Wednesday, September 1, 2010

The State of US Manufacturing: A Political (and Moral) Litmus Test

For those of you who are undecided about whom to elect this November, Cato's Dan Ikenson has some very sound advice: just listen to what they say about the state of the American manufacturing sector:
“US manufacturing grows for 13th straight month” is the headline of an AP newswire story posted around noon today. This statistic doesn’t surprise me, since I’ve been following developments in U.S. manufacturing for many years now, and have published analyses of public data that refute the myth of deindustrialization and manufacturing decline.

With the exception of the recession of 08-09, when all U.S. economic sectors took a hit, U.S. manufacturing has been breaking its own record, year after year, with respect to output, value-added, profits, returns on investment, exports, and imports. U.S. factories are the world’s most prolific, accounting for 21.4% of global manufacturing value added in 2008 (China accounted for 13.4%).

But I bring the AP headline to your attention for one reason: so that you can judge for yourself who has any credibility on Capitol Hill, within the executive branch, in the media, among organized labor, in industry, in the think tank world, and within the international trade bar, as Nancy Pelosi tries to stuff a ruinous anti-China trade bill down our throats in the name of supporting our floundering manufacturing base. Look for the columns, the op-eds, the press releases, and the floor statements between next week and November.

Who among them will continue to cite our suffering manufacturing sector as the justification for protectionism? They should never again have any credibility.
Dan's referring to the monthly ISM survey of US and global manufacturing health, a stat that I've noted several times before and one whose good results can be witnessed firsthand in places like Alabama, MississippiNorth Carolina and Texas.  I'd only add that, according to ISM global manufacturing output in places like China and Australia also improved last month, causing an increase in investors' outlook for US manufacturers like Caterpillar.  This is another great example of how in today's global economy, the success of America's "competitors" readily translates into the success of our own industries.

Too bad protectionists don't care about silly facts like these, and this brings us back to Dan's "manufacturing litmus test" for a second.  I heartily endorse his suggestion that you keep this test (and a few others) in mind when you happen upon op-eds like this recent one in the HuffPo from Gil Kaplan - a frequent lamenter of the state US manufacturing.  He concludes his latest sob story with this laugher: "it's high time we get some good news from the manufacturing sector and not an unending string of defeats, job losses, and plants moving overseas."

I guess Mr. Kaplan didn't read today's paper, or, for that matter, any paper for the last 13 months.

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