By WALTER WILLIAMS
The U.S. Census Bureau reports that 2011
manufacturing output grew by 11%, to nearly $5 trillion. Were our manufacturing
sector considered a nation with its own gross domestic product, it would be the
world's fourth-richest economy. Manufacturing productivity has doubled since
1987, and manufacturing output has risen by one-half.
Over the past two decades, however, manufacturing employment has fallen about 25%. For some people, that means our manufacturing sector is sick.
By that criterion, our agriculture sector
shares that "sickness," only worse and for a longer duration. In
1790, 90% of Americans did agricultural work. Agriculture is now in
"shambles" because only 2% of Americans have farm jobs.
In 1970, the telecommunications industry
employed 421,000 well-paid switchboard operators. Today "disaster"
has hit the telecommunications industry, because there are fewer than 20,000
operators. That's a 95% job loss. The spectacular advances that have raised
productivity in the telecommunications industry have made it possible for fewer
operators to handle tens of billions of calls at a tiny fraction of the 1970
cost.
For the most part, rising worker productivity
and advances in technology are the primary causes of reduced employment and
higher output in the manufacturing, agriculture and telecommunications
industries. My question is whether Congress should outlaw these productivity
gains in the name of job creation.
It would be easy. Just get rid of those John
Deere harvesting machines that do in a day what used to take a thousand men a
week, outlaw the robots and automation that eliminated many manufacturing jobs
and bring back manually operated PBX telephone switchboards.
By the way, if technological advances had not
eliminated millions of jobs, where in the world would we have gotten the
workers to produce all those goods and services that we now enjoy that weren't
even thought of decades ago?
The bottom line is that the health of an
industry is measured by its output, not by the number of people it employs.
When Americans buy more goods from Canadians,
Chinese and Mexicans than they buy from us, it's a problem. Or is it? Let's
explore whether buying more from a person than he buys from you is a problem,
and let me give a personal example.
I buy more from my grocer than he buys from me.
In turn, he buys more from his wholesaler than the wholesaler buys from him.
But sticking to my grocer and me, let's see whether there's a problem — what
some people might call a trade deficit.
When I spend $100 at the grocery, my capital
account (money) goes down by $100, but my goods account (groceries) increases
by $100. My grocer's goods account decreases by $100, while his capital account
increases by $100. There's a trade balance, whether my grocer is down the
street, in another state or in another country.
Say Japan's Sony Corp. sells me a $1,000
television. My capital account goes down by $1,000, but my goods account rises
by $1,000. Suppose Sony doesn't buy any wheat, corn, cotton or cars from
Americans. People are tempted to say that there's a trade deficit. Not true.
Instead of using that $1,000 to buy goods from
us, Sony might purchase stocks and U.S. Treasury bonds from us — in other
words, invest in America. When Sony sells me a television, the corporation's
goods account (called "current account" in international trade) goes
down by $1,000, but its capital account (stocks and bonds) rises by $1,000. Lo
and behold, again a balance of trade.
By the way, it would be great if foreigners
didn't buy anything from us and just gave us cars, computers, televisions,
clothing and other goods in exchange for slips of paper with pictures of past
presidents such as George Washington, Andrew Jackson and Ulysses Grant.
We could live the life of Riley. The world
would bestow all manner of goods and services upon us, and all we'd have to do
is have a few Americans employed printing dollars that foreigners would hold
precious and keep.
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