Trump’s blustering about bringing manufacturing jobs back to the US brought scorn, but perhaps not everywhere
Trump wants Apple to bring manufacturing jobs back to America. It sounds flat to American ears. But elsewhere “das hört sich gut an,” loosely translated from German “that rings true.”
Investment banking doesn’t create value it just moves it from one group to another. Transformation creates value; converting ore into metal, sand into silicon or parts into a car creates value. Triple investment banking employment, the net gain is null. Hence manufacturing is a vital component of a modern economy.
American business and politicians read Tom Friedman’s book “the World is Flat” and decided that the erosion of high value manufacturing jobs was inevitable. Germany read the same book and concluded that following Friedman would ruin their economy based on high value manufacturing jobs and ignored it.
A total of 3.2 million — one in six U.S. factory jobs — have disappeared since the start of 2000 replaced by lower value and lower paying service jobs.
Just look at every city in New England with a few exceptions — they are post industrial decaying urban nightmares. The only city transformed from an industrial economy to a post industrial economy is Boston blessed with the wealth of MIT, Harvard and other universities.
I’m not defending Trump, but rather illuminating the panglossian view that there is something in the future that will replace the value of manufacturing jobs. Take a trip to Naugatuck, Springfield, Lowell, Lawrence, Brockton, Fall River…Detroit, cities that wait patiently for an economic force to raise them from post-industrial depression.
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“Investment banking doesn’t create value it just moves it from one group to another. Transformation creates value; converting ore into metal, sand into silicon or parts into a car creates value. Triple investment banking employment, the net gain is null.”
This is, as you say, wrong and right at the same time. Sure, tripling investment banking employment doesn’t create value, but neither does increasing manufacturing employment. What creates value is an increased rate of production, which may be facilitated by additional employees. Similarly, more efficient flow of funds from those who have to those who need funds creates value, and additional investment bankers (theoretically) should facilitate that.
True, one could decrease the unit value created by adding employees without increasing production. It means that production needs to grow faster than employment. When I first graduated from Boston College, I dated a lovely woman who was a few years younger and still living at home. The importance of manufacturing jobs can best be described by explaining Janet’s family life.
Janet lived at home in a three bedroom Cape Cod style home on lake Cochituate. Her mom, dad, brother and she had health insurance. Mom was a full time home worker. They had two late model cars in the garage. All on here high school educated father’s salary earned on the Framingham General Motors production line.
The hiatus of manufacturing to Asia, isn’t wrong. Failing to consider its consequences was wrong.
I don’t disagree that there were heartbreaking consequences for the uneducated labor pool in the first world. I just think it’s wrong to write off more abstract occupations as useless (not creating value) just because it’s easy and they’re unpopular. The economy grows ever more complex, ours has become a knowledge economy, and there have been casualties along the way.
We could have had both – like Germany, high value and high wage manufacturing jobs and what you call more abstract occupations. I don’t write off these abstract occupations but just caution people to understand that value is not created without transformation – seed to corn – ore to steel.