Tuesday, August 19, 2003

In the last week the General has seen more than a few articles discussing the steady but sure erosion of manufacturing in both the US and the UK by China. In the UK,
a report published yesterday by the Institute for Public Policy Research (IPPR) has such a depressingly resigned view of the outlook for British manufacturing industry, suggesting as it does that manufacturing might shrink to as little as 10 per cent of GDP and 5 per cent of employment by 2050. Interestingly for a left-leaning think-tank, the IPPR thinks there is little the Government can or should do about this phenomenon, which it thinks is both global and inevitable.
And in the US,
The proportion of the work force employed in manufacturing has fallen to 11 percent from 30 percent in the mid-1960's. Two of the 19 percentage points disappeared in just the last 28 months. On another level, manufacturing's share of real gross domestic product � representing all the goods and services produced in the United States � has edged down, even including in the count the output of foreign manufacturers operating here. The share of real G.D.P. has dropped to between 16 and 17 percent, from 18 to 19 percent in the 1950's.

Given manufacturing's importance in maintaining our status as a world power, the downward trends are alarming.
Alarming? Technocrats and new middle class types like Robert Reich will celebrate the rise of the "symbolic analyst" and insist the US and UK can get along just fine selling legal services and insurance and haircuts to one another while the Chinese make all our toys and the Mexicans make all our clothes. Isn't that how the Western countries got to rich, anyway, by casting off lowly manufacturing onto the Global South and turning to the "new economy"?

Maybe not.

Both the UK and the US article mention the social and especially cultural importantance of manufacturing.
it would be wrong to abandon manufacturing entirely to its fate. There are key strategic and social reasons for maintaining at least some kind of a multi-layered manufacturing base. Societies that forget how to make and grow things will eventually lose touch with the very basics of human existence. There has always been a big and vibrant market in individually customised products, but it has tended to be confined to the relatively wealthy. Technology is likely to transform it into a mass market phenomenon, but to work local production is essential. That's why it is so important that Britain continues to maintain a modern skills base in manufacturing.
Over at the NYTimes,
the essence of a great world power is its edge in producing not services but manufactured products that other people want � Boeing's airliners, for example, Intel's semiconductors and Caterpillar's earth-moving equipment. To the extent this output passes to foreign manufacturers, or even to Americans operating abroad, we lose the means to buy what we, in turn, want from others.

More than half of the manufactured goods that Americans buy are made abroad, up from 31 percent in 1987. If we continue on our path of ceasing to make merchandise that others want to buy from us, the danger is that these imports will be unaffordable for our descendants.
What both articles ignore is the role of manufacturing in promoting a more equal democratic society in both the UK and the US. Manufacturing produced the middle class we know today. As manufacturing dies in both countries, so does the middle class. Gaps of inequality are gaping in both countries now as the new middle class takes up law and business consulting and graphic design while the working class slips into jobs as janitors, security guards, retail clerks and telemarketers.

History suggests that democracy depends upon manufacturing.


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