On the Supposed Decline of Manufacturing

By August 19, 2009Economy, Trade

Harold Meyerson, The Washington Post’s most liberal opinion columnist, had a column last week, “Just One Word: Factories,” that boiled down to: Manufacturing is important and the United States should appreciate it more. Eh. Even knowing that Meyerson’s usual policy prescriptions would damage U.S. manufacturing competitiveness, there wasn’t a lot of that in the column, so who could object?

Dan Ikenson at Cato, that’s who. And boy, does he do it with brio. We’ll excerpt at length (asking Ikenson’s indulgence) because he offers facts instead of fallacies. From “Harold Meyerson is Part of the Problem“:

Meyerson makes some claims that cannot be allowed to stand, such as.

“”We don’t [make things] any more – at least, not like we used to. Since 1987, manufacturing as a share of our gross domestic product has declined 30 percent.”

First of all, please note that Meyerson’s second sentence does nothing to support his first. A decline in the manufacturing sector’s share of the total economy speaks to the rapid growth of other sectors of the economy, but says nothing about the change in U.S. manufacturing output or value-added.

According to data from the 2009 Economic Report of the President [4], as gathered and reported yesterday [5] by George Mason University Economics Professor Don Boudreaux, since 1987 real U.S. manufacturing output has increased by 81 percent – hardly a sign of manufacturing decline.

The facts [6] – as reported by the Bureau of Economic Analysis – demonstrate that real manufacturing value-added reached a record high level in 2007 (the last year for which final data are available).  Notwithstanding the recent recession that has affected all sectors of the economy, U.S. manufacturing has been thriving in recent years.

Second, if the United States doesn’t “make things anymore,” then nobody does. According to data [7] from the United Nations Industrial Development Organization, U.S. factories are the world’s most prolific, accounting for 25 percent of global manufacturing value-added. By comparison, Chinese factories account for 10.6 percent.

That may be hard to fathom, given that everyone’s favorite story about shopping in retail establishments these days is that it’s impossible to find anything labeled “Made in the USA.”  But that’s because, increasingly,  U.S. manufacturing produces sophisticated components, such as airplane parts, not consumer goods.

American manufacturing is by no means in decline.  What should be is Meyerson’s myopic way of seeing things.

 Footnotes in the extended entry.

Article printed from Cato @ Liberty: http://www.cato-at-liberty.org

URL to article: http://www.cato-at-liberty.org/2009/08/13/harold-meyerson-is-part-of-the-problem/

URLs in this post:

[1] time: http://www.freetrade.org/node/737

[2] again: http://www.freetrade.org/node/941

[3] fallacy-laden diatribe : http://www.washingtonpost.com/wp-dyn/content/article/2009/08/11/AR2009081102934.html

[4] 2009 Economic Report of the President: http://www.gpoaccess.gov/eop/tables09.html#erp3

[5] reported yesterday: http://cafehayek.com/2009/08/manufacturing-error.html

[6] facts: http://www.bea.gov/industry/gpotables/gpo_action.cfm

[7] data: http://www.unido.org/index.php?id=o3474

Join the discussion 5 Comments

  • Jay says:

    My apologies, there should be a comma after NO in the first sentence.

    “No, too much opposition….”

    My bad.

  • Jay says:

    @AJ — No opposition and too much isle crossing is what got us to where we are today so why in the world would we want to allow an individual to masquerade as someone he is not and heap praise on him?

    A duck is a duck. Just because it starts barking all of a sudden doesn’t make it a dog.

    Dan Ikenson at Cato brings up an excellent point as does David. Our manufacturing sector in the US has made a wide reaching change over the years to producing higher tech items. We are importing the goods that can be made by a monkey with a sewing machine but in the end I am unsure if that’s really a good thing. All types of people in this nation need jobs and not everyone has the experience or schooling to build targeting systems for missiles, circuits for GPS units or airplane parts.

  • AJ Sweatt says:

    Ikenson makes his point – Meyerson is wrong. But is he WRONG? It’s cool that facts were corrected, but the spirit of Meyerson’s piece – that the US does need commitment and stamina and focus – seems to get lost here amidst what amounts to me as splitting hairs.

    And one other point: the fact that Meyerson hasn’t displayed this sort of opinion in the past has little if anything to do with this topic. Shouldn’t we be encouraged (and encouraging) when someone we don’t normally agree with plants his flag in common ground?

  • […] contrast to their supposed interest in supporting American manufacturers, they’ve gone and criticized someone who actually supports strengthening U.S. […]

  • david foster says:

    Part of the problem here is that our politicians & journalists are focused on industries and companies that are BIG…ie, whose workers represent a large voting bloc. Companies that are in our equivalent of the German Mittelstand…those with a few hundred or a few thousand employees…are invisible to them, unless they are doing something which is currently fashionable.

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