Letters | Blame robots, more than trade with China, for US manufacturing job losses
- Readers discuss why the argument that trade with China is responsible for diminished US manufacturing doesn’t hold up, and partisan politics in the US and Canada
US manufacturing is down because of competition from China, right? It is true that employment in manufacturing is down from over 30 per cent of the workforce in the 1950s to under 10 per cent in recent years. Likewise, the value of manufacturing output as a share of the economy has fallen from over 25 per cent to about 10 per cent. People usually point to these figures, and rising trade numbers with China, to conclude that trade with China is killing US manufacturing.
But these numbers are misleading. The value of manufacturing output is based on both the prices and the volume of manufactured goods. The rise in manufactured goods prices has not kept pace with the rise in prices of other goods and services in the economy.
“Productivity growth” is the term economists use to describe a situation when manufacturing output grows to keep pace with the overall economy but manufacturing employment and manufactured goods prices fall. The US economy is still a manufacturing power. It just doesn’t use as much labour or charge as much for the manufactured goods in these times. We are getting more for less.
No one argues that trade with China has caused this productivity boom; the real cause is continuing innovation of manufacturing processes that is replacing workers with capital machinery. So, if you must blame someone or something for manufacturing sector job losses, blame the robots not trade with China.
Recent calls from politicians and pundits from both political parties to use government-directed industrial planning to “beat the Chinese” thus miss the mark.