What's Best for American Manufacturing Workers
Plus: Goethe, MSNBC vs. Jefferson, and "The Outbursts of Everett True"
Joseph Schumpeter wrote that capitalism is fundamentally a chaotic system that — through a process the Austrian-born economist called “creative destruction” — constantly changes, churns, and revolutionizes any economic status quo. Although productive of great wealth, creative destruction unnerves many and catalyzes social and political instability.
The very real tensions creative destruction engenders become magnified by hyperbole from the commentariat. Indeed, many pessimistic policy analysts overstate the extent to which recent technological advancements, globalized supply chains, and modernity’s other destabilizing dynamics have upended the American economy. Even when unmoored entirely from reality, economic sky-is-falling narratives provide opportunities to claim victim status — the most valuable political commodity — on the cheap.
Economic doomers’ ill-founded fretting often centers on America’s supposedly atrophied manufacturing sector. (Spoiler: American manufacturing is doing quite well). The doomers seek to justify centrally planned industrial policy not just to goose output but to help manufacturing workers.
Many authors have dispensed with the myth of flagging output. This week, at the American Institute of Economic Research, this author discussed the modern economy’s implications for labor.
Notwithstanding the importance of investments and liquidity, policy analysts must consider another indispensable, finite resource — human capital. Only so many Americans of working age exist. A worker who takes one job almost invariably cannot take another. A line worker at a shoe factory cannot contribute to the development of advanced microchips. Wasting human capital, or deliberately allocating it inefficiently, benefits neither the economy at large nor the individual worker.
The manufacturing doomsayers neglect several key facts about the modern American manufacturing sector and those who work in it. First, with respect to worker productivity, American manufacturing ranks first globally, boasting $141,000 value-added per worker. Second-place South Korea falls short of $100,000 per worker, and China (languishing in ninth place) manages only $18,783.12 per worker.
To be sure, this productivity (due largely to technological advances) means that manufacturers need less labor to produce their current output. However, this frees workers to employ their natural abilities elsewhere — to create additional value for their fellow citizens. For manufacturers, it generates new profits with which to expand operations — again, creating additional value. The economic pie has no fixed diameter. When its size increases, even Americans who receive only a single slice are far wealthier than they were before. Rising prosperity fills all wallets.
Many industrial-policy proponents paint themselves as guardians of the “dignity” of the worker. In actuality, it is profoundly dignified for workers to go to work knowing that they are among the most productive manufacturing workers in the world. More importantly, that they are as productive as possible given their own abilities and their employer’s capital constraints. Alternatively, they could clock in knowing their work is unproductive busy-work, a de facto welfare program that exists only because Washington ordained it so. The former workers’ achievements come from the value they create for others. The latter group’s comes from the state’s largesse.
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Much murkiness surrounds the fabled erosion that comprised the Rust Belt. In many cases, the region has found itself outcompeted not by the Chinese or by machines, but by other Americans. Manufacturing jobs have, indeed, left Pennsylvania. Many such jobs, though, have resettled in Southern states with friendlier regulatory regimes. Labor unions and the state governments that empower them (ironically the darlings of many industrial-policy enthusiasts) have accelerated this migration.
The Rust Belt’s “dying” manufacturing towns suffer from maladies cultural as well as economic, as writers like Charles Murray and Tim Carney have documented. Not every ex-industrial community becomes a Youngstown. Many survive changing economies. In the “dying” places, civil society has atrophied, and no tariff or subsidy can resurrect a shuttered church or an abandoned bowling league. Their revival must include something more than economic reform.
Some Wisdom
In Johann Wolfgang von Goethe’s epic poem Hermann and Dorothea, set in mid–French Revolution Germany, Hermann’s father lamented about the kids those days:
But I am sorely afraid that will not be the way with our chil- dren. Some think only of pleasure and perishable apparel; Others will cower at home, and behind the stove will sit brooding.
While Goethe seems hostile towards this severity, the father’s words rings true to the modern reader.1 The father’s description of a young generation dividing itself between frivolous, self-indulgent libertinism and moody — and, increasingly, digital — reclusion is eminently recognizable. This author certainly has seen it.
Some Beauty
In light of certain MSNBC commentators’ apparent conflation of mainstream American natural rights theory with “Christian nationalism,” this “news”letter submits the following from the Declaration of Independence, which contains some of the greatest English prose ever.
After positing “that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness,” the erstwhile colonists added another, teleological statement of principle:
That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.
Bracing and timeless stuff. As Calvin Coolidge said:
If all men are created equal, that is final. If they are endowed with inalienable rights, that is final. If governments derive their just powers from the consent of the governed, that is final. No advance, no progress can be made beyond these propositions.
Some Humor
“The Outbursts of Everett True,” a comic strip that ran from 1905 to 1927, is delightful. Generally, it features the titular True doing extreme violence to some ill-mannered person (or persons) who has inconvenienced him. Notwithstanding its not-so-latent anti-corporatism, the strip is weird, idiosyncratic, and unlike anything that appears in today’s papers.
For example:
Sundry Links, &c.
Blaze Media: “FTC’s aggressive tactics strike fear in tech”
Very technical medical terminology.
It’s time for Dodger baseball.
To some degree, at least. Generally speaking, every older generation views skeptically the youngins’ perceived sloth and low character. But the worriers’ parents once worried over them, and the children about whom they worry will likely one day worry over their grandchildren. Each generation futzes away its youth but grows up eventually. Sunrise, sunset — the circle of life. However, something seems particularly wrong with American 20- and 30-somethings.