The reality behind a common myth

There is this idea that the U.S. is fading, especially in the manufacturing sector. China is seen as predominant and overwhelming – just try to find anything of non-Chinese manufacture in WalMart some folks say trying to uphold this view. Despite this evidence, CBS News says the U.S. Factories Still Out-Produce China.

America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations.

The story of American factories essentially boils down to this: They’ve managed to make more goods with fewer workers.

The United States has lost nearly 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. U.S. manufacturers have placed near the top of world rankings in productivity gains over the past three decades.

That higher productivity has meant a leaner manufacturing force that’s capitalized on efficiency.

The U.S. remains No. 1 in global manufacturing, accounting for 18 percent of global manufacturing output in 2008.

And what about the WalMart experience?

What’s changed is that U.S. manufacturers have abandoned products with thin profit margins, like consumer electronics, toys and shoes. They’ve ceded that sector to China, Indonesia and other emerging nations with low labor costs.

The issue has many concepts to study. The perceptions showing a success of the propaganda of the America hating crowd is one. The reasons for U.S. manufacturing efficiency is another. The infrastructure, governmental stability, and cultural impact on manufacturing is another.

The impact of the misperceptions can be seen in ideas for improving economic vitality in the U.S. Many of these involve government funded subsidies and incubators. Subsidies for things like “green” energy development. Incubators to help jump start industries that otherwise could not stand on their own (like businesses that depend upon government subsidies).

California is a prime example. As Hanson has noted, much of the infrastructure such as roads, the power grid, energy supply, and water has deteriorated while rules and regulations aimed at business have proliferated. Even the most basic production, farming, has been strangled.

The U.S. is still pre-eminent despite all these burdens on its abilities. It seems that the first question at hand is whether the pre-eminence is to be maintained or not. Much of the dialogue these days seems to be towards taking the U.S. down a few pegs so that it can join the other second tier nations for some reason. That’s a subject for introspection.

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