New Industrial Age: America Should Once Again Become a Manufacturing Superpower
The US is already a manufacturing superpower. People point to the US losing manufacturing jobs and China gaining manufacturing jobs within a few years of one another and claim the jobs moved from the US to China. They didn&#x27;t.<p>Sure its easy to see evidence of job loss in America - data shows overall employment in sectors like steel manufacturing plummeted. Plus there are tons of old steel mills that got shut down, destroying towns particularly in the rust belt. Surely those jobs had to go somewhere?<p>Well no. Look at US productivity - despite much lower employment, we&#x27;re making more stuff now than we ever were. US steelmaking capacity, for example, is the highest it&#x27;s ever been, we have a huge number of active steel mills, and a record number are currently being built to further expand this.<p>Likewise if you look at productivity in China, there were massive increases, but these increases happen years after the decrease in American employment. If production were simply moving overseas, that would imply years where nothing was being produced at all, which obviously was not the case. Further, the decreases in US employment do not correspond to increased imports. Indeed for many industrial goods, US imports actually dropped. In the particular case of steel, US imports have been falling for all countries except Brazil (which again is seeing the same employment trends as the US), and China isn&#x27;t even a major source of steel.<p>Further, the decrease in employment was not unique to the US. Similar decreases in employment are seen world wide at the same time, for example the steel industries of Brazil and South Africa.<p>These facts are all easily reconciled when you consider that the methods we make things have changed. In the specific case of steel production, in 1921 it took 3 man hours to produce a ton of steel, in 2021 a single man hour of labor made 300 tons of steel. Further this steel is of higher quality, both in terms of better alloys and better consistency. Improved technology made production more efficient. But more than that, transportation became cheaper, populations moved to new areas, and people&#x27;s consumption habits changed. Car production for example in the US is at an all time low, but we&#x27;re not buying Chinese cars, we&#x27;re just buying fewer cars.<p>Those rust belt factories shut down and laid off their workforces, not so identical factories could be built in China, but so much more advanced factories could be built in the sun belt.<p>What about the massive growth in employment in China? Simple. China grew. There are both a lot more people in China looking for work, but also there is a lot more money in China looking to be spent. China needed steel for its own booming industry, so it built steel plants. But being technologically behind and having a very different labor situation, these were not the super efficient ones like were being made in western nations, but the old and labor intensive ones. China has a manufacturing sector that looks like the one the US used to have because China is at the point where the US used to be.<p>But what about the trade deficit? You can easily find tons of stuff in the US that was made in china - particularly cheap plastic knick knacks and consumer electronics. But the issue is these items were never made in the US to begin with. There was never a smart TV factory in the US that shut down and moved its operations to China, instead it was the unique situation of the extremely cheap but appropriately skilled labor that made these cheap consumer goods possible in the first place. Perhaps the argument could be made that under different circumstances those jobs would have arisen in the US instead, but how many Americans do you know are craving to work in consumer electronics production?<p>And at the same time that we talk about reshoring jobs, who is going to work them? US unemployment is at an all time low - people are already working jobs. Oftentimes they&#x27;re working 2 or 3. There&#x27;s a pervasive belief that since people could make a good living in the US working manufacturing jobs 50 years ago, a return of manufacturing will make it the same today. And yeah, a machinist with 20 years experience would probably make good money, but the 40 year assistant manager at Target moonlighting as an uber driver isn&#x27;t going to be starting their manufacturing career with 20 years experience, they&#x27;re going to be starting at the entry level, which is probably a considerable step back in terms of salary and prestige. Further, as stated above, things have changed. The skills most people had which were useful in manufacturing 50 years ago are no longer widely taught, and manufacturing practices have changed such that new skillsets would be required anyways. As the article notes, the good manufacturing jobs 50 years ago were union jobs, whereas most service sector jobs today are not, but there&#x27;s a reason those service sector jobs aren&#x27;t unionized, and its the same reason new manufacturing jobs won&#x27;t be. Any job that was being done for $2 per day by a guy in China is probably going to be a very undesirable job here in the US. Some people would certainly just like to make something (I&#x27;m one of those people) but the fact is American manufacturers are already struggling to find workers despite offering high wages.<p>Finally, there&#x27;s an argument to be made about national security - if your supply chain goes overseas, you are at the mercy of the people who make your stuff, right? Again, this is an over simplistic view. You have to consider what exactly people make. For example in the semiconductor industry a huge number of chips are made overseas whereas US chipmaking capacity is quite limited. However if you look at who makes the precision machines and their subcomponents necessary to make the chips, everything is made in the US, Japan, and western Europe. So too for the even more precise machines necessary to make those machines. Sure economically the amount of tax revenue coming from the sale of one such machine is a pittance compared to the billions of chips it may make, but in terms of geopolitical value it is immense. If China gets mad and stops trade, US supply lines are disrupted for months; if the US gets mad and stops trade, China&#x27;s supply lines are disrupted for decades.<p>None of this is to say that the status quo of the past 30 years will or should remain, quite the contrary change is both inevitable and generally desirable. It&#x27;s just important to understand what change means - the nice union manufacturing job that let your dad with only a highschool education comfortably raise a family of 4 on a single income in a great lakes suburban home is not going to be available for you, and no protectionist policy is going to make it so. Economic woes in China will mostly mean fewer jobs globally. Goods made in China won&#x27;t generally be made in the US, they&#x27;ll just stop being made, or at least not at their current scale. What few jobs do was up on US shores will likely be located in the same places and look quite similar to current US manufacturing jobs. This may be good for those already in manufacturing, as they now have new potential employment opportunities, but old opportunities may go away as the decrease in cheap crap decreases the demand for the expensive crap that was consumed along with it. The US may have fallen to 2nd place in terms of industrial capacity, but it is still more than the 3rd, 4th, and 5th place countries combined - there&#x27;s a lot more room for it to fall than to rise in any given disruption of the status quo.