Once upon a time in the land of the US economy, there was a period of economic slowdown and manufacturing decline. Retail sales dipped, industrial production fell, and durable goods orders declined [cabbfb79]. Strikes, shortages, and external factors played a significant role in shaping the economic landscape [cabbfb79] [25ce5eb8]. However, amidst these challenges, there was a myth perpetuated by presidential candidates about the dwindling manufacturing sector in the United States [c66df397].
The article by Bruce Yandle challenges this myth and argues that American manufacturing is not in decline. It highlights the importance of trade and criticizes protectionist policies such as tariffs and subsidies. The author questions why politicians continue to promote the myth of declining manufacturing and argues that it serves the interests of special interest groups [c66df397] [3ce77deb].
Yandle's article emphasizes the need for rational analysis of data and facts rather than relying on political rhetoric. It points out that the share of manufacturing in the US GDP has remained relatively stable over the years and that the US still ranks highly in various manufacturing sectors. The author concludes by highlighting the benefits of importing goods from other countries and criticizing the increasing tariffs on imports from China and the resulting trade war [c66df397] [3ce77deb].
The opinion piece by George F. Will further supports the argument against the notion of a manufacturing crisis in the United States [ac799170]. Will highlights that the United States has the world's second-largest manufacturing economy, producing a larger share of global manufacturing output than Germany, South Korea, India, and Japan. He also notes that the decline in manufacturing employment is largely due to improved worker productivity, and the manufacturing sector would be the world's eighth-largest economy if it stood alone. Will emphasizes that the United States ranks number one in real manufacturing value-added per worker and attracts significant foreign direct investment in the manufacturing sector. He attributes the perception of a decline in manufacturing to shifting consumer preferences and the fact that consumers often encounter imported manufactured goods rather than advanced U.S. manufactured goods. Will concludes that manufacturing is robust enough to survive political promises and interventions [ac799170].
The article discusses the recent resurgence of manufacturing in the United States, highlighting the decline in manufacturing jobs after World War II due to offshoring and automation. It mentions how former President Donald Trump aimed to revitalize industries through his 'America First' approach and the implementation of tariffs on Chinese imports [4d6f1d6b].
The COVID-19 pandemic and supply chain disruptions have exposed the US's dependency on foreign-made products, leading to efforts to reshore manufacturing. The Biden administration's legislation, such as the Inflation Reduction Act and the Bipartisan Infrastructure Law, has fueled investment in US heavy industry, including semiconductor production [4d6f1d6b].
The article also compares the manufacturing construction spending in the US and Canada, noting the significant gap between the two countries. It concludes by emphasizing the importance of reducing reliance on foreign supply chains and investing in infrastructure to strengthen the US and Canadian economies [4d6f1d6b].
The manufacturing sector in New Jersey accounts for approximately 8.8% of the state's total Gross Domestic Product (GDP), making it the fourth largest sector in terms of GDP. However, employment in the sector fell by 40% between 2001 and 2015, and the number of business establishments fell by 25% over the same period. In 2022, employment in the sector had grown by approximately 5% from its 2015 low, and the number of business establishments had grown 13% over the same span. The sector faces challenges in recruiting the next generation of its workforce and changing outdated perceptions of manufacturing work and necessary skills [0f0463e1].
The article by James Pethokoukis explores the impact of federal regulations on US productivity growth and the challenges of industrial policy [d1b0cd0c]. It highlights how federal regulations since the 1970s have slowed US productivity growth, with economists suggesting that without these regulations, annual growth could've been more like five percent instead of just over three percent. The article also introduces the concept of 'anti-growth safetyism' in America's regulatory approach, which has stifled innovation in sectors like nuclear power and supersonic transport. The author examines the expansion efforts of semiconductor contract manufacturer TSMC in Japan and the United States, noting that labor relations, local partnerships, and government subsidies have contributed to different outcomes in the two regions. In Japan, TSMC has benefited from investments and cooperation from major Japanese companies, while in the US, TSMC has faced labor disputes and slow government subsidy disbursements. The article also mentions the delays caused by environmental reviews required for federal funding and the regulatory problems faced by semiconductor firms, including environmental rules, export controls, and local permit and zoning laws. The author concludes that TSMC's experience in America should temper US policymaker enthusiasm for industrial policy, as spending taxpayer money is only part of the equation and progress can be hindered by the political economy [d1b0cd0c].
A new article from China Daily highlights the need for China to take steps to minimize the negative impacts of Washington's efforts to bring manufacturing back to the US [216361e5]. The US manufacturing industry remains 'hollowed out' despite some progress in bringing manufacturing back. The increased manufacturing jobs have not rebuilt the country's middle class. The US' reliance on China remains strong despite efforts to diversify sources of imports. The failure to reach the desired target can be attributed to divergence between the two parties on revitalizing manufacturing, a shortage of workers in the US, and the higher costs of labor and land. China is urged to capitalize on its domestic market, participate in the global industrial division of labor and cooperation, and boost independent innovation in manufacturing [216361e5].
The article by Skyler Adleta in Newsweek discusses the importance of rebuilding the US industrial base and making it a priority for the government [f9dc260a]. It highlights the dissatisfaction among working-class Americans with the government's advocacy for meaningful opportunities and security. The decline of the industrial base and the loss of manufacturing jobs have contributed to the downward mobility of the working class. The COVID-19 pandemic exposed the dangers of a weakened industrial base and the reliance on cheap foreign labor. The article emphasizes the need for strategic tariffs, subsidies, and investment in apprenticeship programs to encourage domestic growth and innovation. It argues for a pragmatic commitment to common-sense industrial policy that prioritizes good jobs, balanced trade, and prosperity for all Americans.
President Biden expressed his ambition to make the US the manufacturing capital of the world, but recent data shows a decline in manufacturing employment. While the manufacturing sector has performed better than expected after the recession, it is not leading job growth. Manufacturing's share of nonfarm employment has decreased since Biden took office, and factory output is slightly lower than pre-recession levels [566e2d76].
Rumours of industrial policy in America have been greatly exaggerated. The Biden administration has reasserted the role of the state in the US economy, supporting re-industrialisation, subsidising strategic industries, boosting unions, rethinking trade relations, and rebooting competition policy. However, these are separate policies and not a fundamentally new operating system. Both the political left and right have embraced tariffs, subsidies, and government interventions. The state will be more dominant regardless of the outcome of the United States presidential election in November [e6ebe8df].
The reopening of China-U.S. trade lines in the 1970s rewired the global economy, turning China into the 'world’s factory' while hollowing out manufacturing employment in the United States. Elizabeth O’Brien Ingleson explores how the shift toward neoliberal capitalism in the 1970s and 1980s rewrote the dynamics of China-U.S. trade – and ultimately China-U.S. relations. The convergence of interests between the United States and China was crucial for China's eventual convergence with global capitalism. The United States needed to accommodate China's needs for it to converge with global capitalism. The changes happening within China and the changes happening within U.S. capitalism reinforced each other. The United States and China treated trade as an incentive to be offered at different points of the negotiation process. Chinese exports to the United States took on diplomatic importance as a way to redress the trade imbalance. The opposition to the trade relationship and the problems underpinning it made it difficult and profit was far from certain. Labor groups were concerned about the trend of manufacturing moving overseas, regardless of destination, but China's population amplified the broader trends happening in the U.S. manufacturing sector. The U.S. textile industry voiced fears about China because its communist state structures made it easier for China to undercut labor costs and dump cheap goods. The convergence of interests between the United States and China led to the deindustrialization of labor in the United States. The continued focus on the threat of 'Made in China' in Washington removes accountability from corporate decisions that prioritize low wages over all else. The problem at the heart of U.S. industrial policy today is a politics that enables these actions by prioritizing capital over labor. [fe1c3d34]
The article by Elizabeth O’Brien Ingleson in Foreign Policy explores how the perception of Chinese imports shifted in the United States in the 1970s, transforming the U.S.-China trade relationship. It highlights the role of U.S. businessman Charles Abrams in importing Chinese vodka and promoting it as an exotic and high-quality product. Abrams' marketing efforts, along with those of other U.S. importers, helped create a cultural acceptance of the words 'Made in China' on consumer goods labels. The article also discusses the marketing strategies of Don King, who imported Chinese sporting goods and emphasized their mystic powers. The shift in perception from viewing China as a potential market for U.S. exports to a source of cheap labor is highlighted. The article provides historical context and examples to illustrate the transformation of the U.S.-China trade relationship.
The article by Scott Lincicome in AOL addresses common misconceptions about the 'China Shock' and its causes and effects [ae3819ff]. The 'China Shock' refers to the surge of Chinese imports into the United States in the 2000s. The surge was driven by China's internal reforms, such as privatization and import liberalization, rather than U.S. trade policy changes. Academic research shows that the China Shock was responsible for roughly 2 million lost U.S. jobs, including 985,000 in manufacturing. However, these job losses were not the main driver of total factory job declines during the period. The China Shock's negative effects on U.S. manufacturing workers were more pronounced for low-skilled and low-earning workers. While the China Shock caused job losses, it also led to gains in service-sector jobs and provided consumer benefits, such as lower prices. The China Shock is not a justification for tariffs or trade restrictions today, as it has been over for at least a decade and won't be repeated. The article emphasizes the need for a sound U.S. policy response to current challenges, including addressing overcapacity and improving adjustment policies.