Monday, October 17, 2011

The Unites States is still the world's largest manufacturer

According to Lara hoffmans' article in Forbes magazine, America still manufactures more than any other country. More than China. What’s shrinking is manufacturing’s share of total US employment. For that, blame rising productivity. (Or David Ricardo. Or both.) In the infographic (based on Fisher Investments research) industrial production stands in for manufacturing (since industrial production is mostly manufacturing anyway).

Click on the imiage to get a larger picture.  Source: Forbes / Fisher Investments research

America produces more than China but with less than half the workers. What’s more, industrial production is about 41.1% of China’s GDP, but 16.5% of America’s—we produce more and have a more diverse economy. (That’s good, not bad.) The infographic’s third chart shows that, for the last seven-plus decades, industrial production has overall risen—while manufacturing payrolls have fallen. And it’s the same thing globally. Just so happens US productivity gains have been immense. (Again—good, not bad.)

Yes, rising productivity kills jobs—certain kinds of jobs. David Ricardo (and 200 years of evidence) would say those jobs eventually get replaced by other kinds of jobs (in America, namely in the services industries). Said another way, in America in 1900, 50% of Americans worked in agriculture—now about 2% do, but we produce exponentially more food. Same thing.

See the full story in Forbes here.

Geir Solem
Copyright (C) 2011 all rights reserved

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