It’s a rare day when I praise former Clinton Labor Secretary Robert B. Reich. However, his most recent article on the loss of manufacturing jobs is simply dead-on accurate.
America has been losing manufacturing jobs to China, Latin America and the rest of the developing world. Right? Well, not quite. It turns out that manufacturing jobs have been disappearing all over the world. Economists at Alliance Capital Management in New York took a close look at employment trends in 20 large economies recently, and found that since 1995 more than 22 million factory jobs have disppeared.
In fact, the United States has not even been the biggest loser. Between 1995 and 2002, we lost about 11 percent of our manufacturing jobs. But over the same period, the Japanese lost 16 percent of theirs. And get this: Many developing nations are losing factory jobs. During those same years, Brazil suffered a 20 percent decline.
Here’s the real surprise. China saw a 15 percent drop. China, which is fast becoming the manufacturing capital of the world, has been losing millions of factory jobs.
What’s going on? In two words: Higher productivity.
All those on the far left side of the Democratic field who are arguing for a return to the “Fortress America” economic policies of the 1920s are ignoring the very real fact that it no longer takes hundreds of people to smelt iron ore into steel or build cars. Robots have taken far more American jobs than the Chinese have.
As Reich notices, this is a global phenomena, similar to what happened to agriculture during the Industrial Revolution. We’re transition from the Industrial Revolution to the Information Revolution in which we don’t need as much manufacturing capacity in the same way we didn’t need 30% of the American people laboring on farms in the 1950s. Technology has meant that we can do more with less.
The fact is that protectionism doesn’t work to fix these trends either. Just look at President Bush’s idiotic steel tariff decision. Rather than make US steel better it has produced losses of 20,000-40,000 manufacturing jobs and a $30 billion hit to the economy. If that weren’t enough it may well spark a major trade war between the US and the EU which will drive prices up even more.
In the end, this idea that only cutting ourselves off from the world can save jobs is as foolish as it was 80 years ago when the Smoot-Hawley tariff spread the effects of the Great Depression around the globe. The only way to save jobs is to create an economy that has room to grow and create new job opportunities. The way to do that is to open avenues for foreign investments, and fix the broken educational system to make more opportunities open for Americans in the Information Age.
Even Robert B. Reich gets it… now let’s see if the current crop of Democrats will.