chiro
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CAC1001 said:Well the notion of America "de-industrializing" is largely a myth. The U.S. is one of the largest manufacturers on the planet and up until recently was the largest, being outdone by China slightly (China is responsible now for about 19.8% of global manufacturing as opposed to the U.S.'s 19.4% - http://www.industryweek.com/articles/china_tops_u-s-_in_manufacturing_24134.aspx"). But the U.S. achieves that 19.4% with far fewer workers then the Chinese due to our much greater labor productivity.
Also, manufacturing is not some panecea to economic hegemony. It is important, but a service and knowledge economy is very important to, and this is something that China is severely lacking right now. Manufacturing in the United States hasn't so much declined (U.S. manufacturing output continues to increase year-after-year), it's that as a percentage of the economy, it has shrank over the years as the economy has grown by leaps and bounds in other areas. Manufacturing employment has remained relatively the same over the decades even though manufacturing continues to grow, which I suppose means that, roughly, the rate of manufacturing's growth is the same as the rate of increases in its productivity (so everytime a worker is replaced by a machine, the manufacturing sector grows enough to include an additional worker).
Low-margin, simpler things, such as toys, shoes, consumer electronics, etc...are manufactured in countries like China (and even then, the actual design of these products is in the United States), but high-margin, sophisticated things, such as medical devices, computer chips, instruments, sophisticated componentry, etc...are a great deal manufactured in the United States. The Chinese cheat also in that they artificially de-value their currency (which IMO the U.S. should counter with a tariff on all Chinese goods that are hurting domestic U.S. industries simply because they are cheaper due to the currency advantage) and also they subsidize certain industries as well. For example, the U.S. machine tools industry has been hurt by Chinese competition, and IMO a tariff should be levied on Chinese machine tool imports until they decide to stop de-valuing their currency the way they do.
Some myths about American manufacturing also are that it is primarily driven by the defense budget, which isn't true, that it is just a few big-ticket items that the U.S. manufactures (this also isn't true), and that American manufacturing is dominated by large corporations such as GE, Boeing, and so forth (also not true). American manufacturing consists of a whole bunch of small and medium-sized businesses along with large corporations.
On the issue of China's GDP tripling the U.S.'s by 2040, I'd put about as much stock into such a prediction as the tooth fairy. No one can predict economic growth or the condition of an economy that far out into the future. Imagine in 1981 trying to predict the U.S. economy circa 2011 for example. Such a prediction also makes the (rather large assumption I think) that China will continue growing at a very high rate of growth for the forseeable future, which is not likely. All economies that are booming are subject to busts after a certain point.
The question is "what" are both China and the US making?
It would be interesting to actually see what kinds of products are being made in the US, and what products are being made in China.
For products that are "low-tech", a lot of these products manufacturing bases are moving overseas. In terms of training workers to make these products, it is nowhere near as intensive (and also in terms of the abundance of cheap labor with the required skillsets) as a worker that has to say be involved in manufacturing an MRI machine, or some other high-tech product that requires a higher level of training.
It might actually be (and this is a conjecture but if you have actual data that answers my question that would be great) that all the cheap stuff is moved overseas and the expensive stuff (high-tech and other products that have a substantial value IP portfolio) are made in the states.
Under the above assumption if there is that skewness, then it would make sense that the "productivity" would be higher.
One thing to also note is that China's R&D capability is on the rise, and this should be kept in mind when thinking about possible future changes to productivity in manufacturing.
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