The question arose on one of the forums regarding the future of manufacturing in the United States.
To begin to assess the answer, let us look at a chart of manufacturing throughout the world. This is not just the United States; this is Western Europe, Japan, and the whole world. As you can see, the percentage contribution of manufacturing to total economic production has declined steadily over the last 40 years. If the chart went back another 40 years, the same kind of slope would persist. This is a worldwide phenomenon. This is an irreversible phenomenon. This has accompanied the extension of world economic growth to the third world, including especially Asia.
There are people who complain about the declining share of gross domestic product that is contributed by manufacturing in the United States. This is because they are completely unfamiliar with the worldwide phenomenon. They do not understand that economic growth accompanies a declining percentage of manufacturing to a national economy.
THE HEART OF MODERN WEALTH
The heart of wealth is not manufacturing; the heart of wealth is the knowledge applied to reduce the total percentage of manufacturing in the overall economy, and to increase the wealth of the masses through services. These services may be digital. They may be personal. But they are not based on manufacturing.
My friend Bill Myers has this phrase: “Sell electrons, not atoms.” It’s a great phrase. Don’t sell pieces of stuff; sell ideas, entertainment, efficiency, and anything that will reduce the cost of raw materials, the cost of capital, and the cost of output. Cut costs; cut prices; get rich.
This is why manufacturing will more and more be run by machines that are controlled by computer programs. This frees up mankind from the hard lifting of life.
Parents for centuries and even millennia have attempted to get their children into some guild, so that they will not have to do hard physical labor. What virtually all parents want for their children is exactly what the free market has provided around the world. Yet there are people who complain about the decline of manufacturing as a percentage of the overall economy. This decline has been one of the greatest blessings of the modern world, an answer to parents’ prayers for millennia, and yet there are people who honestly believe that America is falling behind because the percentage of the American economy that is provided by manufacturing is constantly declining.
What individuals want for their children, they sometimes lament for the economy overall. Somebody who wants his children to get out of hard manual labor, and who then complains about the decline of the number of jobs for hard manual laborers, is suffering from cognitive dissonance.
All over the world, industrial nations have outsourced manufacturing to foreign nations that are poverty-stricken, and to machines and computer programs that do not care about hard lifting. The jobs are being performed better than ever by poor people in foreign countries and by robots that are becoming ever more efficient as a result of better manufacturing techniques and better computer programming.
At every stage in this process, there have been Luddites who have complained about the replacement of human labor by machines. The phrase “sabotage” comes from the French word for shoe. Laborers who were losing their jobs to machines tossed shoes into the machines, in order to break them. It was the use of coercion against business owners.
Every stage over the last 200 years in which machines have replaced human labor has been marked by an extraordinary increase of output, and also by an equally extraordinary increase in per capita wealth. Our world is completely different from the world of 1800, and the reason for this has been the displacement of workers with minimal capital by workers with a rising quantity of capital. They been replaced by workers with better tools. These tools are getting even better, and ever more workers are being displaced. Thry move on to new areas of service. This has been the story of the transformation of the world to a better place over the last 200 years. Why, at this late date, are people worrying about the fact that machines and computer programs are going to continue to replace workers in many fields? That is what has been going on for two centuries. Why should we expect it to stop now?
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