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Quotation of the Day…

… is from page 3 of Michael Hicks’s and Srikant Devaraj’s June 2015 paper, “The Myth and the Reality of Manufacturing in America“:

The size of American manufacturing as represented by the total value of goods produced (GDP) has enjoyed a healthy growth trend almost since the founding of the republic. This trend continued throughout the last several decades, across recessions and trade agreement regimes.

DBx: Yes. But for at least two reasons this truth is not popularly known.

– Most people see only finished manufactured goods, the ones for sale on Amazon, at Walmart, and in Miss Becky’s Country Gifts. The great majority of these goods sport labels that read “Made in [somewhere other than America].” Most people thus conclude that very little is made in America. Most people pause to consider neither that “Made in” labels indicate only the country of any good’s final assembly (which, by the way, is generally a very low-value-added part of the entire production process) nor that many manufactured outputs are intermediate goods that are used in the production of final goods and services.

– Manufacturing employment has fallen – a reality that, as Hicks and Devaraj find, has been driven overwhelmingly by increased worker productivity. Yet it’s easy for demagogues, out of ignorance or guile or both, to use manufacturing-employment figures to frighten voters into swallowing the false line that there is a free-fall in American manufacturing output.

But the most fundamental point to make here is that the fetish for manufacturing is foolish. If you’re a young person who doubts that the fetish for manufacturing is foolish, ask yourself what career you wish to have. Almost certainly the answer is one in the service sector. If you’re a bit older and have children – or much older and have grandchildren – ask yourself what careers you hope your children or grandchildren will have. Almost certainly the answer is careers in the service sector. (My dear, late father, who dropped out of school in the 6th grade and who worked for most of his adult life in the manufacturing sector – specifically, fitting pipes and welding in a shipyard – would have thought me insane had I abandoned my much-higher-paying and far-more-pleasant career in the service sector in order to follow in his footsteps.)