And now a word from the libertarian corner.
From Reason:
Manufacturing an Economic Myth
Rick Santorum and Barack Obama both have a soft spot for the manufacturing sector.
Barack Obama and Rick Santorum probably couldn't agree that August falls in summer, but on one important issue they are closer than the Winklevoss twins. Both regard manufacturing as precious beyond words, and both think the federal government should be making special efforts to promote it.
Obama favors an array of tax breaks to induce manufacturers to keep jobs in the United States, and Santorum wants to completely scrap the corporate income tax on companies in this particular sector.
"Everybody benefits when manufacturing is going strong," said the president. Santorum recently lamented, "We have the manufacturing sector of the economy when I was growing up that was 21 percent of the workforce. It's now nine."
These are not exactly new sentiments. Walter Mondale, the 1984 Democratic presidential nominee, demanded, "What do we want our kids to do? Sweep up around the Japanese computers?"
In 1992, independent presidential candidate Ross Perot, railing against the North American Free Trade Agreement, forecast "a giant sucking sound" caused by jobs going to Mexico. Pundits galore have long warned that we are "losing our manufacturing base."
But if nostalgia were a sound guide to economic policy, we should be building Studebakers and rotary telephones. Neither Santorum nor Obama seems to grasp the realities of manufacturing in 21st-century America.
The first is that it's not declining in the ways that matter. Compared to1990, the total value of U.S. manufacturing output, adjusted for inflation, was up by 75 percent in 2010 -- despite a drop caused by the Great Recession.
It has declined as a share of gross domestic product only because other industries have expanded even more rapidly. Economist Mark J. Perry of the University of Michigan-Flint points out that in 2009, the total value of America's manufacturing output was nearly 46 percent greater than China's. Over the past two decades, our share of the world's manufacturing has been pretty stable.
The decline in the number of manufacturing jobs is taken as evidence that the sector is sick or uncompetitive or the victim of unfair trade practices. In reality, the change indicates sound health. Our manufacturing workers have become so much more productive that they can churn out more goods with a far smaller workforce....MORE
