Did You Hear the News? U.S. Manufacturing is Fine, Really

I was surprised to read in the Wall Street Journal that American manufacturing is just fine. In "The Truth About U.S. Manufacturing" (Feb 25, 2011) Mark J. Perry, professor of economics at the University of Michigan and visiting scholar at the American Enterprise Institute, says "endless laments in the news that 'nothing is made in America anymore' and that our jobs have vanished to China, Mexico and South Korea" aren't true. I wonder: Is he right?

Must admit, Professor Perry's credentials intimidate the heck out of me. I'm the girl who struggled in math; who still finds graphs and charts perplexing; who defers to experts in the field of economics. I bow to them. I revere their expertise. I am not worthy.

And this, of course, is all my husband's fault. Not the part about "I am not worthy," but about deferring to experts in various fields. As I've mentioned in earlier posts, Don / Richie C is a physician. He has a scientific mind. He reads The New England Journal of Medicine and the Annals of Internal Medicine. Our kids call him Dr. House. But actually he's way smarter than that crazy, Vicodin-addicted Dr. House character. Sometimes he'll watch House and yell at the screen. "What? She doesn't have (fill in the blank). Look at that x-ray. Did they test for (fill in the blank)? Oh, this is hilarious." If we would've known each other in high school, I would've had him do all my geometry and biology homework. Except that he wouldn't have done it for me because, like Happy Days Richie Cunningham, he is so darn ethical.

Anyway, Don / Richie C has this annoying habit of placing a high value on true science (with control groups) as opposed to phony science. For years I said to him, "Jenny McCarthy says vaccines cause autism." He'd sigh and say, "There's no science in that statement." And then, lo and behold--after thousands of parents listened to Jenny and didn't vaccinate their babies--the scientific truth finally debunked the McCarthy myth. True science trumps emotional diatribes. But it's not as much fun.

My Dad operated by the same guiding principles. An engineer before he became a Hollywood cinematographer, he used to throw around phrases like "it just doesn't add up." Certain things in life were ruled by numbers. Period. If you fudged them or ignored them, you ended up with an unstable aircraft or bridges that fell down. That's why Dad wrote "Import Backlash" in the 1970s in the first place: To say Look at these increasingly high unemployment figures, people. Look at the way businesses are beginning to manufacture offshore. The balance of exports to imports doesn't look good. The numbers don't add up. Rots o' ruck if this continues.

So when Perry wags his professor-of-economics finger at those of us who worry about the death of American manufacturing, I'm compelled to sit up and pay attention. "[The] empirical evidence tells a different story," he writes, "of a thriving and growing U.S. manufacturing sector, and a country that remains by far the world's largest manufacturer." We're fine, really, he seems to say. Everyone just take a deep breath and calm down.

Prof. Perry admits his theory is a tough sell, especially in his hometown of Flint, Mich., "where auto-plant closings have meant lost jobs." But, he insists, despite "difficult transitions," the good news outweighs the bad. The bad news: "the U.S. has lost more than seven million manufacturing jobs since the late 1970s." The good news: "Excluding recession-related decreases in 2001 and 2008-09, America's manufacturing output has continued to expand." Ok, so we're talking increased output vs. more jobs.

In 2009, according to "International data compiled by the United Nations on global output," writes Perry, "manufacturing output was $2.155 trillion (including mining and utilities). That's 45% higher than China's, the country we're supposedly losing ground to…truth is that America still makes a lot of stuff…we're merely able to do it with a fraction of the workers needed in the past." Increased capital improvements, Perry explains, have led to increased manufacturing output. "The average American worker today is responsible for more than $180,000 of annual output, triple the $60,000 in 1972." Tough to argue with those numbers.

But Professor Perry's rosy picture ignores our enormous, incomprehensible deficit. It ignores our half-trillion dollar trade imbalance. It says our current level of unemployment, which some would argue is actually closer to 12% (or higher) than the 9.8% currently being reported, is temporary. We haven't yet "transitioned to this new economy," says Perry. This transition will occur when "displaced workers learn new skill sets, and a new generation of workers finds its skills are put to more productive use." Perry touts a highly educated America where "yesterday's farmhands and plants workers become today's computer engineers, medical doctors and financial managers." Hmm. Really?

Let's think about this: In 2005, the U.S. Bureau of Labor reported 22% of Americans had a college degree. Some would say, "That's great. Almost a quarter of the population." But what about the other 78%? People with nothing more than a high school diploma, or less? Where are their jobs? What's the real cost to our country in jobless benefits and welfare? In 2010, 50 million Americans reportedly received Medicaid benefits, a federal-state program principally aimed at the poor. Where do these Americans fit into the "new economy"? They don’t. They fit into the old economy that's been offshored to China and elsewhere.

And I have to ask Mr. Perry: If American manufacturing is so robust, how come I can't find a single microwave oven that's made in the USA? How come my computer and cell phone are made in China? How come I can't go into a Target and find a single item of clothing, not a pair of shoes or a blouse or a pair of pants, that's been made here? Is it because American workers don't have the "skill sets" to produce those products? Or is it because those jobs--however unsophisticated and low paying--have flown the coop?

I think my Dad, the numbers guy, would say while Perry's argument is persuasive, it "doesn't add up." After all, what good is "increased output" if a huge percentage of the population is jobless and hasn't got the money to buy what you're producing? I want to believe Professor Perry. He's the expert, not I. Am I just another Jenny McCarthy, caught up in emotion, ticked-off because I can't find a USA-made microwave? I wonder.