Still Manufacturing Myths Aplenty

by Don Boudreaux on November 22, 2009

in Financial Markets, Myths and Fallacies, Seen and Unseen, The Economy

Here’s a letter that I sent yesterday to the New York Times:

Bob Herbert insists that manufacturing in the U.S. is a mere shadow of its past proud self – and that this alleged decline of America’s “industrial base” is the result of too many Americans concentrating on finance (“An American Catastrophe,” Nov. 21).

The facts speak very differently.

First, the real value of U.S. manufacturing output today is four times what it was during the alleged golden years of American manufacturing might, the 1950s, and more than twice what it was in 1980.

Second, in 1959 the percent of gross value added to U.S. GDP by nonfinancial corporate businesses was about 53 percent; in 1980 it was about 55 percent; today it’s about 50 percent – hardly evidence that the financial sector is growing cancerously and destroying or crowding-out Americans’ capacity to produce non-financial outputs.*

Sincerely,
Donald J. Boudreaux

* The figures in the penultimate paragraph of my letter are calculated from table B51 – and the figures in the final paragraph are calculated from tables B1 and B14 – found here.

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