cross-posted from: https://news.abolish.capital/post/5407

Debunking magical thinking about the US regaining its manufacturing mojo at scale.

Steve Keen highlighted a YouTube video on why the US manufacturing goose is cooked and will stay cooked. The points it makes are broader than the observation we have repeatedly made, that for the US to have any hope of resoring its industrial capacity, it will require way more than just tariffs but sustained industrial policy. But as we will explains, it also is romantically anchored in a past of manufacturing as a generator of many and good middle class jobs, when production is now highly automated and requires few if any workers.

There are two obvious problems in the US with trying to implement industrial policy. The first is that the US is allergic to it and engages in it mainly on an a default basis, via subsidies and tax breaks to politically powerful sectors. See healthcare, the arms industry, banking, real estate, and higher education as some of many examples. Biden’s Inflation Reduction Act proved that rule, by trying to achieve a hodge-podge of objectives, none of them very well.1

The second reason is that the US (ex when on a World War II level war footing) is incapable of sustaining any economic policy over time. Effective rebuilding on a large-scale basis would take at least ten years, even assuming it could be done.

This video provides some useful high level history but is simplistic and at points, inaccurate:

While it makes some important points, such as the virtuous circle that results from manufacturing prowess and how it produces spillover benefits, for instance, to suppliers, it incorrectly implies that manufacturing still generates a significand number of high wage jobs. In fact, industrial kingpin China was reporting 21.3% reported youth unemployment when it suspend publishing the data in 2023 to review the methodology. Its revised, presumably more flattering methodology, showed a still eye-watering 18.9% in August and 17.7% in September.

The rise of highly automated factories, including dark factories that have no humans present during routine operations, has broken the connection between manufacturing and job growth. A summary from Engineerine

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