It’s Not Automation, It’s the Trade Deficit

Matthew McMullan

Matthew McMullan Alliance for American Manufacturing

A common refrain in economic commentary on the nature of work, and the changes in manufacturing employment, is basically:

“Trade didn’t take those jobs. It was robots. The robots did it!”

Okay, maybe it’s not the terminators who are doing it. Rather, it’s industrial automation: We make more stuff with less people, because manufacturing is now performed by automated processes. This idea is breezily inserted into all kinds of articles, including ones with other interesting things to say. (And, in defense of those who spread this idea, there are studies that back this up.)

But this isn’t the entirety of thinking on the subject. David Autor – one of the academics behind the “China shock” hypothesis – has pumped the brakes on this idea. And others – from those at the Democratic-aligned Brookings Institute to President Trump’s hawkish chief of the National Trade Council, Peter Navarro – have pointed to the real-world example of Germany, which has put a lot of robots on the assembly line in recent years but hasn’t seen its substantial manufacturing workforce shrink.

So what gives? How does this refrain persist? Well, a new report by the Information Technology & Innovation Foundation (ITIF) takes a look at the “shaky foundations” it stands on:

First, while productivity growth in manufacturing compared to the rest of the economy was fairly consistent from 1990 to 2010 (25.8 percent in the 1990s, and 22.7 percent in the 2000s), job losses in the latter decade were 10 times greater than in the former.

That’s a very good point that has been made by others, albeit not pointed out enough. What else?

Second, government statistics significantly overstate manufacturing productivity growth. Government data shows an astonishing 179 percent increase in computer manufacturing output from 2000 to 2010. But companies actually produced fewer computers during this time, not more. The discrepancy is explained by the fact that the massive growth in productivity represents increasing computer processing speeds. The resulting mismeasurement of this subsector significantly skews manufacturing statistics overall. Indeed, after removing computer and electronic products, it turns out that real value added from U.S. manufacturing grew just 6.4 percent from 2000 to 2015, not the reported 19.3 percent.

The report’s author, Adams Nager, suggests that an explosion of trade with ChinaChina, not Mexico – and its suite of mercantilist trade policies was a much more likely culprit for the sudden drop-off in American manufacturing employment.

Nager points to a number of other scholars who have drawn the same conclusion.

In sum: Yeah, the robots are coming, man. But are they actively stealing our jobs? It’s just as likely (if not more) that it’s a foreign government that’s trying to do that.

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Reposted from AAM.

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Photo by John Martin.

Before coming to AAM, Matthew worked for the communications department at Council for a Strong America, a childhood advocacy nonprofit, and at community newspapers in Virginia and California. He is a 2006 graduate of Indiana University, and hails from Northwest Indiana. You can follow Matthew on Twitter at @mpmcmullan.

Posted In: Allied Approaches

Union Matters

Saving the Nation’s Parks

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

The wildfires ravaging the West Coast not only pose imminent danger to iconic national parks like Crater Lake in Oregon and the Redwoods in California, but threaten the future of all of America’s beloved scenic places.

As climate change fuels the federal government’s need to spend more of National Park Service (NPS) and U.S. Forest Service budgets on wildfire suppression, massive maintenance backlogs and decrepit infrastructure threaten the entire system of national parks and forests.

A long-overdue infusion of funds into the roads, bridges, tunnels, dams and marinas in these treasured spaces would generate jobs and preserve landmark sites for generations to come.

The infrastructure networks in the nation’s parks long have failed to meet modern-day demand. The American Society of Civil Engineers gave parks a D+ rating in its 2017 infrastructure report card, citing chronic underfunding and deferred maintenance.

Just this year, a large portion of the Blue Ridge Parkway, which is owned and managed by the NPS, collapsed due to heavy rains and slope failures. Projects to prevent disasters like this one get pushed further down the road as wildfire management squeezes agency budgets more each year.

Congress recently passed the Great American Outdoors Act,  allocating billions in new funding for the NPS.

But that’s just a first step in a long yet vital process to bring parks and forests to 21st-century standards. America’s big, open spaces cannot afford to suffer additional neglect.

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There is Dignity in All Work

There is Dignity in All Work