But none of this is true. U.S. manufacturing is not in decline and never has been. We are still one of the greatest industrial powers in the world. The story of U.S. manufacturing and its alleged demise is actually a story about deceptive political narratives of decline and how they distort our view of the world.
Manufacturing output in the United States is somewhere around $2.5 trillion per year, bouncing back to approach its all-time (inflation-adjusted) high in 2007 after recovering from the shocks of the financial crisis and the COVID pandemic. This follows decades of steady increases in output, even during the years people were singing songs about “closing all the factories down” and moaning about the Rust Belt. The term “Rust Belt” itself dates, by some accounts, to then-presidential candidate Walter Mondale complaining about the declining state of the economy—in 1984, during the middle of the Reagan boom.
Just like other sectors of the economy, manufacturing has suffered temporary declines during recessions. But it has always bounced back to new heights. A recent must-read analysis by the Cato Institute’s Colin Grabow sums it up: “In 2021, [the U.S.] ranked second in the share of global manufacturing output at 15.92 percent—greater than Japan, Germany, and South Korea combined—and the sector by itself would constitute the world’s eighth‐largest economy.” Remember when Japan was going to pass us by?
These days, of course, it’s the U.S. versus China. Yes, China now has a bigger share of global manufacturing—but that’s because China has more than four times our population. On a per capita basis, we have more than twice their industrial output. China sounds less impressive when you put it that way, doesn’t it?
And would we want the kind of manufacturing industry China has? It is still a poor country, on average, and its manufacturing has been mostly low-end, inefficient and driven by cheap labor. China’s per capita GDP is one-sixth that of the U.S.—which is to say that most Chinese live below what Americans would consider the poverty line. So we could definitely have their manufacturing—if we were fine being as poor as they are.
As it is, the total U.S. economy is significantly larger than China’s and likely to remain so.
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The comparison to agriculture is a useful one, because agricultural employment lost its dominance for the same reason manufacturing employment has lost its dominance: It became massively more efficient and productive. A farmer with a tractor could do more work than 100 farmers with mules. Much the same thing has happened in manufacturing. The kind of manufacturing that dominates in the United States tends to be high-tech, automated, skilled and highly productive. We aren’t making as many of the big and simple machines and instead are making more complex electronics. We aren’t making as high a proportion of goods manufactured for the consumer market—which is perhaps why it seems to the average person that America doesn’t make things—but we are making more machines and materials that are crucial for businesses. Here is Grabow: “In 2020, for example, the United States was the world’s leading exporter of medical instruments, gas turbines, and aircraft parts—goods not often found on retail store shelves.”
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The grand irony is that this is how you actually get decline—by chasing after the past, instead of pursuing the future. If we want growth and progress, we need to stop longing for what we once had and start embracing the amazing new things we can have in the future.
Kevin Williamson is rightly critical of Tucker Carlson. Two slices:
Carlson, who is doing a fantastic impersonation of Walter Duranty—the disgraced New York Times correspondent who treated American readers to tales of the glory of life in Joseph Stalin’s Russia—reports that the experience of seeing how clean and orderly Moscow is was “radicalizing” for him. I suppose that everything in the ordinary world looks a little dingy after La Jolla Country Day School and that Swiss boarding school that expelled him. And American cities can be pretty awful, it is true, a consequence of Americans’ general contempt for public spaces. Many American tourists have had the experience of being shocked and shamed by how spruce and lovely things are in Amsterdam, for example—but not as many have seen the housing projects and sprawl beyond the parts of the city tourists frequent. The difference is real, but it is easy to exaggerate, too: You could spend a fortnight in London without seeing the city’s unlovely side, but the same is true of Philadelphia and Dallas.
The irony of the Putinism and near-Putinism we see on the contemporary right—one of the ironies, anyway—is that Moscow represents precisely what they believe (wrongly, for the most part) Washington to be: an imperial city in which a coddled, politically connected, decadent urban elite enrich themselves through official influence and off-the-books relationships while scouring the countryside for young men to recruit into their vicious wars of imperialism and conquest. Of course the “Russian girls” MBD encounters in Manhattan boutiques do not have a lot to say about that: If they know, they may not be inclined to say, and if they are inclined to say, they are—or should be—terrified to do so. That’s what terror states do: They terrorize.
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Cities are complicated. In the same way you can never have the same party twice, you never have the same traffic jam twice. There are a lot of reasons Stuttgart is so much nicer than Detroit—and I don’t think German automotive-industry protectionism is in the top 10. But if what you want is protectionism, then everything you see is a case for protectionism. If what you want is Putinism, then you see evidence for the virtues of Putinism. But don’t look too hard.
That grandiose metro station in Moscow has long been famous in the West. The Russian secret police arrested a number of the British engineers who built the Moscow metro—you didn’t think Russians built that, did you?—and held an espionage show trial for them. Lovely space, though, and, if you look, you can still find recordings of “Songs of the Joyous Metro Conquerors.” Hooray. New York’s subway system is a mess, and the $4 billion per mile price of the Second Avenue project is a scandal. Does anybody think the answer is a more Putinist approach? The question is almost too silly to ask.
I understand not liking the United States—I really, really do understand: As I have written before, I still love my native country, but I think we should start seeing other people. Ours is an often ugly, often vulgar, spiritually sick society. But turning instead for inspiration to a brutal police state in which 1 out of 5 families do their necessary business in a hole in the ground is—counterintuitive! Finding inspiration in the gulag where Wall Street Journal reporter Evan Gershkovich currently is held as a political prisoner—a real political prisoner, not the victims of the “patriot purge” of Tucker Carlson’s daffy imagination—is also counterintuitive. But, then, what Carlson was up to in Moscow wasn’t journalism—journalism is what Evan Gershkovich did, and what Tucker did was, at best, tourism. It is tempting to call him a useful idiot, but he isn’t an idiot. He knows what he is doing. I myself don’t speak Russian, but I think I could read the look on Putin’s face, which said: “Good doggie.”
This week, however, the internet has been treated to the absurd spectacle of former Fox News pundit Tucker Carlson’s bizarre propaganda tour of Moscow (on the heels of his more defensible decision to interview Putin). Via videos posted to X, formerly Twitter, Carlson raved about the beauty of the Moscow subway system and was wowed by the stunning technology of…shopping carts? Through it all, Carlson has repeatedly suggested that maybe Russia isn’t such bad a place, as if a lack of subway graffiti were the most important metric for measuring the quality of a country.
Navalny’s death, at the age of 47, says far more about Russia than any of Carlson’s puff pieces ever could.
Consistent with the Chicago, UCLA, and Vienna schools, we define price theory as “the study of how the price system coordinates the disparate plans of producers and consumers.” Because markets are connected by prices, we must understand how prices work in order to understand how markets work. What makes price theory unique in economics is its parsimonious balance between theory and empirical fact.
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To revive this tradition, we recently organized and ran a boot camp for economics graduate students and early career professors that emphasized how price theory can address important questions. After several days of seminars, discussion, and problem solving, we’re more convinced than ever that economists need to return to their roots to explain how the world works.
Unlike other approaches that influence young economists, price theory does not devote major effort to hyper-mathematical modeling; nor does it make heroic assumptions about rationality. Instead, it takes a few workhorse models and uses them to study an astonishing range of circumstances. Why might corn farmers prefer the government to subsidize ethanol instead of corn in general? Which firms are most supportive of minimum-wage hikes? What are the probable effects of corporate tax cuts on workers’ take-home pay? These are merely a few examples of perennial questions that price theory can help us answer.
Other approaches to economics claim to offer better answers, but they are limited by their inflexibility. Elegant theoretical models often add complexity without adding explanatory power. Statistical approaches purport to “let the data speak for itself,” but they rarely yield generalizable results. Price theory strikes the right balance. It uses theory, but as a guide to measurement rather than as an end in itself. It lends itself well to empirical analysis because it teaches us what to measure and, more importantly, what not to measure. If an economist’s first instinct in researching the effects of minimum-wage laws is to gather data on unemployment and the number of jobs, he needs a price theory refresher.
The Wall Street Journal‘s Editorial Board decries the mendacity of Big Climate. A slice:
If President Biden’s electric-vehicle mandate is as popular as progressives claim, why are they trying to censor critics who want to inform the public about the mandate’s costs?
That’s the story this week, after the American Fuel & Petrochemical Manufacturers (AFPM) launched ads in Pennsylvania, Wisconsin, Michigan, Nevada, Arizona, Ohio and Montana to educate Americans about the Administration’s back-door EV mandate. Mr. Biden is “rushing to ban new gas-powered cars” and wants “to force you into an electric vehicle,” one ad says.
The Biden team doth protest. “There is no EV mandate,” a Biden campaign official declared. No? The Environmental Protection Agency has proposed greenhouse gas emissions standards that would effectively require that EVs make up two-thirds of auto maker sales by 2032. The standards will “accelerate the transition to electric vehicles,” EPA said.
EPA’s proposed emissions rules are so stringent that auto makers will be able to comply only by producing an increasing number of “zero-emission vehicles” or by buying regulatory credits from EV manufacturers like Tesla. Americans shopping for a new car will have no choice but to buy an EV or pay a fortune for the few gas-powered cars still available.
Yet Mr. Biden and his allies don’t want voters to know that banning gas-powered cars is their end game. That’s why the progressive umbrella group Climate Power on Tuesday shot off a missive to broadcasters demanding that they pull the AFPM ads—or else. These “advertisements include obvious lies aimed at deceiving the public and must be pulled from the air immediately,” Climate Power chief operating officer Jill Shesol wrote. But who’s actually trying to deceive the public?
