I wish Oren Cass well as I think he genuinely cares about high school educated workers but the vehicle we have for achieving what he wants - MAGA - is bound to dissapoint. My side - progressives - aren’t even trying to help as they are mired in identify politics and white guilt.
When you stop believing that the purpose of language is to deliver truth, the whiplash decreases considerably.
American Compass’ conservative critique of macroeconomics is well founded and much needed. And it was helpful to further buttress its arguments using empirical data drawn from three distinct time periods.
Shifting this argument into a political-economy framework, the question at hand could be phrased as succeeding now where FDR and the New Deal failed, which was precisely along the axis of worker / industrial productivity.
The political power to unionize in order to secure higher wages did not lead to corporations desiring more highly skilled employees whose productivity would justify the higher wages.
To the contrary it energized the simultaneous growth of the “administrative state” and the “managerial capitalism” so celebrated by Chandler. The goal was to perfect the use of labor as a cog in a machine not the deployment of workers to control an ever more sophisticated machine.
For American Compass the rubber is about to meet the road as a new era of industrial policy unfolds. Restricting the labor supply, nationalizing markets, and efforts to weaken competitors like China are likely to be helpful but insufficient.
Enabling workers to earn higher wages through their managerial contributions to the means of production remains a stone left unturned.
Whether you’re working for a hospital, school district, restaurant, or a complex manufacturing company like Boeing, your understanding of the business should be cultivated and your engagement in its management sought out.
Instead we have far too many managerial aristocracies dedicated to the pursuit of golden parachutes, short term profits, and the extraction of wealth.
So, hospitals, for example, layoff staff to balance the books rather than invest in their staff to increase productivity / quality of care.
And the results of all the financial engineering inflicted on Boeing is a national disgrace.
Too much of policy for the last 5 decades is determined by the fear, that somewhere, there's an American industrial worker who, regardless of skills and hours they work, will make more than someone with a Batchelor's degree.... and that can't happen!
Also, THANK YOU for pointing out America's industrial problems began before 1980! So many hacks have swallowed the "and then came Reagan" narrative. Youngstown Sheet and Tube closed in 1977; the first rubber plant 1975 iirc. The start of the Rust Belt.
You make a good point that it did not start with Reagan, it was already in motion. But he did enable the VC revolution which did accelerate the movement of jobs overseas as well as abandon antitrust enforcement, which to be fair, every subsequent administration sans Biden followed.
How exciting for this rust belt resident. A scorecard for the self-proclaimed "very stable genius" to measure his nuanced efforts to bring manufacturing back. The only hurdle may be that Don seems much more focused on cultural grievance and retribution than articulating and implementing a "new right" economic agenda. Then again, he's nominated a powerhouse cabinet to help. To be honest, I'll take anything from the king of debt as long as he doesn't foment another armed insurrection at the end of his term. Here's hoping the 82 year old version of Don is somehow more lucid than the 78 year old version...
"But services occupying a greater share of economic activity does not imply that manufacturing should decline in absolute terms,"
Does it though? For a fixed population, if I'm working in services, I'm not working in manufacturing. Granted, it's not a given that manufacturing output should decline but it won't grow as fast as if services didn't grow.
That said, I'm a bit disappointed this essay waited until the very last paragraph to talk about services. It seems odd to fixate on manufacturing. There's nothing wrong with producing services if that's what Americans have a comparative advantage at and trading those services for manufactured goods. When it comes to generating wealth, whether we do that through goods or services doesn't really matter.
I'm trying to imagine what we do actually "manufacture"? For instance, I was blown away that parts made in China are shipped to Boeing to make aircraft.
Example 2: I was considering putting a metal roof on my home. I joked with my roofer that I did not want any roofing not made in the USA... he came back to me a day later in disbelief. Only a tiny fraction of the metal roofs in the USA are made here... their market is mostly government buyers where it is required to be stamped "Made in USA".
I'm not smart enough to follow Oren's party trick, but I do come away from this with more questions than answers. :)
The US makes a lot of chemicals, pharmaceuticals, electronics, food, and machinery. We don't make very simple and inexpensive things like corrugated steel.
It's worse than I thought.... That brief paints a rosy picture, until you stop and read a few times and you see the hocus pocus these bureaucrats have unleashed on us... word play gone wild. Take away food, lumber and we don't make 100% of much of anything...
Lots of funny comments, lots of cynicism about Trump, who just pulled off the greatest political comeback in history. I'd say the national comeback Trump called for in 2015, to end the free trade stupidity and to rebuild manufacturing now also depends on us in part. AC's work is remarkable for reigniting traditional American economic views, circa 19th C, and that is profound, not merely for the jobs it will create but for the cultural impact it will have. Look at science today. It's failing because we have decoupled science (physics) from physical advancement. MIT was built in an environs of industrial production, not yuppies going into quant trading, social media, or fintech. Think V. Bush era and WW2. Advanced scientific theory depends on the demonstration of new technologies that are broadly applied for social advancement. Think Planck and metallurgy for the quantum, or electricity, clock towers, and Einstein for Relativity. But there is even more gained by a productive manufacturing culture, the social environment of meaningful collaboration between scientists, engineers, and skilled labor, which you see manifest at places like SpaceX. This social cohesion is key for political stability and long term growth. And it gets deeper. Exposing the fraud of current economic stupidity is a great service to mankind, and on that we can all agree! Thanks Oren.
Recently, since the late 70s, increases in productivity haven't been matched by growth in income. Factories pay better than Walmart but there is no guarantee that manufacturers would share the increased profits that come with productivity.
I'm not sure we can achieve a return of industry as there is little financial incentive to the elite to do so. If our betters are making a very good profit on finance and tech they really don't care about servants except to keep the price of us low.
Subscribing to both you and Scott Lincicome I live in a perpetual state of cognitive whiplash. Can you two do a live debate sometime so I can hear you try to address each other’s arguments in realtime?
Lincinome pointed out in a tweet response to me the audience was more moved by his arguments than Oren’s but I think Oren won. He got Lincinome to argue industrial policy may well be right for other countries but not US. And he seemed to know little about how other countries have successfully engaged in it.
In his response to me he said he wanted a more wide ranging debate with Oren but seems to think it needs to take place at Cato based on his offer to Oren. Haven’t seen Oren respond yet. Not sure he sees the benefit.
A human worker, abstractly speaking, is an eye, two hands, two feat, a strong back (sometimes), and most importantly a brain that can learn and remember. And, in a market economy, it can be "rented" for so many dollars an hour ($20, $40, etc.) depending on supply and demand. I make this point to suggest that human labor will perhaps never be totally or even largely displaced by automation. Even now, of the value added in manufacturing facilities, labor continues to receive a very substantial fraction across the entire manufacturing sector I think (maybe Oren can check on this). Which suggests there will always be a substantial number of relatively "labor intensive" manufacturing processes if I am not mistaken.
I only make these points because, as a former factory worker, I think there are still substantial gains (on the order of forty percent) to be made in labor productivity, made possible by the IT revolution, gains which are yet to be realized but which can be over the next several decades. But they are unlike what you might imagine: https://www.amazon.com/dp/B00U0C9HKW
Furthermore, it may be premature to conclude that the future is one of a post-industrial service economy in so far as total employment is concerned. At least not to the extent it is now.
If the output fell, which it certainly did but the index also fell, employment in manufacturing must have fallen more slowly than output. Is this just friction or is something deeper going on.
I wish Oren Cass well as I think he genuinely cares about high school educated workers but the vehicle we have for achieving what he wants - MAGA - is bound to dissapoint. My side - progressives - aren’t even trying to help as they are mired in identify politics and white guilt.
When you stop believing that the purpose of language is to deliver truth, the whiplash decreases considerably.
American Compass’ conservative critique of macroeconomics is well founded and much needed. And it was helpful to further buttress its arguments using empirical data drawn from three distinct time periods.
Shifting this argument into a political-economy framework, the question at hand could be phrased as succeeding now where FDR and the New Deal failed, which was precisely along the axis of worker / industrial productivity.
The political power to unionize in order to secure higher wages did not lead to corporations desiring more highly skilled employees whose productivity would justify the higher wages.
To the contrary it energized the simultaneous growth of the “administrative state” and the “managerial capitalism” so celebrated by Chandler. The goal was to perfect the use of labor as a cog in a machine not the deployment of workers to control an ever more sophisticated machine.
For American Compass the rubber is about to meet the road as a new era of industrial policy unfolds. Restricting the labor supply, nationalizing markets, and efforts to weaken competitors like China are likely to be helpful but insufficient.
Enabling workers to earn higher wages through their managerial contributions to the means of production remains a stone left unturned.
Can you elaborate on what you mean in the last paragraph?
Whether you’re working for a hospital, school district, restaurant, or a complex manufacturing company like Boeing, your understanding of the business should be cultivated and your engagement in its management sought out.
Instead we have far too many managerial aristocracies dedicated to the pursuit of golden parachutes, short term profits, and the extraction of wealth.
So, hospitals, for example, layoff staff to balance the books rather than invest in their staff to increase productivity / quality of care.
And the results of all the financial engineering inflicted on Boeing is a national disgrace.
Too much of policy for the last 5 decades is determined by the fear, that somewhere, there's an American industrial worker who, regardless of skills and hours they work, will make more than someone with a Batchelor's degree.... and that can't happen!
Also, THANK YOU for pointing out America's industrial problems began before 1980! So many hacks have swallowed the "and then came Reagan" narrative. Youngstown Sheet and Tube closed in 1977; the first rubber plant 1975 iirc. The start of the Rust Belt.
You make a good point that it did not start with Reagan, it was already in motion. But he did enable the VC revolution which did accelerate the movement of jobs overseas as well as abandon antitrust enforcement, which to be fair, every subsequent administration sans Biden followed.
How exciting for this rust belt resident. A scorecard for the self-proclaimed "very stable genius" to measure his nuanced efforts to bring manufacturing back. The only hurdle may be that Don seems much more focused on cultural grievance and retribution than articulating and implementing a "new right" economic agenda. Then again, he's nominated a powerhouse cabinet to help. To be honest, I'll take anything from the king of debt as long as he doesn't foment another armed insurrection at the end of his term. Here's hoping the 82 year old version of Don is somehow more lucid than the 78 year old version...
"But services occupying a greater share of economic activity does not imply that manufacturing should decline in absolute terms,"
Does it though? For a fixed population, if I'm working in services, I'm not working in manufacturing. Granted, it's not a given that manufacturing output should decline but it won't grow as fast as if services didn't grow.
That said, I'm a bit disappointed this essay waited until the very last paragraph to talk about services. It seems odd to fixate on manufacturing. There's nothing wrong with producing services if that's what Americans have a comparative advantage at and trading those services for manufactured goods. When it comes to generating wealth, whether we do that through goods or services doesn't really matter.
I'm trying to imagine what we do actually "manufacture"? For instance, I was blown away that parts made in China are shipped to Boeing to make aircraft.
Example 2: I was considering putting a metal roof on my home. I joked with my roofer that I did not want any roofing not made in the USA... he came back to me a day later in disbelief. Only a tiny fraction of the metal roofs in the USA are made here... their market is mostly government buyers where it is required to be stamped "Made in USA".
I'm not smart enough to follow Oren's party trick, but I do come away from this with more questions than answers. :)
The US makes a lot of chemicals, pharmaceuticals, electronics, food, and machinery. We don't make very simple and inexpensive things like corrugated steel.
The Commerce Department published this report in 2022: https://www.commerce.gov/sites/default/files/2024-07/OUSEA-Issue-Brief-Made-in-America.pdf
It's worse than I thought.... That brief paints a rosy picture, until you stop and read a few times and you see the hocus pocus these bureaucrats have unleashed on us... word play gone wild. Take away food, lumber and we don't make 100% of much of anything...
Lots of funny comments, lots of cynicism about Trump, who just pulled off the greatest political comeback in history. I'd say the national comeback Trump called for in 2015, to end the free trade stupidity and to rebuild manufacturing now also depends on us in part. AC's work is remarkable for reigniting traditional American economic views, circa 19th C, and that is profound, not merely for the jobs it will create but for the cultural impact it will have. Look at science today. It's failing because we have decoupled science (physics) from physical advancement. MIT was built in an environs of industrial production, not yuppies going into quant trading, social media, or fintech. Think V. Bush era and WW2. Advanced scientific theory depends on the demonstration of new technologies that are broadly applied for social advancement. Think Planck and metallurgy for the quantum, or electricity, clock towers, and Einstein for Relativity. But there is even more gained by a productive manufacturing culture, the social environment of meaningful collaboration between scientists, engineers, and skilled labor, which you see manifest at places like SpaceX. This social cohesion is key for political stability and long term growth. And it gets deeper. Exposing the fraud of current economic stupidity is a great service to mankind, and on that we can all agree! Thanks Oren.
Recently, since the late 70s, increases in productivity haven't been matched by growth in income. Factories pay better than Walmart but there is no guarantee that manufacturers would share the increased profits that come with productivity.
I'm not sure we can achieve a return of industry as there is little financial incentive to the elite to do so. If our betters are making a very good profit on finance and tech they really don't care about servants except to keep the price of us low.
Subscribing to both you and Scott Lincicome I live in a perpetual state of cognitive whiplash. Can you two do a live debate sometime so I can hear you try to address each other’s arguments in realtime?
They actually have debated here: https://youtu.be/Gp8U7icCCoc?si=3SSeTAWp9PuT6bx6
Lincinome pointed out in a tweet response to me the audience was more moved by his arguments than Oren’s but I think Oren won. He got Lincinome to argue industrial policy may well be right for other countries but not US. And he seemed to know little about how other countries have successfully engaged in it.
In his response to me he said he wanted a more wide ranging debate with Oren but seems to think it needs to take place at Cato based on his offer to Oren. Haven’t seen Oren respond yet. Not sure he sees the benefit.
A human worker, abstractly speaking, is an eye, two hands, two feat, a strong back (sometimes), and most importantly a brain that can learn and remember. And, in a market economy, it can be "rented" for so many dollars an hour ($20, $40, etc.) depending on supply and demand. I make this point to suggest that human labor will perhaps never be totally or even largely displaced by automation. Even now, of the value added in manufacturing facilities, labor continues to receive a very substantial fraction across the entire manufacturing sector I think (maybe Oren can check on this). Which suggests there will always be a substantial number of relatively "labor intensive" manufacturing processes if I am not mistaken.
I only make these points because, as a former factory worker, I think there are still substantial gains (on the order of forty percent) to be made in labor productivity, made possible by the IT revolution, gains which are yet to be realized but which can be over the next several decades. But they are unlike what you might imagine: https://www.amazon.com/dp/B00U0C9HKW
Furthermore, it may be premature to conclude that the future is one of a post-industrial service economy in so far as total employment is concerned. At least not to the extent it is now.
If the output fell, which it certainly did but the index also fell, employment in manufacturing must have fallen more slowly than output. Is this just friction or is something deeper going on.