Oops, I may have added a few zeroes

March 19, 2012 1:04 PM

“I bought into this idea for a long time that it was superior labor productivity that caused most manufacturing job losses,” said Rob Atkinson, of Information Technology and Innovation Foundation, a nonpartisan think tank. “Then I began to dig into the numbers.” An upcoming report argues that the price savings that U.S. factories have realized from outsourcing have incorrectly shown up as gains in U.S. output and productivity. This bias may have accounted for as much as half of the growth of U.S. manufacturing output from 1997 to 2007. (sl Wash. Post link to print version so everyone can read it.)
posted by Benny Andajetz (27 comments total)

I've not really been following outsourcing policy so much. When politicians say they want to reverse it, but are also "pro-free market," how do they plan on going about changing it? I mean, I heard Romney's proposed trade war, but isn't globalization kind of what we reap from not imposing stiff tariffs or anything like that on foreign goods?

And I don't really get the deregulation of local labor laws angle, because I can't really see Americans quickly adapting to sweatshop labor after being used to the quality of labor we've had over the past half century or so. Wasn't there some article about how a lot of jobs that primarily went to undocumented workers in Alabama who were pushed out by strict anti-immigration laws went unfilled because Americans who would go in for the job would quit after one or two days?
posted by mccarty.tim at 1:14 PM on March 19, 2012 [5 favorites]

When politicians say they want to reverse it, but are also "pro-free market," how do they plan on going about changing it?

Slashing wages and benefits while gutting workers' safety and environmental protection obviously.
posted by entropicamericana at 1:27 PM on March 19, 2012 [25 favorites]

Wait, what?
posted by two or three cars parked under the stars at 1:45 PM on March 19, 2012

I've not really been following outsourcing policy so much. When politicians say they want to reverse it, but are also "pro-free market," how do they plan on going about changing it? I mean, I heard Romney's proposed trade war, but isn't globalization kind of what we reap from not imposing stiff tariffs or anything like that on foreign goods?

Exporters get export certificates for their exported manufactured goods. Importers need to pay for those export certificates for the right to import goods.
posted by Talez at 1:50 PM on March 19, 2012

There will never be a trade war waged by the United States. A battle which unites every tech, entertainment, agriculture, financial services, professional services, and retail company in the country on one side won't last long.
posted by MattD at 2:17 PM on March 19, 2012

We have a large trade deficit. We have a large budget deficit. If only our leaders were smart enough to figure out a way to solve both of those problems at the same time. I like Reich but I get very annoyed with the defeatism implicit in saying those jobs are not coming back. They could come back if there was the political will to make that happen.
posted by Tashtego at 2:19 PM on March 19, 2012 [1 favorite]

This is a crap article. The subjects of the article make a big claim that this large increase in US manufacturing productivity, which a wide array of economists all basically agree on, is "a myth," but they don't offer any specific, detailed analysis of what they think the explanation REALLY IS. There is some hint that parts produced overseas (and, presumably, integrated into end user products in the US) are being improperly counted, but how so? What do they mean exactly? What is the impact of that and, more to the point, how can we check their facts to see if there's anything to this claim?

As the article and the quote in the FPP obliquely indicate, this is a "forthcoming" report, and is not out yet. Why not wait a day and see what it actually says?

Oh, and by the way, if you're hoping for this report to really sock it to the corporate overlords, the website for that ITIF organization (a K-street think tank) indicates that their proposed solution includes corporate tax cuts. So... don't hold your breath.
posted by rkent at 2:21 PM on March 19, 2012 [3 favorites]

What's the problem? We are producing more, using fewer laborers. How can that be a bad thing?

BTW, Them kids in Thailand don't count as labor, because, um, if it weren't for us they wouldn't have a job in the first place. Anyhow, we don't pay them enough to count their wages against the balance of trade.
posted by mule98J at 2:32 PM on March 19, 2012 [1 favorite]

“I bought into this idea for a long time that it was superior labor productivity that caused most manufacturing job losses,” said Rob Atkinson, of Information Technology and Innovation Foundation, a nonpartisan think tank.

Is he really claiming that Chinese people just work harder AND that he's nonpartisan?
posted by DU at 2:36 PM on March 19, 2012

Is he really claiming that Chinese people just work harder AND that he's nonpartisan?

No, you're badly misunderstanding the thesis here. The idea of it is that increases in American labor productivity, due to more automation of manufacturing processes, rather than anybody working harder as such, led to losses in American jobs because it was possible to manufacture more goods in America with few workers.
posted by strangely stunted trees at 2:45 PM on March 19, 2012 [2 favorites]

Is he really claiming that Chinese people just work harder

No, that is not even close to what he's saying. He's claiming that what was measured as an increase in US labor productivity was actually a result of the labor being removed from the US market (but the resulting "productivity" still being applied to the statistics even though the now non-US labor isn't being counted.)
posted by ook at 2:47 PM on March 19, 2012 [3 favorites]

Atkinson and other critics of the productivity story concede that indeed, some of the job loss was caused by increasing productivity. Many factories are now filled with automated machines that are far more efficient, after all, so one worker can account for far more output. But he thinks the dominating factor was that U.S. manufacturers lost their edge amid increasing world competition. Based on that view, he favors changes to government policy that he believes could return millions of manufacturing jobs to the U.S.

Atkinson seems to be keeping us in suspense about what these policy changes might be, at least until he puts the full report online tomorrow, but the abstract says

The report stresses that policy changes like a more competitive corporate tax code, increased funding for manufacturing-focused R&D and programs to train manufacturing workers, and increased efforts to fight unfair or illegal trade practices can stem the tide and help restore the U.S. manufacturing base.

So there you go. That ought to fix it right up.
posted by twoleftfeet at 2:47 PM on March 19, 2012

The reason that ook and I are saying contradictory things, by the way, is that I'm describing what he used to believe and ook is describing what he believes now.
posted by strangely stunted trees at 2:51 PM on March 19, 2012

Also that I suck at explaining.
posted by ook at 2:53 PM on March 19, 2012

We have a large trade deficit. We have a large budget deficit. If only our leaders were smart enough to figure out a way to solve both of those problems at the same time.

Yeah, the two are pretty unrelated. If you put in tariffs to cut imports, then you would also have retaliatory tariffs, thus reducing exports as well. So the trade deficit would stay the same relative to imports/exports.
except the vast majority of the trade deficit is oil, and we would still use just as much if we put in tariffs on manufactured goods. So tariffs would actually cause the trade deficit to go up, rather then down.

No, you're badly misunderstanding the thesis here. The idea of it is that increases in American labor productivity, due to more automation of manufacturing processes, rather than anybody working harder as such, led to losses in American jobs because it was possible to manufacture more goods in America with few workers.

That's what he's saying is not true. Rather he's claiming that the productivity figures are actually incorrect, and work done overseas is somehow contaminating our figures.
posted by delmoi at 3:03 PM on March 19, 2012

ook has it:

He's claiming that what was measured as an increase in US labor productivity was actually a result of the labor being removed from the US market (but the resulting "productivity" still being applied to the statistics even though the now non-US labor isn't being counted.)

Say I used to make ten widgets a week, including making all the components that composed those widgets. Now I make a hundred widgets a weeks, but all the parts are made elsewhere. My productivity did not increase tenfold - the labor to make the components has just been "disappeared" from the equation. It's a straight-up con job that has been perpetrated on the working middle-class.
posted by Benny Andajetz at 3:19 PM on March 19, 2012 [12 favorites]

That's what he's saying is not true.

Right, it's what he used to think was true, which is, near as I could tell, what DU was reacting to.
posted by strangely stunted trees at 3:22 PM on March 19, 2012 [1 favorite]

i dont think the error was coincidental. it was politically expedient to claim americans were enjoying gains by losing their jobs. it took someone more than 30 years to finally prove that, nope, we've been had.
posted by liza at 4:48 PM on March 19, 2012 [5 favorites]

Yea, we really need a definition of "productivity". Is it units of x produced in the U.S. by American labor? No.

The only hold up is profit margins. I've, unfortunately, been involved in kaizen, Six Sigma etc. and while it's not totally bullshit, it is totally about profit versus workforce maintenance.

It does cost a lot more to employ here in the states, but I personally believe that it's an investment and not a liability.

Unions, a living wage and health care are major sticking points that I think can all be worked out if and when corporate folks are willing to take a tiny hit on their bottom lines. Seriously, what are the profit margins for the big corporations these days? Who beside pharma and biotech are supporting R&D?

We have what it takes to create even more massive wealth and a great economy in this country.
posted by snsranch at 5:32 PM on March 19, 2012 [2 favorites]

Yeah, I don't think it's necessarily coincidental nor very conspiratorial. Conspiracies aren't necessary when an idea or decision is in the interests of all or enough of the relevant actors needed to git 'er done. Or like Upton Sinclair said, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it"

It's become pretty obvious to most of the American people who aren't completely oblivious or willfully ignorant that the average American worker isn't building or doing a whole fucking lot of anything that requires much skill, in the case of the vast service & sales industries, or much value to society, in the case of the behemoth military and government bureaucracies and corporate feifdoms that employ much of the skilled labor in the United States

There's a lot of interesting experimentation going on with micro-scale businesses, new corporate structures and DIY hacking of everything under the sun by individuals, but 3/4 of the work done by American big-corp-gov employees contributes absolutely nothing of value to the world at best, and not infrequently actually actively, knowingly damages society or nature in pursuit of money/power/status quo

Whether we're going to bother to change direction or just keep hoping the world doesn't call our bluff, is quite a a fun guessing game
posted by crayz at 5:46 PM on March 19, 2012

"The report stresses that policy changes like a more competitive corporate tax code, increased funding for manufacturing-focused R&D and programs to train manufacturing workers, and increased efforts to fight unfair or illegal trade practices can stem the tide and help restore the U.S. manufacturing base."

a more competitive corporate tax code = cut corporate taxes

increased funding for manufacturing-focused R&D and programs to train manufacturing workers = government (taxpayer) subsidies for corporations that talk the talk

increased efforts to fight unfair or illegal trade practices = protectionism

An abstract may not entirely sum up a report, but often betrays it's mission.
posted by carping demon at 9:20 PM on March 19, 2012 [2 favorites]

So, if we do what this expert says, everything will be good again?
posted by TwelveTwo at 10:48 PM on March 19, 2012

The real interesting thing will be what happens when Chinese labour efficiency increases when they switch over from massive manual manufacturing processes to modernized robotic assisted industry. Americans can be instantly shut up by calling them communists. Will the Chinese ruling classes accuse their workers of capitalism when they start agitating for protection and work?
posted by srboisvert at 4:19 AM on March 20, 2012 [1 favorite]

Is he really claiming that Chinese people just work harder AND that he's nonpartisan?

For the record, DU: since neither party claims the Chinese work harder, that claim (which he didn't make) IS nonpartisan.
posted by IAmBroom at 8:57 AM on March 20, 2012 [1 favorite]

mccarty.tim: I've not really been following outsourcing policy so much. When politicians say they want to reverse it, but are also "pro-free market," how do they plan on going about changing it? I mean, I heard Romney's proposed trade war, but isn't globalization kind of what we reap from not imposing stiff tariffs or anything like that on foreign goods?

Talez: Exporters get export certificates for their exported manufactured goods. Importers need to pay for those export certificates for the right to import goods.

Wouldn't that make those "certificates" an import tariff? I know the politicians would like to rename them, but that's what they are.


There will never be a trade war waged by the United States. A battle which unites every tech, entertainment, agriculture, financial services, professional services, and retail company in the country on one side won't last long.

We have always been at war with Oceana, MattD. No, seriously: there are only detentes; the trade war has been going on since the days of Adm. Perry, at least.

As you point out, the risks are too high for all-out war... only idiot neocons and John Birch Society types (including the entire Tea Party) would think otherwise. But "trade war" is just a heightened state of everyday international business.

True Fact: At one point in the Middle Ages, merchants from the Low Countries (Netherlands area) were granted "native" trading status in London - although merchants from other English cities like Norwalk were not!
posted by IAmBroom at 9:11 AM on March 20, 2012

As we all read this here on computers, phones, and tablets which are fully made in China and Thailand except for the processor chip--maybe.
posted by caclwmr4 at 9:34 AM on March 20, 2012 [1 favorite]

As we all read this here on computers, phones, and tablets which are fully made in China and Thailand except for the processor chip--maybe.

It's even worse than that. According to the article, aggregate US manufacturing was flat between 2000 and 2010, except for computers and electronics which rose (supposedly) 18% a year.

So, except for computers and electronics, we've been treading water for at least 12 years. And we don't even make the parts for the manufacturing we "excel" at.

It'd be funny if it weren't so sad.
posted by Benny Andajetz at 12:05 PM on March 20, 2012