Many have bemoaned the loss of US manufacturing jobs to another country. The following quote by Mark Riddix is typical:
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the biggest challenges facing the American economy is that we lack a domestic manufacturing base. To put it simply we do not produce anything anymore. We buy tons of foreign goods and then wonder why we're lacking jobs. We import most of our goods which has led to a huge trade deficit and industrial job losses. Our economy has transitioned from an agricultural society to an industrial society to a service economy.
The burr under my saddle is jobs. Trade deficits export jobs. Some think it is only money on balance sheet but it is jobs that are exported when a country imports manufactured goods.
Is it correct to associate job losses using the US trade deficit? If the US worry about losing manufacturing jobs? In the end, a growing service sector is a very common characteristic of countries with growing per capita incomes. Are the current problems in manufacturing merely cyclical a result of American bankers causing a Order Nike Free Online Canada
panic that led to the global recession? Remember that between 1998 and 2007, the united states unemployment rate averaged 4.9%. Or exist longer term structural problems at work?
I have looked carefully at recent writings on the subject many of the Nike Free Run Cheap Canada
claims for why the jobs were lost are way off the mark. It is notable that most of those bemoaning US job losses look at manufacturing as a single industry. It's not. The manufacturing sector consists of different industries with different dynamics.
What Manufacturing Industries Unemployment?
Looking back to 1975, 1978 was the height year for jobs in manufacturing. Table 1 shows the manufacturing industries using the largest job losses in the 19782007 period. .
Table 1. Job Losses in Manufacturing by Industry, 19782007
What caused these job losses? In reacting to Steve Hansen's article, John Lounsbury stated:
Now, to be fair, not all the employment decline was because of increased employment overseas. Trade deficits remained fairly benign by Twenty-first century standards. Employment declined significantly because of productivity improvements as more and more automation replaced manual labor.
So let's look at jobsaving automation. Within the 1987 to 2007 period, manufacturing useful output has increased by 123% while employment has fallen by 21%. This means an overall productivity increase of 181% for that manufacturing sector, and it could have been greater if the data had gone back to 1978. So where in manufacturing were productivity gains greatest? Probably in electronics and computers.
When it comes to textiles and garments, the Chinese are by far the most efficient. Consumers all over the world would benefit in lower costs if all garments were made in China. And yet, the united states quota on garments from China is the largest trade barrier in the world.
The reason for the job loss in primary metals happens because the US makes most of its fabricated metals out of scrap metal. China is now the major global consumer of iron ore. The job losses in the remaining three categories could be attributed largely to productivity gains. But why then did the trade deficit grow? Because of growing US demand for goods and services. Read on.
Hansen and other associate US manufacturing job losses with a growing trade deficit. Hansen suggests that most jobs resulting from technology are being created overseas. Again, let's consider the trade figures for that different manufacturing industries. Table 2 shows what is happening net to those manufacturing industries whose net trade deficits (imports minus exports) between 1989 and 2007.
Table 2. Manufacturing Trade Deficit Growth,
Source: US International Trade Administration
It seems there is a white elephant in the room: the manufacturing sector with the trade deficit that grew most within this period was oil and gas. This had nothing to do with lowerpriced overseas workers and unfair labor practices. It revolved around the growing US dependency on foreign oil. I quote from an early on piece:
Unlike Japan and China, the united states was at one time richly endowed with energy resources. Even today, it is the third leading producer Nike Free Buy Canada
of energy from oil, the second leading producer from coal, the 2nd leading producer of energy from natural gas, and by far the largest producer of nuclear energy. But due to its voracious energy consumption, the US must supplement its own production of energy with imports. It now imports 63% of its crude oil, and this constitutes 21% of crude oil traded globally. It is really an Ghd Eclipse
extreme and dangerous dependency.
The European countries and Japan have imposed heavy taxes on motor vehicle fuels so gas prices will be in the $6$7 range for more than a decade. However the US government policy has been to keep your gas price as low as possible. The result? Per capita, the US consumes almost 4 times as much oil as the other OECD countries. Timberland Boots Canada Online
Is there a US energy policy?
How come the US import so much oil? Because at existing exchange rates, extraction and shipping oil from overseas is less costly than US extraction. And US extraction costs continuously climb.
I have written numerous pieces on purchases of US government securities by China and also the Japanese to promote their Mens Nike Free Run
exports. Together, both of these countries hold more US Treasury debt ($1.8 trillion) than the Fed ($1.2 trillion). There isn't any question that this propping up of the united states dollar has contributed significantly to US manufacturing job losses.
All of this is not to say American jobs haven't been lost to overseas competition. But what more should be done? I have already mentioned the China garment quota the largest trade barrier on the planet. US agricultural subsidies range from $10 and 30 billion annually. More pressure on the Chinese and Japanese to strengthen their currencies?
With all the Japanese efforts to help keep the Yen from getting stronger, the dollar has lost 60% of its value against the Yen since 1978. Plus they still export excellent cars towards the US at competitive prices. Sooner or later, Americans have to understand that individuals other countries are willing Timberland Boots Canada Sale
to continue to work harder for less. And if that continues, Americans' real incomes will fall further. It is called global competition.
 I look simply to 2007 because I do not want to confuse the findings with cyclical job losses caused by the global recession.