On the Decline of U.S. Manufacturing (and No, It’s Not All About Automation)

Bethlehem Steel
While automation is widely believed to be the key to manufacturing job losses in the United States, more recent research suggests globalization and practices by competitors like China have made more of a difference than otherwise might have been believed. (Photo Credit: Joshua Schnalzer/Flickr/Creative Commons

Ready for a deep dive into economic trends and theory facing the American manufacturing sector? I get it—the topic may not be an altogether sexy one—but the implications that accompany these trends are important ones, so bear with me for a bit.

Gwynn Guilford, reporting for Quartz, recently penned an excellent analysis of the United States’ effective stagnation when it comes to growth in the manufacturing sector, an eventuality that even trained data-driven economists have misinterpreted by viewing manufacturing more holistically. She begins her piece by talking about Donald Trump decrying globalization as a job killer on the campaign trail, and this being dismissed by economists and other data-driven analysts as rhetoric in favor of automation as the dominant explanation for job loss in the States.

As Guilford tells it, though, Trump was closer to the truth than a lot of experts might otherwise have entertained—though for reasons he likely can’t iterate, so let’s not give the Devil too much of his due.

First, a matter of context. According to Guilford, who cites data from the Bureau of Labor Statistics, manufacturing employment has declined by more than 25% since 2000, to the tune of some 20 million jobs. At the same time, however, the manufacturing sector’s output has continued to increase despite the job loss, roughly in line with growth in the U.S.’s gross domestic product (GDP). The easy explanation for this is that advances in management, skill, and—you guessed it—technology have made manufacturing processes more efficient, yielding superior output and production when adjusting for inflation.

True as these justifications for industrial improvement may be, though, there is still the matter of the paradox created with respect to rising output and concomitant declining employment in the manufacturing sector. Here’s where the economic theory comes into play. Susan Houseman, economist and specialist in matters of globalization, in conjunction with Federal Reserve economists, looked at detailed statistics regarding calculations of manufacturing output.

As Guilford explains, integral to understanding what Houseman and her colleagues saw is how economists assess year-to-year measurements. Not only do they look at the raw numbers of finished products made from one period to the next minus the costs of production (a principle known as “value added”), but they adjust for changes in price and product quality. The problem with measuring things in this way, meanwhile, is that adjustments based on assumptions of value can be misinterpreted as or otherwise confounded with sales data, making it seem as if the country is selling more goods than it actually is.

As Houseman et al. contend, this is precisely what’s happening with the consensus analysis of the U.S. manufacturing sector, and one relatively small subsector is skewing the observed data: computers. The evidence of this is alarming when controlling for the computing industry in plotting private industry and manufacturing growth over time. Between 1947 and 1977, graphs of statistics recorded by the Bureau of Economic Analysis show growth of manufacturing and private industry largely in step, on a steady incline. From 1977 on, however, taking computers out of the manufacturing equation creates a stark downward departure for the Manufacturing, Less Computers line. As Guilford puts a cap on this, “By 2016, real manufacturing output, sans computers, was lower than it was in 2007.”

In other words, the health of the American manufacturing sector looks to be dangerously overstated, and while automation did, of course, occur here, Guilford points to evidence that globalization and trade may have done more damage than previously considered. In this regard, China, a frequent target of Donald Trump’s as he stumped for votes, indeed plays a central role.

China’s emergence as a major exporter of goods is estimated by one group of economists as costing America over 2 million jobs from 1999 to 2011, helped by competitive advantages in the form of artificially devalued currency and cheaper labor, and exacerbated by the strengthening of the U.S. dollar, which reduced the demand for American exports. But American leadership is not without its culpability herein. As economists Justin Pierce and Peter Schott argue, China’s joining of the World Trade Organization as a member in 2001 negated the ability of the U.S. to retaliate against Chinese currency manipulation and other protectionist policies, a situation Bill Clinton, among others, encouraged as President of these United States.

In addition, going back to the notion of automation as a job killer, there are some logical flaws in the emphasis on this cause being a primary driving force. For one, as Guilford bluntly puts it, robots “have to work somewhere.” Given the statistic that more than 75,000 manufacturing plants in the U.S. closed between 2000 and 2014, for overall manufacturing output to increase, other factors would have to be at play. There’s also the matter of the United States lagging behind other developed nations such as Korea, Singapore, Germany, and Japan in terms of use of robotics. The numbers, as they say, don’t add up.

Thus, if anyone or anything should get a wag of the finger, according to Gwynn Guilford, it’s “two decades of ill-founded policymaking,” the kind that “put diplomacy before industrial development at home, offering the massive American consumer market as a carrot to encourage other countries to open up their economies to multinational investment.” In doing so, we as a nation dismissed the threat of foreign competition and accepted (and continue to accept) the popular narrative that automation was and is the major driver of job extinction.

What’s particularly problematic about this mindset is that it obscures the importance of manufacturing to the U.S. economy and as a provider of skills to American workers. With production facilities closing their doors, there’s less incentive to do the kind of research and development that leads to better, more competitive products. As you might expect, too, the brunt of the costs of manufacturing’s decline outside of the computing subsector have been borne by the middle class, while the lion’s share of the benefits of globalization have been reaped by the so-called urban professional elite and multinational corporations.

In turn, politically and socially speaking, the country has become increasingly unequal and more polarized. All of these elements suddenly seem tailor-made for Trump and his faux populism to swoop in and capture an upset victory like he did in the 2016 election. The man struck a nerve in the heart of blue-collar America. Predictably and unfortunately, though, he hasn’t done much to boost U.S. manufacturing, instead focusing on tariffs and pushing the nation to the brink of a trade war with any number of entrants willing to fight back, and ignoring the currency manipulation angle that validates, in part, his anti-China tirades. Not that this exculpates the Democrats, either, whom Guilford characterizes as possessing “no vision for how to reverse the industrial backslide.”

All of this paints a fairly grim picture of the outlook for the manufacturing sector moving forward, as it does for the country’s susceptibility to divisive rhetoric and strongmen like Trump. To quote Guilford in closing:

US leaders’ longstanding misunderstanding of the manufacturing industry led to the biggest presidential election upset in American history. But they still don’t seem to grasp what’s been lost, or why. It’s easy to dismiss the disappearance of factory jobs as a past misstep—with a “we’re not getting those jobs back” and a sigh. Then again, you can’t know that for sure if you never try.

It’s one thing for political leaders, often derided as out of touch with John and Jane Q. Public, to misunderstand the issues about which they profess to know—assuming they ever understood in the first place. When economic analysts are falling prey to the same faulty reasoning, however, it doesn’t instill a great deal of confidence in those of us less well-versed in such matters. The most inspiring sentiment here is Guilford’s seeming doubt about whether or not the jobs we take for granted are really lost for good, that we don’t know for sure one way or another. Then again, we have to try first, and based on the current state of affairs, that’s no guarantee.


Considerations of the stagnation of American manufacturing accompany this week’s not-so-great news for workers amid an ongoing assault on workers’ rights from the political right. In a 5-4 decision that saw conservatives comprise the majority, the Supreme Court ruled that employers can compel their employees to sign arbitration agreements in which they waive their rights to bring class-action suits against the employer. Justice Neil Gorsuch, while indicating this practice of company management is “debatable,” nonetheless found that federal arbitration law does not conflict with the National Labor Relations Act, a piece of legislation in place since 1935 governing the rights of employers and employees alike, and designed to protect the ability of the latter to collectively bargain and form trade unions.

Justice Ruth Bader Ginsburg, meanwhile, speaking in dissent, was unequivocal in her negative assessment of the ruling, calling it “egregiously wrong,” and offering these additional sentiments on the matter:

The court today holds enforceable these arm-twisted, take-it-or-leave-it contracts—including the provisions requiring employees to litigate wages and hours claims only one-by-one. Federal labor law does not countenance such isolation of employees.

As the “Notorious RBG” finds, these agreements are evocative of the so-called “yellow dog” contracts used by employers until being outlawed in 1932 that barred workers from forming or participating in unions as a condition of employment. Now more than 85 years removed from a legislative remedy to such lopsided bargains, to know that we are potentially moving backward on the subject of workers’ rights is frightening.

Ginsburg isn’t the only one painting this decision in such ominously historical terms either. While the Court didn’t specifically address discrimination in the workplace with this ruling, civil rights advocates have expressed their fear it will set a precedent that will allow employers to skirt their responsibility with respect to claims of discrimination and harassment in the workplace. Add to this fears that a conservative majority ruling in Janus v. AFSCME could strip unions of their ability to collect “fair share” fees from non-members who nonetheless benefit from union representation, and there is any number of reasons for concern for the fate of American unions and the imbalance of political power fueled and perpetuated by moneyed interests.

As with intervening to attempt to save manufacturing jobs, the impetus should be on lawmakers and the country’s leadership to steer the nation in the right direction on upholding workers’ rights, a point Ruth Bader Ginsburg emphasized in her dissent. At least as long as Republicans control both Congress and the White House, however, any pushback on efforts to undermine organized labor appears unlikely, especially while establishment Democrats fail to rise more strongly to its defense until it’s time to campaign—and even then there are failings, as the story of Hillary Clinton’s 2016 electoral loss demonstrates. A year-and-a-half after the fact, one is left to wonder what lessons, to be exact, the Dems have learned from their defeats of previous years.

Donald Trump was closer than he probably realized to the truth about China’s role in the United States’ manufacturing woes, and it got him to the White House. Until we as a nation get better at diagnosing this reality and abandoning the “robots took our jobs” narrative, crafting proactive-minded policy to adapt to the challenges of a global market, and ensuring that workers can organize and advocate for better wages and working conditions, we run the risk of similarly unqualified candidates taking advantage of the unrest that is apparent in teachers’ strikes and other walkouts which are happening, have happened, and will continue to happen—not to mention continued efflux of research and development skill, factory closures, and job loss.

On the surface, American manufacturing looks to be growing as it has in past decades. A deeper dive into the numbers, though, tells a more complete story—and one that doesn’t obviously lead to a happy ending. Let’s hope we as a country realize this before it’s too late and we fall too far behind on the world stage.

To view this post as it appears on Citizen Truth, click here. Citizen Truth is an independent and alternative media organization dedicated to finding the truth, ending the left-right paradigm, and widening the scope of viewpoints represented in media and our daily conversations. For more on CT, please visit citizentruth.org.

Donald Trump: The Art of the (Reckless) Deal

trump-book-cover
Gag me with a spoon. (Image Credit: Amazon.com)

With all the political commentary made during the campaign season, even after the fact of the election, certain stories or turns of phrase still stick in one’s mind while unpacking recent events. These may not even be widely publicized news reports or soundbites, just random bits of information and opinion that resonate with the individual. For yours truly, one interview which comes to mind is Snoop Dogg’s waxing philosophical on a number of topics in a sit-down with Rolling Stone. When asked specifically about politics and the subject of Donald Trump, and in particular, his reference to the yet-to-be-elected Trump being a “punk-ass,” Tha Doggfather had this to say:

How could we have someone as reckless as him running our country? I been around for a long time. I seen Jimmy Carter, Ronald Reagan, Bushes, Clintons. And I never seen a motherf**ker like him.

“Never seen a motherf**ker like him.” About a man who is set to become the next President of the United States. Leave it to the one and one only Snoop D-O-Double-G to put Donald Trump’s win in historical perspective, placing the matter in its deserving context and plainness: the president-elect is as reckless as they come. On some level, I feel Trump and his supporters would approve of this verbiage which eschews political correctness. Of course, they would probably in the same breath deride him as a degenerate weed smoker, with Mr. Trump himself taking the opportunity to demean him in a Tweet-storm, but that’s how it goes these days, apparently. Any criticism must be met with an equal or disproportionately large clapping back at the source of the criticism. Double points IF YOU USE ALL CAPS FOR A PORTION OR THE WHOLE OF YOUR RESPONSE. YOU’RE SHOWING ENTHUSIASM!

The other anecdote from the campaign season which I feel got lost in the shuffle of the media frenzy that was the 2016 presidential race was a Jane Mayer piece in The New Yorker from July which profiled Tony Schwartz, ghostwriter of Donald Trump’s 1987 memoir The Art of the Deal. To summarize Mayer’s report briefly, Schwartz helped paint a portrait of Trump as the consummate businessman and deal-maker, and especially in light of Trump’s newfound political prominence, he regrets that decision. In breaking a long-standing silence on his role in the deification of Donald Trump, Tony Schwartz made this cutting admission, among others quoted in the piece:

I put lipstick on a pig. I feel a deep sense of remorse that I contributed to presenting Trump in a way that brought him wider attention and made him more appealing than he is. I genuinely believe that if Trump wins and gets the nuclear codes there is an excellent possibility it will lead to the end of civilization.

As Jane Mayer and her interviewee would have it, there are two big myths The Art of the Deal and Donald Trump’s own tall tales have helped perpetuate. The first is the notion that Trump largely made it on his own, without the help of father Fred. Indeed, the image of Donald J. Trump as the self-made millionaire has been essential to his populist appeal. But it’s an illusory one. Fred Trump was there for his son financially, politically, and even legally when needed to co-sign on business contracts to which Donald was a party. The second is that Donald Trump possesses some sort of keen intuition or business savvy, with the reality being that Trump has led both his business and personal lives with an appetite for destruction, incurring heavy amounts of business debt, getting multiple expensive divorces, and spending money like it was going out of style. As journalist Timothy L. O’Brien, also cited in Mayer’s article, adds to the discussion, Trump’s mythmaking in the form of The Apprentice is a reiteration of these themes, only to a greater extent. From there, where is there to go upward from running a business but to run the whole damn country? To a blowhard and egotist like Donald Trump, it seems as much a logical conclusion as anything.

Reckless. Time and time again, this word encapsulates Donald Trump’s approach to life. Reckless with his business finances. Reckless with his own finances. Reckless with his words. Reckless with purported facts and Tweeted graphics. Hell, the man alluded to the size of his dick during a presidential debate, which, at least for me, was the point when this campaign season officially jumped the shark. Many Americans are struggling, and people are getting killed in unspeakable ways both here and abroad, and here we are talking about Trump’s penis. That kind of low-brow fare is fodder for the likes of Jerry Springer, not for a discussion of the most pressing issues facing the nation and the world today. Bur I guess it generates clicks, so that’s all that matters, right? That’s OK. All that stuff about the Social Security trust fund running out in a matter of years was a downer anyway.

Before the election, there at least was the small amount of solace that Donald Trump’s brazen disregard for others was confined to his business dealings or to political debates. Now that Trump has won the presidency and is meeting with heads of business and heads of state, however, the blast radius of his heedless myopia has multiplied exponentially. I mean, dude’s not even President yet and already he’s pissing people off. On a domestic front, President-Elect Trump recently negotiated a deal to keep Carrier, an HVAC and refrigeration brand under the United Technologies Corporation banner, from relocating some 1,000 jobs to Mexico. Sounds great, right?

In actuality, it’s a terrible bit of negotiating. In a piece for FORTUNE Magazine, commentator Robert Z. Lawrence explains just how bad the Carrier deal is for American manufacturing. First of all, Lawrence outlines how, in no uncertain terms, the actions that led to Carrier/UTC staying in the U.S. were part of unsound policy, and the reasons are several, at that. For one, threatening to “blackball” Carrier for moving jobs to Mexico—even though this is perfectly legal—is a clear example of government overreach on President-Elect Trump’s part. Also, in a potentially more injurious way monetarily, by negotiating a tax break for Carrier/UTC to prevent them from leaving the country, Trump has opened the door for other large companies stationed in the United States to demand similar treatment, or else they will threaten to bail for climes with cheaper labor/yet more favorable tax treatment. In addition, Lawrence points out, if Carrier acts in accordance with advice from Donald Trump and/or his administration, and theoretically faces financial struggles afterward, the company will be wont to seek some sort of assistance from the federal government. Three strikes, you’re out, Mr. Trump.

Lawrence has yet more to say on how dumb Donald Trump’s approach to addressing the expatriation of multinational corporations is, including the sheer illegality of what he has suggested doing with tariffs relative to participation in the World Trade Organization, not to mention the modest gains in employment in the manufacturing center that would be realized in the event he manages to knock all his “deals” and “negotiations” out of the park, but for our purposes, we already have enough to construe that “the Donald’s” agreement with Carrier was ill-advised and reckless. The reactions from prominent critics to the deal second the notion that this bit of negotiation is, as the kids say, not all Gucci. Bernie Sanders, finding a topic right in his wheelhouse—you know, bad trade deals, losing jobs and tax revenue to foreign countries, that sort of thing—is among those decrying Trump’s move and what it may signify for his broader economic policy. Sanders even went as far as to pen an op-ed discussing the implications of the Carrier/UTC deal. From the piece:

President-elect Donald Trump will reportedly announce a deal with United Technologies, the corporation that owns Carrier, that keeps less than 1,000 of the 2,100 jobs in America that were previously scheduled to be transferred to Mexico. Let’s be clear: It is not good enough to save some of these jobs. Trump made a promise that he would save all of these jobs, and we cannot rest until an ironclad contract is signed to ensure that all of these workers are able to continue working in Indiana without having their pay or benefits slashed.

In exchange for allowing United Technologies to continue to offshore more than 1,000 jobs, Trump will reportedly give the company tax and regulatory favors that the corporation has sought. Just a short few months ago, Trump was pledging to force United Technologies to “pay a damn tax.” He was insisting on very steep tariffs for companies like Carrier that left the United States and wanted to sell their foreign-made products back in the United States. Instead of a damn tax, the company will be rewarded with a damn tax cut. Wow! How’s that for standing up to corporate greed? How’s that for punishing corporations that shut down in the United States and move abroad?

In essence, United Technologies took Trump hostage and won. And that should send a shock wave of fear through all workers across the country.

A point well noted amid Bernie Sanders’ commentary is that this is a tax break for a company that is not one of the little guys, and one that is not exactly hurting in terms of business, either. As Sanders cites in his essay, United Technologies made a profit in 2015 of $7.6 billion and has also received more than $500 million from the Import-Export Bank as well as sizable tax benefits. Insert quip about the rich getting richer here. What makes the Carrier deal especially egregious is that it directly flies in the face of Trump’s campaign promise to get tough with corporations who abscond with jobs that could be done in the United States. Granted, on some level, we expect politicians to renege on pledges made during stump speeches and rallies. In Donald Trump’s case, the man has a known proclivity for prevarication, so to many of us, it’s even less surprising. It doesn’t make it any less reckless on Trump’s part, however, and it’s all the worse considering over 60 million people voted for him with hopes of positive change in some way, shape or form. Many more thousands of American manufacturing jobs potentially hang in the balance, and the President owes it to his constituents to do more than make hasty deals that expedite the widening inequality in this country.

Trump has been no less frustrating or even worrisome on a foreign policy/diplomacy front. Recently, according to President-Elect Trump, Taiwanese President Tsai Ing-wen called him to congratulate him on his electoral victory. Just a social call, right? No harm, no foul? Not when the very existence of Taiwan as an autonomous, distinct entity is debated, it isn’t. As the reporting team of Amy B. Wang, Emily Rauhala and William Wan, writing for The Washington Post help communicate, the history and relationship between mainland China and Taiwan is complicated. Once upon a time, in the year 1895, China ceded control of China to Japan, only to regain it some fifty years later when Japan surrendered in World War II. Since that time, China has insisted Taiwan is part of China, much as it has with Tibet. The United States, for its part, hasn’t done anything to challenge this claim, even though it has maintained a working relationship with Taiwan, notably in the area of arms sales, which has ruffled China’s feathers in the past. By and large, however, America has striven to, um, not piss the Chinese off on the subject of Taiwan, and despite its reality as a self-governing, democratic island, since 1979 and as a function of re-opening diplomatic relations with China, we don’t have a formal, in-name relationship with Taiwan. In fact, no American president had even spoken with a Taiwanese president, either in person or over the phone, since that stipulation was enacted over 35 years. That is, of course, until Donald Trump just went ahead and exploded that wall of silence with his big yap.

Details are murky surrounding the circumstances behind this phone call and what its true intent was. As noted, Trump alleges President Tsai called him unsolicited. Taiwan, meanwhile, has averred that the two sides worked together to set up a conversation, and since Trump is a congenital liar, I tend to believe the alternative account. As for the purpose of the call, both Trump’s transition team and the Taiwanese government have explained the heart-to-heart under the premise of some vague sort of discussion of “economic, political and security ties” or “strengthening bilateral relations.” Even that, though, may be cover for what some suggest are Trump’s true intentions: building a hotel in Taiwan. Donald Trump’s seeming reluctance to break all ties with his business operations or to put his holdings in a blind trust, paired with reports that a representative from the Trump Organization visited a possible site for the hotel in September, raise serious doubts about whether his foreign policy is driven by a legitimate desire to benefit the United States as a whole, or merely line his own coffers, even if indirectly. Even putting that potential conflict of interests aside for the moment, though—an admittedly big ask, mind you—Trump’s willingness to engage with Tsai Ing-wen in defiance of China, a major player on the world’s stage and one which regards even slight breaches of tradition as provocation, is just throwing reckless fuel on the reckless fire. Either Donald Trump was ignorant of the U.S.’s long-standing policy with China regarding Taiwan, or he intentionally disregarded it, but whatever the case, it portends poorly for his negotiations with other nations. Even if China is inclined to give him some leeway, we shouldn’t be encouraging Trump as POTUS to dance with the Devil.

Whether it’s picking the likes of Ben Carson for Secretary of Housing and Urban Development when the man has no public policy experience and didn’t even really want the job in the first place, flirting with countries with which we have no business talking and alienating allies and trade partners (“Hey, Pakistan came on to me!”), or shooting from the hip when deciding which corporations get what benefits and which get snubbed and Tweeted about (“Boeing was mean to me! Big mistake!”), Donald Trump’s childish temperament, deficient knowledge of domestic and foreign policy, and overall reckless behavior are sure to negatively impact the nation. What’s more, if not picking dangerously unqualified candidates like Carson, he’s doing the exact opposite of what he claimed he would do. He’s not draining the swamp, but as I’ve heard it said, he’s instead feeding its alligators. He’s not making America great again, but rather making it better only for the wealthiest Americans and the top executives of large multinational companies—and essentially giving the rest of the country the middle finger as he does it. The Donald Trump less than half of America elected is a myth, a liar, and quite frankly, not a good human being. He may have won TIME Magazine‘s coveted Person of the Year award, but only because of his newfound stature that he won dishonestly. In reality, he’s not worth the paper his picture is printed on, and the sooner the American people realize the man synonymous with “The Art of the Deal” isn’t the leader he is made out to be, the sooner we’ll all realize what a shitty deal we got.