The Truth About American Manufacturing

, E. J. Fores, Leave a comment

The nature of the liberal mainstream media and academic elite is such that we typically only hear one side of an argument—and that argument is neither balanced nor contested. This has become the status quo of the media and the nature of debate surrounding the state of the economy and American productivity.

Professor Robert Reich offers a seemingly simple solution to explain the loss of jobs in the manufacturing industry and the growing gap between the wealthiest and poorest Americans. In this 2:15 long YouTube video, he outlines six simple bullet points that explain his observations about the economy. He outlines what he sees as economic realities and gives them a class warfare explanation, claimingthat all the wages lost to workers go to the super rich, giving them vast amounts of economic power to keep their taxes low, thus pitting members of the middle class against each other and resulting in the anemic economic recovery that we are currently experiencing. Reich blames capitalistic competition for having a negative impact on society and the middle class, squeezing them ever smaller until they are non-existent.

Reich’s points are well-made and put forth quite clearly.  When one looks into the graphs and data that he uses, this is a logical conclusion to gather.  This conclusion is what academia preaches and this is what the mainstream media has assumed as their guiding truth.

There is more to the story however.

This past week, Professor Don Boudreaux spoke to a Cato University audience about the fallacies of this Keynesian conclusion and the progress our society has experienced thanks to the spirit of competition and innovation, not in spite of it.

Boudreaux spoke of the impressive increases in productivity the US economy has experienced, information that Reich fails to mention. He noted that real manufacturing per worker has steadily risen since the 1950s, as manufacturing output in the US has also increased while the percentage of manufacturing in GDP has decreased, from 25% to 18%, His colleague, Mark Perry, defends this argument in his blog.

It is evident that economic improvements have come from capitalism and freedom to invent in the world around us. Just think about modern conveniences that we use daily— smart phones, HD flat screen TVs, laptops, home appliances. These things have improved AND become cheaper since the 70s.  So while manufacturing jobs may be going overseas, the manufacturing industry in the US is not in decline.

Professor Boudreaux also discussed the change in the work force in our country and in the world. Millions of manufacturing jobs and construction jobs were lost in this recession, and many are unlikely to return. Service sector jobs are showing growth, across various industries, including engineering, health care and the financial industry, and this is proving to be the direction of the job growth in the future.

Boudreaux concluded by saying that worrying about unequal income distribution is a fancy way to turn envy into social policy. Our country seems to favor punishing people for being entrepreneurial and successful and rewarding those who fail to provide for themselves. Milton Friedman once said, “If you pay people not to work and tax them when they do, don’t be surprised if you get unemployment.” In a time when the country desperately needs job growth, we seem to favor more state intervention. The direction that our country is headed does little to produce real growth among individuals, and a great deal to increase the state dependency.

E. J. Flores is is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.

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