In politics, there are popular talking points that get repeated so often they become their own form of gospel, even when cursory examinations of these claims can prove them to be weightless. You’ve all heard that “97% of climate scientists agree…,” “women make 77 cents to a man’s dollar for the same work,” “Samantha Bee and Trevor Noah are funny,” and so forth. As it turns out, much to the chagrin of Bernie Sanders and Donald Trump supporters alike, the notion that the United States has had its manufacturing base bled dry over the past few decades is another example of this.

People hear and read headlines proclaiming the lose of American manufacturing jobs, like this one from CNN (which describes the loss of 5 million such jobs since 2000), and come to the conclusion that outsourcing must be the cause of it. While there are examples of companies “moving overseas,” the overall trend in manufacturing suggests that isn’t the primary threat to low/unskilled American labor. It’s actually technology. In all likelihood, it isn’t a foreigner who took your job, but that nerdy kid that got shoved into a locker back in high school.

According to the Federal Reserve Bank of St. Louis, real U.S. manufacturing output went up, not down, from 1987 to 2016. In fact, output is up a full 85.2% over these 29 years, with current output having recovered to its pre-recession levels. This despite the implementation of that “worst” deal ever, NAFTA. So what does this mean? The total production of our manufacturing sector is at an all-time high, growing at a rate faster than the population since the 1980s, and leading to a greater per-capita production of goods in America than in 1987. At the same time, we are employing millions of fewer people in manufacturing than in years past. How can these both be true at the same time? It’s due to automation, and process improvements.

If the U.S. manufacturing base is making more/better goods than before, but employing fewer people, that’s the result of finding ways to organize production better, machines that run smoother, faster, and do more things, and perhaps additional factors like cheaper or more abundant raw materials, or imported parts. In a world without trade agreements, manufacturing output per-worker would still be higher than before due to these improvements, meaning the total number of people required to make the same volumes and kinds of goods would still be decreasing. In other words, even if protectionism did work (it doesn’t), and you could “keep” some additional jobs in the U.S., it would just be a band-aid, a temporary fix, as these jobs would end up going away with more production improvements anyway.


Income Inequality is a Good Thing

In fact, if anything, we could expect more automation to result from trade restrictions. If it’s cheaper to go with robots, but even cheaper to outsource, many companies will likely do the third. But if you take away that option, they will go with the second cheapest, which is to automate as much as possible, by investing in new physical capital for their plants. It will also incentivize those behind the technology to develop it faster, since demand for such industrial tech would increase.

(I recommend people read this article from Rex Nutting to learn more about changes in U.S. manufacturing)

You see, it’s cheaper, faster, and more efficient to use technology in more ways than ever before. Just a couple of months ago, Budweiser tested the first ever shipment of goods from a self-driving truck, developed by a company named Otto. It was something that scared the hell out of a lot of truck drivers, and others in the comments section of the YouTube video they posted. Some top comments read:

  • “It’s cool, sure. But all the truckers are about to be out of jobs… how is this something to be happy about”
  • ”this is the type of so called technology that we dont need…..lets puts hundreds of thousands of people out of work so the owners of big business will make more profits…..”
  • “this is not cool at all,
    I am a truck driver, and what are the 800,000 truck drivers in America suppose to do once otto takes over?? you want to see mass riots take away a mans lively hood that he has spent a lifetime doing. WE have nothing to lose, i have worked all my life tell me what else i can do that makes 60,000 a year.  screw you Budweiser

People are right to feel nervous about the changing world. The old America, where you could get by with a high school degree has been slipping away for some time. Of course, we can and should help people stuck in this predicament, but we shouldn’t do so by lying to them. This is a skills-based economy now. You need a good college major, or certifications, or you need to go to trade school, but one way or another if you want to make a decent living you’ll have to invest some time, energy, and likely money into yourself first.

Politicians aren’t going to help you. Whether you’re white collar or blue collar, working class or a business owner, CEO or janitor. The current manifestation of our Federal government, and many state governments, is a disaster that’s making things worse. Tax reform, regulatory reform, repealing/overhauling Obamacare, and more can and will make things better. But it won’t fix the long term picture. This is a structural transformation, just as we transitioned from an agriculture-based economy to an industrial one. We are moving faster and faster into the information age, and it’s time more people put their heads and talents towards adapting.