Manufacturing Error

by Don Boudreaux on August 12, 2009

in Myths and Fallacies

If errors and economic misunderstanding were counted as output in GDP figures, Harold Meyerson would rank as one of the world’s largest economies.  Exhibit A: his column in today’s Washington Post — in reply to which I sent the following letter.

Dear Editor:

Harold Meyerson’s argument that America no longer “makes things” is specious.  It’s true, as Mr. Meyerson says, that “Since 1987, manufacturing as a share of our gross domestic product has declined 30 percent.”  But this fact is caused chiefly by substantial growth in services and construction and not, as Mr. Meyerson implies, by declining manufacturing output.

In fact, according to the 2009 Economic Report of the President, total manufacturing output in the U.S. – measured by an industrial-production index – hit an all-time high in 2007 (the latest full year for which data are available).*  In 2007, American manufacturing output was eight percent higher than it was in 2000, 69 percent higher than in 1990, 81 percent higher than in 1987, 184 percent higher than in 1980, and 213 percent higher than in 1967 – one of the years that Mr. Meyerson singles out as a glorious one when America “still made things.”

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

* These data are available in table B-51 at http://www.gpoaccess.gov/eop/tables09.html#erp3
(and do note that these data are adjusted for inflation).

Tim Worstall joins in the fun in documenting that Meyerson’s “facts” are fiction.

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{ 58 comments }

Anonymous August 12, 2009 at 7:28 pm

Perfecto Don, perfecto!

Anonymous August 12, 2009 at 7:34 pm

Don,

While I agree that a declining manfucturing “base” is not necessarily a bad thing, it is not necessarily a good thing, either. Surely it depends on why the manufacturing “base” is declining, right?

If, for example, recent changes have been fuelled by expansionary monetary policy, and represent an unsustainable growth path, then a declining monufacturing “base” may be a real problem. The same argument can aslo be applied to changes in the trade deficit, but you write as though such changes are always good market adaptations rather than detrimental government distortions.

Note: I placed the word “base” in scare quotes above, because it is a word that implies that a national economy is based upon — dependent on — manufacturing. This is clearly misleading; the reductio would be to draw the arbitrary lines of a “nation” around an individual working at McDonalds, and ask whether their well-being depends upon their manufacturing output. Of course, manufacturing has to occur soemwhere, but in a global economy like ours, it need not be the “base” of any particular economy.

Anonymous August 12, 2009 at 7:38 pm

Most newspaper editors are totally incompetent. And they wonder why subscriptions are declining.

The difference between absolute and relative figures is not some eclectic statistical concept beyond the reach of a lowly newspaper man. Or at least it shouldn’t be.

Anonymous August 12, 2009 at 7:38 pm

Don,

Let me put my previous question differently:

You recently criticised Peter Schiff for his view that the U.S.’s declining manufacturing output and trade deficit were something to be worried about. Having listened to Schiff on Youtube, I don’t think he is arguing that changes to the manufacturing industry and trade deficit are inherently bad, but rather they have been distorted by unsustainable government policies. Supposing he is right, would you still disagree with people who worry about the *current* condition of manufacturing and the trade deficit?

John Dewey August 12, 2009 at 7:44 pm

Lee, what do you mean by “declining manufacturing output”? Do you believe that U.S. manufacturing output has somehow declined? Over what period are you referring to?

Why do you group “condition of manufacturing and the trade deficit” together, seeming to imply that one is in any way dependent on the other?

Anonymous August 12, 2009 at 8:00 pm

Hi John,

When I wrote “declining manufacturing output” I was thinking “a relative decline in manufacturing output.” But my question was hypothetical, so it doesn’t matter whether the decline is relative or absolute. Don writes about these matters often, but always as though every change in the manufacturing industry or trade deficit represents healthy market adjustments. But why would he assume that? If the government(s) is distorting relative prices, then such changes may be unsustainable economic maladaptions.

I actually think the housing bubble, the Fed’s monetary expansion, and the Chinese central bank’s exchange rate controls, have actually inflated the trade deficit and led to a relative decline in manufacturing. I think, without these government distortions, the U.S. economy would manufacture more and have a lower trade deficit.

I do not think that a rise or fall in the manufacturing or the trade deficit are in principle good or bad; likewise, I don’t think a rise or fall in house prices are in principle good or bad. But, over the last few years we have seen how government action can create a bad –unsustainable — price rise. If similar distortions are being felt in manufacturing or the trade deficit, they too might be a problem.

Anonymous August 12, 2009 at 8:00 pm

Don – Is the industrial production index a per capita index?

I agree with lee kelly – it’s neither good or bad inherently – a lot of the question is why has it declined, not declined, or increased.

But even granted that point, output should increase as the population increases.

Anonymous August 12, 2009 at 8:16 pm

Look in the end it’s about socialists fetishism about big-ticket item manufacturing jobs(autos, appliances, ships). Somehow our entire national well being is tied up in having the biggest % of high paying union jobs.

Anonymous August 12, 2009 at 9:21 pm

Dan Ikenson at The Cato Institute has done some good work on this also.

Henry Blankett August 12, 2009 at 11:25 pm

1) Which products, specifically, are being manufactured within the confines of the United States? No, I don’t mean manufactured OUTSIDE the United States by corporations whose HQ is located in an office building in downtown Cincy; I mean, manufactured WITHIN the United States. Your cited data doesn’t say (for good reason).

2) If you wish to talk about the scale of economies based on “errors and economic misunderstanding”, you could do no better than quote the guy who you’re citing as some sort of support:

[i]“There is one more thing to note: the number of people employed in manufacturing is also falling. Yes, even while output grows, the number of people making that output is falling. This is known as “rising productivity” and is generally thought of as a good thing. For it means that we can still have all those manufactured things, the things we can drop on our feet, and yet there are now several tens of millions of people who can do other things, things other than making things for us to drop on our feet.”[/i]

Given the undeniable fact (at least to honest observers) that American working people are not sharing in the rewards garnered by all this rising productivity (more working hours spent in exhange for lower wages adjusted for inflation), as well as the fact that several very large areas of the United States have quickly become gigantic decaying rust buckets full of unemployed people, shouldn’t you be writing yourself a letter denouncing your own economic misunderstanding?

(BTW, I’m searching, but so far not succeeding, in locating any predictions penned by either you, Prof. Boudreaux, or your colleague, Russ Roberts, of the imminent housing bubble collapse which was apparent to any capable economist from at least a couple of years ago. All I seem to find are columns about how “well-off” Americans supposedly are…)

Anonymous August 12, 2009 at 11:29 pm

Even admitting that you are stating correct facts, what is the solution? Should we legislate corporations to have a minimum % of manufacturing jobs here in America? Should we unionize more industries? What?

Henry Blankett August 13, 2009 at 1:10 am

A few things that should be pursued:

1) By hook or by crook, force China to properly valuate its currency and cease its mercantalist dumping and tariff practices.

2) Ditto similar tariff practices re. India, etc.

3) Number 1 and 2 refuse to comply? I’d like to avoid an Article 12, WTO, because there are plenty of nations who do trade with the U.S. honestly (such as Canada). Article 12 is a nuclear option, so I much prefer targeted tariffs, directed at obvious culprits.

4) VAT amendments

Peter Morici has some more detailed suggestions here: http://www.forbes.com/2008/03/25/globalization-recession-bernanke-banks-oped-cx_pm_0326morici.html

Economiser August 13, 2009 at 1:19 am

Or, we can try eliminating our tarriffs and subsidies. If countries like China don’t follow suit, so what? It’ll only hurt them in the end.

Regarding a VAT, when we start copying European tax and regulation policies, we’ll start getting European GDP growth rates. Then we can all be poor together.

Henry Blankett August 13, 2009 at 4:39 am

What tariffs does the U.S. have which protect against, just for one example, billions of tons of Chinese goods? Not much. In fact, for all practical purposes, the U.S. is most import-friendly, “free” market in the world. There are agricultural subsidies, but agriculture isn’t the topic; manufacture is. It’s not possible to eliminate what’s already been eliminated (manufacturing import tariffs.)

And the U.S., with a $12 trillion-and-rising debt — mostly owed to China, of all places — can no longer reasonably be called “rich”. We’re just a declining, debt-ridden country with a few pockets of wealthy individuals here-and-there.

Mr. Econotarian August 12, 2009 at 11:56 pm

“(more working hours spent in exhange for lower wages adjusted for inflation)”

Wages may be stagnant, but total compensation has been rising, largely due to health care benefit rises, but also other non-wage benefits.

Economiser August 13, 2009 at 12:20 am

Also the quality of stuff we can buy is increasing. Big-ticket manufactured items (e.g., cars) come with many more bells and whistles than they used to.

Reminds me of the great rhetorical question: “What’s the price of an Ipod in 1980 dollars?” Sure, you could take today’s price, back out the inflation, and quote a figure in 1980 dollars. But in a more appropriate sense, the price is infinite. The richest person in the world in 1980 couldn’t buy an Ipod.

Henry Blankett August 13, 2009 at 1:14 am

The only thing that’s been rising at my job in regards to health care benefits is the percentage of out-of-pocket payment I would need to make. But your post reminds me of another idea to help kick-start the U.S. manufacturing sector: implement single-payer health care. Business health care expenditures towards private employee insurance would be drastically reduced.

MWG August 13, 2009 at 2:05 am

“Given the undeniable fact (at least to honest observers) that American working people are not sharing in the rewards garnered by all this rising productivity (more working hours spent in exhange for lower wages adjusted for inflation)…”

Henry, Are you saying that the average American doesn’t live much much better today than he did 30 years ago?

Your understanding of even the most basic economic principles is seriously lacking.

Henry Blankett August 13, 2009 at 4:29 am

(Somehow, I posted this in the main response column, so I’ll re-post it here, where I originally intended).

MWG: I didn’t specifically say that, but yes – financial life for Americans not in the top quintile or perhaps 1/3 asset-holders HAS been getting worse over the past 25-30 years — most rapidly within the past 15 years, as debt has replaced earnings as a source of household “wealth”. Three decades of a hell-bent government/multinational policy to encourage manufacturing flight has been the catalyst, though it’s not the sole reason. You’d have to be living in a cave surrounded by walls of Heritage Foundation working papers to believe otherwise.

Anonymous August 13, 2009 at 5:12 am

“implement single-payer health care.”

That’s one solution. But instead of trashing US health care quality Canada-style, and making it illegal for people to get some services at ANY price (even if they’ve paid for it with a lifetime of taxes), why don’t we instead end the federal government’s encouragement of employer-based third-party financing, so that people will be encouraged to find non-employer-related groups, and to purchase coverage and care directly, thereby creating a consumer-oriented market, and driving down prices so that more people can afford to buy it?

What is your bloody fascination with no-recourse coercive monopolies? Why in the world would you want to do business with the same entity that controls the laws and the army? What if they don’t do a good job? What if another Bush is elected and takes control of it? What are you going to do, take your business elsewhere? Report them to the better business bureau? Sue them? Vote against your Congressman in district #makesnofrickingdifference?

And why, please why, must you insist that everybody participate in your idiotic scheme? I seriously doubt that I am less knowledgeable, less intelligent, less educated, or less empathetic than you (not that any of that matters), and I REALLY REALLY REALLY think it is a bad idea that will hurt me my family, and millions of others.

And the beauty of it is, to leave me out of it, is incredibly easy–just make the program voluntary! If it will work with 300 million participants, then why not 10 million? 2 million? If I’m not in it, then it is my loss, right? I’m good with that. I will never complain about not being included–I swear.

You can form a club or a company, and only allow in those you want in. Your idea is so beautiful, that I’m sure almost everyone will WANT to sign up for it, right? Those few who don’t will see the error of their ways and likely join later on. Why, it will spread so fast, you will be the hero of the ages.

Nice and peaceful, right? No arm-twisting. No consternation. No having to wait for blue dog Democrats to agree. No evil obstructionist Republicans. No hateful Astroturf racist town hall mobs. You can bypass all of them. Just get together with all like-minded folks and make it happen for yourselves. Who needs those nasty naysayers, anyway?

I’ll even give you my best wishes and hope for you all the luck in the world. Tell you what. I’ll even give you $10 seed money, just in the spirit of good will. I won’t interfere at all. And all I ask in return is the easiest thing in the world–just leave me out of it.

What do you say?

Sam Grove August 14, 2009 at 1:17 am

implement single-payer health care. Business health care expenditures towards private employee insurance would be drastically reduced.

Other than through increased rationing by bureaucracy, how does this idea alter the quantity of resources required to produce said health care?

It doesn’t.

There’s no magic box by which political power can produce those resources.

Greg_Ransom August 13, 2009 at 12:43 am

Meyerson is a leftist. Facts don’t matter to him.

Words are mere means for achieving his leftist ends, and no rules such as honesty or integrity can stand in the way. The great and liberating thing about being a leftist is that being a leftist means never having to have any principles. It’s part of the package — traditional rules of law and morality are means for bad people to exploit and oppress the poor, so they don’t apply to leftists.

Being a leftist means having an end which trumps any mere principle of morality.

Meyerson won’t bat at eye or retract a single word if he by accident reads your letter.

Anonymous August 13, 2009 at 1:44 am

Q: How can you tell if a leftist is lying?
A: His words don’t match what you know he intends to do.

schwabby August 13, 2009 at 1:36 am

OK, you are correct. He should have said” Flat manufacturing output combined with growth of low wage service jobs results in falling real wages for the middle class.”

Henry Blankett August 13, 2009 at 4:27 am

I didn’t specifically say that, but yes – financial life for Americans not in the top quintile or perhaps 1/3 asset-holders HAS been getting worse over the past 25-30 years — most rapidly within the past 15 years, as debt has replaced earnings as a source of household “wealth”. Three decades of a hell-bent government/multinational policy to encourage manufacturing flight has been the catalyst, though it’s not the sole reason. You’d have to be living in a cave surrounded by walls of Heritage Foundation working papers to believe otherwise.

Mathieu Bédard August 13, 2009 at 9:37 am

As Stephen Manning of the Associated Press acknowledged in a rare “just the facts” story in mid-February, the U.S. “by far remains the world’s leading manufacturer,” producing goods valued at a record $1.6 trillion in 2007 — nearly double the $811 billion produced a decade earlier. Indeed, the AP writer noted, “For every $1 of value produced in China’s factories [in 2007], America generated $2.50.” Not bad for a country that doesn’t produce anything anymore.
http://www.msnbc.msn.com/id/30229507/from/ET/

Carl Pham August 13, 2009 at 10:49 am

This is a stupid point, even if it were true. Say your boy is graduating high school this year. What would make you happier? (A) That he’s going down to the Ford plant the day after graduation to turn a wrench for the next 45 years? (B) That he’s going to MIT to get his MS in engineering and spend his career in front of computer designing cars, aircraft, maybe spacecraft? Multiply by 300 million.

This complaint is like the mid 19th century piss and moan about the decline of the US as a bucolic agricultural country, populated by sturdy Jeffersonian yeomanry who sewed their own buckskin togs. I am nauseated.

I don’t give a fig if every last dishwasher, car, tractor and steel I-beam is manufactured in Korea or Botswana, so long as we can keep those juicy jobs designing new cancer drugs or writing computer algorithms to run the Korean or Botswana factory robots.

Anonymous August 13, 2009 at 10:58 am

We won’t keep juicy jobs designing new cancer drugs or writing computer algorithms to run the Korean or Botswana factory robots if we don’t manufacture the drugs, robots and products of the robots, because at some point, the cultures still manufacturing the products will know better than us how to design the next generation of products and productive infrastructure.

The vision of the U.S. as a “designing nation” is fundamentally a vision of central planning. It won’t work for the same reason that socialism can’t work.

Anonymous August 13, 2009 at 6:59 pm

No it’s central planning to have the government interfere with the free market and decide what types of jobs people should be doing. It’s the opposite of central planning to have millions of companies making their own decisions. Isn’t that better?

John Dewey August 13, 2009 at 7:03 pm

martinbrock: “at some point, the cultures still manufacturing the products will know better than us how to design the next generation of products and productive infrastructure.”

I don’t think cultures design and manufacture products. Entrepreneurs and corporations employ workers to design and manufacture products. The smartest entrepreneurs and corporations will utilize the best workers for each part of the manufacturing process, regardless of the culture in which that talent developed.

martinbrock: “The vision of the U.S. as a “designing nation” is fundamentally a vision of central planning.”

I don’t have any such vision, but I don’t understand why you would equate “design” with “central planning”. U.S. businesses which compete furiously with each other can all possess strong design capabilities in the U.S. as well as manufacturing facilities abroad. Why would that be a “vision of central planning’?

Anonymous August 13, 2009 at 2:23 pm

Definitely! It would be disconcerting if we didn’t produce any food here, just like it would be if we didn’t produce any manufactured goods here. What if war breaks out and trade contracts? What if there’s a trade war? It’s a very vulnerable position to be in.

BUT – I still agree with your point. The point is, we aren’t Jeffersonian yoemen anymore and yet we’re still a breadbasket for the world. Why? Mechanization and productivity. The same is true with manufacturing. I wouldn’t be as excited as you are about the prospect of having NO manufacturing here. But I’m certainly comfortable with only 1% of the workforce operating fantastically productive machines to produce what it took 20% of the workforce to produce several decades ago. Sounds good to me.

Anonymous August 13, 2009 at 2:24 pm

Granted… that’s a painful short-term displacement. We shouldn’t confuse sypathy over the pain of displacement with an unwillingness to accept productivity gains.

Brad Hansen August 13, 2009 at 1:03 pm

I would have also pointed out that as of 2007 the United States was the leading manufacturer in the world. China, the number two country only produced about 60 percent as much.

Anonymous August 13, 2009 at 2:55 pm

And China produced 60 percent as much with 4-5 times the population.

On the other hand, many of the “manufactured goods” we produce aren’t really so good, as markets measure “goodness”. I’m thinking of the military-industrial complex and other producers in the command economy. Aircraft carriers and strategic bombers are “manufactured”, but I don’t buy them. Central authorities tax me and buy them on my behalf, to protect me. So they say.

A rising line on a “manufactured output” graph obscures some significant details. I’d like to know more of these details. Precisely what we manufacture matters. Doesn’t it? More and more of the stuff I choose to consume myself, in the market, is manufactured abroad, and this divergence seems interesting at least, if not alarming.

Fascist Italy looked like an economic miracle for a while too.

John Dewey August 13, 2009 at 6:47 pm

martinbrock: “I’d like to know more of these details. Precisely what we manufacture matters. Doesn’t it?”

If you’d truly like to know, do a little research. BEA’s GDP by industry reports will show you that the U.S. produces many billions of: chemicals; machinery; computers and electronics goods; and fabircated metal products.

martin brock: “More and more of the stuff I choose to consume myself, in the market, is manufactured abroad”

More of what stuff you consume? the Boeing aircraft you fly in? the dental and medical equipment your health care professionals use in treating you? the gasoline you burn in your vehicle? the paper in the magazine you read? Do you know where those goods are manufactured? Or do you refer to just the shirts and telephones and kitchen appliances which are labelled “Made in China”?

Anonymous August 13, 2009 at 6:56 pm

To be fair, 99% of consumer goods are manufactured in China. The question that has to be asked is, so what? Is it a natural evolution to shift from manufacturing consumer goods to more knowledge-based products? I’d hate to think that as a society we would remain so stagnant as to be doing the exact same thing forever.

John Dewey August 13, 2009 at 7:13 pm

ArrowSmith: “99% of consumer goods are manufactured in China”

What do you mean when you use the word “consumer goods”? I think the most common definition would be:

goods that are ultimately consumed rather than used in the production of another good and specifically intended for the mass market

Such a definition would include not only televisions and t-shirts, but also gasoline, plastic bags, newspapers, motor vehicles, and packaged foods. The U.S. produces many billions of dollars of such consumer goods.

Arrowsmith: “Is it a natural evolution to shift from manufacturing consumer goods to more knowledge-based products?”

Of course, the service sector has been the largest component of U.S. GDP for at least 70 years if not longer.

Anonymous August 13, 2009 at 8:27 pm

If you’d truly like to know, do a little research.

That’s what I’m doing here. Thanks for the link.

BEA’s GDP by industry reports will show you that the U.S. produces many billions of: chemicals; machinery; computers and electronics goods; and fabircated metal products.

I assume that the U.S. produces these things. I’ve posed more specific questions.

How much of the growth in manufacturing do these things represent compared with products of the command economy?

How much foreign investment finances this growth and other growth in the market sector, compared with financing for the command economy (like Treasury securities and mortgage backed securities with an implicit Federal guarantee)?

More of what stuff you consume?

The usual stuff we discuss in this context, automobiles, dynamic RAM, flat panel displays, cellular phones, laptop computers and the like. We’ve discussed mp3 players in other threads for example.

Or do you refer to just the shirts and telephones and kitchen appliances which are labelled “Made in China”?

No. I haven’t mentioned any of these things. That must be you.

John Dewey August 13, 2009 at 8:47 pm

martin brock: “The usual stuff we discuss in this context, automobiles, dynamic RAM, flat panel displays, cellular phones, laptop computers and the like.”

I don’t know who the “we” is to which you refer. But I’m fairly certain economists do not refer to only high tech goods and automobiles when discussing either final goods or consumer goods.

Would you limit your analysis of “stuff you consume” to high tech and automobiles? and ignore other manufactured goods categories on which households spend considerable amounts, such as gasoline and food?

Why would any discussion of what you consume exclude those items you consume indirectly? Medical equipment, chemicals, plastics, and passenger aircraft – items produced in the U.S. – are all indirectly consumed b you.

Sam Grove August 14, 2009 at 1:21 am

Um…he was asking.

Paul McLellan August 13, 2009 at 1:43 pm

I don’t really understand how something like an iPod is accounted. It is manufactured in China, with chips mainly from Taiwan. However, I suspect that margins of all those people are very thin. If that manufacturing were done in the US, even assuming we could do it for the same price, which we can’t, why would we want to create jobs that generate so little value.

When you go to apple.com and order an iPod, it gets shipped straight from China to your door. Apple makes almost all the profit. So, in some deep sense, when Apple sends the latest iPod design to China to be manufactured, it is actually a billion dollar export not captured in the trade figures, against which the incoming low-value iPod hardware should be offset.

Now, what is the effect of this on the trade-deficit? How different would it be if we manufactured it here? Would that be a good thing given that Apple would have to divert high value resources to a low value task.

Anonymous August 13, 2009 at 3:24 pm

I suspect that margins in the U.S. are also thin. Why would margins be thicker here? If designing mp3 players adds so much more value than manufacturing them, why does Apple claim a fatter margin than Creative or SanDisk or Samsung, producers and presumably designers of the mp3 players I’ve owned?

I love my new Samsung U5 by the way. It does just what I want and no more in a very convenient, economical package.

Apple didn’t invent the mp3 player by a long shot, and it didn’t produce them first either. Somehow, it made “IPod” practically synonymous with “mp3 player”, and that’s a clever feat too, but I don’t understand any U.S. comparative advantage in this regard.

If we really have a comparative advantage in design, I might expect Samsung to outsource the design of its next mp3 player to some firm in California, but I doubt that it has.

In fact, our manufacturing output continues to rise in part because many foreign corporations now manufacture goods here for sale here, so Toyota now manufactures cars in Kentucky. Do Californians design these cars? I doubt it.

MWG August 13, 2009 at 6:28 am

http://www.reason.com/news/show/129745.html

“The mistake made by the School of Gloom is looking only at wages, narrowly defined. According to the Bureau of Labor Statistics, average hourly earnings of production and nonsupervisory workers, adjusted for inflation, fell by 4 percent between 1975 and 2005. But those figures deceive because they omit fringe benefits like health insurance, pensions and paid leave, which make up a bigger share of total compensation than before. The numbers also rely on a mismeasure of inflation.

When those flaws are corrected, a very different trend leaps off the page. Median wages, says Fitzgerald, rose 28 percent between 1975 and 2005. Nor were the gains restricted to Bill Gates and Hannah Montana: Significant gains occurred in the middle as well.

The same pattern holds for households. The figures that suggest families are struggling to stay even overlook some types of income, and they don’t account for the fact that households have gotten smaller on average. After accounting for such things, Fitzgerald found that “inflation-adjusted median household income for most household types increased by roughly 44 percent to 62 percent from 1976 to 2006.”"

Anonymous August 13, 2009 at 8:23 am

Three decades of a hell-bent government/multinational policy to encourage manufacturing flight has been the catalyst, though it’s not the sole reason.

It’s not even a primary reason, even if I accept your premise about manufacturing flight.

Union contracts that gave steelworkers 14-week vacations, tonnage paid for unsellable steel, and a grievance system that made it almost as difficult to fire a steelworker as it is to fire a postal worker, did all that was needed to be done to kill that particular golden egg-laying goose, and union autoworkers have similarly done their damnedest to kill auto manufacturing in Michigan.

If there is a primary culprit to manufacturing flight, it is union stupidity, with a strong ally in government tax policy.

Anonymous August 13, 2009 at 5:35 pm

“the U.S. is most import-friendly, “free” market in the world.”

The US has a very high level of trade freedom, but according to the 2009 Index of Economic Freedom (http://www.heritage.org/Index/Explore.aspx), the following countries have higher trade freedom than the US:

Hong Kong, Libya, Macau, Singapore, Norway, Namibia, Canada, Iceland, Croatia, Kyrgyz Republic, Papua New Guinea, and Mauritius.

Regarding US Trade Freedom the Index says:

“The weighted average U.S. tariff rate was 1.6 percent in 2006. High out-of-quota tariffs, some import and export bans and restrictions, some import fees, some services market access restrictions, regular use of anti-dumping and countervailing duties, and export-promotion programs and subsidies add to the cost of trade. Ten points were deducted from the U.S. trade freedom score to account for non-tariff barriers.”

Sam Grove August 14, 2009 at 1:13 am

We’re just a declining, debt-ridden country with a few pockets of wealthy individuals here-and-there.

but what do we blame that on?
Trade policy?
Maintaining our empire?
Entitlements?

We have a very expensive government.

Anonymous August 13, 2009 at 9:09 pm

I don’t know the “economists” to which you refer.

I wouldn’t ignore anything. I said that more and more of the stuff I consume seems to be imported. I don’t consume more and more gasoline and food. I actually consume less and less gasoline. I’m trying to consume less and less food but not so successfully.

Why would any discussion of what I consume exclude items I consume indirectly? Good question. Why? You tell me. I haven’t excluded any of these things.

Again, I posed specific questions, and you haven’t addressed them. You seem to be evading them instead.

John Dewey August 13, 2009 at 10:19 pm

martin brock: “Again, I posed specific questions, and you haven’t addressed them.”

The questions I see in your reply would require research to answer. Do your own research. I don’t care about those questions.

Sorry, but your series of replies is confusing. You have mixed the productive output of the nation:

“Aircraft carriers and strategic bombers are “manufactured”, … “A rising line on a “manufactured output” graph

with your personal consumption habits:

“I don’t consume more and more gasoline and food.”

and, I guess, have made some point. Sorry, Martin, but I don’t understand what that point is.

Is your point that the U.S. economy is not producing the goods and services you personally wish that it did?

Anonymous August 13, 2009 at 10:26 pm

Yes, I personally wish that markets chose more of the nation’s productive organization and that central authorities in the command economy chose less, and I wonder how the central authorities will continue to command their organization of productive resources and how these commands will constrain my capacity to realize my personal wishes.

John Dewey August 13, 2009 at 10:58 pm

Well, now you are referring to markets rather than your personal consumption desires. That’s an entirely different view.

Contrary to your personal goals, consumers in the free market have been consuming more food and more gasoline (though growth of the latter has slowed). U.S. factories have been supplying those needs.

Americans have also been directly and indirectly consuming more chemicals and plastics. U.S. factories have been supplying those needs as well.

Americans have been consuming more pharmaceuticals. U.S. factories have been supplying those needs.

Americans, through decision of their elected representatives, have been indirectly consuming more defense and national security equipment. U.S. factories have been supplying those needs. That you do not agree with those wishes of the American people, as expressed through their elected representatives, seems irrelevant to the issue of whether U.S. manufacturing is healthy.

Anonymous August 14, 2009 at 12:30 am

Per capita gasoline consumption is down nationally, but it’s beside the point I’m discussing anyway. You aren’t interested in this point, so I’ll just let you argue with yourself.

Elected officials don’t represent me, and the rents they impose limit my capacity to pursue other goals, so I’ll go on worrying about that even if you’re happy with it.

Sam Grove August 14, 2009 at 1:26 am

Right, so the lucre feedback involved is part of the democratic process as well?

John Dewey August 14, 2009 at 1:25 pm

martinbrock: “Elected officials don’t represent me”

The 535 members of Congress represent the 290 million or so citizens of this nation, including you if you are a citizen. You may not wish them to represent you. You may not be happy with the decisions they make on your behalf. but as long as you are a citizen of the U.S., they are representing you.

John Dewey August 14, 2009 at 1:30 pm

Sam, you may not be happy with the way these clowns are making decisions. I am not always happy, either. If enough of the electorate is equally unhappy, all the lobbyists money in the world will not help these elected officials. It is ordinary citizens – not lobbyists – who allow elected officials to remain in office.

Anonymous August 14, 2009 at 2:11 pm

The 535 members of Congress represent … you …

No, they don’t. They say they do, and you parrot their declaration, but they don’t. I’ll stand by my usage of “represent” even if it’s not common.

“It matters not. He is your King.”

The sentiment is increasingly globalized.

John Dewey August 14, 2009 at 2:37 pm

I don’t parrot their declaration. I do advocate following the U.S. Constitution.

Legally, you are represented in Congress, whether you like it or not.

That they legally represent you and the other 290 million citizens gives Congress the right to tax you, whether you like it or not.

That they legally represent you and 290 million citizens gives Congress the right to spend those taxes as they decide, whether you like it or not.

A rational person would realize how much his legal representatives control his life, and try to do something about it. That’s why I write to my Congressman, attend town hall meetings, and write letters to the local paper. I hope you do the same, Martin.

Anonymous August 14, 2009 at 2:51 pm

Enough dull repetition.

Sam Grove August 14, 2009 at 3:15 pm

It is ordinary citizens – not lobbyists – who allow elected officials to remain in office.

I’ve noticed.

I’m not a democracy worshiper, so I can’t say I’m disappointed in the electorate.

I also think it’s a systemic issue, so the electorate is not entirely to blame for the situation, most of them attended government schools after all.

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