WI: 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.​

For how to achieve this, you'd probably need a more successful Nixon Presidency, with him doing something like a Tobin Tax after its conception in 1972, encouraging companies to invest in machinery rather than do things like stock buybacks. Likewise, have his efforts to pass UHC be fruitful, as healthcare costs have been cited as another reason for the downturn in manufacturing employment:

 

[Tryglaw]

Hmmm, yes, I recall reading somewhere recently that China has in last year built more industrial robots then the US has in total...

Also, offshoring jobs to cut costs also has its price, since those whose jobs got made redundant have lost their purchasing power. So short term gains lead to long term losses, as corporate profits grew at first the long term purchasing power of the consumer base shrunk, the middle class could not keep up, the extra-rich became even more rich (at expense of everyone else), the wealth gap keeps growing.

 

[UberSink]

since those whose jobs got made redundant have lost their purchasing power.

Not if you give everyone cheap credit

Works for a while, at least

 

[Tryglaw]

Not if you give everyone cheap credit

Works for a while, at least

Yes, but that's just kicking the problem down the line, until the debt becomes too much...
Unless we'll see a "new deal" where the banks will just keep printing and printing and printing... They've been doing just that for quite a while though...

 

[ShadowLord]

I'm no economic expert, but it probably would have been better for the United States as a whole if they had.

 

[stevep]

HL

Would such an idea prompt an earlier and possibly stronger Reaganite reaction against it? Given the strength of fiscal interests and the 'laissez faire' ideas among the larger institutions this might or might not succeed.

Also this assumes that the tax is set at a high enough level to discourage such activities but from the examples in the link you give this isn't always the case.

The other issue is that if you do deter HFT [High Frequency Trading] the companies will have more money for other activities but its not certain they would put that into investment. Could be higher bonuses, dividend payments or general wage increases or combinations of. Although it does mean that any company that does invest in the business wisely is going to be in a more competitive position so possibly that's what you mean?

Steve

 

[Aaron Fox]

Yes, but that's just kicking the problem down the line, until the debt becomes too much...
Unless we'll see a "new deal" where the banks will just keep printing and printing and printing... They've been doing just that for quite a while though...

Only because 1) there is a pandemic going on and you'll need to keep the money flowing or cause a situation that simply induces a revolution, 2) people keep forgetting that a capitalist economy is -at its most basic level- a cycle of money transference and thus must keep the cycle moving or it flies apart, and 3) in order for the US to go into hyperinflation, you'll need to print something on the order of our debt at least twice over last I've checked.

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.​

For how to achieve this, you'd probably need a more successful Nixon Presidency, with him doing something like a Tobin Tax after its conception in 1972, encouraging companies to invest in machinery rather than do things like stock buybacks. Likewise, have his efforts to pass UHC be fruitful, as healthcare costs have been cited as another reason for the downturn in manufacturing employment:

There is no way to keep the US as an industrial powerhouse, I'm afraid. At least not without some serious alien space bats going on, from what I can tell.

 

[History Learner]

There is no way to keep the US as an industrial powerhouse, I'm afraid. At least not without some serious alien space bats going on, from what I can tell.

If we maintain the existing regulatory and taxation regime, combined with the particulars of corporate culture that emerged in about the 1980s, I'd agree, that's why I'm proposing a change under Nixon. All of these aforementioned issues can be fixed at that time, and thus lead to the retention of industry and industrial jobs. If your argument is there are some other structural issues, what are they? If it's high wages, as Cass notes, you're forced to explain examples like Germany, the Netherlands, Norway, South Korea, etc...

 

[Aaron Fox]

If we maintain the existing regulatory and taxation regime, combined with the particulars of corporate culture that emerged in about the 1980s, I'd agree, that's why I'm proposing a change under Nixon. All of these aforementioned issues can be fixed at that time, and thus lead to the retention of industry and industrial jobs. If your argument is there are some other structural issues, what are they? If it's high wages, as Cass notes, you're forced to explain examples like Germany, the Netherlands, Norway, South Korea, etc...

The core problem in comparing the US to Europe is the fact that Europe generally has a far healthier relationship between corporations and worker's unions. That and they did outsource much of the intermediate production (i.e. all the parts between raw material to finished product) anyway. Then add to the fact that US companies would go back to their Gilded Age shenanigans if they can get away with it...

Not only that, you'll have to 'convince' a certain breed of stockholders (which, as far as I can tell, started showing up in the '50s and by the '70s dominated the corporate scene with the mid-to-late '60s being the point-of-no-return) as well, and they only can be convinced via stupidly-high-profit margins and there is really no way to do that while reconciling all the required regulations (because US companies will go back to their Gilded Age shenanigans if they can get away with it), making the companies work with the worker unions (fat chance), and that required stupidly-high-profit margins.

 

[Buba]

Looking at the list of right-to-work States and dates of adoption of such ordinance, having 1/3rd of the country with such laws by 1960 did not help?
Why did not industry flee to the South? Or why did not companies bribe donate enough money to local parties to make them pass right-to-work laws in the North?
So, would unions be only a small part of the issue?

 

[Aaron Fox]

Looking at the list of right-to-work States and dates of adoption of such ordinance, having 1/3rd of the country with such laws by 1960 did not help?
Why did not industry flee to the South? Or why did not companies bribe donate enough money to local parties to make them pass right-to-work laws in the North?
So, would unions be only a small part of the issue?

Unions were only a (comparatively) tiny part of the issue, the big problem is that the culture of the stockholders changed immensely and thanks to the US pushing the geopolitical model of 'trade or else' upon most of the world in a two-part bid to contain the Soviets (and Chinese) and to prevent another world war, the rest of the world opened up and allowed for outsourcing.

Remember, US companies will go back to being their Guilded Age selves if they have a chance to get away with it. Outsourcing allowed that chance to be semi-permanent.

 

[Buba]

Unions were only a (comparatively) tiny part of the issue,

OK. Live and learn

Remember, US companies will go back to being their Guilded Age selves

I do not understand this reference - what does going back to Guilded Age mean?

 

[Aaron Fox]

I do not understand this reference - what does going back to Guilded Age mean?

A period of US (and some European countries) history where life is literally pennies on the dollar, profit above all else and damn the consequences, and is basically real-life cyberpunk without the cybernetic augmentation aspect.

Gilded Age is so termed because if you're in the upper-middle class and above, it is a golden facade placed on top of the literal communist revolution fermenting shitshow. There is a reason that the Progressives were saviors of the US, the US was quite literally a hop and a skip away from a communist revolution (which even the US military would be in on, given that Congress absolutely loved fucking over the military at every opportunity, the only armed force that would be available to fight against such a revolution is the Pinkertons and they're not large and well-equipped enough to fight a genuine military).

 

[History Learner]

The core problem in comparing the US to Europe is the fact that Europe generally has a far healthier relationship between corporations and worker's unions. That and they did outsource much of the intermediate production (i.e. all the parts between raw material to finished product) anyway. Then add to the fact that US companies would go back to their Gilded Age shenanigans if they can get away with it...

Not only that, you'll have to 'convince' a certain breed of stockholders (which, as far as I can tell, started showing up in the '50s and by the '70s dominated the corporate scene with the mid-to-late '60s being the point-of-no-return) as well, and they only can be convinced via stupidly-high-profit margins and there is really no way to do that while reconciling all the required regulations (because US companies will go back to their Gilded Age shenanigans if they can get away with it), making the companies work with the worker unions (fat chance), and that required stupidly-high-profit margins.

It's why I included the bit about the Tobin Tax, which Brookings found reduced the tendencies of businesses to do as you note, reducing things like stock buybacks over capital investments that updated machinery. Basically, it puts them into the position of having to do upgrades to factories rather than short term actions, as the former delivers the most return. I agree on the beneficial nature of unions, but I don't think they are decisive; as Cass notes, plenty of places where unions are weak have seen stable or even growing industrial employment. The mass decline in the U.S. is pretty unique and largely a result of the lack of the aforementioned capital improvements.

To quote Oren Cass again:

Faced with this reality, efforts to blame job losses on automation require the fatally flawed assumption that output is not supposed to increase. Holding output constant and comparing the past’s lower productivity with the present’s higher productivity will always reveal that employment would be higher but for the productivity gain. This is how, for instance, an oft-cited report from Ball State University reaches the conclusion that 88 percent of manufacturing job losses are attributable to automation: “Had we kept 2000- levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers. Instead, we employed only 12.1 million.” But of course we’re employing fewer manufacturing workers than if productivity had not increased—and the same could be said about every decade.​

​

Using this reasoning, we could say that had we kept 1960-levels of productivity and applied them to 1970-levels of production, we would have required 25 million manufacturing workers. Instead, we employed 18 million. Did automation destroy 7 million jobs in the 1960s? Maybe. But this wasn’t a problem, because output rose 62 percent, so manufacturing employment was higher at decade’s end. By contrast, the output of the manufacturing sector in 2016 was only 3 percent higher than it was in 2006. Single years achieved higher growth than that thirty-two times during 1950–2000, at least five times during every decade before 2010.​

Further:

In manufacturing, every year will see extraordinary upgrades in some processes. But firms will have to decide how many areas they will risk changing at one time and how much capital they can devote to the effort. With each decision, they will have to balance the benefits of investment in the ideal tool for a specific task with the loss of flexibility that comes from committing to that tool and that task. Even the steel industry, a poster child for automation, required forty years to increase its per-worker output from 260 tons to 1,100 tons—an annual improvement of less than 4 percent.​

​

Across the manufacturing sector globally, the Boston Consulting Group reports that the stock of installed robots grew only 2 percent to 3 percent per year during 2005–14—no faster than total manufacturing output. As robotics pioneer Rodney Brooks observed in MIT Technology Review, “I regularly see decades-old equipment in factories around the world. I even see PCs running Windows 3.0—a software version released in 1990.” Anyone who has peered around a checkout counter to see the readout on the cashier’s screen knows this feeling. Brooks continued: “The principal control mechanism in factories, including brand-new ones in the U.S., Europe, Japan, Korea, and China, is based on programmable logic controllers, or PLCs. These were introduced in 1968 … I just looked on a jobs list, and even today, this very day, Tesla Motors is trying to hire PLC technicians at its factory in Fremont, California.”​

 

[Aaron Fox]

It's why I included the bit about the Tobin Tax, which Brookings found reduced the tendencies of businesses to do as you note, reducing things like stock buybacks over capital investments that updated machinery. Basically, it puts them into the position of having to do upgrades to factories rather than short term actions, as the former delivers the most return. I agree on the beneficial nature of unions, but I don't think they are decisive; as Cass notes, plenty of places where unions are weak have seen stable or even growing industrial employment. The mass decline in the U.S. is pretty unique and largely a result of the lack of the aforementioned capital improvements.

To quote Oren Cass again:

Faced with this reality, efforts to blame job losses on automation require the fatally flawed assumption that output is not supposed to increase. Holding output constant and comparing the past’s lower productivity with the present’s higher productivity will always reveal that employment would be higher but for the productivity gain. This is how, for instance, an oft-cited report from Ball State University reaches the conclusion that 88 percent of manufacturing job losses are attributable to automation: “Had we kept 2000- levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers. Instead, we employed only 12.1 million.” But of course we’re employing fewer manufacturing workers than if productivity had not increased—and the same could be said about every decade.​

​

Using this reasoning, we could say that had we kept 1960-levels of productivity and applied them to 1970-levels of production, we would have required 25 million manufacturing workers. Instead, we employed 18 million. Did automation destroy 7 million jobs in the 1960s? Maybe. But this wasn’t a problem, because output rose 62 percent, so manufacturing employment was higher at decade’s end. By contrast, the output of the manufacturing sector in 2016 was only 3 percent higher than it was in 2006. Single years achieved higher growth than that thirty-two times during 1950–2000, at least five times during every decade before 2010.​

Further:

In manufacturing, every year will see extraordinary upgrades in some processes. But firms will have to decide how many areas they will risk changing at one time and how much capital they can devote to the effort. With each decision, they will have to balance the benefits of investment in the ideal tool for a specific task with the loss of flexibility that comes from committing to that tool and that task. Even the steel industry, a poster child for automation, required forty years to increase its per-worker output from 260 tons to 1,100 tons—an annual improvement of less than 4 percent.​

​

Across the manufacturing sector globally, the Boston Consulting Group reports that the stock of installed robots grew only 2 percent to 3 percent per year during 2005–14—no faster than total manufacturing output. As robotics pioneer Rodney Brooks observed in MIT Technology Review, “I regularly see decades-old equipment in factories around the world. I even see PCs running Windows 3.0—a software version released in 1990.” Anyone who has peered around a checkout counter to see the readout on the cashier’s screen knows this feeling. Brooks continued: “The principal control mechanism in factories, including brand-new ones in the U.S., Europe, Japan, Korea, and China, is based on programmable logic controllers, or PLCs. These were introduced in 1968 … I just looked on a jobs list, and even today, this very day, Tesla Motors is trying to hire PLC technicians at its factory in Fremont, California.”​

It wouldn't work out that way when it hits reality, as the companies will find a way to bypass it or start throwing money to repeal it.

 

[ShadowArxxy]

A period of US (and some European countries) history where life is literally pennies on the dollar, profit above all else and damn the consequences, and is basically real-life cyberpunk without the cybernetic augmentation aspect.

The ur-example of the Gilded Age was the infamous Triangle Shirtwaist Factory fire, or more precisely, the aftermath of that horrific fire:

• The owners of the factory -- Blanck and Harris -- escaped legal liability by claiming that they didn't personally know that the workers were locked into the burning building, despite it being their company's official procedure to do so in order to guard against the possibility of workers stealing product. (Extra slimy note: the owners' lawyer successfully discredited key witness testimony at trial by claiming that the testifying worker had "obviously" been coached because her account was consistent under hostile questioning.)

• The owner of the building had it repaired and upgraded with fireproofing measures in compliance with the building code, which it had previously been in blatant violation of. In response, Blanck and Harris moved their business to a different building which lacked fireproofing. Why would they do such a thing? Well, because insurance fraud was an integral part of their business model -- the deadly fire was the fifth time that their factory had suddenly and mysteriously caught fire just as their product inventory fell out of fashion.

• Blanck and Harris were subsequently caught in the act of locking workers into their new building, the very same practice they had sworn in court they were totally unaware of and would never have allowed if they knew. When they were brought to court, the judge apologized to the business owners for being forced to penalize them under the new, stricter worker protection laws.

 

[Aaron Fox]

The ur-example of the Gilded Age was the infamous Triangle Shirtwaist Factory fire, or more precisely, the aftermath of that horrific fire:

• The owners of the factory -- Blanck and Harris -- escaped legal liability by claiming that they didn't personally know that the workers were locked into the burning building, despite it being their company's official procedure to do so in order to guard against the possibility of workers stealing product. (Extra slimy note: the owners' lawyer successfully discredited key witness testimony at trial by claiming that the testifying worker had "obviously" been coached because her account was consistent under hostile questioning.)

• The owner of the building had it repaired and upgraded with fireproofing measures in compliance with the building code, which it had previously been in blatant violation of. In response, Blanck and Harris moved their business to a different building which lacked fireproofing. Why would they do such a thing? Well, because insurance fraud was an integral part of their business model -- the deadly fire was the fifth time that their factory had suddenly and mysteriously caught fire just as their product inventory fell out of fashion.

• Blanck and Harris were subsequently caught in the act of locking workers into their new building, the very same practice they had sworn in court they were totally unaware of and would never have allowed if they knew. When they were brought to court, the judge apologized to the business owners for being forced to penalize them under the new, stricter worker protection laws.

... and you would think why I want to have CEOs, Presidents, the Board of Directors, and the major stockholders (i.e. stockholders that own low double digits of the stock value) rigged with shaped charge collars that would detonate the moment the investigation found the company of negligence?

 

[WolfBear]

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.​

For how to achieve this, you'd probably need a more successful Nixon Presidency, with him doing something like a Tobin Tax after its conception in 1972, encouraging companies to invest in machinery rather than do things like stock buybacks. Likewise, have his efforts to pass UHC be fruitful, as healthcare costs have been cited as another reason for the downturn in manufacturing employment:

In addition to your suggests, what about implementing protectionism starting from the 1970s or so? In other words, to discourage outsourcing as much as reasonably possible, especially of manufacturing jobs.

 

[History Learner]

In addition to your suggests, what about implementing protectionism starting from the 1970s or so? In other words, to discourage outsourcing as much as reasonably possible, especially of manufacturing jobs.

I think the Tobin Tax is an excellent way to do that.

 

[WolfBear]

I think the Tobin Tax is an excellent way to do that.

OK. I'll need to look it up and read about it more. That said, though, what else could help here, other than someone like Pat Buchanan winning the US Presidency in 1992 or at least much earlier than 2016?