Friday, October 2, 2009

The Nobility of Manufacturing

Luke Johnson's columns in the Financial Times are hit-or-miss for me, and mostly misses. But this one Wednesday was one of the hits, "The genuine nobility of manufacturing". A brief excerpt:

There is something authentic, something noble about making physical objects. It appears to me the essence of capitalism. Service and support sectors are all very well, but their output feels so much less tangible than a production business. Moreover, economies need balance: that way they are better equipped to ride out downturns.


But manufacturing matters not simply because of vaguely romantic notions about creating things. It provides well-paid blue-collar and professional jobs. It generates exports to help offset trade deficits generated elsewhere in the economy. It adds far more value pro rata than service industries. Every major plant fosters clusters of other businesses.


This seems so self-evident, that you might think smart soi dissant progressives would embrace the notion. Not Michael Lind though, who, in his Financial Times column last week ("Healthcare can get America working") followed fellow progressive Matt Miller in arguing for eschewing manufacturing in favor of health care as a source of future jobs. Lind gives the same rationale as Miller: manufacturing jobs can be outsourced (as if health care jobs can't be -- and increasingly aren't being - insourced, i.e., filled by immigrant workers). Lind writes, apparently without irony,

Will the health aide be the typical worker of the 21st century, as the factory worker was the iconic figure of the 20th?

If the elites in both major parties don't come up with more coherent responses to the challenges that globalization presents to those who are vulnerable to outsourcing or insourcing (i.e., most private sector workers), they will leave open a large political void. They may not like what fills it.


'Ripple' Butch said...

Bowery Bums say...

Appliance [Cardboard]Box Makers = Creators of Manufactured Housing

JK said...

I'm kind of gloomy about the prospects of manufacturing or any other industry to provide long term sustenance for the blue collar middle class. The writer says manufacturing offsets trade deficits and adds value to the national economy, which is true. But nowadays there is no "American company", we have multinationals with no national allegiance or proletarian patriotism(as they see it) who only care about their own bottom line. They hop across borders (and even bankrupt their own countries)as it suits them in a game of global arbitrage. If it can be done cheaper in some 3rd world country, it will. If it can be done cheaper here by immigrants or robots, it will. Either way the idea of a "high-paying blue collar job" is becoming obsolete as the world flattens and technology advances. The new car plants being built by toyota and Hyundai in the South only pay about 12 dollars an hour for positions that GM and Ford unionized workers would receive 2-3x that. Unionization became a corrupt system, but on the flip side you can't raise a family well on 25k per year jobs either. The only areas where workers will command relatively high salaries will be around the cutting edges of technological advancement and knowledge based industries. Increasingly, even the low level workers in these fields need to be educated to an extent that not everyone (-most people) will be able to accomplish.

Until technology punches through political and economic constraints to create a post-scarcity world where everyone can afford a fab-lab in their garage, rapid growth garden in their kitchens, and timeshares of a solar-power harvesting satellite, we are going to become increasingly stratified into a Jeffersonian aristocracy of haves and have-nots, with a small middle class that services the have-class's petty fancies.

Normally this would be a recipe for insurrection, but -to the dismay of NRA aficionados- the populace's guns are as useless against our military's technology as Zulu spears were against british rifles. "The future is already here, it's just unevenly distributed" -William Gibson

Therefore any revolt or political upheaval would be only successful for elites who would use it to install some left-wing or right-wing tyranny or another (is there much of a difference?) and consolidate power. More likely though, soma in the form of virtual worlds(gaming), legalized drugs and violent sport will keep people happily sedated, oblivious to their low paying jobs and changing surroundings until Singularity occurs, if that is ever allowed to happen.

DaveinHackensack said...

A (slightly off) Gibson quote and a Huxley reference in one comment -- nice work, J.K. Re the wages at the car plants in the south, if memory serves, they average about twice the figure you mentioned, though I have heard of workers starting at $15 per hour for a few years, in some cases. A union that had some sense of restraint and common purpose with the companies could probably raise those figures a little, but that doesn't describe the UAW (the steel workers union, in contrast, was more pragmatic during the restructuring of the U.S. steel industry).

It's also worth bearing in mind that manufacturing still employs a larger percentage of the work forces in Germany and Japan than it does here, and I believe those countries both have higher labor costs than we do.

It's not inevitable that all high-end manufacturing jobs get outsourced; there are other considerations and costs for manufacturers than labor costs. There are energy costs, taxes, regulations, access to (and quality of) infrastructure, transportation, quality of workforce, etc. Rather than merely appeal to the patriotism of companies (the larger of which, as you note, are multinational), I am arguing that our government ought to work to make America a more attractive place for companies to set up factories.

Re insurrection, I believe the political void I am referring to can be and will be filled peacefully, through our current system. But it's worth remembering that, although the Zulus were ultimately defeated by the British, their spears did exact a heavy toll against British rifles at the Battle of Islandlwana. That's the battle that preceded the heroic stand by a small British force at Roark's Drift, which, eighty-something years later, was dramatized in the great movie Zulu.

As for tech giving everyone their own fab lab in the future, I think I've mentioned this book to you a few times already, but something like that was the premise of Neil Stephenson's entertaining novel The Diamond Age.

JK said...

The $12 an hour figure was from some MSM article I read during the oil bubble about how workers at a hyundai plant in Alabama couldn't afford the gas it took to get around. I don't know how accurate that figure is or how broadly it applied.

It would be interesting to do more research into the nature of Germany and Japan's manufacturing industries. My parents are hosting a foreign exchange student from Germany, and from conversations with him, it seems that the Germans are a lot more protectionist. Most everyone in Germany drives German cars for instance, which obviously helps the manufacturing industry there. He was not aware that Mercedes and BMW's are considered luxury status-symbol items here. Maybe a dose of protectionism is beneficial? It's not like the countries our labor force competes against play by the same humanitarian rules.

Also, I wonder how much of Germany's and especially Japan's manufacturing industry are related to high tech products, products that require a certain educational threshold that the american blue collar class (and a good portion of the low-paid white collar "cubicle class", for that matter) does not have.

Japan's saving grace might be its robotics industry, the only positive thing going for it in the face of other headwinds (aging population, ostracization by other Asian countries, etc). But that industry alone is the death knell for most blue collar manufacturing. What aspect of manufactuing can't be done by robots? Sure, robots need maintenance, but that only takes up a fraction of the labor it replaces, and the more advanced robots get, the less likely a high school graduate will be able to maintain them.

Good point about the Zulus. However shooting at remote controlled drones doesn't inflict any real damage to your enemy, even if you hit them.

The Diamond Age looks like a great book, judging by the synopsis on wikipedia. I see he shares my doubts about Turing machines' ability to fully simulate human cognition. However, he was probably not aware of quantum computing back then, as few were.
Incidently, a technology mentioned in the book -cheap production of diamond structures- is being suppressed today. There is a small company in Mass. that has an advanced CVD process for (very) rapid synthesis of diamonds. Unfortunately, the exact location of the company is a secret and it works on a referral-only basis, because powerful De Beer cartel interests have put a bounty on the founders' heads, because they could single-handedly crash the diamond market if they wanted to.

DaveinHackensack said...

Protectionism wouldn't be my first choice, given the state of the global economy and the potential risks of igniting a trade war, but I wouldn't rule it out down the road if other measures are unsuccessful. In the event of a trade war though, presumably countries with big trade deficits, such as ours, would have less to lose.

Incidentally, I may have mentioned this hear before, but I wonder if Boeing's debacle with the extreme outsourcing of the manufacturing of the Dreamliner might have prompted a rethinking of outsourcing. At some point, the downsides may exceed the expected cost savings. That seems to be the case with Boeing now, if you take into account the canceled orders, delays, etc.

DaveinHackensack said...

In the interests of full disclosure, I should note that venture #3 for Launching Innovation may be a tangible product. I've started preliminary consultations with an engineer about it. If I decide to go forward with it, I will look into the feasibility of having it manufactured in the U.S. I think if it's a high-enough margin, high-quality product, it may be feasible. We'll see. I'd rather create some jobs here, if possible.