorrhage? Really?

ItsMe000001 8y ago
May I suggest you try to read more than the first paragraph of a linked article (or more than just the headline) before commenting?
- deleted 8y ago
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ItsMe000001 8y ago

Good article, my only gripe is that it seems to me that the author had to meet a word count target and expanded the content by 400% to meet it.

Spooky23 8y ago

This is why people don’t trust institutions, and is why we shouldn’t treat economics as science. Smells like willful ignorance to me. The brain dead obviousness of these shocking new revelations have been apparent to most people for decades — I wrote a paper about it in high school in 1992. I live upstate NY, once an economic powerhouse, now an empty shell. Every sector is dead, from farming to traditional industry. It was pretty obvious 25 years ago what was happening, and pretty obvious now. Work went to Mexico. That includes the machinery and tooling. Ten years later, it went to China. Automation is a thing, but the jobs left years ago and the upside of automation like mechanical engineering and tools are all being realized in China.

api 8y ago
"This is why people don't trust institutions." Too bad there's no HN gold. :) While its possible there is something to it, even if there is it irritates me to see so many people harp on Cambridge Analytica and Russia and such for why Trump won. Trump won because he was the only one who really ran on the collapse of the interior as an issue. I am not convinced Russian trolls or CA had much to do with it. At the very least I think without the rust belt he would have lost badly.
- deleted 8y ago
  [deleted]
- digi_owl 8y ago
  There was another, but he was to old and too male to be allowed to run...
  - ComputerGuru 8y ago
    It was purely political, he’s barely older than Clinton and gender isn’t the reason they picked someone from the in crowd over an outsider.
    - digi_owl 8y ago

MrBuddyCasino 8y ago

Its really hard to understand. I mean the newspapers were full of outsourcing stories, and how China was the world's sweatshop. The factories are there, they produce stuff, they employ massive amounts of people, manufacturing things that used to be manufactured in the west. NNT was right, again.

jml7c5 8y ago
NNT?
- deleted 8y ago
  [deleted]
- grzm 8y ago
  Nassim Nicholas Taleb https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb
mistermann 8y ago
They went from a 3rd world country to 2nd largest economy in < 20 years, their country is full of brand new wealth from skyscrapers to luxury cars to designer goods, and that wealth is also spilling over very flagrantly into numerous other countries, in some cases substantially distorting real estate markets. And the one reads articles that open with "Looking back, there were two kinds of people who lived in America in 2016: people who believed Donald Trump, and people who believed data." As if: a) Non-trump supporters read data b) Jobs disappearing due to automation could enable China to achieve its amazing transformation I can appreciate how leftists can laugh at stereotypical Trump supporters, they can be rather dumb after all, but can't wrap my head around how "Liberals" take themselves seriously, at least those who buy into the mainstream corporatist neo-liberal flavor of it. > Between 2000 and 2010, manufacturing employment plummeted by more than a third. Nearly 6 million American factory workers lost their jobs. The drop was unprecedented—worse than any decade in US manufacturing history. Even during the Great Depression, factory jobs shrunk by only 31%, according to a Information Technology & Innovation Foundation report. Though the sector recovered slightly since then, America’s manufacturing workforce is still more than 26% smaller than it was in 2000. Precisely as Ross Perot told us would happen. https://en.wikipedia.org/wiki/Ross_Perot https://en.wikipedia.org/wiki/Ross_Perot Based on his performance in the popular vote in 1992, Perot was entitled to receive federal election funding for 1996. Perot remained in the public eye after the election and championed opposition to the North American Free Trade Agreement (NAFTA), urging voters to listen for the "giant sucking sound" of American jobs heading south to Mexico should NAFTA be ratified. To those of you who may have the urge to claim Perot wasn't entirely right, China didn't join the WTO until 2001.

quantumofmalice 8y ago

Meanwhile economists STILL bang on about ricardian free trade while, out the other side of their mouth, talking gleefully about the fading usefulness, way of life and, ultimately, existence of the people whose communities were destroyed by their recommendations.

tfehring 8y ago
I don't disagree, but I also don't think it's appropriate to say that globalization and free trade should be avoided just because they've harmed those communities - globalization just needs to occur alongside policy changes that offset the localized harm that it does. At its current level of globalization, the US is at a point where it stands to benefit significantly in aggregate from further globalization [0]. The problem is that the benefits of globalization disproportionately accrue to the wealthy, both in aggregate and at the US's current level of globalization [1]. IMO, the best approach is to "grow the pie" by promoting globalization and free trade and then implement distributional policies domestically to ensure that no one gets screwed over. Most advocates of globalization would likely say the same. The issue is that in practice, that increase in globalization has occurred, but domestic policy has been regressive rather than progressive in terms of its impact on wealth inequality. [0] https://www.imf.org/en/Publications/WP/Issues/2018/03/13/The-Distribution-of-Gains-from-Globalization-45722 https://www.imf.org/en/Publications/WP/Issues/2018/03/13/The..., page 23 of linked PDF [1] Same source, page 26
- cleandreams 8y ago
  This doesn't work, as shown by the last 30 years. It requires not only wiser elites than the ones we've got but also real political power for working people. "Ordinary" middle class working people have much less political representation than they did 40 years ago and there is no improvement in sight.
  - taurath 8y ago
    Campaign finance reform is needed before there can be any significant priority shift in the US from the wealthy elite and corporations to actual people.

ChuckMcM 8y ago

This is a pretty interesting article. It reminds me yet again that understanding how the data is collected and interpreted is as important, if not more important, than the data since the post processed data can drive invalid conclusions. Similar economic metrics that have undergone fairly large changes for both practical and political reasons are the unemployment rate and the cost of living. In all of these cases if you can get the core data and the methodology (as Dr. Houseman did) and it is yet another reason to make all of the data available rather than just to governors on the Federal Reserve board.

maxerickson 8y ago

Doesn't New York make a lot of Yogurt? Do the farmers know they stopped working?

Spooky23 8y ago
Dairy farmers are well aware of how hard they work. They lose about $0.10 for every dollar they make in New York. Most of them are just trying to stay solvent until they can sell.
- mr_spothawk 8y ago
  I don't understand this Dairy reference. where can I learn mo?
  - dugmartin 8y ago
    Here is an article from my local paper in rural Massachusetts that gives more info - http://www.recorder.com/Dairy-farmers-hurt-by-lowest-prices-in-decade-4148749 http://www.recorder.com/Dairy-farmers-hurt-by-lowest-prices-...
    - mr_spothawk 8y ago
      I didn't realize there were federally set minimums. Good grief.
- maxerickson 8y ago
  So is the sector dead or is it frantically losing money? I'm confused. (I'd sort of guess it matches up with the broader US milk market and produces more milk than it did in 1992, with the average producer being larger)
  - Avshalom 8y ago
    bit of both http://www.dailyitem.com/news/dropping-milk-prices-jeopardize-dairy-operations-in-u-s-and/article_9fc885a0-19eb-11e8-924f-4709a009fb43.html http://www.dailyitem.com/news/dropping-milk-prices-jeopardiz... https://www.motherjones.com/food/2018/03/dairy-glut-pizza-hut-trump-dominos-checkoff-taco-bell/ https://www.motherjones.com/food/2018/03/dairy-glut-pizza-hu...

digi_owl 8y ago

Gets a guy thinking about Steve Keen... https://en.wikipedia.org/wiki/Steve_Keen https://en.wikipedia.org/wiki/Steve_Keen

dredmorbius 8y ago
Absolutely one of the more interesting economists these days.

kelnos 8y ago

If we work hard to bring all these manufacturing jobs back, won't this just increase the cost of goods by a great deal, and make people upset because of that? Sure, shipping goods from overseas isn't free, but it still seems like US workers will not accept wages that will keep prices as low as they are now. And I don't blame them; I imagine the salary of your average factory worker in a developing country wouldn't get you very far even in areas in the US with a pretty low cost of living. Then again, I guess it's better to have a job but be unable to afford the the latest and greatest toys, than it is to just not have a job at all.

pdonis 8y ago
> If we work hard to bring all these manufacturing jobs back, won't this just increase the cost of goods by a great deal, and make people upset because of that? Yes. That's the fundamental reason those jobs went overseas in the first place: it was too expensive to keep them in the US. > it still seems like US workers will not accept wages that will keep prices as low as they are now I think that's correct. > I guess it's better to have a job but be unable to afford the the latest and greatest toys, than it is to just not have a job at all. The problem is not that the worker won't be able to afford the latest and greatest toys; it's that nobody else will be buying what the worker is producing, because it will cost too much. Which means bringing back those kinds of jobs is simply not a realistic proposal at this point.
- knuththetruth 8y ago
  Too expensive for whom? If businesses reinvested their profits back into worker’s wages, the marginal rise in these costs could’ve been absorbed. Instead, the channeled them all into executive compensation and created a massive series of political and economic distortions along the way.
dizzystar 8y ago
I"m not really sure. I'm not an expert on all of this, but I've sourced from the US and China, so this is my take. The problem is that we (the public and various business owners) are still living under the assumption that it's the year 2000, when you could land from China for $3 and sell something for $30. This isn't true in the "New China," where wages are catching up to the US. That $20 item you are buying on eBay has a COL of $15. There are three major issues: 1- China has a TON of engineers. This isn't so true in the US. This means that China can get from spec to market in short order. In the US, spec to market is much slower. 2- Supply chain. In China, the manufacturer, design team, broker, sales, printer, and so on are all in one building. The US supply chain is incredibly convoluted, featuring 5 layers of people who's sole job is to prevent the buyer from contacting the factory directly. 3- China still has an unfair advantage. When you buy a product, a large chunk of that cost is shipping ("free shipping" is up to $7 that you don't see). This is doubly bad for the supplier, as they have to work out the shipping price for China -> US and US -> customer. Ever heard of e-packets? It's actually cheaper to use USPS ship from China -> customer than it is to ship a package US -> customer, even if the customer lives across the street. In short, China has some inherent advantages, but the US also does many things that give China an unfair advantage. Last but not least, the US supply chain is a complex web of back-patting that does little more than destroy itself. There are plenty of options for cheap US manufacturing, it's just that there is no scale for that, and there are many other small issues. The US has to do much more work than open up a new factory down the street. If we are talking about raw per piece production, the US often does it cheaper than China. It's all the other things that raise the price.

awat 8y ago

The efficiency quandry is really interesting to me. It makes me wonder if there is a practical limit to the utility of pure efficiency for a society? Obviously there are huge upsides to efficiency in resource usage etc. but it seems to harm portions of society at a certain point.

deleted 8y ago
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notabee 8y ago
What you're left with is social inefficiencies instead of material or process inefficiencies. It's like trying to fix bad management at a company through engineering fixes: it just doesn't work. You have to solve the human problem. Also, the world is limited: you can't balloon out resource usage indefinitely to appease bad societal patterns. Eventually external factors will intervene such as resource exhaustion, ecosystem collapse, climate change, etc.

losvedir 8y ago

I want to like the article, but the lack of units on the axes are killing me! With the automation one... what's that mean? 300 what? 300 robots? And similarly with jobs declining and such. Some of them describe what's going on in the title, but a lot are sort of handwavy. I'm sure there's real data under it, but it's not presented very well.

alejohausner 8y ago
300, relative to an initial value of 100. This is common practice.
- djokkataja 8y ago
  An initial value of 100 what? And over what time period? It's common practice to not label graphs correctly or at all, but without labels, graphs don't offer any representation of a model of reality (so the author is free to claim the graph indicates whatever he wants it to indicate). ... So if you click the link below the graph for the source data, the data that was graphed was the number of robots per ten thousand workers in the manufacturing industry in 2016. The report also indicated that the US had the second highest number of robots per 10000 workers in the automotive industry in 2016 after South Korea. Given that the article's main point was that the computer industry distorts the overall growth numbers for US manufacturing, it may be worth pointing out that different industries within the overall manufacturing industry may find different levels of automation appropriate at our current level of technology. Without a clearer picture of the relative representation of different manufacturing industries in each of these countries and what's considered state-of-the-art in terms of automation for each, I don't think the data for this graph can be used to unambiguously support the author's conclusion. Link to the source report: https://ifr.org/downloads/press/Executive_Summary_WR_2017_Industrial_Robots.pdf https://ifr.org/downloads/press/Executive_Summary_WR_2017_In...
  - burfog 8y ago
    100% We start at 100% of the starting value, by definition. We then go from there. So if there were 256 robots, and that increased to 384 robots, the graph would start at 100 and end at 150.

manofstick 8y ago

Another economic number I ponder over is inflation, and the economists method of revaluation of goods called the hedonic quality adjustment [1]. If you follow the example on the link provided, they show how upgrading an old tv that cost $250 to a new one that cost $1250 actually was had a negative inflation effect due to the extra features that the new TV had. From one perspective I can understand their point, but when the "new normal" of tv ownership basically demanded those features, so they weren't really extra benefits for the end user in the long run (and then became standard features where the prices did plummet back to the original $250, one again reading down the inflation figures). Look if like to think that economist are smarter than that, but given the original article... [1] https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...

SilasX 8y ago
There's an epically bad version of that error that I keep re-linking because it was such a central economic policy maker and such a clear version of the error[1]: essentially, yeah, food is more expensive, but iPads are faster, so it cancels out. Even if you accept the core logic, they went about it in an absurdly naive way: a 50% faster chip does not make the iPad 50% better; very little of that went to relieve a true bottleneck and so doesn't translate into observably higher usefulness. Now, if iPads were so much better that they actually freed up owners from significant household tasks that actually translated into e.g. greater free time or ease of earning, that would make sense. But the chip simply being faster isn't good enough. Incidentally, do they ever readjust inflation upward when products get worse? Like, when packaging is flimsier or paper cups harder to grip? Somehow I doubt it. [1] https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUSTRE72A4D520110311 https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...
- ThrustVectoring 8y ago
  Or more relevantly, when ecological standards make household products worse. Removing phosphates from detergents, low-flow showerheads that are less relaxing, low-flow toilets that clog more often, high efficiency washers that break down more often, etc.

pm24601 8y ago

This line at the end is the most frustrating: > But they still don’t seem to grasp what’s been lost, or why. It’s easy to dismiss the disappearance of factory jobs as a past misstep—with a “we’re not getting those jobs back” and a sigh. Then again, you can’t know that for sure if you never try. If there is one thing that Obama did that was vital to the US it was saving of the automotive industry in 2008. He did this in spite of the "learned" economic experts saying otherwise. Too bad, he didn't ignore them with the banks and jail the bankers.

azemetre 8y ago
The issue with jailing bankers is that nothing they did was illegal. It was highly immoral but we don't jail people for being immoral (they do in some countries). If you want to jail bankers in the future, supporting institutions like Consumer Financial Protection Bureau and electing politicians that want to pass more strict laws is the only way to accomplish what you want. In this diametric political climate we have one party that is gutting the CFPB by installing leaders that are pro-finance/banking industry and rolling back protections under the guise of "not being fair."
- pm24601 8y ago
  > The issue with jailing bankers is that nothing they did was illegal. They were never investigated. Looking back to earlier banking meltdowns, plenty of crimes were discovered. See for just such an example: https://en.wikipedia.org/wiki/Savings_and_loan_crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis It is a perfectly reasonable to suspect that similar crimes were also committed. You could also look at the court cases at : http://4closurefraud.org/ http://4closurefraud.org/ Many of the foreclosure cases involve banks not being able to demonstrate that they actually had standing to foreclose on houses. For example: http://4closurefraud.org/2018/02/09/fl-3rd-dca-reverses-ruling-that-found-hsbc-forged-mortgage-documents/ http://4closurefraud.org/2018/02/09/fl-3rd-dca-reverses-ruli...

siculars 8y ago

To say that outsourcing manufacturing was a good thing for anyone other than banksters is to say the sun shines out of my ass. And this is exactly what the US has allowed to happen over the course of decades. When manufacturing goes so too goes all the knowhow locked in real people along with all the innovation those real people could bring to the next generation of manufacturing. All that potential is now happening elsewhere. Because the US let it happen elsewhere. Oh, and in case it wasn’t obvious, that sentiment is partly responsible for the election of Trump.

SkyMarshal 8y ago
Agreed. The article touches on that, and Andy Grove spent the last decade or so of his life warning about it. https://www.theregister.co.uk/2016/03/23/andy_groves_warning_to_silicon_valley/ https://www.theregister.co.uk/2016/03/23/andy_groves_warning...

organicmultiloc 8y ago

There is some deep history here that has been barely reported on at all by any journalist, anywhere. It happened in many industries, in many political groups. Rumsfeld et al started this bigtime in the 80s, selling and giving tech and IP to several asian countries for diplomatic favors. We were not consulted as to why at the time, just forced to make ourselves highly available for several Chinese government partners that were very interested in some of our advances, particularly in networking and manufacturing. This song and dance apparently accelerated in the G W years, but by then all half our company had shut down and I had abandoned tech for the second time.

mirimir 8y ago
Yes. That's the basis for this, from the article: > In effect, US policymakers put diplomacy before industrial development at home, offering the massive American consumer market as a carrot to encourage other countries to open up their economies to multinational investment. Then, thanks to the popular narrative that automation was responsible for job losses in manufacturing, American leaders tended to dismiss the threat of foreign competition to a thriving manufacturing industry and minimize its importance to the overall health of the US economy. It started with Nixon's 1972 visit to China. Engineered by Kissinger. However, it's arguable that it helped prevent WWIII, so hey.
- jackcosgrove 8y ago
  There's a word that describes the transfer of wealth from one country to another to achieve a desireable political outcome. It's called tribute. On a personal level it's called bribery. It could have been the best option at the time, especially with nuclear weapons in the mix. However it's also very convenient that those deciding to pay the tribute or bribe (government bigwigs) did not have to pay out of their own pockets. In fact they were able to skim a portion off for themselves.
  - mirimir 8y ago
    That's a great insight. I had thought of it as a policy decision, one aspect of the post-WWII globalization initiative. Encouraging trade and international connections, to reduce the risk of war. But yes, it also looks like tribute. Edit: > In fact they were able to skim a portion off for themselves. Walmart was represented at those talks :) I've heard that Mao offered 200 million young Chinese women, but Nixon passed, I guess.

jdhn 8y ago

>Since he took office, however, Trump has paid minimal attention to boosting US manufacturing. Instead, he’s favored counterproductive protectionism and ignored currency manipulation, preferring the punitive over the constructive. If those are counterproductive methods to boosting manufacturing, what would productive methods look like?

nsnick 8y ago
I think you need to read your quote again. A productive approach would focus on currency manipulation instead of protectionism.
- jdhn 8y ago
  Oops, I missed the "ignored" in the second sentence. Good catch, thanks!

jMyles 8y ago

Wow - that was a great read. I like how it started by saying, > Looking back, there were two kinds of people who lived in America in 2016: people who believed Donald Trump, and people who believed data. ...only to show that, against the odds, people who believed "data" ended up being incorrect about some of the most crucial conclusions drawn by the use of that data. However, I have this itching feeling that I always have whenever I read an analysis on this topic, and it's this: Americans don't want those jobs back. We really don't. I think Dave Chappelle said it very well: https://www.youtube.com/watch?v=inlDT62oGy8 https://www.youtube.com/watch?v=inlDT62oGy8 And that leads to an even bigger realization: people (and the body politic) don't want jobs at all. Jobs aren't useful. People generally only want the resources and independence that come with a job. We've been sold the idea that the connection between "a job" (ie, something that someone does for hours a day, 5 days a week, in the tack of a career) and resource (like food and shelter, ie, the Money) is a natural, wholesome consequence of a free market. But then, why don't animals have jobs? Why don't very wealthy people have jobs? Why don't very poor people have jobs? Why don't indigenous people have jobs? Why don't well-adjusted hippies (think Rainbow Gathering) have jobs? I think that we can find a truly free market, with the price signals and freedom from state intervention that free market fans always cheer, but whose central models are the Job and the Money. If the internet means anything truly useful to our species, I think it's best viewed as our chance to finally shed the Job and the Money.

will4274 8y ago
> _Americans don't want those jobs back_. We really don't. > I think Dave Chappelle said it very well: https://www.youtube.com/watch?v=inlDT62oGy8 https://www.youtube.com/watch?v=inlDT62oGy8 > "I want to wear Nikes, I don't want to make them" I don't mean to sound like a dick, but it's very easy for a multimillionaire speaking to a upper middle class audience or for an upper middle class software developer on hackernews to agree with this sentiment. I think if you asked 100 unemployed Americans living in poverty, you might hear a different answer.
- jMyles 8y ago
  You think that they'd say that, given the choice over whether to be given Nikes, made entirely by automation, or to have to work to make them, that they'd choose the work? I'm not saying that there aren't classes issues in play here. I'm saying that I wish poor people didn't have to wish to make shoes. Surely if we can automated all the matter around us to do our will, we can also shape instill in our economies the basic tendencies toward compassion and freedom.

confounded 8y ago

While I very much enjoyed the narrative of plucky Houseman and her cross-tabulation-of-truth battling against elites, smug in their complacent certainty, I’m also skeptical of it. I spent most of this century in the UK, and the narrative there was always that these jobs have gone away, they are not coming back, that’s why things say ‘Made in China’ on them. This seemed to be the conclusion of other EU countries too. Germany was very deliberate in its approach to manufacturing for export. I find it very hard to believe that the US alone could come to a radically different conclusion than the rest of the world about the largest economic trend of recent times, because no-one had examined numbers. The surprising thing is that as a politician you can say what you like, and journalists have neither the ability or interest to examine it before spreading. This seems to be what happened with the automation narrative.

jdietrich 8y ago
Likewise. Were people really arguing that offshoring was irrelevant to the decline in American manufacturing? I don't follow American politics, but it seems completely absurd that anyone would make such a claim. If true, then it's no wonder that Trump won the election.
- archgoon 8y ago
  I don't recall this (everything was really due to Automation) being a serious bone of contention by anyone. The articles the article links to are all "This is totally counterintutive, but is it true?", which is basically just clickbait. As far as free trade philosophy was concerned during the election, Trump (and Bernie) got Hillary to back down from supporting the TPP, which seems to support the idea that politicians believed that outsourcing was reducing manufacturing jobs in the US. So as far as American Politics were concerned, everyone, including the free traders, believed that free trade hurt manufacturing jobs at home. It seems that the author is making this entire scenario unnecessarily political and polarizing. "Rogue Economist finds blinding obvious flaw by incompetent elites"; which, given that this is Houseman (one of the economic elites), it's very much kinda not?
jedberg 8y ago

burkemw3 8y ago

I didn't expect there was much electronics manufacturing in the US at all, let alone it has been driving manufacturing "growth". I honestly expected a solid chunk of design happened in the US, then the fab happened elsewhere. This article got me to do a bit more reading (yay!). So, I'm sharing a bit of that, as a starting point for anyone else that wants to dig in more. This commerce.gov report [0] taught me a few pieces of the puzzle. I especially like the graphics on pages 5 and 7, showing major semiconductor manufacturing and lots of output from Cali, Oregon, and Texas. This wiki page [1] shows lists semiconductor fab plants. The ones I recognize (as my own proxy for size) are Intel, TI, Broadcom, Seagate, former Fairchild, and NXP/Freescale. [0]: https://www.commerce.gov/sites/commerce.gov/files/migrated/reports/made-in-america-computer-and-electronic-products.pdf https://www.commerce.gov/sites/commerce.gov/files/migrated/r... [1]: https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat...

amluto 8y ago
Sometimes I wonder how well attribution of added value works. If a US plant imports a laptop, a laptop manual, and a box, puts them all together to make a laptop in a box, and sells the laptop to Best Buy for 20% more than what it cost them to get the pieces manufactured abroad, did they really just manufacture 20% of the wholesale price of a laptop? If so, their productivity is high, but it has nothing to do with automation.
- deleted 8y ago
  [deleted]
- starky 8y ago
  This is one area of manufacturing that I am sorely lacking on knowledge in. However, isn't value added calculated on the COGS? That is, they take all the inputs, and then add labour, raw materials, property, etc. to get the total cost?
  - amluto 8y ago
    I’m not sure. I do suspect that a naive calculation of COGS gives essentially arbitrary results. Consider a hypothetical phone assembled in the USA. Maybe COGS is quite low. Then the maker shifts profits to Ireland by selling its IP to an Irish subsidiary and licensing it back at ruinous rates. Did COGS go up? For factory productivity numbers, I assume that labor is not subtracted from value. If one person at $50/hr builds $51/hr of widgets completely from scratch, their productivity is $51/hr, not $1/hr.

tzs 8y ago

> By 2016, real manufacturing output, sans computers, was lower than it was in 2007 Maybe I just overlooked it, but I didn't see any mention of the big recession that happened on the 2007 end of that interval. A lot of industries that were hit hard in that took a very long time to recover (some still have not). Because of that, articles that do comparisons from 2007 or thereabouts probably should include a short note explaining when whatever they are looking at recovered from that recession.

jerkstate 8y ago

Stripping out computer manufacturing is an interesting take, but the rise of import of intermediate (partially completed) goods is another major cause of the decline of manufacturing in the US. Labor, energy, and environmentally intensive partially completed goods are often manufactured elsewhere now, we do final assembly here and add the output value to our "manufacturing output" so that line goes up even though we're doing a lot less of the work here.

tzs 8y ago

> There are also observable signs that automation wasn’t to blame. Consider the shuttering of some 78,000 manufacturing plants between 2000 and 2014, a 22% drop. This is odd given that robots, like humans, have to work somewhere. We need more information to tell if that is odd. Yes, robots, like humans, have to work somewhere--but robots, unlike humans, don't care where that somewhere is. Plants using mostly human labor face more size constraints, I'd expect, than do plants using mostly robot labor. Adding more humans to a plant means you need more housing in the nearby communities, more traffic capacity, bigger schools, and so on. There are limits on how fast communities can add those things, so you can end up having to have several plants in different communities. With a mostly robotic plant, your growth constraints are land, energy infrastructure, and transportation infrastructure to bring in raw materials and ship your output. I'd expect, then, that a company using mostly robot plants would move to have a smaller number of larger plants for a given level of output than would a company using mostly human plants.

touristtam 8y ago
You are forgetting financial burden (short vs long term) and technological investment. It kind of reminds me of the state of Chrysler vs Toyota in the 90s.

ComputerGuru 8y ago

I’m just wondering why we research and policy have been built around “net numbers minus computer numbers” instead of “non-computer sectors, aggregated.” What an ass-backwards approach. No wonder the data has been wrong and the findings have been wrong. You have access to raw data, and you instead chooose to go to final results that already include some measure of error and approximate the solution in reverse rather than simply summing up non-tech industry growth? Really?

8bitsrule 8y ago

No jobs, no homes for millions. No wonder things look so rosy. Like a plane with no economy class. But ... will this aggression stand?

Avshalom 8y ago

So what they're saying is that manufacturing is still going up just in different fields, and the nobody got hired for the manufacturing that is happening... I understand the distinction they're trying to draw but I don't know if it's actually all that usefully distinct.

foota 8y ago

Is stripping away computer manufacturing a legitimate thing to do though? After all, it is still output.

purple-again 8y ago
In this instance yes, it’s core to understanding what really happened in our economy. The critical point is how they account for better products year over year. A faster chip in 2017 is counted as 2 2016 chips because it’s that much better. A can of soda in 2017 is equal to a can of soda in 2016. So when you remove this one weird industry that is experiencing tremendous growth in power, it turns out our manufacturing has been well and truly gutted. If you look at manufacturing “value” including computers it doesn’t look so bad. If you look at manufacturing units not including computers...you understand Trump 2016 a little better.
- foota 8y ago
  Yes, but didn't the computer manufacturing industry use up lots of investment to get there?

jackcosgrove 8y ago

The fact that rapid productivity increases due to the computer industry began in the late 1970s is a flashing red light to me. The late 1970s is when productivity and wages began to diverge. Much ink has been spilled about this, as it corresponded with the emergence of neoliberal economics by Reagan and Thatcher. Maybe wages and productivity began to diverge not because labor was capturing less value due to political developments, but because we have been overestimating the productivity of industry in aggregate due to the rapid productivity growth in one sector, computers, skewing the aggregate. It seems like a statistical misattribution of this scale could be applied to many other phenomena.

mc32 8y ago
It's a bit surprising that statisticians and others who study the economy would miss this nuance. If Piper Jaffrey and others can pour into Apple's suppliers to divine whether Apple will meets iPhone shipment expectations, one would think professional economists would peer similarly into the nuts and bolts of the industries they profess to know about. There was a time the US had an interest in the getting the rest of the work to "Globalize" to stem the Soviet tide. We won, it's over, but the American worker is still getting shafted by the industrialists who loved cheap outsourced labor. Clinton, Bush and Obama either were completely complicit in this or lacked the wherewithal to fight it. Maybe Kanye along with others can get Americans reluctant to side with current American policies to see the advantages to bringing things back state side --or at least stemming the hemorrhage. It's not like China or Mexico or anyone else thinks "Oh, those poor Americans who get laid off, who will think of them". Nope, everyone is out for themselves --despite what Globalists say.
- greglindahl 8y ago
  "Comparative Advantage" in economics involves everyone being out for themselves, and that's how businesses choose where to produce or procure things.
- simonh 8y ago
  The problem for Clinton, Bush and Obama is that if you put up protectionist firewalls against cheaper goods from foreign counties with cheaper labour two things happen. Firstly yes you stimulate employment in local manufacturing, but by definition all of the consumers buying those locally made goods are paying more for them. You might have a million more manufacturing jobs, but hundreds of millions of people are paying through the nose for it. Meanwhile you may not actually make any significant difference to overall employment. Most of those million people now in manufacturing will have moved from jobs in other sectors, increasing costs in those sectors too. Meanwhile none of this does anything for America’s exports, because foreigners can still buy the same goods from your cheaper foreign competitors. In fact it can hurt exports if the goods you’re manufacturing are inputs to existing American exporters. Take steel, if American car exporters now have to buy more expensive locally made steel, the price of their cars goes up hurting car exports as well as shafting American car buyers.

pessimizer 8y ago

I think the real mistake (which isn't a mistake, but an intentional deception) is that the manufacturing that left the US was in less capital-intensive industries (i.e. where labor costs were higher), and the lowering of the number of labor hours per dollar of earnings was intentionally misinterpreted as an increase in automation as a way to get industry-favored legislation passed.

branchless 8y ago

Manufacturing is a waste of time. People don't need real stuff. Paper wealth is where it's at. Check out the 'growth' in banking: https://pbs.twimg.com/media/DceTLZ9UQAAr335.jpg:large https://pbs.twimg.com/media/DceTLZ9UQAAr335.jpg:large "The divergence first emerged in the late 1970s". Hmm.

forapurpose 8y ago

Does anyone know anything about the institute that produced this report, the Upjohn Institute? I've never heard of them, which doesn't man a lot but it means something. https://www.upjohn.org/ https://www.upjohn.org/ Also, does anyone know anything about Houseman, the (principle?) researcher? IME, there are many small organizations that produce reports to grind some small axe. It doesn't mean Upjohn is one of them, but it's important to know who you are listening to. EDIT: It looks like a local research organization located in Kalamazoo, Michigan. They say they date back to the Great Depression. The Board of Trustees often gives a good introductory picture of an organization; in this case, I see a mix of academic and business leaders local to Kalamazoo: https://www.upjohn.org/about-us/board-of-trustees https://www.upjohn.org/about-us/board-of-trustees Also, you can find Houseman's and other researcher's official bios here. They look like real economists, fwiw: https://www.upjohn.org/about-us/research-staff https://www.upjohn.org/about-us/research-staff (Ironically, many in this discussion are citing research by economists to claim that economists are unreliable.)

phonon 8y ago
The W. E. Upjohn Institute for Employment Research has been around since 1932 [1]. They have a staff of around 100 employees[1], and assets of over 192 million dollars[2]. Susan Houseman has a very distinguished CV[3], and you can read her full paper and presentation here.[4][5] Here is a video of her speaking on the topic.[6] [1]https://en.wikipedia.org/wiki/W._E._Upjohn_Institute_for_Employment_Research https://en.wikipedia.org/wiki/W._E._Upjohn_Institute_for_Emp... [2]http://www.upjohn.org/sites/default/files/pdf/Upjohn-Institute-Financial-Report-2016-Final.pdf http://www.upjohn.org/sites/default/files/pdf/Upjohn-Institu... [3]https://www.upjohn.org/sites/default/files/housemancurrentcv_Jan2018.pdf https://www.upjohn.org/sites/default/files/housemancurrentcv... [4]http://research.upjohn.org/cgi/viewcontent.cgi?article=1268&context=empl_research http://research.upjohn.org/cgi/viewcontent.cgi?article=1268&... [5]http://research.upjohn.org/cgi/viewcontent.cgi?article=1054&context=presentations http://research.upjohn.org/cgi/viewcontent.cgi?article=1054&... [6]https://www.c-span.org/video/?439645-1/manufacturing-jobs https://www.c-span.org/video/?439645-1/manufacturing-jobs

HillaryBriss 8y ago

... according to Houseman’s data, without computers, manufacturing’s real output expanded at an average rate of only about 0.2% a year in the 2000s. By 2016, real manufacturing output, sans computers, was lower than it was in 2007. This is a very interesting story that deserves a much wider hearing.

andrewjl 8y ago

The US needs a serious industrial policy to counter this. Couple of ideas: - A venture fund, similar to In-Q-Tel, focused on investing in cutting edge manufacturing tech startups. It'll make sense to focus on defense applications initially, but many of those techniques do get carried over into private enterprise. - Increased grants for fundamental research, and tax write offs for corporates who expand R&D facilities adjacent to production facilities in the country. - Inevitably any company doing manufacturing today will experience labor shortages, most experienced staff are now retired. A federal program to re-train displaced workers to become technicians servicing the robots doing the assembly, monitoring quality, and doing basic troubleshooting work onsite. - Tax writeoffs for companies who provide training for front-line employees to move into design and engineering roles. EDIT: Old time manufacturing jobs are gone and not coming back, however they are loads of opportunities in other areas of manufacturing that will generate much more value per employee and hence will pay better. Giving companies incentives to create these jobs, and providing a pathway for individuals with minimal training to attain the skills necessary to do them will solve the problem over time. Of course, it's all in the details.

mrfusion 8y ago

What was the mistake?

tobinfricke 8y ago
»“Declining manufacturing employment over the past 30 years has given a lot of people the impression that America’s manufacturing sector is in decline. But that’s actually wrong,” the Vox article explained. “American factories are about twice as efficient today as they were three decades ago. So we’re producing more and more stuff, even as we use fewer and fewer people to do it.”«
ars 8y ago
An increase in the speed of computer was counted as an increase in manufacturing output. Once you remove all of that the data looks radically different.

OrganicMSG 8y ago

Did anyone sensible think automation was largely responsible for the job loss in the richer countries? Manufacturing has chased cheap wages globally since the 1960's. I always thought the widely accepted narrative was that automation might bring some bulk manufacturing back to richer countries when it starts to compete with the cost of a skilled worker in a lower wage economy, after a decades long policy of outsourcing manufacturing chains, not that richer countries somehow automated away all the jobs at home.

11thEarlOfMar 8y ago

If it were me, I'd want to know what % of manufactured goods consumed globally[0] were manufactured in the US over time. If that % has dramatically dropped over the last, oh, 50 years, I'd say we've exported our manufacturing, regardless of automation. [0] Semi equipment, earth moving equipment, networking equipment, aircraft,... a lot of big, expensive stuff made in the US gets exported, wouldn't want to leave that out of the picture.

RickJWagner 8y ago

Silly me, I thought this would be an article about manufacturing. Of course it's really poorly written political propaganda. Ugh, a minute lost.

mi100hael 8y ago

> Trade may have been a factor—but it clearly wasn’t the main culprit. Automation was. Why can't both be considered? Trump wasn't wrong when he pointed out trade agreements were shifting labor abroad. > The Economic Policy Institute think tank estimated that as of 2010, the trade imbalance with Mexico had cost the U.S. about 683,000 net jobs — about 60% of those in manufacturing. (http://www.latimes.com/business/la-fi-mexico-jobs-20161212-story.html http://www.latimes.com/business/la-fi-mexico-jobs-20161212-s...)

rdlecler1 8y ago

I don’t buy it. You can lie with statistics and You can also lie with data. The fact that many many jobs moved to China coupled with the growth of their own manufacturing industry and it’s clear that globalization is an issue. The argument is that consumers pay cheaper prices but it doesn’t work that way with technology. Consumers have the money they are willing to spend and they’ll get the best item then can with that. Which is more important, my 65” HDTV or a 55” 1080p that comes with jobs and economic balance.

wpdev_63 8y ago
You should go tell walmart that their business model isn't working.
- losteric 8y ago
  It's exploitative, unsustainable, and highly profitable.

evrydayhustling 8y ago

I disagree that automation was the main opposition narrative about why manufacturing jobs were declining. The dominant line among folks I knew was that Americans didn't want to put up with the lifestyle offered by, say, Foxconn China (which produced a suicides alongside iPhones). That's consistent with "losing jobs to foreign competition", but hardly and argument for moving that capacity back to the States. Note: I personally think there is amazing innovation around production happening elsewhere in the world, besides low wages. That's something I would like to see happening more in the USA. But I doubt it is as significant as cheap labor in moving manufacturing abroad.

azernik 8y ago

The article doesn't explain the quality adjustment problem well: > The problem is, the processor released in 2017 is superior to that sold in 2016 in many tangible ways. But how do you account for the fact that a 2017 processor provides users with more value? In general, statisticians assume the difference in value between the two models is just the difference in their prices. If, say, the 2017 processor costs twice as much as the 2016 one does, then selling one 2017 processor counts as selling two of the 2016 versions in the statisticians’ books. This makes it sound like the problem is prices rising from year-to-year. The real issue is that the comparison is made with the price of the 2016 processor in 2017. See "methods of quality adjustment" in https://www.bls.gov/ppi/qualityadjustment.pdf https://www.bls.gov/ppi/qualityadjustment.pdf So basically - let's say in 2016 a new CPU costs $200. Then in 2017 Intel releases a new model, prices it also at $200, and sells the old model at $100. The quality adjustment algorithm will see that right now, the new one is selling for twice as much as the old one, and assume that there's been a 2x jump in value per item. [EDIT: One way of thinking about this is: the method treats clearance prices for last year's model as deflation in this particular market, and adjusts for it.]

whack 8y ago
I was thinking about this as well, and it doesn't seem like an easy problem to solve. Subjectively, we know that the reason 2017 processors cost 2x as much as a 2016 processor, is because of improvements in process technology and architectural design. There might be incremental improvements in the manufacturing process, but not enough to say that "manufacturing capabilities have doubled compared to last year". The obvious solution here would be to compare the price of a 2017 processor in 2017, to the price of a 2016 processor in 2016. But that would give hopelessly cynical answers in other circumstances. For instance, consider a factory for paperclips that produced 10M units in 2016, and due to various improvements, 20M units in 2017. The paperclips in both years are mostly identical to one another. But for various market reasons, the price of each paperclip has fallen by 50%. Possibly due to the enlarged supply from factories all over the country doubling their production. In such a situation, if you rated the factory's output using the alternative metric suggested above, you would think that the factory hasn't made any improvements at all in the last year. When in reality, it has doubled its production capabilities and efficiency. There just doesn't seem to be a purely quantitative to compare the manufacturing capabilities of factories that produce qualitatively different products year over year. This seems to make moot any single metric that rates aggregative manufacturing capabilities across multiple years.

dalbasal 8y ago

"two kinds of people who lived in America in 2016: people who believed Donald Trump, and people who believed data." This is scientism. The question around the effects of economic globalisation, trade relations, the size of china's manufacturing industries, automation and other advances in manufacturing methods... it's not a decided issue. You can't just put quote an economist on "The Long-Term Jobs Killer is Not China. It’s Automation." and present this as a "case closed, science has spoken" decree.

ebalit 8y ago
I think this line is about repeating the narrative about the trade debate during the last US election. The author follows by explaining why it was wrong, showing why data is not always reliable and in a sense rehabilitating the value of gut feeling.
- dalbasal 8y ago
  That is fine. It is a perfectly reasonable argument. She should make it, and make a case. But, she started with "the data/science is in" as if she's reporting on an indisputable truth, rather than a plausible narrative. This puts anyone who disagrees with her in an irrational truth denier category, as if her position was an authority on par with newton's laws. This is scientism, and it's harmful when public debate (especially around politically charged questions) picks up this style of writing/speaking.

deleted 8y ago

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lgleason 8y ago

This article fails the basic sniff test. The US is running net trade deficits and continuing to take on more debt every year. As you go about your daily life in the US a significant amount of the manufactured things you purchase are made overseas. Most electronics, made in Asia. Cars, if assembled in the US, have a significant amount of foreign content. Clothes, more often than not overseas. Dishes & kitchen items, mostly China. Major appliances, unless you are buying a GE (now owned by Haire Chinese company) or Whirlpool, made in Mexico, Asia or Europe. Furniture, many choices, especially the ones you assemble, overseas. Lamps, fans, light bulbs, switches, HVAC system etc....mostly China, Mexico etc.. Bed linens, towels, mostly overseas. Your luggage, Asia, Mexico or Europe. If you fly on a US airline on a Boeing plane, it's major overhauls and inspections are being done in Mexico, China etc.. If automation were the culprit, given the transportation costs, these would be manufactured in the US by robots.

dougabug 8y ago
Did you read the article? The central thesis is that automation is not the primary culprit for manufacturing job losses.

profalseidol 8y ago

How come people don't realize that less jobs due to automation should mean more vacation?