"A
pleasant natural environment is a good - a luxury good, philosophical
good, a moral goody-good, a good time for all. Whatever, we want it. If
we want something, we should pay for it, with our labor or our cash. We
shouldn't beg it, steal it, sit around wishing for it, or euchre the
government into taking it by force."--P.
J. O’Rourke
Hey Billy,
How does this impact your perspective on our need for an industrial policy?
http://www.fivethirtyeight.com/2010/02/us-manufacturing-is-not-dead.html
There is a common theme across the internet: US manufacturing is dead and it's never coming back. Well, there's a big problem with that analysis: it's not true. In fact, as the chart above indicates, it's actually false. Note that since 1960, the index of industrial production has risen from a little below 30 to its current level of about 100. And note the increase is continual -- meaning the number didn't just hover around 30 for most of that time only to spike up in one big move. The index has continually risen over that entire period.
...
Instead, what people are commenting on is the drop in manufacturing employment.... Non-durable goods manufacturing is even worse. From the mid-1960s to the early 200s, total employment in this area hovered around a 6.8 million. However, starting in 2000, the number fell off a cliff, losing almost 2 million people. This is the lowest the number has been in over 60 years.
Depressing, but resist blaming China:
US Manufacturing is alive and well. The real issue is manufacturing employment, which is dropping like a stone. And the reason for the drop is an increase in productivity.
Many people have a knee-jerk reaction to the decline in manufacturing jobs and immediately blame outsourcing/imports for this decline. The following graph demonstrates that the linkage between increased imports and a decline in manufacturing jobs is virtually nonexistent.
Controversial, but they back it up with a ton of data (nicely illustrated with graphs).
That said, the author is actually in favor of *proactive* industrial policy to create new jobs
Secondly, there have been calls for a US industrial policy -- that is, for Washington to essentially "pick winners and losers" by promoting some industries that they feel have a high probability of success. Asian countries have been doing this for years with remarkable success and it is a policy which we clearly need to copy. I'm a big promoter of nano-technology, alternative energy and stem cell research, but those are just my choices. There are plenty others out there that would also make sense.
-- rather than a reactive one focused on saving old jobs:
the data appear to show that the real factor in goods job creation (or loss) is the relationship between productivity and production, which unfortunately leaves little room for protectionism (even sans the trade war implications that would create), as unless productivity falls precipitously we would see no net job creation from any such endeavor.
Would be interested in hearing your take.
-- Ernie P.
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