Not only is the downfall of American manufacturing mostly a myth, but it’s a harmful one.
Trump and Biden have systematically imposed taxes or tariffs on American citizens for broad categories of imported goods and borrowed billions in world credit markets to subsidize the domestic manufacture of such things as computer chips, electric vehicles and batteries. Assuring us that protectionism will even up the nation’s trade balance, they never tell us what these policies will do to America’s real GDP growth, which over the long term ensures a widely shared standard of living.
Where’s the recognition that Americans benefit when people elsewhere provide us with goods and services in exchange for the green pieces of paper that we print?
If you were to look at a plot of U.S. manufacturing’s share of real GDP across the last 75 years, you’d see a wiggly line that barely heads south: Around 12% in the late 1940s to 13% in the 1970s and then to the current 10.9% in 2023’s third quarter. That’s not much of a decline.
America still ranks second in the world share of all manufactured goods (after China, with over four times our population). We rank first for chemical products, petroleum products, fabricated metal products, pharmaceuticals and timber products; second for automobiles and tires; third for electrical equipment; and fourth for semiconductors, steel and cement. The U.S. economy is not a 90-pound weakling when it comes to manufacturing muscle.
No matter what happens in broader society, we can always count on the California Legislature to do the bidding of the state’s powerful unions, which are committed to little else beyond boosting their membership rolls—whatever that might mean for the broader economy. And so the state recently agreed to a deal that will dramatically increase fast-food wages and make it more difficult for private companies to set their own operating policies.
It will be tougher for young workers who lack job skills and for disabled people to get these jobs. I’m already noticing a higher percentage of older workers at fast-food establishments. I’m also noticing far more kiosks. Let’s be blunt: Fast-food work isn’t meant to be career work for most people. These are great ways to earn quick cash and learn basic skills, which can then be leveraged into better jobs as people build better lives for themselves. Unions and progressives want to take this approach to other industries.
For most of us, the higher prices will mean a little less pocket cash and a lot more home-cooked meals. But think about the lost opportunities for people who need them the most. Unfortunately, the Legislature and governor won’t be providing any apology notes.
The national grocery market is also becoming more competitive, not less. No longer limited to brick-and-mortar supermarkets and independent grocery stores, the grocery market now includes a growing assortment of e-commerce stores, like Amazon, discount grocers like Aldi and Lidl, and delivery providers like FreshDirect and Instacart. These newer market entrants have fundamentally altered grocery shopping.