Manufacturing Can’t Create Enough Jobs. Infrastructure Can.

  
Via:  bob-nelson  •  5 months ago  •  58 comments

Manufacturing Can’t Create Enough Jobs. Infrastructure Can.
Manufacturing is not shrinking in the United States.

S E E D E D   C O N T E N T


Manufacturing is not shrinking in the United States.

512 Quite the contrary, production is growing, and it appears that corporate America — and corporate Europe and corporate China for that matter — intends to put even more factories in this country.

Works Progress Administration employees on a construction job in 1943. Part of President Franklin D. Roosevelt’s New Deal, the W.P.A. employed millions of people.
Associated Press

But jobs in manufacturing are another matter. Unlike big infrastructure projects, which are under discussion between President Trump and Democratic leaders of Congress, manufacturing is unlikely to be capable of producing a great deal of additional employment.

Here’s why.

Modern assembly-line machinery continues to eliminate jobs. Production has been increasing, but factories are doing this with fewer people.

From a post-World War II peak of 19.6 million workers in 1979, employment in manufacturing has declined to 12.5 million, according to the Bureau of Labor Statistics. Put another way, manufacturing has dropped from 23 percent of the total work force to nearly 8 percent. That happened even as factory output rose in total value to $2.154 trillion in 2018. America is making more goods and materials with fewer people.

Walk along assembly lines in many factories today and what is striking is the overwhelming presence of machinery that is only sparsely attended to by human beings.

So what are young people to do? Go to college, they’re told, and qualify to do well-paid work away from assembly lines. Many people have taken that advice. The share of men and women over age 25 with bachelor’s and advanced degrees rose to nearly 35 percent in 2017 from less than 5 percent in 1940, the Census Bureau reports.

But what has also risen, with much less ballyhoo, is the dropout rate from gainful employment — that is, the percentage of men and women who no longer even “participate” in the labor force.

Labor market participants are defined as those over the age of 16 who either hold a job or are actively looking for one, and are thus officially unemployed. Defined this way, the participation rate, according to the Commerce Department, has sunk to 63 percent, its lowest level since the early 1960s, when women started to take jobs in ever larger numbers. Overall labor market participation peaked at 68 percent in the late 1990s, before its nearly 20-year decline.

Why has this happened? Automation is one reason. Another is that two-thirds of products and materials manufactured in the United States are made in factories owned by multinational companies like General Motors, General Electric and Dow Chemical, according to data provided by Michael C. Short, a spokesman for the National Association of Manufacturers.

Instead of ramping up production at their American factories to increase exports, these companies often open assembly lines in Asia, Europe and Central America, and they sell into those overseas markets from their overseas factories. In 2018, for example, G.M. sold nearly four million vehicles in China versus nearly three million in the United States. That makes China, at least for the moment, a bigger marketplace for G.M. than its home country.

original The New Deal employed tens of thousands of people
in the construction of huge dams that generated hydroelectric power.
Here, limestone was blasted for use in the Tennessee Valley Authority’s Cherokee Dam.
Associated Press

President Trump won the 2016 election partly because he made a series of promises. He promised more factory output in the United States and more jobs for blue-collar workers. He also promised to spend heavily on labor-intensive infrastructure projects that presumably would give employment to the minimally educated, just as the New Deal did in the 1930s.

Superficially, all of these promises had a certain historical logic. After all, over the generations, the American economy has periodically generated massive employment increases for blue-collar workers. Farming did so, until it was mechanized, and then manufacturing carried the ball through most of the 20th century.

There have been other major sources of new jobs, as well. The construction of the transcontinental railroad after the Civil War and of major airports after World War II were important contributors. For a while, retail and department stores provided loads of jobs, too. Truck driving is still a big blue-collar occupation, though it is also threatened by automation.

But today, in a nation where most young people still don’t finish college and only two-thirds even sample it, an injection of additional well-paid hourly work (at $20 an hour or more) is urgently needed. With manufacturing unlikely to be capable of producing that employment, the Trump administration is under pressure to generate an alternative source of well-paid hourly jobs.

The answer could be signature public works projects. Mr. Trump has as precedent the efforts of two presidents: Franklin D. Roosevelt in the 1930s and Dwight D. Eisenhower two decades later.

Roosevelt’s New Deal employed tens of thousands of people in the construction of huge dams that generated hydroelectric power and of public buildings, among them post offices that still serve towns and cities across the country.

Roosevelt was a Democrat, but Republicans like Eisenhower also identified themselves with Roosevelt’s New Deal, and construction of the interstate highway system, initiated by Eisenhower in 1956, became an enormous source of publicly funded employment.

Mr. Trump talks of big infrastructure projects, and on Tuesday, at a meeting with Democratic congressional leaders, he agreed to spend $2 trillion to upgrade the nation’s infrastructure, leaving the details (such as how to raise the $2 trillion) to be worked out in coming weeks. Although it wasn’t one of Mr. Trump’s announced priorities, a high-speed, federally funded rail network, for example, could employ tens of thousands of people with high school educations during the yearslong building phase.

Whatever infrastructure project or projects that Mr. Trump and Congress finally agree upon, a labor force participation rate of only 63 percent suggests, rather strongly, that a lot of work force dropouts would come off the sidelines for a job that paid well enough.

Roosevelt and Eisenhower drew in such people with massive and immensely popular public works projects. And what about Mr. Trump or, perhaps, his Democratic opponents? Or the two parties together, as they vie with each other in advance of the 2020 election?

Well, let’s see.

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Bob Nelson
1  seeder  Bob Nelson    5 months ago

I know... I know...

Policy is boring!

The problem is that if you try to make policy without knowing the facts, you're going to make a mess. (Like the present administration, promising to create manufacturing jobs...)

HSR for the BosWash corridor is a twenty-year project. (The Chinese would do it in ten - already have - but hey!)

 
 
 
XDm9mm
1.1  XDm9mm  replied to  Bob Nelson @1    5 months ago
(Like the present administration, promising to create manufacturing jobs...)

Like the present administration proposing a couple of TRILLIONS OF DOLLARS spending on INFRASTRUCTURE as President Trump discussed with Representative Pelosi and Senator Schumer.

You REALLY need to keep up Don, you really do.

Democrats say $2 trillion for infrastructure agreed to after meeting with Trump

Source:  https://www.cnn.com/2019/04/30/politics/pelosi-schumer-trump-infrastructure-meeting/index.html

At the same time, MANUFACTURING JOBS are BOOMING.

Oh, just to make sure you know.  All those infrastructure jobs building roads, bridges, tunnels and such are TEMPORARY jobs.  Once the project is finished, the workers try to find other jobs.  Manufacturing is while similar still different in that manufacturing products is a similar process but gets repeated continually to satisfy demand.  As long as the manufacturer can satisfy the consumer the manufacturing process will continue.

 
 
 
epistte
1.1.1  epistte  replied to  XDm9mm @1.1    5 months ago

Most of those infrastructure jobs would be a decade or more.

 $2 trillion isn't enough. 3-4T is what is needed, so repeal the ineffective tax cut and spend the money where it will do the country as a whole the most benefit. 

 
 
 
Bob Nelson
1.1.2  seeder  Bob Nelson  replied to  epistte @1.1.1    5 months ago

Yay!

 
 
 
XDm9mm
1.1.3  XDm9mm  replied to  epistte @1.1.1    5 months ago
$2 trillion isn't enough.

First, it's a start.  

Second, don't forget that some 'spending' is only to supplement what STATES spend on things like roads, tunnels and bridges.  And user fees can add additional revenue streams.

Third, some of that money will be in the form of loans to PRIVATE enterprise like utility companies (electric - and common carriers), railroads, and other entities, but that money will obviously be recycled when the funds are repaid.

But again, it's better than nothing.

 
 
 
epistte
1.1.4  epistte  replied to  Bob Nelson @1.1.2    4 months ago

This is from the American Society of Civil Engineers,

In its most recent report card on the condition of America’s infrastructure, the American Society of Civil Engineers (ASCE) gave U.S. infrastructure a D+ or “poor” rating. The engineers estimated the cost of bringing America’s infrastructure to a state of good repair (a grade of B) by 2025 at $4.6 trillion, of which only about 55 percent has been committed. [4] Improving roads and bridges alone would require $1.1 trillion more than states, localities, and the federal government have allocated. Schools need another $380 billion beyond what’s been invested. (See Figure 1 and Table 2 in the Appendix.)
 
 
 
Bob Nelson
1.1.5  seeder  Bob Nelson  replied to  epistte @1.1.4    4 months ago

France took 25 years to complete its High Speed Rail network. Tens of thousands of jobs during construction, and quiet comfort at 150 mph when it was finished.

Of course... HSR doesn't interest everyone. The 1% don't need it (and therefore will do everything they can to avoid paying the taxes needed to build it). They'll take their private jets.

 
 
 
Greg Jones
1.1.6  Greg Jones  replied to  Bob Nelson @1.1.5    4 months ago

High speed rail is only practical in certain urban corridors with high population densities. Trying to install it where the ridership will not be near enough to pay the costs would give us another travesty such as the boondoggle in the Central Valley of California.

 
 
 
XDm9mm
1.1.7  XDm9mm  replied to  Greg Jones @1.1.6    4 months ago
High speed rail is only practical in certain urban corridors with high population densities. Trying to install it where the ridership will not be near enough to pay the costs would give us another travesty such as the boondoggle in the Central Valley of California.

Another factor that needs to be understood is that HSR is heavily subsidized in most places.  As in the example Bob uses, France.  France subsidized it's rail system to the tune of 13.2 billion Euros (2013) or $14,799,193,200.00 for a system in a country the size of Texas.

Amtrak gets roughly 2 billion a year in subsidies, and while 'serving' roughly 32 million people annually, (I'll submit the vast majority of those are daily commuters in the Northeast region of the country.) only about 4.7 million use it for long distance travel.  Why take a train when air travel is so plentiful and easy or drive to the SPECIFIC DESTINATION you want to travel to as opposed to traveling to a 'train station' and hoping the end point is somewhere close to where you want to be.

When people try to compare European COUNTRIES to America and fail to consider the vastness of America as opposed to European countries is disingenuous at best.   It's an apples and oranges comparison.

 
 
 
Bob Nelson
1.1.8  seeder  Bob Nelson  replied to  Greg Jones @1.1.6    4 months ago

Agreed.

 
 
 
Bob Nelson
1.1.9  seeder  Bob Nelson  replied to  XDm9mm @1.1.7    4 months ago
As in the example Bob uses, France. France subsidized it's rail system to the tune of 13.2 billion Euros (2013) or $14,799,193,200.00 for a system in a country the size of Texas.

To put things in perspective, France is well over twice the population of Texas, but about 10 % smaller in area. A HSR network covering all of France is reasonable, but one for all of Texas would not be.

A good rule of thumb is that HSR is best between 500 miles (then air) and 100 miles (then car). So Texas has its Triangle, but otherwise HSR would probably not work.

As for subsidies... There are subsidies everywhere. Big Oil is the most subsidized industry ever... and not coincidentally the most profitable industry ever. The real topic should be, "Are we subsidizing the industries we need for our strategic future?"

HSR will never be popular with the ultra-rich, who prefer their private jets. Therefore, HSR will always be opposed by the Republican Party.

My point here is not the venality of the GOP. Strategic projects, necessary for America in competition with China, will always be hamstrung by domestic politics.

 
 
 
epistte
1.1.10  epistte  replied to  XDm9mm @1.1.7    4 months ago
Another factor that needs to be understood is that HSR is heavily subsidized in most places.  As in the example Bob uses, France.  France subsidized it's rail system to the tune of 13.2 billion Euros (2013) or $14,799,193,200.00 for a system in a country the size of Texas.

Amtrak gets roughly 2 billion a year in subsidies, and while 'serving' roughly 32 million people annually, (I'll submit the vast majority of those are daily commuters in the Northeast region of the country.) only about 4.7 million use it for long distance travel.  Why take a train when air travel is so plentiful and easy or drive to the SPECIFIC DESTINATION you want to travel to as opposed to traveling to a 'train station' and hoping the end point is somewhere close to where you want to be.

When people try to compare European COUNTRIES to America and fail to consider the vastness of America as opposed to European countries is disingenuous at best.   It's an apples and oranges comparison.

If high-speed rail was a viable option to flying more people would use it.  I hate the hassle of flying and being locked in a tube that you cannot move around it for 3-4hours, plus layovers, so if we had a 150mph train it would get my support for travel to the east coast and the midwest. 

 At the current level of support for Amtrak is much slower and in some case just as expensive if not more expensive than flying, so only a small demographic will use it. 

 
 
 
XDm9mm
1.1.11  XDm9mm  replied to  Bob Nelson @1.1.9    4 months ago
To put things in perspective, France is well over twice the population of Texas, but about 10 % smaller in area. A HSR network covering all of France is reasonable, but one for all of Texas would not be.

Not quite Bob...   the Population of France is roughly 42 million.   The population of Texas is roughly 25 million.   Not anywhere near "TWICE the population".

As to size, Texas is roughly 20% larger than France 687,052 sq km as opposed to France at 551,500 sq km.

And HSR is not meant for the ultra-rich.  They don't fly commercial anyway as you so eloquently note they use their "private jets".  And you're projecting that all of the ultra-rich are Republicans, which is quite a leap from reality.   We could go into names, but I'll posit there are appreciably more Democrat/Liberal/Progressives among the ranks of the ultra-rich than there are Republicans/Conservatives.

Strategic projects, necessary for America in competition with China, will always be hamstrung by domestic politics.

Of course politics will always get in the way of some things.  But at least Trump has recognized that and is in fact challenging China and calling out their bullshit as opposed to virtually every administration before him, Republican AND Democrat, kowtowing to and placating China while they stole our intellectual property and industries.

 
 
 
Bob Nelson
1.1.12  seeder  Bob Nelson  replied to  XDm9mm @1.1.11    4 months ago

C'mon!

original

 
 
 
XDm9mm
1.1.13  XDm9mm  replied to  epistte @1.1.10    4 months ago
At the current level of support for Amtrak is much slower and in some case just as expensive if not more expensive than flying, so only a small demographic will use it. 

How much 'support' does the air industry receive or are the flying public essentially paying their own way?

I hate the hassle of flying and being locked in a tube that you cannot move around it for 3-4hours,

I prefer the ability to get to a place, say 1600 miles away, at 400mph in a plane making the trip in 4 hours over making the same trip in a train at 150mph making the trip in 10.6 hours.  My time is more valuable than that.

Now, don't get me wrong.  Rail has it's place.   It's great at moving vast quantities of materials long distances at exceptional cost savings as opposed to other forms of transportation, air or truck for example.  It's also great for doing scenic tours in locations where driving would be difficult or impossible.  But as a fast means to get from point "A" to point "B" I prefer and the vast majority of people I know prefer air.

 
 
 
XDm9mm
1.1.14  XDm9mm  replied to  Bob Nelson @1.1.12    4 months ago
C'mon!

I was incorrect.  I apparently had old information.   Damn they must have had a huge population invasion from the middle east.

And I was also wrong about Texas (used a comparison chart which was dated).  2019 population is 29.1.

So, you were quite correct.

 
 
 
Bob Nelson
1.1.15  seeder  Bob Nelson  replied to  XDm9mm @1.1.13    4 months ago
How much 'support' does the air industry receive or are the flying public essentially paying their own way?

It doesn't pay for airports, air traffic control or FAA inspections (although the 737Max mess makes us wonder if your sainted "deregulation" will allow yet more accidents).

I prefer the ability to get to a place, say 1600 miles away

Surely you can remember what I posted only two hours ago: "A good rule of thumb is that HSR is best between 500 miles (then air) and 100 miles (then car). So Texas has its Triangle, but otherwise HSR would probably not work."

 
 
 
Bob Nelson
1.1.16  seeder  Bob Nelson  replied to  XDm9mm @1.1.14    4 months ago
So, you were quite correct.

Thanks

 
 
 
luther28
2  luther28    5 months ago

I would like to see them reconstitute the Civilian Conservation Corp plenty of work to be done.

 
 
 
Bob Nelson
2.1  seeder  Bob Nelson  replied to  luther28 @2    5 months ago

Yes. There needs to be a mix of big projects and small ones.

 
 
 
XDm9mm
2.2  XDm9mm  replied to  luther28 @2    5 months ago
I would like to see them reconstitute the Civilian Conservation Corp plenty of work to be done.

Really?  Why exactly?   CCC workers were for the most part low wage workers, living in essentially work camps far from their homes and families.  It was for lack of a better analogy a make work program to exact the maximum amount of labor from the unemployed people suffering from the throes of the Depression.  Granted, they accomplished some pretty amazing projects, but I believe they were actually exploited labor.

Current practice is to hire local contractors, more often than not using local labor pools to accomplish the contracted for project.   Let's face it, major road building or rebuilding is more often than not a multi year project where young tradesman learn the trades and older workers potentially retire from.  The same goes for bridges, tunnels, major electrical infrastructure and other utilities.

Their pay is appreciably more than CCC workers would demand, and you would get tradespeople who KNOW their jobs as opposed to people looking to make a buck and not giving a shit about their work product/quality. 

 
 
 
luther28
2.2.1  luther28  replied to  XDm9mm @2.2    4 months ago

Training platform for the unskilled, so they can move up the social ladder, one of the reasons.

 
 
 
Bob Nelson
3  seeder  Bob Nelson    5 months ago
You REALLY need to keep up Don, you really do.

I'm Bob. You really need to keep up George, you really do.

From the seed:

Mr. Trump talks of big infrastructure projects, and on Tuesday, at a meeting with Democratic congressional leaders, he agreed to spend $2 trillion to upgrade the nation’s infrastructure, leaving the details (such as how to raise the $2 trillion) to be worked out in coming weeks.

You really need to keep up Paul, you really do.

 
 
 
XDm9mm
3.1  XDm9mm  replied to  Bob Nelson @3    5 months ago
(Like the present administration, promising to create manufacturing jobs...)

Here's a clue....   your posit "Like the present administration" inferred Trump was not advancing infrastructure.   As USUAL, you're quite wrong.  Further, Trump was advancing infrastructure funding on the CAMPAIGN trail.  You know BEFORE he won the election and became President.

Donald Trump's Big-Spending Infrastructure Dream

The Republican nominee’s push to pour more money into roads and bridges than Hillary Clinton is his latest break with conservatives, and it’s drawing criticism from one of his own economic advisers. Source:  https://www.theatlantic.com/politics/archive/2016/08/donald-trumps-big-spending-infrastructure-dream/494993/

Would you care to make any other unwarranted and untruthful posts about President Trump?

NEXT!!!

 
 
 
Bob Nelson
3.1.1  seeder  Bob Nelson  replied to  XDm9mm @3.1    5 months ago
...inferred Trump was not advancing infrastructure.

No, actually, it did not. There is no logical connection there, [deleted]

 
 
 
XDm9mm
3.2  XDm9mm  replied to  Bob Nelson @3    5 months ago

[deleted]

 
 
 
Bob Nelson
3.2.1  seeder  Bob Nelson  replied to  XDm9mm @3.2    5 months ago

[deleted]

 
 
 
XDm9mm
3.2.2  XDm9mm  replied to  Bob Nelson @3.2.1    5 months ago

[deleted]

 
 
 
Bob Nelson
3.2.3  seeder  Bob Nelson  replied to  XDm9mm @3.2.2    5 months ago

[deleted]

 
 
 
bugsy
3.2.4  bugsy  replied to  Bob Nelson @3.2.1    5 months ago

[deleted]

 
 
 
Bob Nelson
4  seeder  Bob Nelson    5 months ago

Speaking of infrastructure:

 
 
 
XDm9mm
4.1  XDm9mm  replied to  Bob Nelson @4    5 months ago

You are aware that global trade is in MANUFACTURED GOODS are you not?

NEXT!!

 
 
 
Bob Nelson
4.1.1  seeder  Bob Nelson  replied to  XDm9mm @4.1    5 months ago
...global trade is in MANUFACTURED GOODS...

Oh... I see...

Your definition excludes services, does it?

That explains a lot.   jrSmiley_78_smiley_image.gif

 
 
 
XDm9mm
4.1.2  XDm9mm  replied to  Bob Nelson @4.1.1    5 months ago

Oh, and which services might you be referring to?  Computer and network maintenance, monitoring and repair?  Yeah, brilliant idea to let Communist China take care of that for everyone right?

Maybe you'd prefer professional services like legal, or medical, or how about accounting?

What China is REALLY good at is stealing everything they can and then selling it back to the fools they stole it from.

 
 
 
Bob Nelson
4.1.3  seeder  Bob Nelson  replied to  XDm9mm @4.1.2    5 months ago

Did you bother to watch the video? Did you notice that seven of ten of the biggest construction companies are now Chinese?

Lemme try to remember... is "construction" a service?   jrSmiley_78_smiley_image.gifjrSmiley_78_smiley_image.gif

 
 
 
XDm9mm
4.1.4  XDm9mm  replied to  Bob Nelson @4.1.3    5 months ago
Did you notice that seven of ten of the biggest construction companies are now Chinese?

So, you're now proposing that the US Government help American Construction Companies grow on a global scale?

THANKS!!!   That's great.

MAKE AMERICA GREAT(ER) AGAIN!!!

So now you're a Trump supporter.

 
 
 
Bob Nelson
4.1.5  seeder  Bob Nelson  replied to  XDm9mm @4.1.4    5 months ago
you're now proposing

No.

 
 
 
Ronin2
4.1.6  Ronin2  replied to  Bob Nelson @4.1.5    4 months ago

How do you think the Chinese are doing it?  You don't think they are subsidizing their construction companies; and working with foreign governments to get contracts for them?

 
 
 
Bob Nelson
4.1.7  seeder  Bob Nelson  replied to  Ronin2 @4.1.6    4 months ago

How about you expressing what you think, instead of you expressing what you imagine I do not think?

 
 
 
XDm9mm
4.1.8  XDm9mm  replied to  Bob Nelson @4.1.3    4 months ago
Did you bother to watch the video? Did you notice that seven of ten of the biggest construction companies are now Chinese?

It's not hard to do when you're either state owned or heavily supported and subsidized by the state.  

Here's something for you to ponder.

China's Global 500 companies are bigger than ever—and mostly state-owned

image?url=https%3A%2F%2Ffortunedotcom.fi
Chart by Stacy Jones
By SCOTT CENDROWSKI
July 22, 2015

Take a look at the number of Chinese companies on this year’s Fortune Global 500 list and it’s hard not to come away impressed—even a bit intimidated. Ninety-eight companies are based in China, including those headquartered in Hong Kong. That puts China second only to the U.S., which has 128 companies on the list. (You can filter the companies of the Global 500 by country using Fortune’s new, searchable and sortable database .) If you compare this year’s figure to recent ones, China’s rise is even more spectacular. China had just 46 companies appearing on the list in 2010, and only 10 in 2000. The U.S. has trended in the other direction: 139 American companies made the list in 2010 and 179 in 2000.

But dig a little deeper, and China’s rise begins to look less imposing. First, the top 12 Chinese companies are all state-owned. They include massive banks and oil companies that the central government controls through the State-Owned Assets Supervision and Administration Commission of the ruling State Council (SASAC), which appoints CEOs and makes decisions on large investments. Of the 98 Chinese companies on the list, only 22 are private.

 
 
 
Bob Nelson
4.1.9  seeder  Bob Nelson  replied to  XDm9mm @4.1.8    4 months ago
It's not hard to do when you're either state owned or heavily supported and subsidized by the state.

Thanks, Captain Obvious...

Perhaps you should "ponder", rather than angrily fire off references that you clearly have not digested.

Think about the future, with Western Capitalism in haphazard competition, while China advances in Mandarin orderliness. Then re-read the seed and your post.

Take time. You're angry, and that's making you careless.

 
 
 
Dean Moriarty
4.1.10  Dean Moriarty  replied to  Bob Nelson @4.1.9    4 months ago

What causes you to think that he is angry? 

 
 
 
Bob Nelson
4.1.11  seeder  Bob Nelson  replied to  Dean Moriarty @4.1.10    4 months ago
What causes you to think that he is angry?

He's posting dumb stuff. Being a generous soul, I'd rather believe that that's anger, rather than stupidity.

 
 
 
XDm9mm
4.1.12  XDm9mm  replied to  Dean Moriarty @4.1.10    4 months ago
What causes you to think that he is angry? 

He likes to project (from France maybe?).

 
 
 
Bob Nelson
4.1.13  seeder  Bob Nelson  replied to  XDm9mm @4.1.12    4 months ago

It appears I was being too generous.

 
 
 
Kavika
4.1.14  Kavika   replied to  XDm9mm @4.1    4 months ago
You are aware that global trade is in MANUFACTURED GOODS are you not?

Actually it's not only manufactured goods. Global or International trade consists of manufactured goods on one hand and services on the other. 

The total trade deficit in 2016 was $416B...the services provided by the U.S. resulted in a $200B surplus. 

https://www.stlouisfed.org/on-the-economy/2017/june/us-trade-deficit-driven-goods-services

 
 
 
Nerm_L
5  Nerm_L    4 months ago

How is it possible to build infrastructure without manufactured goods?  Will Congress agree to source requirements, if not US source then at least North American source?  Or will Congress use infrastructure spending to bail out China?

Here is the reality:  Sectors of US Economy as Percent of GDP 1947-2009 (source citation at bottom of page)

512

Notice that persistent trade deficits began about 1971.  Note the rise in professional and business services began when the US began experiencing persistent trade deficits.  Note that the growth of finance and professional services follow the same trend.  Also notice that finance surpassed manufacturing around 1986 when trade deficits experienced a large increase.

The United States was transformed from a producing economy toward a borrowing economy in the 1980s.  And government policy shifted toward favoring the financial sector at that time.  The United States has become a financial services economy; people are supposed to be obtaining income from financial services.  But all the theories about finance, globalization, and trickle down economics have failed to deliver.

Keep in mind that all the doom & gloom concerning manufacturing jobs is being written by financial reporters.  Multinational corporations headquartered in the United States have become financial enterprises.  Foreign investment is coming into the United States; how are those foreign investors spending their money?  Foreign investors seem to be buying and building manufacturing facilities in the United States.  Even Chrysler has been owned by several foreign businesses.  

Is manufacturing dead in the United States?  Foreign investors don't think so.

Manufacturing Leads as Top Sector for Foreign Direct Investment in the United States

 
 
 
XDm9mm
5.1  XDm9mm  replied to  Nerm_L @5    4 months ago

Unlike in the past, we have Donald Trump pushing for American products, made in American factories.

At least he's trying to do what's right for American workers.

 
 
 
Nerm_L
5.1.1  Nerm_L  replied to  XDm9mm @5.1    4 months ago
Unlike in the past, we have Donald Trump pushing for American products, made in American factories. At least he's trying to do what's right for American workers.

It isn't just American workers, it's American businesses, too.  The United States must have businesses that produce things; that's not optional.  

China Is Losing The Trade War In Nearly Every Way - Forbes

The article is a little long and discusses political issues a little more than economics.  The bottom line is that Xi Jinping is counting on Democrats winning the 2020 election and reestablishing the status quo .  Xi Jinping is playing a long game that depends upon Democrats continuing to be consistently less hawkish toward China.  No doubt Democrats will fulfill Xi Jinping's expectations.

 
 
 
Bob Nelson
5.2  seeder  Bob Nelson  replied to  Nerm_L @5    4 months ago

I don't agree with everything in your post, but it does imply what I've been saying: If we don't have a master-plan and an oversight entity to ensure that it's applied, our "Me! Me! Me!" ultra-rich will continue to put their own fortune above all else.

 
 
 
Nerm_L
5.2.1  Nerm_L  replied to  Bob Nelson @5.2    4 months ago
I don't agree with everything in your post, but it does imply what I've been saying: If we don't have a master-plan and an oversight entity to ensure that it's applied, our "Me! Me! Me!" ultra-rich will continue to put their own fortune above all else.

The rich are becoming richer by engaging in finance rather than manufacturing.  Here is an article that provides a non-technical explanation (the article was published by the Guardian, so is British-centric.  But the mechanisms work the same way in the US.)

Wealth inequality is soaring – here are the 10 reasons why it’s happening - Guardian

Debtors don't build wealth by borrowing.  Lenders create money out of thin air but the interest they obtain by lending is real money.  Lenders aren't required to produce anything; lenders get something for nothing.  Finance simply cannot create a broad prosperity.

The policy must shift towards production rather than financial services.  Infrastructure is a viable means to make the policy shift because infrastructure can't be built without manufactured goods.  However, that policy shift is going to require a more nationalist and protectionist approach to economic planning and regulation.  The United States cannot borrow its way to prosperity even if the government is doing the borrowing.  The health of the US economy depends upon American businesses producing things; that's not optional.

 
 
 
Bob Nelson
5.2.2  seeder  Bob Nelson  replied to  Nerm_L @5.2.1    4 months ago

I kinda sorta agree, except this:

The United States cannot borrow its way to prosperity even if the government is doing the borrowing.

Currently, as for several years already, the US can borrow, long-term, at rates that are essentially zero. Even the stupidest CEO would be borrowing to finance investments, even those with a lousy ROI - hey! the money is free!

But no! America has no problem taking on a trillion in debt, to give it to the ultra-rich, but debt for investment is unthinkable.

Bumper-sticker slogans make wretched economics.

 
 
 
Nerm_L
5.2.3  Nerm_L  replied to  Bob Nelson @5.2.2    4 months ago
Currently, as for several years already, the US can borrow, long-term, at rates that are essentially zero . Even the stupidest CEO would be borrowing to finance investments, even those with a lousy ROI - hey! the money is free!

Except that's not true:   Daily Treasury Long Term Rate Data - US Dept. of the Treasury

Government borrowing doesn't work the same as consumer borrowing.  Treasury bills and securities are bought with money that already exists in the money supply.  Government debt redistributes money that is already in the money supply.  Only consumer borrowing under fractional lending rules creates money.  As the prior link to the Guardian article explains, the rich are getting richer on consumer debt and not government debt.

The Federal Reserve did create new money with qualitative easing.  And the new money was used to bail out the financial sector and avoid depreciation.  Again the financial sector got something for nothing.  

Everyone wants a credit card that doesn't have to be paid.  But perpetual debt is like perpetual motion, it doesn't work.  The only economic activity that creates wealth instead of money are enterprises that produce things.  Without a strong manufacturing sector the United States loses its ability to create wealth.

 
 
 
Bob Nelson
5.2.4  seeder  Bob Nelson  replied to  Nerm_L @5.2.3    4 months ago

Your post does not disagree with mine in the slightest.

 
 
 
Nerm_L
5.2.5  Nerm_L  replied to  Bob Nelson @5.2.4    4 months ago
Your post does not disagree with mine in the slightest.

The financial sector has a vested interest in ensuring consumers become increasingly dependent upon consumer debt.  That's how the rich get something for nothing.

Look at the bit of misinformation in the seeded article:

"From a post-World War II peak of 19.6 million workers in 1979, employment in manufacturing has declined to 12.5 million, according to the Bureau of Labor Statistics. Put another way, manufacturing has dropped from 23 percent of the total work force to nearly 8 percent. That happened even as factory output rose in total value to $2.154 trillion in 2018. America is making more goods and materials with fewer people."

The size of the US population has more than doubled since the end of World War II.  The US real GDP is 8 times larger today than at the end of World War II.  And the manufacturing sectors contribution to GDP has been declining.  The rise in factory output value has not kept pace with population growth or growth in real GDP.  What that means is that the United States is losing its ability to increase and distribute per capita wealth.  Until government policy favoring the financial sector changes it will be almost impossible to create broad prosperity.

That also explains why the appeal of socialism to seize and redistribute wealth is increasing.  If the United States becomes socialist it will happen on Wall Street.  Depending on how Congress handles infrastructure spending, infrastructure projects could be used to move the United States toward socialism rather than retreat from socialism.  

 
 
 
Bob Nelson
5.2.6  seeder  Bob Nelson  replied to  Nerm_L @5.2.5    4 months ago

Excuse me, but you're giving facts that agree with the seed, and then drawing conclusions that do not follow.

I don't know how to conduct a conversation in these conditions.

 
 
 
Nerm_L
5.2.7  Nerm_L  replied to  Bob Nelson @5.2.6    4 months ago
Excuse me, but you're giving facts that agree with the seed, and then drawing conclusions that do not follow.

Excuse me but the facts contradict the seeded article.  The seeded article presents data that clearly refute its own conclusions; we don't need to ramp up manufacturing for export (as the article interjects), we need to ramp up domestic manufacturing for domestic consumption.  The seeded article is deliberately misleading.

An important purpose of infrastructure spending is to bolster domestic manufacturing by establishing domestic consumption.  Infrastructure spending isn't just a jobs program.

 
 
 
freepress
6  freepress    4 months ago

ABsolutely right, fixing our infrastructure makes us strong, provides jobs and creates a better future which is worth any cost.

 
 
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