Manufacturng Renaissance?

The least I can say is that the topic does not lie within my ken. And yet, why not present some contrarian views about the coming manufacturing renaissance, from a seasoned economist by the name of Rebecca Patterson. 

Her essay appeared in the New York Times. The thrust of her argument is that engineering a manufacturing renaissance, not to mention a revival of the American middle class, is more of a pipe dream than a real possibility.

The problem is human capital. We do not have the people needed to man these industries. The people we have available are largely incapable of doing the jobs. 

So, we are going to be obliged to import foreign workers, which is well and good, except that these workers in most cases will be required to hold a bachelor’s degree from university.

How many of the subliterate masses who are coming into the country from the third world can read, write or count, not to mention, do algebra at college level.

Begin with the demographic problem:

In 1950, when manufacturing was near its peak as a share of total employment, the mostly male working population was growing at a steady clip, thanks in part to a fertility rate of 3.1 children per woman.

The complexion of the working population and its growth rate has since changed. While women and immigrants helped offset the slowing growth of the native-born population, it hasn’t been enough: Two-thirds of respondents to a National Association of Manufacturing survey this past spring said that their biggest challenge was attracting and retaining employees.

Aside from the fact that Americans are not reproducing enough, they are educating more females than males. More women receive college degrees than men do. But, ask yourself this, how many of said women want to work in manufacturing? And, how many of them have majored in fields that qualify them for such work.

By now, we have fallen behind and depend on foreign countries for too many products:

While the United States is working to reduce its dependence on China, particularly in certain strategic sectors, it cannot succeed in its national security goals by doing so alone. In numerous industries, such as semiconductors, where key parts of the supply chain are dominated by one or a small handful of companies in countries including Taiwan and the Netherlands, the United States has to partner with companies overseas. It doesn’t have the needed expertise at home, at least for the foreseeable future.

Now, Patterson notes that some of these jobs can be taken over by automation. This is true. And yet, considering the rancorous strike of the longshoreman’s union, among whose issues is a refusal to automate, and ask yourself whether American unions will ever allow such a thing to take place. Otherwise, the solution will be to move factories out of the country. 

But, Patterson notes, we can try to deal with these problems by imposing tariffs on imported goods. Everyone loves tariffs. They sound like a great idea:

Tariffs are likely to spark a trade war that puts at risk needed overseas’ investments in the United States — which would likely work against manufacturing employment. A 2019 Federal Reserve research paper found that U.S. tariffs levied under Mr. Trump in 2018 and 2019, along with retaliatory tariffs from foreign countries, led to a 1.4 percent reduction in manufacturing employment, or roughly 175,000 jobs that would have otherwise been created.

This assumes that the tariffs on foreign manufacturing open shelf space for American products that are of equal quality and that are not overly costly.

The moral of the story is that we should not take what politicians are promising at face value. It will take more than some new legislation, even a new industrial policy, to bring us back from that brink.

A little skepticism will do us well when thinking through these issues.

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