We Don’t Make Anything Anymore

By Dave Smith, Contributor, USDR

In his capstone speech last week to the Republican National Convention, Donald J. Trump had plenty of criticism for the Democratic nominee, Hillary Rodham Clinton. But in addition to the “red meat” attacks, he served up something else: steaming piles of economic fallacies, in the most anti-free-market speech from a major candidate of either party in years.

One of the cornerstones of Trump’s rhetoric from the beginning – even in previous political pronouncements that preceded his current presidential campaign – has been consistently a message that is anti-free-trade. Free trade agreements such as NAFTA, he claims, were poorly negotiated; in his RNC acceptance speech, he called NAFTA “disastrous” and “one of the worst economic deals ever made by our country”. He further singled out China’s admission to the World Trade Organization as a “colossal mistake”, the “job-killing deal with South Korea”, and stated that free trade “has been destroying our middle class”.  While he didn’t use the exact words in his RNC address, he, along with fellow protectionists such as Democrats Bernie Sander, Sherrod Brown, and Dennis Kucinich, and Republicans such as Pat Buchanan, have often cited the decline in manufacturing employment in the U.S. as proof of a declining manufacturing sector, using the phrase “we don’t make anything here anymore”.

That simply isn’t the case. It’s a complete fallacy.

While it is true that the number of employees in manufacturing has been on the decrease – according to the official Bureau of Labor Statistics numbers, manufacturing employment peaked at just over 19.5 million in 1979 and has fallen to approximately 12.3 million workers today – manufacturing output – the true measure of the economic activity – has increased. According to the Federal Reserve Bank of St. Louis Industrial Production Index, manufacturing output has nearly doubled since the 1979 high water mark for manufacturing employment, and has increased by nearly 500% since the 1950s, a decade often looked upon as a golden age of the American factory.

We make more “things” in the U.S. than ever before; we just need fewer people to make them because of efficiency and increasing gains in worker productivity. By usual metrics, creating more products using fewer resources is considered a good thing.

A similar theme is observed in the agriculture sector: according to the Department of Agriculture, output has increased by approximately 270% over the past 65 years, while the number of people employed in agriculture shrank from 16% of the total work force to less than 2% today. We have more food, and we require fewer people to produce it.

Only a Luddite would bemoan the “loss” of scythe-wielding reapers due to the advent of tractors and other farm implements; agriculture is rarely mentioned in the protectionist, anti-free trade arguments. But the phenomena are one and the same: technological advancements allow us to produce more goods and services using fewer resources. These effects are seen throughout the economy: phone operators and cartwrights are largely extinct; bank tellers are dramatically fewer.

But just as we celebrate the proliferation of cell phones and cars, and enjoy more plentiful food, we should celebrate the gains – yes, gains – that we’ve made in manufacturing.

All this has happened concurrent with the United States and its trading partners moving in the opposite direction outlined by Trump and his fellow protectionist travelers: we’ve done it by moving towards freer trade facilitated by a growing number of free trade agreements.

Unfortunately, that’s just one of many fallacies that Trump is promulgating.

Next up: the “Trade Deficit” Fallacy.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.

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  1. Trump is Flirting with Protectionism – USA Business Radio

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