No Scheiber, there has not been a manufacturing decline in the USA

I didn’t care much for Upper Mismanagement, The New Republic’s Noam Scheiber piece on “Why can’t Americans make things? Two words: business school.”

This begs the question that US manufacturing is in fact in decline. I know this has been fisked many times before, but let me lay it out simply. While there has been a large decline in the fraction of Americans in manufacturing, the actual output of the US manufacturing sector is not in decline. Check out this chart from the Federal Reserve on real output from 1959 to 2005:

Level of Manufacturing Output has almost monotonically increased since 1959

The Strange World of Harold Meyerson

We can see that the level of Manufacturing Output has almost monotonically increased since 1959 through 2005. Certainly it gives no evidence of long or recent declines in manufacturing in the United States. This is hardly what we would expect to see if we faced a MBA driven decline. Basic fact checking should have killed this pointless and sensationalist piece.

But wait, maybe we’d have grown faster without the MBAs. How did major competitors with fewer MBAs do? Here we can see that the major Western European countries don’t seem to be doing any better in keeping their manufacturing bases, even though they have far fewer MBAs then Americans do.

Per-Capita Manufacturing Output USA vs Western Europe

Manufacturing in America

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2 Responses to “No Scheiber, there has not been a manufacturing decline in the USA”

  1. Absolute output may have gone up, but don’t these Federal Bureau of Labor figures include output from mines and other raw materials? I know the manufacturing output figures quoted every week or month on NPR do include raw materials output along with factory output.

    I put it to you that it’s the production of value-added goods that really matters in terms of political economy. I suggest that our country needs to have a well-diversified economic base that includes a manufacturing industry devoted to consumer goods. It is that which we have lost over the past 30 years. Are you saying that “de-industrialization” is a myth?

  2. OneEyedMan says:

    Well, the BLS definition of the manufacturing sector doesn’t seem to have any of the basic resource extraction industries in it. It is hard to know if this is the exact definition used in the two charts but I think it is.

    This depends a bit on what you mean by de-industrialization. I don’t consider America de-agriculturalist even though only 2% of Americans farm. We have far fewer people in manufacturing then we once did just as we have far fewer people in farming, but productivity in these areas has exploded so total output in these areas of the economy has actually increased.

    You are right that the jobs better reflect the political power of an industry than output does. In that sense the manufacturing industries are in a long twilight without the political power of the Senate to protect their rural interests. Just the opposite. Manufacturing was primarily an urban activity that receives disproportionately small political influence due to the form of the Senate and Gerrymandering in the house.

    I don’t really care what we make. The smaller European nations seem to do well without worrying about having diversified economies. I’m happy to let the market sort that one out.

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