the deal with manufacturing.

A few years ago I was obsessed with manufacturing. While I’m not an expert, I have read thousands of pages on the topic and hundreds of articles. In my campaign for Congress, I tried to make jobs, and as a result, manufacturing a cornerstone. All that to say, that this is something I find interesting and care deeply about.

In the past few days I came across two must-read articles on the topic.

1) The NY Times dives into the topic through the lens of Apple and the iPhone. How the US lost out on iPhone work; Apple, America and a squeezed middle class. Must Read.

2) The Atlantic Monthly absolutely blows the doors off with a great dissection at the high-level of American manufacturing and weaving in the human face. Making It in America. Phenomenal.

I recommend starting there. There are a slew of topics that every citizen should understand. Manufacturing is one of them. It drives the wealth and stability of nations and the type of society you have. At least until now it has. It was clearly one of the building blocks of a prosperous and triumphant America. Our mercantilist policies and inherent natural advantages largely contributed to the sole superpower position we held.

I want to lay out 3 important things about manufacturing that are not well understood or known. I’ll do a separate post on why manufacturing matters — but the fact that has historically been a primary source of work for the masses should be enough for now. (That shouldn’t be controversial.)

1) Automation. Robert Reich is the one who first drew my attention to this in 2009. Essentially, global competition or not, technology was rapidly cutting into the humans you needed for production. This trend has only accelerated, as robotics and software improve at scale, the costs of automating repetitive tasks are going to continue to sharply decline. We’ll see more automation everywhere in the world. It will literally take a shortage of the natural resources (a whole other post) to cease this inevitability. So, net, automation has cost a good chunk of American jobs. This is also true for Chinese, German, Japanese, South Korean, et al jobs.

2) Training. I blame politicians (shocker) for why this is so little understood. Since Bill Clinton, I feel like this has become one of those safe ubiquitous lines everyone agrees. “Move up the value chain. Education is the key. etc, etc” These lines have been parroted and led us to the “sacred truth” that everyone needed to just go to college and they’d be well on their way. I think this is (and was) total bullshit, though all the reasons why this is true is another post. (Google Thiel “Higher Education Bubble” for an excellent background on the counter to this “truth”). In reality, educated workforce meant a very complex, diverse truth. It meant a great liberal arts education for some, a rigorous math, science/engineering education for others, and the missing one — was a highly valued vocational training. Germany has long known the importance of this and has a variety of vocational training. Both articles linked to above touch on the need for this. Over the past decade we have all but given up on this kind of training. While part of a more complex point, I believe that we should aggressively be retooling our community colleges to focus on this kind of vocational training.

3) Industrial Policy. Automation aside, the Apple story talks about government having targeted industries that they wished to build up and this resulting in an unbeatable combination. This is what’s called industrial policy and is something that is rarely talked about in America. Countries that have heavily used industrial policy? Japan, China, Germany, South Korea. It’s a whose who list of the powerful, triumphant manufacturers of the world. America too once had a very muscular industrial policy starting largely in the 1800′s going through World War II. With Europe in shambles and our industrial and economic might seemingly infinite, foreign policy and political concerns dominated any kind of industrial policy. The result has been that slowly but consistently (with a surge this past decade) built up industrial capability overseas that has led to Ross Perot’s sucking sound of jobs going overseas. Industrial policy can be a combination of tax benefits, cash and natural resource subsidies, calculated currency manipulation, and protectionist trade restrictions to protect a burgeoning industry. While there are examples of America focusing here (agricultural primarily) we’ve sat out this game. Industrial policy matters and while it has its skeptics (can the government really pick the right industries that matter?) — the rise of most of China, Japan, etc is ridiculous proof for a thinking person to ignore.

There are a lot of other important things to join this discussion. The importance of building a cost infrastructure that supports manufacturing vs consumption. On a scale of 1 to 10 — China is a 10 towards supporting jobs (manufacturing, etc). The US is close to a 1 — we have focused on consumerism and the amassing of more and more crap. By the way, lately that crap has been debt. There’s also a philosophical question about what an ideal, fair, and practical society looks like. I find that you have to not think on a national scale to do this exercise, but go back to that of a small village. Unfortunately we’re neither having an abstracted conversation about where we’re headed, what we’ve been doing, and where want to go nor discussing the actual real impact on American’s lives. Both the NYT piece and The Atlantic do both of these things on some level. It’s much needed.

I’ll end by saying that while I loved the articles, I found Davidson’s closing line in The Atlantic to be a bit disingenuous:

For most of U.S. history, most people had a slow and steady wind at their back, a combination of economic forces that didn’t make life easy but gave many of us little pushes forward that allowed us to earn a bit more every year. Over a lifetime, it all added up to a better sort of life than the one we were born into. That wind seems to be dying for a lot of Americans. What the country will be like without it is not quite clear.

It’s become fairly clear. In fact, that’s why his article was so great. He lays out the clear arc:
1) People like Maggie who the article opens with are actually quite rare. A great very many “Maggie’s” across the country don’t even have the opportunity that she has.
2) And even for her, the basic ideal of a middle class life barely escapes her reach on a salary of sub-$30K.
3) And then finally, the writing is on the wall that with automation, even what the lucky one, like Maggie has is likely to be gone in the forseeable future.

The “very lucky” in this story, Luke, is shown as a clear anomaly. In fact the NY Times story on Apple presented the other side of Luke, in the well-trained Eric Sargoza an engineer who can’t find a job and has been replaced by someone in Shenzen who makes nearly what he did.

From Davidson’s own article, the future, by connecting the dots, is even more dark. The variable here is that we live in increasingly chaotic times. You can’t make predictions in times like this because there are too many variables. You’re bound to be wrong if you do. In the absence of that, you have to at least connect the dots and prepare. Because that’s the best you can do. Sadly, the dots have clearly been there since I was born (30+ years). We’ve chosen mostly to ignore them and, I fear, the chickens are coming home to roost.

**This article was written stream of consciousness and is unedited. I’ll remove this once I’ve edited it** Also, a future post will be what I think we need to do now. At a ridiculously high level, it’s this: http://votechili.com/7/#manufacturing