Cafe Hayek
where orders emerge
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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Brian Garst Agriculture in the U.S. is a mere shadow of its past proud self! Bob Herbert should be sent to investigate for us why we aren't all starving. Bob in SeaTac This wins the thread! Nomore comments needed. muirgeo Well maybe just one more.....http://www.cattlenetwork.com/AMI--USDA---U-S--H... robert_o The poll question matters more than the poll results.In any case, being a rich (and generous) doctor, you must donate a lot of money to food banks, right? sethstorm You're trying to conflate the agricultural decline with the ideas of an unrelated economic subject. Your purpose for doing so is to demonize by extending an unfavorable association. No thanks. Brian Garst Who am I demonizing? What unfavorable association? That sentence is barely comprehensible to me.They are not unrelated. It is routinely asserted that the U.S. manufacturing base has been eroding by pointing to declining manufacturing jobs. This is a misguided argument, which I choose to highlight by pointing to similar declines in agriculture (which also once dominated our economy) that happened for the same reason: productivity gains. We employ fewer people to manufacture goods for the same reason we employ fewer people to produce food: we are capable of making more (as we are doing) with less labor. This is not a catastrophe; it is progress. sethstorm You're trying to associate the agricultural decline with the current decline. Where you wish to demonize it is with your reference and indirect association to debunked Malthusian arguments over food supply. What you wish to have happen in the long run is that US citizens have to be subservient to despotic (Third World/BRIC) nations; if so just because "that is where the jobs are".Less labor and increased dislocation is not good practice for keeping a nation prosperous on the long term. But if you wish to allow for a decline to "a nation amongst world peers", I cannot agree. MWG "Less labor and increased dislocation is not good practice for keeping a nation prosperous on the long term."As in the example of.... Barbarossa Your percentage figures for "gross value added to U.S. GDP by nonfinancial corporate businesses" does not really support your argument about the state of domestic manufacturing, since, along with the obvious percentage decline, the figure does not reflect growth in nonfinancial SERVICE jobs. And does manufacturing compose the same percentage of GDP? If not, is that a good thing or a bad thing or neither here nor there?And you say the "real value," so I assume you have adjusted for inflation? Have you adjusted for the fact that government inflation statistics have changed since the 70s (and continue to change), resulting in inflation's being understated? Has the classification of what is or is not considered manufacturing changed? If so, how can we consider such statistics relevant? And why is it that the output of consumer durables has declined by 30% in less than ten years? Is that an indication of anything? If our output of manufactured consumer goods has steadily increased but our output of capital goods has declined, is that something to worry about? How is it that television and other electronic manufacturing disappeared from the U.S. and went to Japan, when they had wages equal to our own? Are the trade and current-account deficits really nothing to worry about, as you have before seemed to imply? Is there no danger to the dollar? How can our deficits not matter when they are being financed by borrowing and the printing press? Don, I agree with you on 99% of everything else, and I think your very existence is invaluable to our country, but I have long disagreed with you concerning the trade and current-account deficits and always found your position thereon slightly suspect. muirgeo "Has the classification of what is or is not considered manufacturing changed?"Great question I would love to see the answer to. I can't seem to find it anywhere. muirgeo "... hardly evidence that the financial sector is growing cancerously and destroying or crowding-out Americans' capacity to produce non-financial outputs."I've read tis 5 times over or more. It's unfathomable. But I guess there are climate scientist who think we aren't responsible for climate change and biologist who don't believe in evolution. But the statement does seems extraordinary. http://www.monthlyreview.org/images/080401foste...http://www.monthlyreview.org/080401foster.php Barbarossa Your link has a little bit of useful information and had at first a lot of promise, until I realized that the author was shoveling implicitly Marxist bullshit. brotio Yasafi posted the links.What did you expect? :-D Mark "But I guess there are climate scientist who think we aren't responsible for climate change"Muirdork the sheep. Baa baa. Lead me to the slaughter, baaa baaa. Call yourself a scientist and I'll believe anything you say. Baa baa. sethstorm 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.-- Explain the declines in quality that logically happen when you cut out First World nations from production? MWG You mean the like the declining quality of computers and cell phones? brotio Who boy! You'd really like to compare American cars of the 1970s to cars made in Korea today? Used to be that a car that reached 100,000 miles was a great car. Now if a car doesn't reach 100,000 miles, it's a piece of crap.Also, we didn't cut out First World nations from production. Unions can take the bows for that one. Matt Prof. Boudreaux et. al., would you mind linking me to a brief paper/article that accurately describes the state of manufacturing in the US?Cheers Matt Prof. Boudreaux et. al., would you mind linking me to a brief paper/article that accurately describes the state of manufacturing in the US?Cheers Read Full Article »