2011/03/14

"China noses back ahead as top goods producer to halt 110-year US run"

That's a headline from today's Financial Times that includes much gnashing of teeth over the decline of US manufacturing. I'm a bit more sanguine about this development than some of the experts quoted in the article.

I understand the concern of people who view manufacturing output one of the key measures of economic prestige. Nonetheless, it leads me to ask some simple questions. Now, granted that with 9% unemployment, there are plenty of people in the US who who would gladly take any job they could get. However, does anyone really believe that the US economy would be in better shape if we were employing hundreds of thousands or millions of people to manufacture sneakers and bluejeans?

While I'm not a "true believer" in the neoliberal consensus on globalization and world trade, I do agree that it is the natural tendency of advanced economies to spend more resources providing services to people and less resources making things. Keep in mind, I'm sure one can find experts from the past expressing similar concerns about agricultural goods and commodities. But as agriculture has become a relatively less central part of the economy, resources were shifted to higher productivity sectors.

Also, while manufacturing jobs are often seen as more important to the national economy than service jobs, keep in mind that restaurants, barber shops, retail, etc. will never be outsourced. As long as we ensure good wages and saltiness for service providers, it will actually improve job security to shift resources to those areas.

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