The second presidential debate of 2012 gave me the maddening spectacle of two candidates disagreeing vehemently with each other within a shared context of falsehood. The subject was “shipping jobs overseas.”
Three weeks from the election neither presidential candidate has had the courage or the wisdom to denounce, even with a wink, the nested myths of a lost golden age of American manufacturing and of China as a big cheat.
In the fifties and sixties, there were many more manufacturing jobs than there are now. I won’t even bother to discuss whether the statement is absolute or relative: More manufacturing jobs total or just more as a % of total jobs (which would necessarily happen if the American service sector had grown even more than the manufacturing sector had grown.) My question is: So what?
I remember those days well. The widespread nostalgia refers to what were overwhelmingly bad jobs. They were assembly-line jobs for semi-literate idiots who were determined and proud to remain semi-literate, even trans-generationally. They were foundry jobs that managed to be both brain-deadening and dangerous. There were many more mining jobs than today, then offering a grimy life with a fairly good chance of death by suffocation.
The same people (or the same kind of people), the same organizations (unions) who currently lament the de-industrialization of America (an ambiguous idea. See my blog “The De-Industrialization of the U.S…“) then wailed over the horrible features of the same now lost jobs. When I began in academia, one of the main cottage industries in the discipline of sociology was the study of chronic unhappiness among blue-collar workers. (If you are going to Google it, use the key word “alienation,” N.S. !)
Many Americans, perhaps most Americans, exist with the vague impression that everyday life was better in some good old days that took place around the fifties or the sixties. It’s easy to get false impressions that way because few people have much ability to remember bad things. That would include your own grandparents. Below are a handful of facts to set the record straight.
In 1960, the life expectancy (at birth ) of Americans was 70; in 2012, it’s 80. That’s a 15 % improvement in a good thing. How many other things do you know that have become fifteen per cent better in fifty-two years? Besides Cognac, I mean.
The US infant mortality was 26 in 1960. It’s now 7 or 8. That’s a two thirds reduction in a bad thing . Do you know anything at all that has improved as much in fifty-two years? Disappointment in love? Sexual frustration?
OK, you don’t believe that being alive rather than dead is a valid measure of standard of living? Say it aloud, make sure to leave your name so I can quote you to all comers.
Yes but how about the quality of life, you say? Nostalgia for old black and whiteshows such as “I Love Lucy” notwithstanding, there were only three television chains, then. Choice matter. It doesn’t matter to you? Think it through.
Cars broke down all the time. That included beautiful leather-upholstered Cadillacs (proudly made in America by well-paid American workers). Not ever being sure of your car, ever, will put a damper on the quality of your life for sure.
More on quality of life: Simple, small things matter too if they tend to be repetitive. In 1960, in the whole continental United States, good coffee was to be had in about five establishments in Manhattan, in one in San Francisco (in North Beach) and in one in New Orleans (Le Café du Monde, of course).
Somebody or other might have been better off in the fifties and sixties but it wasn’t the working class (however defined).
America has become “de-industrialized” only in the narrow sense that there are many more easy white-collar and unobjectionable blue-collar jobs than there used to. Most of the hard jobs requiring no skills are gone. The few left are in agriculture and they are performed overwhelmingly by foreign labor. Meanwhile, the total value of American manufacturing only keeps going up. (Read this again!) It does so just about every year as compared to the previous year.
In constant dollars, in real dollars, the value of American manufactures recently was X times the value in _________________ (The answer is in one of my blogs. looking for it should be fun.)
Closely connected with the fallacious impression that Americans are worse off because of de-industrialization is the idea that China is responsible for our imaginary decline.
Most people would have trouble explaining how “China” does it. Most of what they would come up I had already heard in the 1980s in connection with …Japan. Japan was going to bury us. Instead it fell into an interminable state of stagnation.
Probably the most common perception is that American producers broadly defined cannot possibly compete with very, very cheap Chinese labor.
This perception is absurd on its face. There are other high-cost labor countries, countries where the average cost of labor is even higher than it is in the US, such as Germany, Switzerland, Sweden, and France. None of those has been wiped off the face of the earth. Expensive French industrial workers are still manufacturing the Airbus, not barefoot Chinese peasants who are content with one bowl of rice a day with a piece of seaweed thrown in on Sundays.
There is a basic arithmetic exercise about labor costs that hardly anyone seems to be willing to perform or to promote. Here it is:
Suppose the cost of labor accounts for 5% of the total cost of an item. Suppose that by switching to cheaper labor, you manage a phenomenal reduction of half the labor cost. Suppose further that this labor cost reduction is not accompanied by any loss of quality, not any. Suppose further that it is not associated with any loss of production effectiveness (as can be caused by delivery delays, for example). Under this rosy scenario, you have reduced the total cost of your product by 2.5%. In many case, you could effect this modest achievement simply by bargaining better with your suppliers. It’s true that in some cases, in a very few industries, price competitiveness is high and such savings matter. There are few products and few manufacturing industries where this is true. (It’s often true in major retail business though.)
How realistic is the assumption that labor only accounts for 5% of total cost? Obviously, this is a question with many possible answers, But, for American products today, across a wide variety of tangible products, by and large, the answer is: “quite realistic.”
The other common answer to the question of what exactly is the Chinese ogre guilty of against us is that the Government of China manipulates its currency to harm us, or someone who is not us because he is not me but who is related to me in some fashion. And of course. Manipulating the national currency is nothing any branch of the US government would ever do, right? (Think of the Federal Reserve Board.)
I taught undergraduates in a business school for twenty years. Let me assure you that the average person in this country does not know a damn thing about national currencies. In addition, most of what the few who know something on the topic know is simply false. So, let me help and don’t be offended.
Our political class accuses the Chinese government of keeping its money’s value lower against the dollar than it should be. Put another way, when you exchange your US dollar for Chinese money, you receive too much Chinese money. The result of this atrocity is that, according to our unspeakable political class, you are able to buy more Chinese t-shirts, more shovels, more flashlights, more plates and mugs etc, than you ought to be able to. The end-result is that you end up owning more stuff because the Chinese are sacrificing themselves. Bastard Chinese!
There are several other sizable falsehoods associated with international trade, the export of jobs, the loss of manufacturing jobs, and the arch-villain China. (Communist China is a villain but for other reasons.) Discussion of those are available throughout my blog. The wide reach of those falsehoods may ultimately decide this election and much of America’s future. Labor unions – which have a vested interest in the myths – often hold Democratic politicians by their soft parts. I regret that Republican candidates either don’t know any better or that their soft parts are not big enough to make them tackle the problem.
At the risk of repeating myself, let me sum up the issue of domestic manufacturing production:
Americans, collectively, have to decide if they would rather earn $6,000 making and selling a single computer chip or $5,000 with one ton of pig iron and ten thousand mouse traps.
It’s a simple enough question with powerful implications for national policies. Ask yourself.