There is No Crisis in American Industry
The crisis of American industry has become a truism across the whole political spectrum. Pundits and politicians offer various solutions to this crisis, all of them tacitly making the same assumptions about what it is. In fact, however, the entire notion of a crisis in US industry has little to do with reality, and everything to do with our preconceptions. Manufacturing in the US is at an all-time high.
According to the Federal Reserve data, we have now recovered to pre-recession levels of industrial production, which were the highest in our nation’s history. Why, then, is there bipartisan anxiety about our nation’s industrial decline?
Part of the answer has to do with the way we think about industry. The iconic version of manufacturing in the US is probably the 1950s—a postwar boom characterized by conspicuous heavy manufacturing. We built dams and skyscrapers and highways, out of a continent’s worth of gravel and iron ore and asphalt. It wasn’t just industry; it was the stuff people imagine when you say the word “industry”.
Our current industrial production is about five times greater than it was back in that “golden age”, but it looks very different. We are making satellites, solar panels, microscopic surgical implants. True, a lot of the iconic industrial production of the blast-furnace and monkey-wrench variety has moved on to countries with cheaper labor. But we didn’t “lose” it: we shifted to more complex, value-added production. Certain industrial sectors have moved abroad, to be sure, but this is not because we lack the will or technical ability to retain them. We just can’t afford it, in the way that billionaires cannot afford to wash their own dishes: their time is occupied in other ways.
This shift in the nature of American industry has had another effect, of course, which lends itself to the idea that American industry must be rescued: automation. Only about 10% of Americans are now employed in the industrial sector, though they are far more productive than industrial workers were a generation or two ago. Again, this runs up against our iconic vision of the American worker as an industrial worker, and our manufacturers as huge employers. In the last year, for instance, politicians of all stripes have talked a lot about coal miners, those legends of industry. Lost in that rhetoric is the fact that there are very few of them: only about 50,000. Solar employs five times more.
The process of automation and technical improvement that has changed our industry is hardly new. New technologies shrink the workforce in one sector, and those people go elsewhere, eagerly or not. We have seen this happen, and discussed it in more or less the same way, for at least four centuries. And that by itself demonstrates that industry does not need rescuing. Imagine if we had rescued the mining industry back in the 19th century, by refusing to allow steam drills? John Henry is a good song, but a poor economic policy.
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