This is probably an unpopular opinion: it pains me to see the manufacturing industry decline in the US. I don't really mind paying $300 for a pair of shoes. Yes, it will be expensive, but then I'll just buy fewer pairs. In return, more people get decent jobs, or so I hope. And no, I'm not talking about just the so-called "low-end" manufacturing, but also the high end. Indeed, how can we even grow "high-end" talent if we don't have a place for them to start their career? The average age of workers in the remaining few ship manufacturers is well over 50. The cost of producing things in the US is just way more expensive than in China, even if we factor out labor cost. When covid started, both GE and BYD set up factories to produce masks. GE's assembly lines are semi automatic, if not manual, and their machines looked archaic. In contrast, BYD's assembly line was fully automated and shiny.
I mean, can a country as large as the US be really competitive without manufacturing? I just can't see how services and virtual stuff like FB alone can be essential.
In the hey-day of manufacturing things like shoes and clothing in the US, these things weren't considered "good" jobs. You can easily find numerous articles in national magazines from the period decrying them as dangerous, monotonous, and otherwise awful. You can still buy a $600 pair of boots or derbys from Alden of New England (I have a pair) or Viberg. But these are niche products within a niche.
If you're talking about high end manufacturing like cars, planes, specialized steel or similar we still do tons of that in the US. In inflation adjusted dollar amounts we produce more than ever, it just doesn't take very many people to do those things anymore. Robots do most of the jobs people used to do in that kind of manufacturing.
Ship building has been killed largely by the low cost of over land transit since the highway system was built and government protectionism vis-a-vis the Jones act which allowed ship builders in the US to become uncompetitive. But realistically we never had a special advantage in ship building, beyond build a bunch of naval vessels really quickly.
> I mean, can a country as large as the US be really competitive without manufacturing?
We do manufacture a lot of things, just very few people work in manufacturing. We're also a world leader in agriculture. Services are fine, and very lucrative. One of our chief exports is education, which is a service.
> In the hey-day of manufacturing things like shoes and clothing in the US, these things weren't considered "good" jobs.
My understanding is that a family can afford middle-class life with a single blue-collar job with the US has a prosperous manufacturing industry.
> If you're talking about high end manufacturing like cars, planes, specialized steel or similar we still do tons of that in the US.
I thought the market share was declining. The US used to have more than 68% of market share in manufacturing in the world back in 2001 or 2002, but now it is about 40%? It can't be that only low-end manufacturing that is gone, right?
Only some blue collar jobs, specially union jobs in select industries provided that opportunity. It’s also worth noting that it was lower material standard of living than people generally enjoy today in the US.
You’re referring to a slice of the whole pie globally, However the pie is much larger now. Every industrial nation other than the US was basically leveled in WWII so we had a huge slice from the jump.
US manufacturing output has not actually declined though - it has never been higher and has increased over 40% in the last 2 decades[1].
The perception of US manufacturing decline is widespread. My guess is that this perception is due to a number of factors. Other sectors of the US economy have grown more, so manufacturing now represents a smaller share. And also as productivity increases, fewer people are required to produce the same amount of output - so manufacturing workers make up a smaller share of the workforce than they did in the past. Both of these facts mean that manufacturing has less visibility in the US than it had. Finally, as poorer parts of the rest of the world have grown - the US's share of global manufacturing is smaller.
And by the way, there is absolutely no problem finding someone who will sell you a pair of US made shoes for $300 (or more) if that's what you want. There's a long list of US manufacturers who make high end boots and shoes.
relative output matters and the US has lost massively in terms of global manufacturing compared to what it used to be.
saying US manufacturing hasn't declined is like saying IBM hasn't declined in stature compared to decades past. IBM technically has more revenue than they did in the past, but they aren't considered a technology leader anymore and very few are impressed by them, many see them as a dying company
I don't think using IBM is an appropriate comparison. It is a company in actual decline - revenues peaked at about $110B just over ten years ago and were less than $60B last year. Like I said US manufacturing output is growing and has been growing.
And I don't subscribe to a zero-sum view. Just because other historically poorer countries have grown economically doesn't hurt Americans (the opposite) or their way of life or standard of living. And just because other sectors of the US economy (like tourism for example) have grown more rapidly doesn't mean that US manufacturing is harmed - and certainly doesn't mean Americans are worse off in any absolute sense.
Worrying about loss of stature is highly subjective and is more about feelings/pride/emotions/etc.
the US objectively loses a massive amount of foreign policy leverage by not being the largest manufacturer anymore, this is undeniable and obvious when you see how many countries are openly not sticking with the US with regards to Ukraine because they can just side with China, Russia, and India.
The US has gone from 40% of global GDP in the 60s to less than 20%, they've lost relative power when it comes to global issues as a result of that.
The US has also gained immense power through growth in other sectors like finance/banking/insurance - the biggest sector in terms of US GDP. The second biggest sector - professional/business services - also allows the US to project immense power - particularly when combined with the fact that the US dominates global banking and finance.
Looking at a table of US GDP by sector, what rebalancing are you suggesting would increase the ability of US to project power globally? For more Americans and US capital to be involved in manufacturing, some other sector will have to shrink. And manufacturing is already the fourth biggest sector.
I'm skeptical of those numbers although they may be wholly true, they may only be technically true because final "huge value add" simple assembly is done onshore while all the base parts are produced offshore.
Ford "assembles" cars - that's why they're called "assembly lines." Yes, any manufactured good of sufficient complexity will have at least one part coming from somewhere else in the world that specializes in making that part. That's not a bad thing. Insisting we make everything in the U.S. to be counted as being built in the U.S. is a huge step backwards. It is simply unreasonable to expect the U.S. to be the most efficient at producing everything. And if we're forced to accept such inefficiencies then we're necessarily lowering our standard of living.
I don't consider cars simple assembly, that has obvious value add when compared to a pile of parts. Fiber optic assemblies are expensive to buy but trivial to build from the inexpensive imported parts. Forcing purchasers of those assembled parts to buy onshore should count as an effective negative manufacturing GDP because it could have been purchased offshore fully assembled for cheaper. Perhaps there are good national security reasons for requiring onshore assembly of telecoms equipment but mixing it with economics statements is goosing.
People don't see industies where they don't work. Rising specialization and automation means that fewer are involver in industry. People are myopic and judge facts by feelings instead of using them as a proper guide of priorities.
It's only unpopular because it flies in the face of economics. You say you're fine paying $300 for a pair of shoes - but are you okay with your livelihood being making shoes? If you're capable of doing higher-value work then isn't it a "waste" for you to be doing lower-value work?
The U.S. has invested trillions of dollars building an infrastructure that has led its citizens to being some of the best-educated and most-productive in the world. Those citizens are capable of doing higher-value work. Should they do that low-value work when it can be easily and eagerly performed by other countries where the populace hasn't benefitted from such an infrastructure investment? Thereby raising the standard of living for all the parties involved? That's the economists' argument. Moreover the late 19th and the first half of the 20th centuries taught us that focusing on the nation-state leads to widespread warfare. Better to have those nation-states in economic cooperation that leads to peace than economic competition that leads to war.
I'm not saying you're wrong, but I am saying you need to really think through why and how we got here when considering our next steps. You're going to need to address how doing what we did before won't lead to the same problems we experienced before. I suspect you're not going to be able to do that, but I'm willing to be shown to be wrong.
> The U.S. has invested trillions of dollars building an infrastructure that has led its citizens to being some of the best-educated and most-productive in the world.
Remember what you said: some of the population is capable of doing such things, but a relatively large portion of the population are doing gig work. The distinction isn't "why take the highly skilled segment of the workforce and retrain them," but instead "why not take the 'low-skilled' portion and upskill them." Ultimately we know the answer, but your framing was off.
> but are you okay with your livelihood being making shoes? If you're capable of doing higher-value work then isn't it a "waste" for you to be doing lower-value work?
This assumes that everyone can do the higher-value work per their standards, right? US is probably the most educated country in the world, while in the meantime we still have millions adults[1] who don't have college degree. We still have millions of kids who struggle with basic algebra. And per my interaction with kids and college students in the past many years, I have to conclude that not everyone can or like to take on "high-end" jobs. In any class except those magnetic schools, you can see the bottom 20% or more students are hopeless in learning STEM or sophisticated writing. However, they may get decent jobs if there are other demand in the market.
That worries me, actually. Are we leaving a large group of people behind? Have we written them off because they're not able to do "high value" work and yet our life expenses in the U.S. are such that they're not economically viable for doing the "low value" work, either? Is living on public assistance really the best option? Or working in the gig economy? I don't have answers to these questions but I do think about these things.
> That worries me, actually. Are we leaving a large group of people behind? Have we written them off because they're not able to do "high value" work and yet our life expenses in the U.S. are such that they're not economically viable for doing the "low value" work, either?
The answer to both of these questions is "yes". I've worked in education and am very familiar with homeless communities and their issues. It's very obvious that in some locations (like the Bay Area) there simply isn't enough low-complexity work for the bottom 10-15%, people for whom "dishwasher" is a complex job. Technology has just been slowly eating away at those jobs for a century and replacements have not come in as fast the jobs are disappearing.
> Moreover the late 19th and the first half of the 20th centuries taught us that focusing on the nation-state leads to widespread warfare. Better to have those nation-states in economic cooperation that leads to peace than economic competition that leads to war.
I think it has taught us the opposite? Pre WWI, the world was already very integrated and globalized, to the point that many pundits said that a large war is impossible, because it would hurt businesses everywhere too much. And yet it happened.
The story I've always heard is nobody thought there would be war in Europe to the magnitude of WWI because so many heads of state were Queen Victoria's grandchildren. Surely the family wouldn't war with one another?
> The U.S. has invested trillions of dollars building an infrastructure that has led its citizens to being some of the best-educated and most-productive in the world.
Citation, please (and yeah, I see you using weasel words.)
Why in the world do you think it would take $300 to buy a pair of shoes???
Like what? You can buy all the raw materials for 10 - 15 dollars (way less in bulk) and a single person can make a pair in under an hour with minimal training.
Manufacturing things in the US doesn't have to be vastly more expensive.
The greatest revolution right now is the ability to do small scale manufacturing. Now the issue is that most of the equipment IS still being made in China. That's because manufacturing in China is small scale. Even on a large scale it is still just a lot of people together doing small scale manufacturing.
They don't have the crazy advanced automated processes like you see in the stereotypical american factory with lots of parts whizzing down automated assembly lines. They just have thousands of people putting things together by hand or with modest equipment.
I was thinking of the price of shoes in the late 80s when Canada and US had not outsourced their shoe manufacturing, and my mom told me that it would cost more than $200 to buy a pair of decent shoes. Now adding inflation and subtracting tech improvements, I came up with the $300 number. The point is that I'm willing to pay more to see US as productive as when it was in post-WWII era.
If the opinion you share is unpopular, it's because it's correct, and the truth is the enemy of the oligarchs that are scamming citizens in the US and the West in general. US is now a scam that exports inflation and crap 2nd rate weaponry. Scam economy, scam military industrial complex, scam military, scam president, scam everything.
If you have a feeling the US is in decline, it's because it is. The situation is much worse than most Americans realize. There is no hope for either Democrats or Republicans to fix anything here. I recommend to all my friends that they emigrate if they can.
And who is ascendant? China, who, oops, was overcounting their population by 100 million and now realize they have reached/passed the peak working population? Europe, who is completely dependant on the USA to maintain a unipolar world that they then take advantage of? Are you an 80s kid like me, and Japan and Russia are going to eat our lunch any day now? Maybe Dubai with their wanna be Vegas financial center in the desert is where you think is safe in a 'the world is falling apart, let's move to a self sustaining country' scenario? Is the whole world falling apart, in which case it's probably best to be in a country that is energy independent (USA), able to be food independant (USA), has the manufacturing base that if needed can onshore/bootstrap manufacturing (USA) and able to retool to be technologically independent (USA).
Wealth is something that is given by God, not something that is taken from another person or state. Many nations will prosper but the colonies will never prosper. The people that are actually eating our lunch are our oligarchs right here in USA. When you have a bunch of uneducated brainwashed people with zero morals or integrity, you’re not going to have a good outcome.
Did I say anything about NATO? How many bilateral deals does the USA have with Europe, where only the USA keeps their side? Every industry I have been in that is supposed to have 'open' trade has had artificial barriers erected on the European side, barriers not allowed by treaty. And when we tried to get the relevant USA agency to require Europe to follow the treaty we were seldom supported. German companies can bribe to get contracts in foreign countries, USA companies (rightly) can not. That puts us at a huge disadvantage. Dude, stop with Trump, and try to understand how Trump came to exist, and why 'lies' have so much staying power. Or just feel smug. Start holding Europe accountable. Who creates and keeps structures beneficial to Europe operating around the world? Who keeps safe open shipping lanes? International dispute resolution that allows international diplomacy to have enough faith in rules to function? A stable enough reserve currency to make long term deals feasible? There is so much 'scaffolding' that is there thanks to the USA the we get zero credit for. But keep demeaning our contribution. Keep making it about Trump instead of maybe addressing American's frustrations (resentments) with Europe and the worlds relationship with us that allowed Trump to happen, that will make the world better. Instead of telling me my frustration doesn't exist (Trump lies) maybe try to understand WHY those lies have staying power, why Trump happened in the first place.
Stop bribing and encourage corruption, start paying (in diplomatic works, in laying 'Western' ideal foundations, and in just sticking to your word, whether that be military commitments or open trade deals) your fair share to the world order and be a partner. Try to understand WHY the average American is frustrated enough that we bought those lies. Or yeah, go after the symptom, not the disease, and enjoy the next iteration of a 'Trump' figure before the decade is out.
Um, no. My family are all immigrants from Europe. Most Americans are raised to despise Europe, and the situation's that resulted in our families having to flee to another continent with nothing (this manifests as being anti-big government, because we have family memory of big government banning our existence/trying to wipe us out). I don't think Europeans understand the average american's psyche or the damage it does when your country tries to eliminate your existence (Irish Catholic, Russian Jewish, small sect German, non-Catholic French descent here).
America is an especially non-homogenous country. And I wouldn't exactly call it damage when they were 100% right about big government trying to destroy them while citing the benefit of the masses more or less. A non-nuanced view about why it is a problem but that is always the case.
Any sovereign nation would be better. Mexico, China, India, Hungary, Croatia, Singapore, Switzerland… USA is a zombie nation state that is more like a colony than a functional nation state.
There's two main "foreign" forces at work in the USA that have more power than the average Joe/Jane, but I'll let you do the math on which forces those are.
> I don't really mind paying $300 for a pair of shoes. Yes, it will be expensive, but then I'll just buy fewer pairs. In return, more people get decent jobs, or so I hope.
I suspect that this would just help keep the same returns for the shareholders and executives.
Shoes may be more expensive, but not $200 more expensive (if we take that on average they cost $100 now) if made in the US. Even for a single worker spending four hours in a pair of shoes, this accounts for $50 extra per hour, or around $100,000 per year.
The whole "we can't make things in America, you wouldn't be able to afford them" song and dance is a lie. When companies outsourced production of goods, they didn't drop the prices - they pocketed the increase in margin.
The reverse is true: nothing stops production from coming back except corporate/investor greed.
Shoes that retail for $120-$150 don’t cost $100 to make. Normal shoes cost like $20 to make. The rest of the costs are transportation, warehousing, marketing, etc. Also remember that retail takes a 25-35% cut. I would expect a shoe that costs $200 to make to retail for at least $400.
My point is that the hypothetical $200 difference between a pair of shoes made in the US, and somewhere else, is not going to go to the folks making them.
+1 - Id also argue that even though that show costs $300 we have enough of a market and population to have competition drive prices down in a generation or two (if not faster).
That is because EU has Poland, Bulgaria, Hungary and other places where Western Europe partially outsourced parts of its manufacturing. It was more expensive than moving it to China, but otherwise much more convenient and less risky.
Europe still kind of has regional currencies, so that makes manufacturing cheaper in certain countries, while the lower wages still can pay for an acceptable standard of living inside those countries.
> Yes, it will be expensive, but then I'll just buy fewer pairs
This is key though, it presupposes everyone can buy fewer pairs. There are probably a lot of people who get by on one pair of sneakers - particularly children, who are going to grow out of them anyway. These are the people that will suffer if $300 shoes become commonplace.
offshoring is short term optimization and has long term negative consequences by killing the entire ecosystem it takes to go from raw material to finished products. The problem is that economists only think 1st order effects, not 2nd and 3rd order.
Charlie Munger has a pretty good take on it and how many economists and our own government officials are in complete denial about it:
>Now let’s follow and second and third order consequences: You are more prosperous than you would have been if you hadn’t traded with China in terms of average well-being in the United States, right? Ricardo proved it. But which nation is going to be growing faster in economic terms? It’s obviously China. They’re absorbing all the modern technology of the world through this great facilitator in free trade, and, like the Asian Tigers have proved, they will get ahead fast. Look at Hong Kong. Look at Taiwan. Look at early Japan. So, you start in a place where you’ve got a weak nation of backward peasants, a billion and a quarter of them, and in the end they’re going to be a much bigger, stronger nation than you are, maybe even having more and better atomic bombs. Well, Ricardo did not prove that that’s a wonderful outcome for the former leading nation. He didn’t try to determine second order and higher order effects.
>If you try and talk like this to an economics professor, and I’ve done this three times, they shrink in horror and offense because they don’t like this kind of talk. It really gums up this nice discipline of theirs, which is so much simpler when you ignore second and third order consequences.
>The best answer I ever got on that subject – in three tries – was from George Schultz. [Schultz was an MIT economics professor before becoming Secretary of the Treasury and Secretary of State.] He said, “Charlie, the way I figure it is if we stop trading with China, the other advanced nations will do it anyway, and we wouldn’t stop the ascent of China compared to us, and we’d lose the Ricardo- diagnosed advantages of trade.” Which is obviously correct. And I said, “Well George, you’ve just invented a new form of the tragedy of the commons. You’re locked in this system and you can’t fix it. You’re going to go to a tragic hell in a handbasket, if going to hell involves being once the great leader of the world and finally going to the shallows in terms of leadership.” And he said, “Charlie, I do not want to think about this.” I think he’s wise. He’s even older than I am, and maybe I should learn from him.
Basically our leaders know we are in a horrible position and are counting on dying before the full consequences of their actions take effect.
it's funny how HN says outsourcing manufacturing is fine and has no negative consequences while going into a fury at the suggestion that software engineering can/should be outsourced. Both result in short term gains but long term negatives
> But which nation is going to be growing faster in economic terms?
well, likely both. because of trade and specialization. when the US offshored shoemaking people did not just went to the beach and called it a day. both capital and labor got reallocated for better returns. (yes, not everyone moved to the service industry, unfortunately not everybody was able or willing to change to different jobs/sectors.)
> maybe even having more and better atomic bombs
even one is plenty.
> If you try and talk like this to an economics professor, and I’ve done this three times, they shrink in horror and offense because they don’t like this kind of talk. It really gums up this nice discipline of theirs, which is so much simpler when you ignore second and third order consequences.
was it at a xenophobic libertarian economists party?
anyway regarding higher order effects and long-term strategy and American "interests":
your response to the argument that economists are wrong is to post more stuff from economists that don't look at 2nd order effects? China doesn't practice anything resembling free trade and as a result they are dominating naïve Western economies
the biggest problem is people who worship "free trade" as a religion while smarter nations use it as a tool to bash them in the head
None of those are economists though. (I don't know whether they have econ degrees of some sorts but neither of them are practicing economists, both are pundits.)
I'm completely in favor of levying customs on China for anticompetitive practices. (Eg. favoring state-owned enterprises against other market participants.)
The point that the free trade zealots make - correctly IMHO - is that despite all the problems with the freeness of trade the trade part in itself got us so so so much prosperity.
> they are dominating naïve Western economies
Okay, that's a very vague claim. Dominating how? Their GDP growth is bigger? (Which is completely expected, it's much easier to catch up.) They stole a lot of tech? (Western companies knew all the risks when they entered into these partnerships, plus if they feel their IP is misused they can - and do - sue both inside and outside China, I guess with largely predictable outcomes.)
The problem in the US is fair distribution of income, not lack of production. In other words, we don't need to make more stuff.
"When you are a hammer, every problem looks like a nail." This is faulty reasoning that probably makes sense to an engineer because, well, engineers usually make stuff.
The only people who this is an unpopular opinion to are the rich fat cat execs who only care about their profits and share prices. Pretty much everyone I know thinks it was a bad idea to outsource manufacturing to less than friendly countries. Thanks, Krugman.
This just isn't true. Maybe they think that because they're not aware of what would happen if manufacturing hadn't been offshored, but the vast majority of people would be extremely unhappy if the cost of all manufactured goods doubled.
I mean, can a country as large as the US be really competitive without manufacturing? I just can't see how services and virtual stuff like FB alone can be essential.