Readers jumped all over the nutty idea, presented here yesterday, that America’s economic prowess has remained undiminished by decades of job losses in the manufacturing sector. That was a salient point of the graph below, which accompanied an upbeat article by Jim Manzi in National Affairs. Although Manzi’s blog is first-rate, we wondered how he could have gone so far awry as to suggest that the nation’s manufacturing sector is as economically meaningful as ever, notwithstanding the fact that it employs far fewer workers than in the past. If you take the graph at face value, manufacturing’s share of the country’s GDP has hovered just below 15 percent for more than 60 years, steady as a rock. However, some readers saw statistical fraud here of the same blatant sort that colors U.S. unemployment data. Indeed, while the government’s statisticians assert that 10 percent of the work force is currently unemployed, the actual figure is closer to 22 percent if calculated using the same assumptions that were used in the 1980s.
With similar disingenuousness, the spinmeisters supposedly tweaked the definition of manufacturing a few years back so that Starbucks and Burger King instantly became “manufacturers.” Both “assemble” food, or so the bureaucratic thinking goes, and that is why the contribution of sandwiches and lattes to the country’s economic output is grouped in the same category as jet aircraft, concrete and roller bearings. We were unable to verify this at press time, but even if Burger King et al. are not in fact classified as manufacturers, we’d bet dollars to donuts that there are dozens of equally farfetched businesses that are.
Offshore Fudge-Factor
The statistical lies grow still more brazen, and probably more meaningful, when it comes to differentiating goods actually produced in this country from those that are merely assembled from foreign parts. As one reader noted, “Just about all U.S. manufacturers now buy their parts in China and other low labor-cost countries, then assemble the completed product here in the U.S. This registers as [American] GDP…for the entire cost of the product, when in reality a higher percentage of the product is actually made overseas.”
Others saw no need to split statistical hairs over whether the U.S. is still in the game. “If the chart is true,” one reader asked, “then how come you can hardly find anything in Wal-Mart that’s made in the USA?” The same reader also noted that because the chart ends around 2005, it failed to capture the acceleration of “the offshoring movement” during the past five years. Another reader pointed out that, even if manufacturing’s share of GDP has remained steady, workers have failed to keep up with inflation. “It doesn’t matter how much manufacturing the U.S. has if the upper management is the only class that benefits in real-wealth terms from the increased productivity of the workers. If our country is to return to solid footing economically, then the workers need to take back what is theirs, the fruits of their labor,” he continued. “In the last 30 years, upper management in all sectors, in concert with our corrupt government, has become entrenched in their philosophy of robbing from the masses in more and more diabolical ways. They won’t willingly change. History has proven that!”
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Jerry – I agree the universities are run by nut jobs. However, I don’t understand the whole Reagan bashing bit. I consider Reagan an icon- up there with Ron Paul, Washington and Andrew Jackson as true patriots. Reagan believed in Austrian economics and his one regret was not ending the fed. We could use a few good Reagans right now.