U.S. manufacturing - We are still top of the heap.

[tzor]

Just read an interesting article from Walter E. Williams True or False where he talks about two things "global warming and U.S. manufacturing decline." Here I would like to look at the later

According to data assembled by Dr. Mark Perry, in his article in The American (12/23/2009) titled “Manufacturing’s Death Greatly Exaggerated,” “For the year 2008, the Federal Reserve estimates that the value of U.S. manufacturing output was about $3.7 trillion.” If the U.S. manufacturing sector were a separate economy, with its own GDP, it would be tied with Germany as the world’s fourth richest economy. The 2008 GDPs were: U.S. ($14.2 trillion), Japan ($4.9 trillion), China ($4.3 trillion), U.S. manufacturing ($3.7 trillion), Germany ($3.7 trillion), France ($2.9 trillion) and the United Kingdom ($2.7 trillion).

U.S. manufacturing employment peaked at 19.5 million jobs in 1979. Since 1979, the manufacturing workforce has shrunk by 40 percent, and there’s every indication that manufacturing employment will continue to shrink. Because of automation, the U.S. worker is now three times as productive as in 1980 and twice as productive as in 2000. It’s productivity gains, rather than outsourcing and imports, that explains most of our manufacturing job loss.

U.S. manufacturing is going through the same kind of labor-saving technological innovation as agriculture. In 1790, farmers were 90 percent of the U.S. labor force. By 1900, only about 41 percent of our labor force was employed in agriculture. By 2008, less than 3 percent of Americans were employed in agriculture. ...

Let’s not stop with agriculture. In 1970, the telecommunications industry employed 421,000 workers, in good-paying jobs as switchboard operators, handling 9.8 billion long-distance calls yearly. Today, the telecommunications industry employs fewer than 60,000 operators, and they handle more than 100 billion long-distance calls yearly. That’s an 85 percent job loss. The spectacular advances in telecommunications, which raised productivity, made the cost of long-distance calls a tiny fraction of what they were.

[Juton]

Not for long:

http://money.cnn.com/2010/06/21/news/ec ... /index.htm

[Username17]

Not for long:

http://money.cnn.com/2010/06/21/news/ec ... /index.htm

That article is somewhat laughable. China is about to catch up with... 1.7 trillion dollars? What number is that? That's not the US total manufacturing, that's two trillion dollars less than the US' manufacturing sector (correctly reported by Tzor's crazy to be 3.7 trillion dollars).

Furthermore, who the fuck calculates Chinese manufacturing in terms of nominal GDP? They manipulate currency, those numbers don't mean anything. If you want to compare Chinese manufacturing to anything, you use Purchasing Power Parity. And at PPP, China's manufacturing sector is worth 2.7 Trillion dollars. Substantially less than the US output.

In 2008, the US manufacturing sector was the equal of China, India, and Brazil combined. US manufacturing is the most efficient and largest manufacturing sector on the planet, and will continue to be... for a while. Honestly, we can't keep automating things and firing people forever. But for now the fear is that US manufacturing might fall below 20% of the entire world's output rather than that it would actually fall to any level that any sane person could characterize as "small".

Of course, actually reading the article Tzor was talking about... the guy is a quote miner. His hatchet job on global warming doesn't reference any of the actual temperatures and blithely insists that the Earth has been cooling for the last decade! This is... not true. The man pulls some weird quotes out of context, but links to no data at all. The reality is that the amount of snow in the world is, yes, Still Decreasing. It still gets cold in the winter, and big snow storms happen, and yes, that's caused by warming too.

-Username17

[Juton]

Well, I will say mea culpa for posting a link from CNN, they are not the best source for anything substantive.

Finding an accurate number for China's manufacturing output is actually more difficult than I expected, you can find a lot of numbers but none are consistent between articles. I've decided to resort to wikipedia like so many others who can't be bothered. China has a nominal GDP of 4.99 trillion and a GDP of 9.05 trillion when considering PPP [1] for 2009. 46.8% of Chinese GDP is due to manufacturing [1] so we'd expect their total manufacturing output to be 2.33 trillion (nominal) or 4.235 (PPP). The US of A has a GDP either 3 times or half again as big as China's depending on what measure you use (14.266 trillion nominal vs 14.289 PPP [2]) current as of 2009. The discrepancy I'd attribute to the euro becoming used as a reserve currency. 21.9% of the USA's GDP is from manufacturing which means their manufacturing output is 3.124 trillion (nominal) or 3.129 (PPP).

Nominally the USA has a higher manufacturing output but by PPP China would seem to have a higher output.

[1] http://en.wikipedia.org/wiki/Economy_of ... c_of_China
[2] http://en.wikipedia.org/wiki/Economy_of ... ted_States

[K]

https://www.cia.gov/library/publication ... 4rank.html

If you want to look at numbers, the CIA Factbook is the THE online argument winner. Gotta love spooks.

When you look at it, note one important thing: Hong Kong and China are given separate listings despite the fact that Hong Kong is now owned by China. Put them together and they have a PPP that exceeds the US.

[Username17]

https://www.cia.gov/library/publication ... 4rank.html

If you want to look at numbers, the CIA Factbook is the THE online argument winner. Gotta love spooks.

When you look at it, note one important thing: Hong Kong and China are given separate listings despite the fact that Hong Kong is now owned by China. Put them together and they have a PPP that exceeds the US.

Except, you just linked to "per capita" values, which do not add, they average. Hong Kong has almost the per capita PPP of the US, and the rest of the country is a basket case. The factbook puts China at 8.8 trillion dollars in PPP. That's a lot, but it's still not that close to the US (albeit bigger than anyone else).

-Username17

[Cynic]

So wait, if America is still on the top end of manufacturing then why do we keep being called a purchase economy rather than a service economy?

What exactly do these numbers mean?

[K]

https://www.cia.gov/library/publication ... 4rank.html

If you want to look at numbers, the CIA Factbook is the THE online argument winner. Gotta love spooks.

When you look at it, note one important thing: Hong Kong and China are given separate listings despite the fact that Hong Kong is now owned by China. Put them together and they have a PPP that exceeds the US.

Except, you just linked to "per capita" values, which do not add, they average. Hong Kong has almost the per capita PPP of the US, and the rest of the country is a basket case. The factbook puts China at 8.8 trillion dollars in PPP. That's a lot, but it's still not that close to the US (albeit bigger than anyone else).

-Username17

Mmmm, online pundit fail.

Ok, after doing some more research it looks like the output of our goods are still doing well. Basically only conservative hacks are the ones pushing for the idea of the failure of US manufacturing. Surprising.

It's the fact that we do it with almost no people and so all the money goes to the top 20% that is the problem. Social inequality ftw.

[Username17]

So wait, if America is still on the top end of manufacturing then why do we keep being called a purchase economy rather than a service economy?

What exactly do these numbers mean?

The US has net imports, and has for some time. Functionally what that means is that the US hands out piles of paper which we print the faces of our presidents on, and the other countries send us actual stuff. Three Hundred and Seventy Eight BILLION Dollars worth of stuff every year. It's kind of like tribute.

It's problematic in several respects. The first and most obvious is that the United States currency won't be in demand forever, so running a hugely negative current account year after year is obviously unsustainable. That reckoning would normally expect to play out as a depreciation of the dollar against other currencies, which would lead to a modest contraction in US standards of living and a sharp reduction in imports and a sharp increase in exports.

Which brings us to the second problem. Other countries have their economies setup with the US as buyer of last resort built in to their assumptions. As in: literally when a capitalist makes stuff in a factory there is more dollars worth of produced stuff than there is increased domestic demand from paying wages to the people who make the stuff. This in turn means that you ultimately need something in the system that buys up and removes produced stuff or adds in domestic demand or both, or you'll get what is called a "General Glut" by Malthus or a "Crisis of Overproduction" by Marx. It's bad. Which means that the US is subsidizing domestic demand around the would by buying up overproduction by well over three hundred billion dollars.

And if they stopped doing that, or worse yet went back to being a net exporter - countries all over the world would go into an immediate recession. Germany literally cannot sustain its current economic system without the US buying $41 billion worth of their shit every year. They'd need to come up with comparable amounts of market clearance internally somehow. And on short notice... they can't.

-Username17

[Parthenon]

It's problematic in several respects. The first and most obvious is that the United States currency won't be in demand forever, so running a hugely negative current account year after year is obviously unsustainable. That reckoning would normally expect to play out as a depreciation of the dollar against other currencies, which would lead to a modest contraction in US standards of living and a sharp reduction in imports and a sharp increase in exports.

http://www.projectcensored.org/top-stories/articles/1-global-plans-to-replace-the-dollar/

the US has been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States, then the exchange rate against the dollar increases, penalizing exporters. This has allowed the US to print money without restraint, to buy imports and foreign companies, to fund military expansion, and to ensure that foreign nations like China continue to buy American treasury bonds.

In July 2009, President Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.” The coin, which bears the words “Unity in Diversity,” was minted in Belgium and presented to the heads of G8 delegations.

In September 2009, the United Nations Conference on Trade and Development proposed creating a new artificial currency that would replace the dollar as reserve currency. The UN wants to redesign the Bretton Woods system of international exchange. Formation of this currency would be the largest monetary overhaul since World War II. China is involved in deals with Brazil and Malaysia to denominate their trade in China’s yuan, while Russia promises to begin trading in the ruble and local currencies.

This is from way back mid 2009, and I'm wondering what as happened in this area since then, as well as if the article's predictions of woe are accurate.

[Juton]

Russia and China are doing bilateral trade in their own currency, which is a little bit of woe right there. Once Oil begins to be traded in something other than US dollars that's when the real fun will start. It's hard to predict what will happen, although it's pretty certain that the US dollar will have a downwards correction, whether that will cause inflationary craziness we'll have to wait and see.

One of the favourites for internet conspiracy junkies like Alex Jones is talk of a one word currency leading to a one world government, so your link is a little bit spooky for lack of a better term. Can someone more knowledgeable in economics say whether they intend to create a fiat system, which would traditionally need a government to back it or a currency based on commodities.