by Rick Lowe (http://www.weblogbahamas.com)
If one spends a lot of time listening to many of talking heads or reading a number of the "progressive" columnists about US manufacturing, you would believe that it is spiraling downward, out of control.
However, Professor Don Boudreaux corrects that myth in his blog of August 12, 2009.
He has given us permission to reprint it here:
Dear Editor:
Harold Meyerson’s argument that America no longer “makes things” is specious. It’s true, as Mr. Meyerson says, that “Since 1987, manufacturing as a share of our gross domestic product has declined 30 percent.” But this fact is caused chiefly by substantial growth in services and construction and not, as Mr. Meyerson implies, by declining manufacturing output.
In fact, according to the 2009 Economic Report of the President, total manufacturing output in the U.S. – measured by an industrial-production index – hit an all-time high in 2007 (the latest full year for which data are available).* In 2007, American manufacturing output was eight percent higher than it was in 2000, 69 percent higher than in 1990, 81 percent higher than in 1987, 184 percent higher than in 1980, and 213 percent higher than in 1967 – one of the years that Mr. Meyerson singles out as a glorious one when America “still made things.”
Sincerely,
Donald J. Boudreaux
Chairman,
Department of Economics
George Mason University
Fairfax, VA 22030
Visit Cafe Hayek here…
Hi Rick,
The numbers are a little misleading. What is not factored into the data Boudreaux conveys, is manufacturing by foreign companies- like Toyota and Honda in the USA.
Also, what he has not factored in is the manufacturing of foreign components by US firms abroad- especially with regard to canneries and high value tech components.
Currently, the G.19 report in manufacturing and industrial output, has had the US, since the begining of the recession, down on all counts- with minor blips in automobile manufacturing and their components.
The US does produce less of wholely American made products. Fact!
Best,
Youri
http://globalviewtoday.blogspot.com
Hi Youri:
Thanks for dropping in.
The numbers Dr. Boudreaux talks about is/are over all, not just since the recession. Since the recession world production is down.
So what Honda and Toyota produce at their US plants is not US manufacturing?
Having been to a couple of their plants in the US, I see something quite different than you imply.
Hi Rick,
If you want to split hairs and call Honda an American company because it produces in America, you are fine to have that opinion. I think Bourdeauz is splitting hairs as well…
I think the issue is with regard to the American made, wholly owned American made, goods in America and abroad.
I think a more fair and complete thing to say is that American brand name products are in decline.
To that extent, except for silicon valley and for the most part with car components through GE anf Ford, American made goods have been less and less and they have lost their competitive egde over their global competitors. This is not a secret.
Best,
Youri
http://globalviewtoday.blogspot.com
p.s.
Glad to know you went to car plants to see foreign firms make foreign cars and parts for America.
Funny thing Youri.
I’ve been to manufacturing plants on three continents and four countries and every single one imports parts from other countries.
If I remember correctly, the Honda Accord has more material from the US than Ford does.
But we should celebrate comparative advantage, not frown on it.
That’s what allows us to have air conditioners in our houses for example, even though we are middle class or lower when our grand parents could never afford them.
For the “miracle of creation” see I Pencil
( http://bit.ly/2AvVX ) by Leonard Read.