Tell me what you think of the following statement: “American manufacturing has been destroyed over the past 20 years? Going back further, it’s nothing like it was in 1960. Everything is made in China now.”
[mainbodyad]If you agreed with the statement, congratulations! You failed. Miserably. Start thinking for yourself and stop watching the news commentators who insist that America is on the decline.
Today, The United States of America manufacturers approximately 1/5th of everything made in the world, which is virtually the same percentage it was 21 years ago in 1990. Jeff Jacoby points out in a fantastic article called “Made in the USA” that United States manufacturing still tops China by 46% (they produce $1.48 trillion in goods whereas we produce $2.15 trillion in goods). You have to read it. Print it. Give it away at the office. Pass it out at church. Throw it off of highway overpasses. The few of us who actually pay attention to factual truth are getting tired of constantly pointing out that it is an illusion American manufacturing has declined in any meaningful way.
Even more stunning: Adjusted for inflation, American’s manufacturing output is twice – yes, double – what it was in the 1970’s.
We’ve already discussed in the past that American manufacturing profits are more than keeping pace with inflation compared to the 1960’s. The difference is, it requires far fewer people to manufacture what we make thanks to software and technology driving productivity increases. Oh, and manufacturing is a smaller percentage of the economy because other things, like the fancy toy we call “the Internet” came out of nowhere and blossomed into an enormous economic powerhouse, making our manufacturing base smaller by comparison but not in absolute or relative terms.
Why do people suffer from this economic delusion? It would be like you having $100 million and your sister having nothing. Suddenly, she builds a business, becomes successful and has $50 million. You are just as rich as you ever were. But now you are concerned about the “decline” of your wealth and staying competitive with your sister. That is because you are relatively less rich than you were but that isn’t because of anything you’ve done; she’s just pulled herself out of poverty. We are witnessing the contrast principle in action in the same way.