AHC: U.S. remains an industrial powerhouse

[History Learner]

The Terminator Myth: It’s Not Robots That Hurt Workers, by Oren Cass:

Compare that period to the 21st century, when America has lost nearly five million manufacturing jobs. Was any of this because of extraordinary technological breakthroughs that caused productivity to surge, allowing firms to do much more with many fewer workers? No. In fact, the average rate of productivity growth in manufacturing this century has been 3.1%—lower than 1947–72 and no different than 1972–2000. But output growth has been only 1.3%, less than a third the rate of the earlier period. We’ve gone from the world where firms use a doubling of productivity to double output, to one where they use it to lay off half their workers. Had output growth this century equaled that of 1950–2000, manufacturing employment today would be near an all-time high.

So when policymakers blame automation for job losses, they are looking in the wrong place. Productivity gains have always been with us—in fact, they used to come faster. If anything, the American economy is suffering from insufficient automation—as reflected in declining productivity growth, stagnant wages, and remarkably little use of robots. American manufacturers use only 200 industrial robots per 10,000 workers, the standard measure of adoption. In both Germany and Japan, that level exceeds 300. In South Korea, it exceeds 700. With greater automation and higher productivity, American firms would likely be more competitive in the international economy.

MANUFACTURING THE FUTURE: Why Reindustrialization Is the Road to Recovery by Mark Levinson, New Labor Forum, Vol. 21, No. 3 (Fall 2012), pp. 10-15

Those like Reich and Goolsbee-who think manufacturing is healthy and the employment decline is due to productivity increases- point to the fact that the change in real manufacturing value added, relative to GDP, is stable. But what's obscured is that, in 2010, thirteen of the nineteen manufacturing sectors were actually producing less than in 2000. But, more importantly, when corrected for the problems identified by Mishel-overestimation of output in the computers and electronics sector, and problems with how inputs are measured-manufacturing output actually fell over the last decade, while GDP increased by 17 percent. Employment in manufacturing is declining mainly because of reduced output.

Productivity growth, rather than being the cause of declining manufacturing employment, is the prerequisite for manufacturing employment growth. This should not be surprising. Only highly efficient factories can survive in todays global economy. William Nordhaus has shown that, within each manufacturing industry, increases in the rate of productivity growth were associated with increases in the rate of job growth from 1948 to 2003. A Brookings Institution study extended the Nordhaus study until 2009 and concluded that "there is no evidence that productivity increases were significantly correlated with job loss." It is not inevitable that manufacturing will decline. Many nations with higher manufacturing wages than the United States- including Germany, the Netherlands, and Norway- have seen either stable or increasing manufacturing output as a share of GDP. Other countries- Korea, Austria, Poland, Finland, the Czech Republic, and the Slovak Republic- have actually seen their manufacturing sectors grow as a share of their economy.

What sort of PoDs would be needed to have American companies make the capital investments needed to adopt a higher level of industrial robots per workers, thus allowing for greater output and thus allowing for not just a retention of manufacturing jobs but even a massive expansion of them as Cass notes could've happened?

 

[Deleted member 140587]

If Nixon had gotten CHIP through in the 1970s and taken the burden of healthcare off industry that would help

 

[marathag]

If Nixon had gotten CHIP through in the 1970s and taken the burden of healthcare off industry that would help

Still don't change that it's cheaper to build and then ship to the USA from Japan then Taiwan then South Korea then China....

 

[M79]

Stopping NAFTA at least slows the fall. Make Haiti strong enough to enforce OTL minimum wage demands and is slows even more. Creating a prosperous or openly capitalist China continues the trend.

 

[Father Maryland]

In terms of value, raw numbers of workers, and as a percentage of the workforce Industry is actually larger in the US then in say the 40s. Certain industrial sectors have definitely suffered (say Steelmaking) but it's less overall about the US "Deindustralizing" and more the rest of the world catching up. Also there's been a fuck ton of "Insourcing" as industries move plants from the old Rust Belt that's more pro union to the South where wages are lower, unions weaker, taxes lower, and land prices lower.

The only way to really keep the US more or less the so remain the top and only industrial powerhouse is prevent the rest of the world from recovering from WW2 (though that would also indirectly really hurt the US in the long run). Maybe have a WW3 in the mid 50's that leaves the US more or less untouched but leaves much of the Old World radioactive ruins.

 

[bpbruce]

D JFK never breaks US Steel 1962. Pat Moynihan and Ralph Nader never attack Detroit's Big Three, so they are still going strong. A couple lawyers don't bribe the D party to let them break light airplanes in the early seventies, so we get flying cars by the eighties instead of losing our light plane manufacturing. Nader doesn't break nuclear power- you can't do a lot of manufacturing without power. It would help if the Democrats don't hassle the industrial midwest into a Rustbelt. The Clintons don't take a half billion dollar bribe from Microsoft's competitors to sic the Justice Department on Microsoft- this was 1999, so I don't think it's current politics. Current politics is about dealing with our lack of a manufacturing base.

 

[marathag]

That's a lot of PoDs

 

[WolfNeuron]

the sort of thing policymakers bear responsibility to address. This means acknowledging the many things they have gotten wrong: imposition of environmental restrictions that make industrial development slow and costly, obsession with college enrollment to the exclusion of the many non-college pathways that might better prepare people for relevant fields, nonchalant tolerance of a massive and widening trade deficit, entrenchment of an outdated system of organized labor that workers and employers both dislike, and so on.

The article suggests things that will increase industrial output. Some answers could be the creation of an Robotics Industry Development Plan to rival China's of the same name. I think this is realistic as the US is currently pumping in a ton of money into using AI in the military to combat China. The ideas are there, they just need to be redirected into industry rather than the military.

She also talks about excessive focus on university degrees as opposed to other routes, that can be changed fairly easily with a focus on apprenticeships as another route. I'm not so sure about environmental regulations and unions, I mean they seem kinda important to me. Maybe reform which makes industrial companies freer would help though.

I think all it really takes is for the government to conclude that lack of production increase is the problem and take action based on that. Overall, it's just very tough to prevent industry being moved abroad, and so I think it's better to create a US where industry is focused on high tech production which is more advanced by a decade or so by 2020 and means AI mostly means that the US is far more productive than the rest of the world.

 

[Laxault2020]

Here are a couple other PODs/ideas (FYI I really do like everyonne elses, lots of good ideas here all around)

Generally speaking, while government policy will help, honestly, the best response is to simply have US firms and plants be better managed. Poor American corporate leadership relative to the developing world is an understated reason behind our decline. Better management would lead to more profitable companies, who in turn have more capital to invest. Personally, I believe a big reason why our firms fail vis-a-vis Chinas is that our best and brightest overwhelmingly go to Wall Street or Silicon Valley because of existing success. As a result, those sectors consistently receive the best talent and the cycle builds. Meanwhile, Ford, Chevy, etc and even more so smaller firms are run by B-C level leaders who get beaten by the Jack Ma's of the world. If you change the culture around this (e.g. maybe have the Big 3 move to Miami, Dallas, or any other sexier place to live) than at lot would be fixed without sacrificing air quality or worker wages. For all of the emphasis we place on government policy in these debates, its really only a drop in the bucket and most a reflection of the reality that people on this site, by its nature as a politics focused site, have faith in the efficacy (or destructiveness) of government policy. my 2 cents

But for the heck of it, here are some ideas

Post collapse of Bretton-Woods the world agrees to adopt the SDR as the global reserve currency, not the dollar. As a result, the US can inflate the dollar, cheapening exports. Our exports are prohibitively expensive, especially increases, as the world keeps buying our currency. One paper I read said this switch (if it occurred now mind you) would lead to an increase of 1 million US jobs and an annual increase in GDP growth by 1% a year. Would lead to more inflation too though, which could hurt.

Moreover, signing more trade agreements might help too...so long as the other countries don't have a comparative advantage in industries. Think more deals with high minimum wage/low labor productivity countries, or countries that are resourced-cursed (making industry a poor investment). Instead of South Korea or Peru-The United Kingdom and Angola. In addition, more competitive trade earlier on would reward better run companies, leading to better prepared American firms once Japan, SK, and China arrive on the scene.

In addition, more trade deals with neighbors that keep part of the higher-skilled parts of the manufacturing process here as other parts are outsourced, and less with far-off cheap labor countries would help. E.G. NAFTA, but also with Cuba, but never ever letting China in the WTO (honestly a big one on its own).

Also, having China either stay Maoist or at least isolated (no Nixon to China) or democratize under Indian lines (with massive amounts of Red Tape and a federalism that doesn't reward success like in China's pseudo-federalism) would help. Killing off the German Mittlestand would also help, s the US, even with high labor costs, could compete as a high-quality/tech producer without Germany around.

Lastly, while the financial boom of the 80s was very good and needed at the time, many firms outside of the internet sphere got lazy in the innovation and product department, and narrowly focused on growth through acquisitions, which is bad business strategy if these acquisitions don't build on/up synergies.

 

[peeter]

I’d say the gov in the early 70s threatening corporations with higher taxes on corporate profits from companies that ship a majority of their labor base overseas but that would require some major political changes

 

[History Learner]

If Nixon had gotten CHIP through in the 1970s and taken the burden of healthcare off industry that would help

This, I think, might very well be the main issue:

Still don't change that it's cheaper to build and then ship to the USA from Japan then Taiwan then South Korea then China....

The "Lower Wages" argument doesn't really hold given Germany and other major First World nations haven't suffered steep drops in Industrial employment like the United States did.

 

[History Learner]

In terms of value, raw numbers of workers, and as a percentage of the workforce Industry is actually larger in the US then in say the 40s. Certain industrial sectors have definitely suffered (say Steelmaking) but it's less overall about the US "Deindustralizing" and more the rest of the world catching up. Also there's been a fuck ton of "Insourcing" as industries move plants from the old Rust Belt that's more pro union to the South where wages are lower, unions weaker, taxes lower, and land prices lower.

The only way to really keep the US more or less the so remain the top and only industrial powerhouse is prevent the rest of the world from recovering from WW2 (though that would also indirectly really hurt the US in the long run). Maybe have a WW3 in the mid 50's that leaves the US more or less untouched but leaves much of the Old World radioactive ruins.

The "Catching Up" hypothesis doesn't really work, given the timing of the loss of industrial employment. To quote from The Once and Future Worker by Oren Cass:

The difference this time, and the cause of economic distress, isn’t that productivity is rising; it’s that output is not. From 1950 to 2000, while productivity in the manufacturing sector rose by 3.1 percent annually, value added output grew by 3.6 percent—and employment increased, from 14 million to 17 million. During 2000–2016, productivity rose by a similar 3.3 percent annually. But output growth was only 1.1 percent—and employment fell, from 17 million to 12 million. Even with all the technological advancement of the twenty-first century, had manufacturers continued to grow their businesses at the same rate as in the prior century, they would have needed more workers—a total of 18 million, by 2016.

 

[marathag]

The "Lower Wages" argument doesn't really hold given Germany and other major First World nations haven't suffered steep drops in Industrial employment like the United States did.

Germany had nice, new Factories that implemented the latest production theories.

USA?
Nobody bombed our factories into rubble, so kept using the old ones, even though that by 1955, developments in Steel Mills meant that every works in the USA was functionally obsolete by 1960
Could have the USA done things differently?
sure. But the growth was fueled with cheaper imports. Hard to argue beancounters about that

 

[bsmart]

Have Malcom McLean not be successful with Sea-Land shipping and the intermodal shipping container. This would keep shipping costs high and make the worldwide integrated market in-efficent enough that production of many items would remain in the U.S. because between pilferage, wasteage, and slower loading and unloading rates that it would be cheaper, even with higher labor costs to produce things in a decentralized manner.

 

[1940LaSalle]

Shorten drastically or avoid the 12 week steel strike in 1959, and there will be funds available to upgrade and modernize. There are a host of ripple effects from that alone.

 

[KaiserWilhelm]

I mean, American manufacturing production is at all time highs, and the economic analysis tells us that the vast majority of job loss in the sector was due to automation, not outsourcing

 

[M79]

Maybe do what GE did at one of its facilities in KY. It used to need 35,000 workers and had its own zip code before nearly being closed permanently - so GE upgraded the infrastructure and now it makes higher-end appliances with 1/4 the workforce. Transition the excess workers gradually into Tech and we might have a high-quality industrial production infrastructure that while not titanic does allow thr US to be much closer to self-sustaining.

 

[marathag]

I mean, American manufacturing production is at all time highs, and the economic analysis tells us that the vast majority of job loss in the sector was due to automation, not outsourcing

But some sectors are just gone.
Not many TV sets made in the US anymore. Off Patent Pharmaceuticals, as well. if its not pleasureboats, or Military there's not much shipbuilding either

 

[M79]

But some sectors are just gone.
Not many TV sets made in the US anymore. Off Patent Pharmaceuticals, as well. if its not pleasureboats, or Military there's not much shipbuilding either

Maybe achieve lobbying reform in the US during the late 1960s or in the aftermath of Watergate or the Tylenol scare prevents private interests from moving some things offshore or barring overseas competition for others?

 

[herkles]

I say keep the Unions strong would be a good thing to look at as well. So say no Taft-Hartly, and Operation Dixie succeeds(that being the plan to unionize the south by the CIO) would help.