My February Project Syndicate Column: if your life was centered around making old things the old way, you learned the hard way what Joseph Schumpeter meant when he called modern capitalism “the perennial gale of creative destruction.”..
My perennial issue here is trying to discern what share of jobs were actually lost to technological change per se, and what share to just doing the same low-productivity manufacturing in a low-wage country (primarily China of late, but previously Korea, Taiwan, Macau, and Japan). Because when I look at the panoply of China-sourced low-tech manufactured goods on Amazon (and I mean very basic things, literal nuts and bolts, hand tools, small hardware) it certainly is not clear that there was any manufacturing technology change that meant that the workers who used to make them in American factories lost their jobs; the very same processes were simply moved to somewhere were the workers were cheaper (and coal power was plentiful and environmental and workplace safety regulations absent).
Now I should be clear I’m not saying that’s all bad in economic terms. But it is more of a conscious choice to open trade than to helplessly observe the dead hand of technological progress, and the people displaced are aware of this.
I’m not sure what the split is, and especially as it is also true that a sclerotic American maker may not have embraced modern methods whereas an entrepreneurial foreign maker newly entering might do so, or simply (as with Japanese cars) that their material constraints force them to produce more efficiently or produce products that are themselves more efficient.
Certainly the Chinese merchants competing on Amazon have a zest for making every sale they can in a cutthroat contest, which is good both for prices and innovation (modulo fraud and fakery).
I have seen some American companies go toe to tow in recent years, usually with a combination of uniquely high quality and high prices, along with CNC production. But those still tend to cater to less price-sensitive commercial and industrial buyers.
I think the impact goes much further than the steel mills and other very large rust belt enterprises. Often it is a Southern or Midwestern town of 5,000 where there was a factory making hinges, or mattresses, or carpets, often quite automated already and just employing a few hundred. Those appear to now be a great source of opioid addicts, NEETs and so on. And technological changes per se (other than that of shipping and logistics and the bureaucratic technology of trade rules) weren’t the culprit there.
There was a near perfect example of the technological story in an article on a fire truck factory closing in one of these towns lately. I’ll find it… there very clearly the factory’s production methods and lack of scale at least meant there was profit margin to be obtained by consolidation, even if it might not have been inevitable.
"the very same processes were simply moved to somewhere were the workers were cheaper (and coal power was plentiful and environmental and workplace safety regulations absent)."
I remain unconvinced that the absence of basic safety standards, to say nothing of slave labor, fits the Ricardian principle of competitive advantage.
My perennial issue here is trying to discern what share of jobs were actually lost to technological change per se, and what share to just doing the same low-productivity manufacturing in a low-wage country (primarily China of late, but previously Korea, Taiwan, Macau, and Japan). Because when I look at the panoply of China-sourced low-tech manufactured goods on Amazon (and I mean very basic things, literal nuts and bolts, hand tools, small hardware) it certainly is not clear that there was any manufacturing technology change that meant that the workers who used to make them in American factories lost their jobs; the very same processes were simply moved to somewhere were the workers were cheaper (and coal power was plentiful and environmental and workplace safety regulations absent).
Now I should be clear I’m not saying that’s all bad in economic terms. But it is more of a conscious choice to open trade than to helplessly observe the dead hand of technological progress, and the people displaced are aware of this.
I’m not sure what the split is, and especially as it is also true that a sclerotic American maker may not have embraced modern methods whereas an entrepreneurial foreign maker newly entering might do so, or simply (as with Japanese cars) that their material constraints force them to produce more efficiently or produce products that are themselves more efficient.
Certainly the Chinese merchants competing on Amazon have a zest for making every sale they can in a cutthroat contest, which is good both for prices and innovation (modulo fraud and fakery).
I have seen some American companies go toe to tow in recent years, usually with a combination of uniquely high quality and high prices, along with CNC production. But those still tend to cater to less price-sensitive commercial and industrial buyers.
I think the impact goes much further than the steel mills and other very large rust belt enterprises. Often it is a Southern or Midwestern town of 5,000 where there was a factory making hinges, or mattresses, or carpets, often quite automated already and just employing a few hundred. Those appear to now be a great source of opioid addicts, NEETs and so on. And technological changes per se (other than that of shipping and logistics and the bureaucratic technology of trade rules) weren’t the culprit there.
There was a near perfect example of the technological story in an article on a fire truck factory closing in one of these towns lately. I’ll find it… there very clearly the factory’s production methods and lack of scale at least meant there was profit margin to be obtained by consolidation, even if it might not have been inevitable.
Here we go:
https://www.washingtonpost.com/business/2022/02/03/kme-fire-truck-factory-closing/
"the very same processes were simply moved to somewhere were the workers were cheaper (and coal power was plentiful and environmental and workplace safety regulations absent)."
I remain unconvinced that the absence of basic safety standards, to say nothing of slave labor, fits the Ricardian principle of competitive advantage.
Comparative advantage, dammit.