“No country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order.” — Franklin D. Roosevelt
Manufacturing is dying. Manufacturing is leading the recover. Manufacturing jobs will disappear. This is a current conversation in the US, but I find people in all the developed countries, indeed even in China these days, concerned about the same thing.
I have been accumulating sources that include Martin Ford author of “The Lights in the Tunnel”, and Andrew McAfee (professor, blogger, and co-author with Erik Brynjolfsson of “Race Against the Machine”) for a column on this topic. The statistics references are to America, but they probably fit many countries.
If you look at manufacturing production, the long-term slope is positive. Indeed, the economic value of manufacturing is the backbone of the economy. Meanwhile, jobs in manufacturing have declined over several decades. Why is this? McAfee says in a recent blog post, “The conventional explanation for this phenomenon—and the one I believe—is productivity growth. American manufacturing value added was rising while American manufacturing employment was falling for a long time before 2007. In fact, both have been going on since the early 1980s, with remarkable steadiness.”
Martin Ford made the point in his book that automation was replacing all the jobs. In fact, he was quite pessimistic about the future of society if there were almost no jobs. Brynjolfsson and McAfee also analyze the employment situation in their book and spend the first few chapters in a rather depressing projection of employment. Personally, I have made an observation not based on facts for many years that manufacturing must surely parallel agriculture.
American agriculture is still a fundamental part of our economy—and of our quality of life. Employment in agriculture has dropped for well over a century.
One question to me is what is to become of unskilled labor? Take a look at some comments from McAfee’s latest blog from older manufacturing workers. “You didn’t need a high school diploma.” “You just needed to be a hard worker, and you needed to show up every day, because it wasn’t easy work.” “The skills I had weren’t really applicable”.
Part of the answer is to provide more and better education to more of our population. There are millions of jobs that require some sort of technical education. It may not always require a university degree, but it will require something beyond basic high school work. Let’s make more unskilled people skilled people.
What I like about “The Race Against the Machine” is that the authors do not end in pessimism. They offer what they call the “tip of the iceberg” of prescriptions. Here’s my summary of the top of the tip of the ideas:
• Invest in education
• Teach entrepreneurship as a skill
• Lower government barriers to business creation
• Invest to upgrade the country’s communications and transportation infrastructure
• Increase funding for basic research
• Reform patent system
I’m with them. We can all help with several of these.