The State of Manufacturing in the United States

vidyohs -

My politics is moderate - perhaps my posting isn't. I disagree with you, though - I don't know more about economics than Don or Russ. Quite a bit less, in fact. I'd also disagree about GMU being a "top university". It's a very respectable economics program, but I don't think it's on anyone's short-list of "top programs" unless you're thinking of Austrian economics specifically. Which is fine - I didn't go to a top program either.

Healthy Markup -

RE: "Please split hairs now on the difference between "good for her" and "she'll lose more in the long run.""

Quite simple - when I said "she'll lose more" it was clearly in reference to losing more jobs. How many jobs are lost in the long run may or may not have anything to do with some theoretical person's preferences. I'm not sure what the conflict is.

Michael Smith -

RE: "This is typical of your posts -- it begins with and rests upon an unsupported assertion. Why is the situation with manufacturing employment a “crises”? What is your definition of a “crises”? You don’t explain or show -- you merely assert."

Yes - if you ONLY quote that one section it looks like I'm just asserting something. But I specifically said manufacturing is losing a large amount of jobs. Insofar as that can be considered a crisis, it's a crisis.

RE: "When, and in what fields of employment, has there ever been a time of “no prospect” of loss of employment to competition? Under what conditions is anyone entitled to view their jobs as completely “safe” from competition?"

I apologize for the mistake. What I should have written was "there was much lower probability of job loss from competition". And I would say that under no condition is anyone entitled to view their job as safe from competition... it doesn't make it any harder when they lose it. Are these really the points you're quibbling over, Michael? The point is, there's been a lot of job loss and that's hard for people to cope with, but that's not an argument for protectionism. That's all I'm asserting. Is that really such a frustrating point to accept?

Re: "Since -- judging from your other comments in other threads -- your definition of a “moderate” is anyone who advocates anything less than the immediate imposition of a Stalin-style totalitarian dictatorship,"

??????????

dg lesvic -

RE: "If you're going to blame the free market, you have to explain how it could NOT tend toward equilibrium."

The market is "to blame" insofar as job loss happens in the market. The fact that it's a crisis for those who lose their jobs doesn't mean the market is bad. The cause is the market and international trade. The solution is to keep trading, and in some situations it may be appropriate to help the unemployed make the transition. I'm not sure why you have to prove that it doesn't tend towards equilibrium. Market equilibria will lose some jobs for some people. That's just life. The market is to blame, but the solution isn't to close the market.

RE: "That's the crux of the issue, the forest that seems to have been lost for the trees."

Not by me. The only person here who seems to be railing against free trade is muirgeo. I'm just saying that I sympathize with the unemployed - that's all.

I_am_a_lead_pencil -

RE: "I apologize for the shift in focus from "trade generally" to labor dislocation due to technology. A similar concern for lost jobs and a lack of economic education permeate both."

It's nothing to apologize for. Although some jobs in specific sectors have been lost due to competition, the bulk of job loss in manufacturing (as I understand it) is attributable to technological change. So it's another myth that needs to be addressed. Although there is somewhat of a "job crisis" in manufacturing - not a whole lot of it is due to trade.

Daniel Writes:

"...losing your job is a very hard and disruptive experience, and most of these people entered these careers when there was no prospect of losing them to competition. I think we can be concerned about them without abandoning trade, though."

I'm curious - what does being "concerned about them" suggest that you will (or should) do?

"She may save some cashier jobs today by rejecting this kind of change, but she'll lose more in the long run as a result."

It is for this reason that I would argue that economic education is vital for humanity to thrive to the fullest extent possible. If this acquaintance of mine, rather than picketing the local grocer, spent her time aiding a specific laid off individual, she would likely do far more good. But (nod to Russ) she can do whatever she wants.

I apologize for the shift in focus from "trade generally" to labor dislocation due to technology. A similar concern for lost jobs and a lack of economic education permeate both.

Daniel put his finger on it.

"The point is, it's a job crisis, not a production crisis."

We certainly do have a job crisis.

So, what is the cause and cure?

Was the cause too little interference with the free market, and, the cure, more interference with it?

Or was the cause too much interferrence, and, the cure, less, or even none?

If you're going to blame the free market, you have to explain how it could NOT tend toward equilibrium.

That's the crux of the issue, the forest that seems to have been lost for the trees.

Daniel,

Whatever your faults, you're the most challenging, and valuable, commenter here.

Now, won't you just shut up for a while!?

Daniel Kuehn wrote:

We do have a manufacturing crisis in this country - but people should just take care to note that it it's not a production crisis, or a productivity crisis, or a value crisis - it's a jobs crisis……

We do have a manufacturing crisis in this country…..

This is typical of your posts -- it begins with and rests upon an unsupported assertion. Why is the situation with manufacturing employment a “crises”? What is your definition of a “crises”? You don’t explain or show -- you merely assert.

I also not what you don’t mention -- namely, that if the loss of employment is due, as you claim, to improved productivity, then it means either: 1) higher wages for the remaining workers, and/or: 2) Higher profits for the owners of the businesses, and/or: 3) Lower prices for the consumers that purchase the goods now produced at higher productivity. In all three cases, someone’s purchasing power has increased, which means greater business for other enterprises thereby increasing their employment. Is this gain in employment elsewhere to be ignored so that you may declare a “crises”?

You also wrote:

Because losing your job is a very hard and disruptive experience, and most of these people entered these careers when there was no prospect of losing them to competition.

Again, this is simply an unsupported assertion. What is the evidence that the people who’ve lost manufacturing jobs “entered these careers” when there was “no prospect” of losing them to competition? When, and in what fields of employment, has there ever been a time of “no prospect” of loss of employment to competition? Under what conditions is anyone entitled to view their jobs as completely “safe” from competition?

If you work at a government-imposed monopoly -- like the Post Office -- then one might have grounds for claiming that there was “no prospect” of loss of employment to competition -- until someone comes along and invents e-mail. But in a free market (or even in a non-free, highly regulated market like we have), I can see few situations when one could legitimately claim a right to view a “career” as having “no prospect” of loss to competition.

You also wrote:

I think we can be concerned about them without abandoning trade, though.

I'm the type of moderate that you need J

As a rule, your type of “concern” usually means advocating the use of government force to extort benefits from some to transfer to these unemployed -- or the use of government force to limit, prohibit, constrain or otherwise make impossible the sort of competition and/or productivity gains that caused the job loss -- or some other force-based government intervention, regulation, controls, etc.

Since -- judging from your other comments in other threads -- your definition of a “moderate” is anyone who advocates anything less than the immediate imposition of a Stalin-style totalitarian dictatorship, what do you advocate with respect to manufacturing employment in the U.S. -- this alleged “crises” you’ve declared -- what do you want done, beyond merely expressing your concern?

Daniel Kuehn,

Note the italics.

"But some people - maybe the friend of the cashier - might be outraged and start shopping at a small local grocer as a result rather than the big chain grocers. If she prefers shopping there, it's good for her and it's certainly not bad for the local grocer either."

Same topic...

"We can't fall into the Luddite trap of being afraid of technological growth. She may save some cashier jobs today by rejecting this kind of change, but she'll lose more in the long run as a result."

Please split hairs now on the difference between "good for her" and "she'll lose more in the long run."

"Type of moderate... I'm the type of moderate that you need :)

Posted by: Daniel Kuehn | Apr 21, 2009 6:14:04 AM"

LOL.

The "moderate" condition that now applies is that approximately 80% of any comments to posts by the owners of the Cafe, are from Daniel. Definitely a "moderate" performance. Oh how moderate!

The "moderate" performance is that Daniel has his own take on every single thing that is written by every single person who comments, and will run anyone around the mulberry bush until they sicken or tire of the game. How moderate!

The "moderate" Daniel even knows more about economics than two top professors at one of the top universities for economics. How moderate!

Yep, definitely a moderate. Is the radical leftwing now dropping the attempted label "progressive", which everyone knew was a lie, and turning to "moderate" as their cover label? People know that is a lie as well, you know, Daniel?

No one who is as prolific in nit picking output as you, Daniel, could ever get away with calling himself a moderate. It is laughable.

While I agree with Don's post we also need to be careful of the conclusions that we draw from a single number. Yes, manufacturing revenues have continued to increase - a trend that has been going on for some time. At the same time manufacturing employment has been decreasing. What is going on? Simply manufacturing is a broad based classification of companies that make things. Most of the job loss in manufacturing has been in the assembly areas where parts are put together to make a final product. The second area of decline is in the making of parts. The primary reason for this is that as these items become more like commodities - price becomes the deciding factor and low cost labor is an essential factor for consideration.

On the other side of the process - as parts become commodities than the real revenue stream moves up the chain to those who make the machines that make the parts. The faster and more consistent those machine are the higher their value and thus their price. The manufacturers who are thriving in this market are those who create the machines that make the parts that others assemble into products. Seems to me this is classical economics at work.

Sam -

RE: "Why is there concern for people who lose jobs do to changes in market patterns?"

Because losing your job is a very hard and disruptive experience, and most of these people entered these careers when there was no prospect of losing them to competition. I think we can be concerned about them without abandoning trade, though.

dg lesvic -

Re: "When his empty words fail him, he calls in the math. When that fails, he simply slips from one topic and one thread to another."

First, I don't see any math here. Second, threads go dead and move on. I usually don't give up on an earlier thread - if I wake up or come to work and check and nothing has happened I move on. If you're attributing that to a reaction that I'm having to some point you've made, you're mistaken. And I've never minded you bringing up old stuff (maybe other people do, but I don't) - I'm just not going to scroll down the blogroll and continue to check ten different threads.

JMD -

RE: "God I hope it is true, but we were told a while back how production in the States was down.

. . . and this is a recession - recessions do as recessions do."

When were we told that? These numbers are very easy to find - you don't have to trust MSNBC. Production AND employment numbers in manufacturing... as well as wages, health benefits, unionization rates, etc. are all very accessible. The recession is a good point - industrial production and capacity utilization of dropped significantly since the start of the recession - but the point is that relative to other countries we're still producing much more.

Crusader:

Re: "Daniel is the type of liberal that we need on this blog"

Type of moderate... I'm the type of moderate that you need :)

Healthy Markup -


RE: "These cashiers' jobs are being lost to equipment that's almost undoubtedly of "non-local" manufacture, so isn't she hurting her "local" economy if she continues to buy from this robotic grocery?"

Wow! You caught me! No, I'd have to disagree. Any localism I've promoted is a voluntary kind, and I've only said that I ever commit to that on a few products that I get particular utility from supporting the local producers. So I don't think this is a conclusion I'm obligated to draw. But some people - maybe the friend of the cashier - might be outraged and start shopping at a small local grocer as a result rather than the big chain grocers. If she prefers shopping there, it's good for her and it's certainly not bad for the local grocer either. While I probably wouldn't be moved to change my consumption I'm certainly not going to argue that that won't help the local economy (although since both the large and small grocers are local, it probably wouldn't change much of anything, unless the small grocer had higher local content).

dg lesvic,

When you go to blog-commenter's heaven (many years from now) this will be on your gravestone:

My attack upon him was not an ad hominem, but an ad weaselem.

A better comment on your contributions I doubt I would be able to find.

Daniel Kuehn,

Revealed preference anyone?

"I think we need some balance on these questions. We can't fall into the Luddite trap of being afraid of technological growth. She may save some cashier jobs today by rejecting this kind of change, but she'll lose more in the long run as a result."

AND

"You seem to be making the case that the "total welfare" of Florida will not be helped by these schemes. I would disagree - if they're engaging in this activity voluntarily, it shouldn't hurt their welfare at all. If people start to find value in trading with those who live close to them, then that is valuable to them - who are you to challenge that?"

These cashiers' jobs are being lost to equipment that's almost undoubtedly of "non-local" manufacture, so isn't she hurting her "local" economy if she continues to buy from this robotic grocery? Other groceries will just follow its lead and outsource more "local" cashiers' jobs to foreign robots.

Say, fellows, is the man the only thing you can attack? Can't you attack the idea?

Yes, it does, to be fun.

Ask Daniel.

He knows what I mean.

Daniel is the type of liberal that we need on this blog, rather the the hit & run trolls(Trumpit, muirduck, etc...). He sounds informed and responds to people's point without resorting to ad hominem attacks. You see, it doesn't have to get ugly.

I want to believe the report, but I have long ago realized anything on MSNBC is only put on their to help liberals (they can claim Obamunism is working - they don't need logic). I hope I'm wrong, but I smell a fake report.

God I hope it is true, but we were told a while back how production in the States was down.

. . . and this is a recession - recessions do as recessions do.

MnM,

Just to remind you of a previous comment of mine, about Daniel, but directed especially to you. I don't recall the exact words, but it was something like this:

Notice Daniel's pattern.

When his empty words fail him, he calls in the math. When that fails, he simply slips from one topic and one thread to another.

And, if you chase him from the one to the other, you're accused of being "off-topic," as though endless evasion was alright, but ever actually pinning him down to anything was an intolerable imposition.

Futhermore, my attack upon Daniel was not an ad hominem, but an ad weaselem.

So there are job losses in U.S. manufacturing yet the U.S. is the highest producer. But, of course, a century or two ago there was a shift from manual farming to mechanical farming in a way that farms became more productive and could feed more people but only a fraction of the population was required to work on the farms. Hence there can be massive productivity gains yet still have high job losses. But the simple reasoning is that it isn't the industries' duty to 'provide jobs'. If virtually all industries could fully automate their processes in a way that create virtually no employment in the various industries then so what? It could be said in a simple analogy that blacksmiths became unemployed with the arrival of the automobile. Furthermore many-a-blacksmith found that their skills didn't automatically cross over to being a car mechanic. Many blacksmiths who were well-to-do professionals in their heyday couldn't recover from the sudden job losses and lived out their days by finding only low-paid, low skilled jobs. But the big question is - so what? Should anyone care let alone make the claim that when some jobs are lost there will be other jobs created? Or that the new jobs will automatically be better than the jobs that were lost?

Wealth destroying activities: much of what government does.

No.

Can we cease the special case ad hominems and stay on topic, please?

And, by the way, Daniel, from the Higgs on Bernancke thread below:

"And, again, 'it looks like this discussion is over, and the bad guys have retreated with their tails between their legs,' no doubt to resurface elsewhere saying that they had really won the argument."

Posted by: dg lesvic | Apr 20, 2009 2:48:50 PM

Are you going to do the same thing here, too, Daniel?

Silly question.

The market, always tending toward equilibrium per se, always tends toward full employment, equilibrium between the supply of and demand for labor. So, when there is chronic, massive interference with the market, and chronic, massive unemployment, it is idiotic to blame the market rather than the interference with it.

Why is there concern for people who lose jobs do to changes in market patterns?

Because many workers are in debt or near the edge of fiscal viability.

Why is this the case?

Why haven't these workers managed to save enough to tide them over periods of unemployment, to enhance their marketable skills, etc.?

At least part of the reason is the cost of supporting an extensive bureaucracy, generous pension benefits, entitlements, and empire.

Context matters.

By allowing the growth of wealth destroying activities, much of the middle and lower class, those who labor to produce value are made excessively dependent on their accustomed level of income for the near future.

" I wonder how much of that can be attributed to Boeing?"

Ask and you shall receive. Well it isn't perfect but it is the next best thing. There is data for Boeing, Honeywell and all other transportation equipment manufacturers ex-autos found here....

http://www.bea.gov/industry/gpotables/gpo_list.cfm?anon=94363&registered=0

Daniel,

You are a prolific typist.

http://www.freetrade.org/node/737

Above is the link to another great paper about the state of U.S. manufacturing written by Dan Ikenson at the Cato Institute

So Don -

Can I assume that you are careless in your writing?

Or can I assume that there is more than one entry under "cost" in Websters and that both of us know that when people talk about "low cost" producers they're talking about wages and health benefits and rent and that sort of thing - and they're probably not thinking about how much of good X the producer can make in terms of the amount of good Y that producer can make, and that you and I both have the insight to explain to them that in terms of trade that the later is more relevant (and indeed, the market will gravitate them towards making decisions based on the later, even if an MSNBC writer is thinking about the former).

Is it fair to assume that both of us understand that and that neither of us are careless in our use of the word "cost"?

Don -

Which is why I specifically introduce leisure to demonstrate that in the real world when someone talks about "cost" there are multiple definitions, and my juxtaposition of "cost" and "opportunity cost", rather than suggesting a misunderstanding of the idea of opportunity costs, demonstrates that I exactly understand the relationship and am pointing out that actuarial costs are irrelevant insofar as they don't take opportunity costs into account in these gains from trade discussions.

By your logic of ignoring context, this one from Russ also implies that there are multiple kinds of costs:

"Then there's the implication that if Tiger Woods continues working without pay for Buick that there's no other cost, that Woods won't spend more time, perhaps, helping some other product."


Russ is talking about opportunity cost here, but his phrase "there's no OTHER cost" would probably indicate to you that he doesn't really understand comparative advantage.

And this use of "costs" by Russ is certainly only concerned with actuarial costs:

"Buick is going broke because not enough people are willing to pay the price of Buick's cars given what it costs Buick to make them."

This one from you may or may not suggest multiple kinds of costs (some people use a phrase like this to refer to actuarial costs - some use it with reference to opportunity costs, so I'm not sure how you're using it):

"eliminating environmental laws (because these impose substantial costs today in return for benefits that arise mostly in the long-run)"

This one from you certainly sounds like you're only talking about actuarial costs:

"Large systemic risks are created only when competition is replaced by monopoly power, when decentralization is supplanted by centralized decision-making, and when personal responsibility gives way to socialized 'sharing' of costs and benefits."

This one is clearly in terms of actuarial costs:

"As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds. "

This one too:

"It's nice to talk about restraining health care costs. America doesn't get its money's worth from its health care expenditure but that's because it's highly subsidized. To keep those subsidies in place and cut costs requires some serious rationing. The American people aren't going to like that. But either way, it's not a growth policy."

That is all from Cafe Hayek.

The cost of a year of my labor is $50K. The cost of a year of my labor is also the 50 fish and 100 bananas I could have otherwise produced. Both are legitimate to talk about in different contexts - my contrast of the two different kinds of costs above should indicate to you that I'm very aware of the meaning of comparative advantage. You have used "cost" in both ways on this blog - and nobody assumes you don't understand something because you've used it both ways. Why? Because Webster understands it both ways too.

Daniel,

Ann does NOT produce bananas at a lower cost than does Bob. The example assumes only two goods: bananas and fish, and therefore excludes any other goods from the example, including leisure.

And I'm sorry, but I re-read again your earlier post, and it reads as if it is written by someone who believes that there are a variety of different "costs," with opportunity cost being one among this variety. I'll assume that you were merely careless in your writing -- which is perfectly understandable, given that the cost of writing comments here at the Cafe is positive!

Don -

It is unecessarily nit-picky. Should I scrutinize every use of the word "cost" in the last several posts on Cafe Hayek? I contrasted "cost" with "opportunity cost" because "cost" has multiple English definitions and in context I thought it was clear that I was talking about actuarial production costs (the usual use of the term - the use that I'm pretty sure Sirkin was intending, but I could be wrong about).

Do you really think it's likely that I actually forgot the meaning of comparative advantage in a paragraph where I explicitly talked about and contrasted "cost", "opportunity cost" and "comparative advantage". You really think it's more likely that I misunderstood the meaning of opportunity cost there than it is that the MSNBC author was using "cost" in terms of actuarial costs? The MSNBC author gave no indication he knew that people think about "low cost" in several ways, but that only one way is relevant. My contrast of the two terms explicitly demonstrated that I knew there were two ways that people think about it and only one is important in discussions of the gains from trade.... and yet you think it's me that was confused?

In your linked example, Ann does produce bananas at a lower cost than Bob in the sense that she is more efficient at it (has to give up less leisure for it), which is a perfectly legitimate and extremely common way of thinking about "cost". My use of the term cost in this way as a direct juxtaposition with opportunity cost relative to other traded goods is exactly the point of comparative advantage and exactly the message of your link.

Daniel,

Sorry to nit-pick, but if you understand that all costs are opportunity costs, then why would you have written the following (in your comment of a few minutes ago):

"The whole point of comparative advantage - and why it's even worthy of mention in text books - is that it says that even if you produce something at a lower cost than all other producers, you may not end up producing it because you produce it at a higher opportunity cost than a trading partner."

This paragraph - indeed, the entire comment of which it is a part -- reads as though its author forgot, if only for the time it took him to compose the comment, that there's only one kind of cost, namely, opportunity cost.

Don -

I don't think you or I misunderstand comparative advantage at all. One of us, however, misunderstands the author - and that's what it boils down to. It may very well be me.

Don -

I don't misunderstand anything - I understand that all costs are opportunity costs, and that explanation is exactly my understanding of comparative advantage. What I'm saying is that if the author of the article was using "lowest cost" in the way that economist use it - in terms of opportunity costs and not actuarial production costs - then I would be very surprised and impressed. I assume that when MSNBC writes about "lowest cost", they're talking about the actuarial production costs that most people think of - and perhaps that is an uncharitable assumption about MSNBC on my part. But if I'm right, and if that's what the author means by "lowest cost", then it is a misinterpretation of comparative advantage.

At least the author isn't misinterpreting it AND arguing against trade - that would truly be a tragedy.

If you break out the composition of industrial production you get a very interesting story.

Since 1975 output of computers, communication equipment and semis has averaged a 22% growth rate.

Over the same period the output of all other industrial production averaged 1%.

You need to be careful what you are measuring when you talk about growth of industrial production.

Daniel,

"...it's perfectly legitimate to reference [factory worker's] experience."

I agree. And as a former factory work I would just like to mention that factory work sucks. I see no more reason to put Americans back to work in the factories than to put them back to work on family farms or in the mines.

Daniel,

On comparative advantage: you misunderstand it. This principle says that just because some entity (say, the United States) can produce greater quantities of both X and Y (in some relevant time period) than can another entity (say, Mexico), that fact does not mean that the U.S. is the lowest-cost producer of both X and Y.

Your distinction between "cost" (or "absolute costs") and "opportunity cost" is off-base; ALL costs are opportunity costs.

I infer from your use of the term "absolute cost" that you are confusing cost with "advantage" -- as in "absolute advantage."

There is no such thing as "absolute cost" -- at least, no such animal that I'm aware of.

An entity is said to have an "absolute advantage" in producing X if that entity can produce greater quantities of X (in some relevant period of time) than can any other entity. But having an "absolute advantage" in no way means that that entity has a cost advantage in producing X. Indeed, showing why this fact is so is the chief lesson of the principle of comparative advantage.

I understand that you said that this point is a sidebar, and I respect that. But because so much of the case for free trade rests on the principle of comparative advantage -- and because this principle is indeed (as Paul Krugman describes it) "Ricardo's Difficult Idea" -- it's important that it be understood.

One of my own contributions to that effort of understanding is here:

http://www.econlib.org/library/Enc/ComparativeAdvantage.html

I_am_a_lead_pencil -

The cashiers should learn how to make self checkout machines.

I think we need some balance on these questions. We can't fall into the Luddite trap of being afraid of technological growth. She may save some cashier jobs today by rejecting this kind of change, but she'll lose more in the long run as a result.

Still, that recognition doesn't change the immediate consequences. Try telling the unemployed that labor markets clear. They might eventually - but it's worth worrying about these disruptions and frictions without overcompensating and railing against technological progress itself.

It's not inconsistent to say - "we have a major job dislocation problem in manufacturing" and "manufacturing is doing great" and "imports are good" and "technological progress is good" all in the same breath. MnM - I know the article wasn't about jobs, but my point is simply that people wrap the jobs/production/competitiveness idea into one single problem - it's worth picking those strands apart and saying "this one is legitimate, this one is illegitimate".

Daniel said:

It is legitimately no fun for former factory workers, and it's perfectly legitimate to reference their experience. But the fact is, for the most part they are losing their jobs not because of China (although competition has certainly taken it's fair share) - but primarily because of productivity gains and technological change - something that should be celebrated.

It not only bothers the unemployed factory worker, it also bothers the average casual reader. An acquaintance of mine is planning to boycott a local supermarket chain for its installation of self checkout lines. She views them as forcing unemployment "just for some extra profit".

MnM -

No I certainly recognize and agree with the authors ponit. Believe it or not, I don't always post on here to be beligerant.

I'm just saying that there is more "in the air" than just a concern about what we produce - that concern is definitely misplaced. But there is also a concern about manufacturing with respect to employment in manufacturing. That may be a big concern for some people, it may be a small concern - but unlike the concern about production, the concern about jobs is very, very real (if those sorts of things concern you).

So in other words, I'm just saying it's not completely a "myth". There is certainly something going on in manufacturing, and that's simply worth noting - that's all.

Don -

The whole point of comparative advantage - and why it's even worthy of mention in text books - is that it says that even if you produce something at a lower cost than all other producers, you may not end up producing it because you produce it at a higher opportunity cost than a trading partner.

Perhaps I am not giving the author enough credit, but usually when you read "produce something at lower cost" in the general media, they're refering to absolute costs.

Either way - it was just a sidebar.

The point is, it's a job crisis, not a production crisis. U.S. manufacturing has been hemmoraging [sic] jobs for years now.

I'm not entirely sure how to respond to this. I guess you and I disagree on what the point it.

The article clearly stated that the premise was on the production side, not the labor side. See here:

A few weeks ago, my wife asked me why the U.S. doesn't make anything of value anymore. Everything, she said, is made in China or Mexico or other faraway points on the compass.

Anything not anyone.

I'll likely have more to say on this, but I won't be able to post for a few hours.

Daniel,

I re-read Sirkin's solitary use of the term "comparative advantage." I didn't cringe. What's wrong with it? To produce X according to comparative advantage is indeed to produce X at a lower cost than your trading partners can produce X. (Sirkin's use of the term "lowest cost" surely means "lowest" relative to all trading entities.)

"I guess the real question is, why do such myths persist?"

I deal with similar issues when it comes to baseball instruction.

80 to 90 percent of what instructors teach is crap and will hurt, rather than help, your swing or pitching. That is because...

1. Very few people actually study what the best big leaguers actually do.

2. Many of the people who actually do study big leaguers (e.g. Tony Gwynn) don't understand physics so they end up confusing cause and effect.

Only the fewest of the few actually study good hitters and pitchers and know how to correctly interpret what they are seeing.

Isaac -

That's an interesting point - as the Austrians would say, it's not the aggregate supply that matters - in many cases what is specifically supplied is relevant as well. The production structure, if you will.

To all -

I cringed on page two - another butchering of the definition of comparative advantage. Oh well - their general sense of things is in the right place, and I'm sure we're all used to that particular mistake by now.

I think that this is great news, but I am curious. I wonder how much of that can be attributed to Boeing? For all I know, it's a drop in the bucket, but right now it represents just about half of the world's supply of commercial aircraft. Can anyone point me towards a breakdown of the largest us manufacturers as a percentage of total "manufacturing" in the US? Thanks!

Don -

And to anticipate you - I know Krugman said there's no such thing as national competition... I was using the phrase very casually, not especially analytically.

Don,

I agree that reality is difficult to grasp, but this strikes me as something different; something much more severe.

It amounts to a complete denial of reality. It's like pointing someone with a belief in a pink and green poke-a-doted sky to the blue sky and saying "see?", only to get a bewildered look in response. I guess we could modify the question to read, "why, in the face of contradictory evidence, are people unwilling to let go of their priors"?

By the way, I plan on attending your wife's lecture at Berry College tomorrow. Looking forward to it.

MnM and Don -

It's not a myth - I wouldn't dismiss it that easily. The point is, it's a job crisis, not a production crisis. U.S. manufacturing has been hemmoraging jobs for years now. It is legitimately no fun for former factory workers, and it's perfectly legitimate to reference their experience. But the fact is, for the most part they are losing their jobs not because of China (although competition has certainly taken it's fair share) - but primarily because of productivity gains and technological change - something that should be celebrated.

We do have a manufacturing crisis in this country - but people should just take care to note that it it's not a production crisis, or a productivity crisis, or a value crisis - it's a jobs crisis.

MnM,

I've come reluctantly to the conclusion that most of what is believed by even educated people is myth. Reality is damnably difficult to grasp, particularly complex reality such as the nature of society and of economies.

Moreover, I agree with H.L. Mencken that thinking seems to give most people a headache. So thinking is not done much in situations in which the personal consequences to someone of thinking or not thinking are small.

Emoting is vastly more enjoyable and much, much easier than is thinking hard.

I guess the real question is, why do such myths persist?