The scary thing about the manufacturing sector of the U.S. economy isn't the percent of jobs lost in the manufacturing sector or even the U.S. GDP less non-manufacturing as either side of Perry's proposed argument suppose.
Perry misses the point by defeating a straw man argument. Yes, manufacturing in the U.S. is alive. Yes, productivity gains have decreased jobs and increased output. And yes, we are still the largest economic engine in the world, but...
The problem is the calling into question of the pillars of American economic productivity. We built our eminence as an economic world power on manufacturing because of comparative advantage. We are now losing that advantage (not necessarily a bad thing). We haven't lost it yet and will probably always have a vibrant manufacturing sector, but as efficiencies increase and jobs in that sector decrease whether that be due to cheap labor abroad, gains in technology, productivity gains, or shifting transportation costs as we fall behind in consumption, we need to rethink our education and training systems to accommodate the growing parts of our economy. The fact is manufacturing as a percent of GDP has been shrinking for some time. Of course manufacturing is producing more output, but population and consumption have been growing in the U.S. too. GDP relative growth is where it's at.
"The problem is the calling into question of the pillars of American economic productivity."
I have no idea know what this means. I'll just point out that we have clearly lost our comparative advantage for low-skilled, cheap maunfacturing (textiles, steel products, etc...) but have gained one in the manufacturing of high-skilled, expensive manufacturing (computer chips, pharmaceuticals, etc...).
I meant that the American economy was built on manufacturing, but now that sector seems shaky. The pillars upon which our economy was productive are in question.
I think it's yet to be seen whether we've cornered the market for high skilled manufacturing.
I think the term comparative advantage, as applied to nation-states, is out of date. When coined, competition amongst countries was very high (mercantalism was on the decline but still relevent). Today it's companies, and more appropriately individuals, that explicitely compete. As such, we need to identify our own comparative advantages in order to succeed.
Welcome to Non Incautus. This is a blog written by a group of Washington & Lee graduates that focuses on contemporary issues, economics, politics, philosophy, movies, music, television and everything in between. It aims to educate and enlighten (the writers as well as the readers!) while fostering civil discussion and debate.
The scary thing about the manufacturing sector of the U.S. economy isn't the percent of jobs lost in the manufacturing sector or even the U.S. GDP less non-manufacturing as either side of Perry's proposed argument suppose.
ReplyDeletePerry misses the point by defeating a straw man argument. Yes, manufacturing in the U.S. is alive. Yes, productivity gains have decreased jobs and increased output. And yes, we are still the largest economic engine in the world, but...
The problem is the calling into question of the pillars of American economic productivity. We built our eminence as an economic world power on manufacturing because of comparative advantage. We are now losing that advantage (not necessarily a bad thing). We haven't lost it yet and will probably always have a vibrant manufacturing sector, but as efficiencies increase and jobs in that sector decrease whether that be due to cheap labor abroad, gains in technology, productivity gains, or shifting transportation costs as we fall behind in consumption, we need to rethink our education and training systems to accommodate the growing parts of our economy. The fact is manufacturing as a percent of GDP has been shrinking for some time. Of course manufacturing is producing more output, but population and consumption have been growing in the U.S. too. GDP relative growth is where it's at.
"The problem is the calling into question of the pillars of American economic productivity."
ReplyDeleteI have no idea know what this means. I'll just point out that we have clearly lost our comparative advantage for low-skilled, cheap maunfacturing (textiles, steel products, etc...) but have gained one in the manufacturing of high-skilled, expensive manufacturing (computer chips, pharmaceuticals, etc...).
I meant that the American economy was built on manufacturing, but now that sector seems shaky. The pillars upon which our economy was productive are in question.
ReplyDeleteI think it's yet to be seen whether we've cornered the market for high skilled manufacturing.
Good summary of the issue:
ReplyDeletehttp://online.barrons.com/article/SB125755376044934905.html
I think the term comparative advantage, as applied to nation-states, is out of date. When coined, competition amongst countries was very high (mercantalism was on the decline but still relevent). Today it's companies, and more appropriately individuals, that explicitely compete. As such, we need to identify our own comparative advantages in order to succeed.