Forum Index
Economics, Portfolio Optimization, and Technical Analysis
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
Log inFast Charts

Debate On Manufacturing

Post new topic   Reply to topic Forum Index -> Economic Review
View previous topic :: View next topic  
Author Message
Site Admin

Joined: 28 Dec 2005
Posts: 11166

PostPosted: Fri Feb 13, 2009 2:54 pm    Post subject: Debate On Manufacturing Reply with quote

PeakTrader said...
Income itself doesn't measure true living standards. For example, in the U.S., real income rose at a slower rate in 2001-06 than 1993-98. Yet, U.S. living standards rose at a steeper rate in 2001-06 compared to 1993-98. Moreover, this steeper rise in U.S. living standards took place in a structural bear market, after an 18-year structural bull market (there were structural breaks in 1982 and 2000). The improvements in U.S. living standards were caused, in part, by massive efficiencies in production and increasingly larger gains-of-trade.

t jefferson said...
Its to bad the U.S. had to ravage its manufacturing base to improve the worlds ratings.

PeakTrader said...
T, in manufacturing, the U.S. made up in value what it lost in volume (many export-led countries had to make up in volume what it lost in value).

Cato says quit whining about manufacturing decline
September 17 2007

The United States manufacturing sector is experiencing record growth, record profits, record output, record exports and record return on investment and is in no need of legislative or protectionist support from Washington, according to the Cato Institute. The United States is producing two-and-a-half times more output than China, despite the loss of three million jobs since 2000. Since the nadir of the manufacturing recession in 2002, U.S. manufacturing job declines have "leveled off to historic losses," says Cato.

The perceived ill health of the U.S. manufacturing sector is a "fallacy," says the institute's Center for Trade Policy Studies in a report "Thriving in a Global Economy--The Truth About Manufacturing and Trade." Between 2002 and 2006, the U.S. manufacturing sector's revenues increased by 22.5 percent to $4.99 trillion, and profits jumped by 49.5 percent to $353 million.

The National Association of Manufacturer's Frank Vargo's recent testimony before Congress "should be required reading for all lawmakers who are considering supporting trade legislation on behalf of manufacturers," according to Cato. Vargo said that it is "common to hear that U.S. manufacturing is on its last legs, that we have been hollowed out and that our production base has moved overseas. A look at the factory shipments and industrial production ... shows this is not true."

t jefferson said...
The crisis facing U.S. manufacturers is one of the central economic challenges confronting the country. It stems in large part from our massive trade imbalance and disproportionately affects minorities. What is this crisis?

Since the United States joined the WTO, our trade deficit in goods has exploded, rising from $150.6 billion in 1994 to $817.3 billion in 2006.i In 2006, our trade deficit with China alone amounted to $232.6 billion,ii a deficit more than eight times larger than that of any other country.iii
Since December 2000, the United States has lost 3.2 million manufacturing jobs.iv
The U.S. manufacturing crisis results, in large part, from unfair practices by our trading partners. U.S. manufacturers face unfair import competition in the form of significant government subsidies,v currency manipulation,vi large-scale dumping in the U.S. market,vii and other market-distorting practices.

QT said...
T Jefferson,

Manufacturing jobs have been going down since 1970 largely due to mechanization and productivity gains. It is true that more labour intensive work has gone abroad but these were the low skill, low wages jobs. There are actually shortages in skilled manufacturing labour. Average age of a welder is 55 years, for example.

t jefferson said...
You missed the unfair import competition part didn't you.

What kind of jobs and pay did the 3.2 million people get when they left manufacturing?

PeakTrader said...
T, actually, the explosion in international trade has helped the U.S. poor through lower prices and cheaper capital. Basically, there was a tremendous shift of wealth from savers, including foreigners, to borrowers, including lower income U.S. workers. Also, it has freed-up limited resources for emerging industries and older firms producing goods with market power, along with providing cheaper capital for small business start-ups. There are laws against dumping, including the tariff imposed in the early 2000s to protect the U.S. steel industry.

The U.S. share of global manufacturing has remained roughly constant for 25 years, although the U.S. lost millions of manufacturing jobs and U.S. negative net exports lifted foreign manufacturing output.

Your article states: "Since December 2000, the United States has lost 3.2 million manufacturing jobs...{s}ince 2001, over 300,000 black males have lost jobs in the manufacturing sector." It's possible there has been a disproportionate share of minorities in overpaid union jobs.

When unions were most powerful, in the 1960s, union workers were grossly overpaid, while non-union workers were grossly underpaid. The disparity has narrowed substantially, while real compensation has increased 70% since the mid-1960s.

Anonymous said...
t jeff,

When my friend(s) were laid off from GM, many years ago, they went in to Construction (carpenter) and Nursing (ER staff).

One retired (the carpenter) at 53 years old and the others make $40+ per hour working 3 twelve hour days a week. By choice. When they need more money (for fun stuff) they work more.

It's quite amusing to see rugged looking mountain type men working as Nurses. But, it gets them the pay they need and the time off to enjoy our hobbies together. We spend 8 weeks a year abroad hunting and fishing.

Not a bad career change I'd say.

t jefferson said...
Peak Trader
Ya unions are terrible. I remember when my Dad left a non-union shop as a tool maker and doubled his pay with health care at a union shop. We even went to the the movies once a week after that. The real goss overpaid people are the highly productive educated Executives that just shuffle stuff around. Eyes roll.

Anonymous said...
And then your Dad lost his job because the union made his company's products uncompetitive.

QT said...
T Jefferson,

You are right. I have not addressed your concerns with regard to balance of trade, currency manipulation or government subsidies.

With regard to balance of trade, Adam Smith argued that many countries with negative trade balances but continue to prosper despite dire predictions. From what I have read on this subject, there appears to be proponents on both sides of the issue. I do not share your concerns about trade imbalances, however, we may not know for another 25 yrs.

With regard to currency manipulation, China has allowed its currency to appreciate in recent years albeit not as much as the U.S. would like. Many developing nations peg to the U.S. dollar as a way of creating currency stability. We also have to view this issue from their perspective ie. fear of currency swings & double digit inflation.

Do all of the Chinese imports directly compete with American goods? One would expect that a developing nation would create goods with higher labor content where they have a comparative advantage while the U.S. would concentrate on more sophisticated manufactured goods like medical instruments, or pharmaceuticals where the U.S. has a technological advantage. There are also goods imported from China that are inputs into higher end finished goods like furniture. Not everything that China exports is necessarily a bad news story for the U.S.

With regard to government subsidies, the Chinese government runs most industries. From their perspective, they see their industries as unable to compete against the U.S. on many measures ie. capital investment, productivity, workforce education, technology, innovation, energy efficiency. Joining the WTO is the most significant sign of progress on this front. China will now have to abide by international trade rules.

I am inclined to think that improvements in developing nations may be more positive than negative. Economic changes will create opportunities for workers. Rather than hoping to return to a golden age of manufacturing, it may be better to assist workers to transition to new jobs through enhanced education utilizing the power of the internet.

poor boomer said...
PeakTrader -

My consumption of goods, other than food, is quite minimal. Approx $150 per year on clothes, some fuel and electricity, and some odds and ends (soap, etc), and that's about it.

Almost all of my food is produced domestically, as is the electricity I use. My (largely imported, of course) petroleum consumption is limited basically to my use of public transit and what little I buy that is petroleum-based.

This supposed cheaper capital hasn't trickled down to me to any meaningful extent, as far as I can tell. Sure I'd like to start a small business - my future surely does not lie in employment - but that is still out of reach.
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic Forum Index -> Economic Review All times are GMT - 8 Hours
Page 1 of 1

Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum

Powered by PeakTrader 2.0.8 © 2001, 2002