Manufacturing Growth

From Walter E. Williams:

The U.S. Census Bureau reports that 2011 manufacturing output grew by 11 percent, to nearly $5 trillion. Were our manufacturing sector considered a nation with its own gross domestic product, it would be the world’s fourth-richest economy. Manufacturing productivity has doubled since 1987, and manufacturing output has risen by one-half. However, over the past two decades, manufacturing employment has fallen about 25 percent. For some people, that means our manufacturing sector is sick. By that criterion, our agriculture sector shares that “sickness,” only worse and for a longer duration.

In 1790, 90 percent of Americans did agricultural work. Agriculture is now in “shambles” because only 2 percent of Americans have farm jobs. In 1970, the telecommunications industry employed 421,000 well-paid switchboard operators. Today “disaster” has hit the telecommunications industry, because there are fewer than 20,000 operators. That’s a 95 percent job loss. The spectacular advances that have raised productivity in the telecommunications industry have made it possible for fewer operators to handle tens of billions of calls at a tiny fraction of the 1970 cost.

For the most part, rising worker productivity and advances in technology are the primary causes of reduced employment and higher output in the manufacturing, agriculture and telecommunications industries. My question is whether Congress should outlaw these productivity gains in the name of job creation. It would be easy. Just get rid of those John Deere harvesting machines that do in a day what used to take a thousand men a week, outlaw the robots and automation that eliminated many manufacturing jobs and bring back manually operated PBX telephone switchboards. By the way, if technological advances had not eliminated millions of jobs, where in the world would we have gotten the workers to produce all those goods and services that we now enjoy that weren’t even thought of decades ago? The bottom line is that the health of an industry is measured by its output, not by the number of people it employs.

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Will This End the Toyota Witch Hunt?

From BGR:

The National Highway Traffic Safety Administration, with the aid of NASA engineers, concluded that the electronics systems found in Toyota’s vehicles was, in all likelihood, not the cause of unintended acceleration. In 2009 and 2010, the Japanese car manufacturer recalled nearly 8 million cars after drivers began reporting sudden and unprovoked acceleration from their vehicles.

“Our conclusion- that Toyota’s problems were mechanical, not electrical – comes after one of the most exhaustive, thorough, and intensive research efforts ever undertaken,” said Department of Transportation Secretary, Ray LaHood.

The report determined that two mechanical defects in the accelerator pedal and floor mats are to blame. “Both problems had been identified before the NASA investigators began their work.” NASA was given unrestricted access to over 200,000 lines of code used in Toyota’s vehicles; its examination of said code lasted over 10 months.

Toyota says it’s confident that the issue is now resolved and that its cars are amongst the safest on the road.

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The State of Manufacturing

From Walter E. Williams:

How about statements like these: “The United States got to where it is today by making things.” “There’s nothing made here anymore.” “One-third of the nation’s manufacturing jobs have vanished in the past decade.” These statements suggest that we are no longer the world’s top manufacturer; we have all but turned into a nation of “hamburger flippers.”

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. What would you have had Congress do in the face of this precipitous loss of agricultural jobs? Should Congress have outlawed all of the technological advances and machinery that cost millions of agricultural jobs and made our farmers the world’s most productive? Also, had Congress done something to save those agricultural jobs, where would we have gotten the workers to produce the millions of things we enjoy that weren’t even around in 1790? We would have been poorer.

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.

What we’re witnessing in many of our industries is what economic historian Joseph Schumpeter called “creative destruction.” The adjustment to it can be painful, but to stand in its way will make us a poorer nation.

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“The Chevy Volt is a Disaster”

Charles Krauthammer on the Chevy Volt:

The only people who are going to buy it are going to be very rich people who are going to park it outside their townhouse for ostentatious show of how virtuous they are while they drive around in their Cadillac Escalade.

[…]

This is a classic example of what happens when the political and ideological desires of an administration are imposed on a private company. That’s how the Soviets worked it with the five year plan, and it didn’t work. It’s not how many jobs you create or even save, it’s can you sell a product in the market that will make a profit. Otherwise, it’s a farce.

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Capitalizing on the Toyota witch hunt

What are the government bureaucrats in Washington going to do regarding the Toyota witch hunt? Pretty much what you’d expect:

U.S. to Seek $16.4 Million Fine Against Toyota

What was the outcome of all of those unintended acceleration claims made against Audi in the mid-1980s?

Indeed, per car sold the Audi 5000 had 40 times the sudden acceleration complaints Toyota has received. Yet a later NHTSA study, along with others in Canada and Japan, found every one to be groundless.

And what will become of all the claims against Toyota? Years down the road after all of the lawsuits and fines and loss in sales and reputation, those too will prove to be spurious.

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Groupthink

From Michael Fumento:

For three days, James Sikes held America’s highest honor: victim. The nation had been transfixed by his almost half-hour-long 94-mph horror ride in his runaway Toyota Prius. He burned his brakes right down to the metal, unable to even slow the vehicle. Only his prescience in calling 911, followed by a highway patrol officer providing assistance, saved his life.

Then my article “Toyota Hybrid Horror Hoax” at Forbes.com brought it crashing down. But lest you get false impressions from that title, the real hoaxter wasn’t Jim Sikes, but the media. Red flags about his story were popping up from the start. Yet the entire Fourth Estate systematically ignored them.

[…]

Yes, I’m a good investigative reporter. After all, that used to be my job with IBD! But this isn’t rocket science, folks. Reporters trained to think in terms of “if your mother says it, check it out” exchanged that for a new motto: “In Sikes We Trust.”

Conversely, when you read online articles that allow comments to be posted below, almost all of the readers are skeptical. Herewith, representative samples from one site:

  1. Sikes told CNN, “I was afraid to try to (reach) over there and put it in neutral. I was holding onto the steering wheel with both hands.” No, actually he was holding a cell phone in one hand most of the time, but as this image shows, remarkably the Prius can be shifted with both hands on the wheel.
  2. Wow! A car that has an engine more powerful than its braking system. What a crock! He should take his Prius to a tractor pull if he thinks its engine can overcome its brakes.
  3. This driver is a scammer. He repeatedly ignored the operator’s suggestions to put his car into neutral. He’s a liar.
  4. Despite enough time to call 911 and talk over, this old man is really stupid to be not able to kill the engine. So is every other person who agrees with him.
  5. This guy had brakes. I know what wins between the brake pedal & the accelerator every time. THE BRAKE!!!!
  6. This is laughable!!!!
  7. But we know if something’s wrong with the pedal, do not call 911. Just put neutral shift and the car slow down.
  8. Fake fake fake!!!!!!!!!!
  9. Doesn’t pass the smell test.

Some of these people could barely construct a sentence, yet somehow they were smart enough to recognize a scam. Why couldn’t journalism school grads?

Obviously, many did. But the media have been pursuing a Toyota witch hunt regarding unexplained sudden acceleration. The Prius incident fit beautifully. Too beautifully, as it happens. So skepticism got the boot, as indeed it so often does with the media today. As one person put it in an e-mail to me, “I weep for the state of American journalism.”

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