Sep 08 2009
The Importance of Manufacturing Job Losses in Developed Countries
An article yesterday titled ‘Manufacturing: Make or break?’ summarizes a lot of what I have been talking about with respect to the current and prospective importance of loss in manufacturing jobs in the developed countries. As the article summary puts it “The shift of manufacturing to low-wage parts of the world was supposed to usher in an era of well-paid service sector jobs. But as the factories have gone dark, much of the work connected to R&D has also taken flight while the number of low-paid service jobs has mushroomed. Now post-industrial economies are reconsidering the importance of their manufacturing sectors”, and that “Many policy makers believe future growth once again lies in making things” – referencing the rush by governments to stress the importance of a vital manufacturing sector to future economic growth. How can it be otherwise. As I have said many times, manufacturing creates ‘things’ of at least some lasting value, service jobs in general do not do that – nor are the ‘products’ generated from service jobs typically as subsequently transferable as are products generated by manufacturing jobs.
The article reports President Obama’s new “Middle Class Task Force” sees the reinvigoration of the “flagging” U.S. manufacturing sector as critical if average Americans – whose after-inflation incomes have stagnated for years – are to achieve real wage gains in coming years. Apparently Mr. Obama imagines the U.S. factories of tomorrow producing high-tech electric cars, silicon chips and solar panels.
In my view, the only way that the developed countries will retain a meaningful manufacturing base going forward is by generating manufactured products in capital-intensive, low labour requirement, manufacturing plants. The labour rates in the developed countries simply are not, and will not be, competitive without a major reduction in the expectations and standards of living of residents of the developed countries. Anyone who thinks that production workers – be they Chinese, Tiawanese, etc. – are not capable of producing high quality products needs to give their head a shake. They can and they are doing that. So think about it, is the worker who makes or made $60 – $70 per hour at a car assembly plant in Michigan going to be willing to work for (say) $10 – $15 per hour in order to compete with developing country labour rates plus the attendant incremental transportation costs related to making a car in China and selling it in Michigan? It doesn’t take rocket science to answer that one! Either the worker in Michigan will unhappily ride a bicycle to work and eat pork and beans instead of steak, or be unemployed and be even less happy with his/her lot in life.
I believe the developed countries by giving up their manufacturing jobs – particularly in the past 10 years – to maintain and even increase the standard of living for their residents have played the old ‘short-term gain for long-term pain’ game. This seems obvious to me, and I can’t see how others don’t think and write extensively about this. In prior posts I have invited readers who disagree with me on this and other topics – and to comment on my blog posts and tell me why I am wrong. As a Canadian living in Southern Ontario I assure you I very much want to be wrong on this ‘loss of manufacturing jobs’ issue. To date, no reader has taken me up on ‘straightening my thinking out’. When I receive no comments when I invite them there are three obvious conclusions: (1) no one reads my blog posts – and I know that is not true from by Blog visit statistics; (2) no one disagrees with me, which I seriously doubt; or (3) some readers do disagree with me but simply can’t be bothered to respond or are reluctant to say what they think in a Blog comment. I encourage the latter group to come out of the woodwork.
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Just a clarification. When you said: “I believe the developed countries by giving up their manufacturing jobs – particularly in the past 10 years – to maintain and even increase the standard of living for their residents…”, I think you meant to say “to maintain and even increase the standard of living for some of their residents..” those being the already affluent owners of capital. I don’t believe the move to export jobs oversees was done with the average “Joe” in mind.
Another point on switching mfg jobs with service jobs: Is it too early to declare that strategy a failed one? Wouldn’t it take many years (possibly more than 10) for that strategy to bear fruit?
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Margaret
http://cardrawing.net
Ian,
I am also stunned that you have only 2 responses! You have nailed it. It think it speaks to the effectiveness of the media brainwash job that was done to sell the “high tech service economy” swindle. You do not hear much of that these days as it seems it is not going well, more like a disaster.
More important, the mess can be repaired by honest government lowering taxes, mandates and regulations on industry. We do not have honest government. The deindustrialization of America was planned and executed by a massive socialist cabal. That is the sole reason Germany and China have surpassed the US as the world’s leading exporter.
Ian,
You definately do not require your thinking straightening out! your right on the ball!.
With all the comments each day on Seeking Alpha,I am also stunned at the response,Possibly its because you have spoken the TRUTH,the truth hurts most folks & they are unable to respond.
Unless of course the powers that be, have all the folks NOW under control with all the prescription drugs circulating out there,which reduce their ability to think & speak out.
Ritalin being given to kids wholesale is starting a ginormouse event down the road. They will all be like sheep herded to slaughter,or is this whats happening right now,everyone having their hands tied behind their backs,with just the odd one standing out,as Ron Paul & Peter Schiff & etc.
Being reasonably new to Canada,I am often told to calm what I say in puplic as it may hurt some one! Canadian population mostly all laid back & happy if they have a dollar in their pocket!.
Supression of thought & speech supress\’es much outflow of ideas and progress.
Overpaid Car workers need to be taught a lesson,where else on this Earth are they going to find work paying that amount for the hours that they put in.Perhaps the coming sort out in the world will rectify these too big to fail operations. The Car workers were the main cause of the UK\’s downfall way back,being always the first to want wage rises with all other industries following on after them, in my younger days over there.
Another reason for unresponsivenes would be the flack from nit picking folk who reply to posts on spelling & catcalling & etc. Not all folk can put their thoughts in a letter together,very many being of different nationalitys with lack of English.
This being the first for a very long time I have replyed due to the above,SO PLEASE don\’t lets see any one giving an adverse comment after you read this!.
Jd. Canada.