by From Ken Zimmerman Most economists (and policy makers) of the last 50 years see no difference between potato chips and microchips, favor unrestricted globalization, and celebrate the loss of US manufacturing jobs as a desirable evolutionary step toward a purely service economy. But human culture is invented by many people. Many of whom have never read economics and don’t spend much time with policy makers. They insist we pay attention to the basics. And the basics in this case is manufacturing. US manufacturing was a fundamental force in creating and advancing the nation’s economic, strategic, and social power. US manufacturing rapidly rose during the last decades of the 19th century, consolidated and modernized during the pre–WWII decades, played a big role in enabling the world’s
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from Ken Zimmerman
Most economists (and policy makers) of the last 50 years see no difference between potato chips and microchips, favor unrestricted globalization, and celebrate the loss of US manufacturing jobs as a desirable evolutionary step toward a purely service economy. But human culture is invented by many people. Many of whom have never read economics and don’t spend much time with policy makers. They insist we pay attention to the basics. And the basics in this case is manufacturing. US manufacturing was a fundamental force in creating and advancing the nation’s economic, strategic, and social power. US manufacturing rapidly rose during the last decades of the 19th century, consolidated and modernized during the pre–WWII decades, played a big role in enabling the world’s first mass consumption society after 1945, and as a result of beliefs and policies explained at the beginning of this paragraph started declining post-1974.
I believe that no advanced modern economy can truly prosper without a strong, diverse, and innovative manufacturing sector whose aim is not only affordable, high-quality output but also to provide jobs for more than a minuscule share of the working population at good wages. The notion that manufacturing does not have to be a major concern of effective economic policy or an important part of long-term national aspirations for those societies we call “postindustrial” is embedded deeply in today’s economics and almost every variety of think tank. So is the corollary that low-cost foreign suppliers can cover any need in a global economy. These notions have two sources. First, the growth imperative of modern economies is incompatible with the second law of thermodynamics, entropy. For any rational society, accessible material at low entropy and minimized entropic degradations should be the foremost goal. Our current understanding of entropy makes it clear that not every society, and sometimes none of them can grow to near their maximum. The second line of reasoning leading to low concern about manufacturing’s declining fortunes, and one much more common and widely accepted, understands that trend as an essential component of a highly desirable evolution marked by a steady decline in the sector’s contribution to the national economic product—and by the opposite trend of an inevitably rising importance of services. These two trends, one downward, one upward, characterize all modern economies.
Manufacturing is not the only economic sector that has been interpreted as increasingly unimportant when compared to services. Agriculture, fisheries, and forestry are also treated thus. But this simply does not work. We need only consider a few examples to see why. What would the EU economy be without French or German farming? Is it possible to replace all the food in any affluent populous country by imports? What consequences would follow from the loss of US farm exports, the world’s largest source of traded grains and meat. Last, but not least one of the services invented to economically displace manufacturing is financial services. An invention that nobody outside of the financial services community wanted or needed. That has led to massive wealth and income inequality. Particularly, in nations without enough will or resources to regulate this crazy quilt of greed, lying, and arrogance.
https://rwer.wordpress.com/2019/06/25/under-trump-manufacturing-job-growth-slows-to-a-trickle/