Bringing Back Manufacturing Jobs Would Mean Economic Stagnation

The British fought three wars in Afghanistan over an 80-year period. They finally left this “graveyard for empires” in 1919, only to eventually be replaced by the Soviet Union in the late 70s, and the U.S. in the aftermath of 9/11.

A lack of change in the kind of work we do, is a sign of economic decline. Very interesting about Afghanistan is its evolution, or lack thereof. In a recent snapshot of the dysfunctional country, New York Times reporter Rod Nordland noted that “It is striking how little the rural Afghan landscape has changed between the early 19th and 21st centuries. The mud-walled fortifications of those days can still be seen throughout the country, and some of them are still in use as military facilities today.”

The picture painted by Nordland brings to mind the roughly 30-year gap in visits to the former Soviet Union by former Federal Reserve Chairman Alan Greenspan. In his 2006 autobiography, The Age of Turbulence, Greenspan recalled how the equipment used by laborers in the country hadn’t changed a bit in the decades in between.

Greenspan’s point was that a lack of change in how we do work, and the kind of work we do, is a sign of economic decline.

The New York Example

Which brings us to New York City. Interesting about it is that right before the Civil War began, New York was a city of factories. 11 percent of its jobs were in manufacturing. Right through the first 3rd of the twentieth century, New York City was the #1 manufacturing locale in the United States.

But it’s decidedly not a manufacturing city today. Not in the least. Who knows what the number is, assuming there is one, but the number of manufacturing jobs in New York City is likely close to zero. It’s too expensive to manufacture on land that’s so valuable, plus manufacturing jobs would be a waste of the skills of NYC’s inhabitants. As Ken Auletta long ago put it about New York, “For those with talent, this city is the final test.”

The alleged “loss” of a certain form of work would never signal a city’s deterioration.

While it will be by some, the above shouldn’t be construed as an elitist comment. It’s an economic statement. That manufacturing long ago departed New York is a sign of the city’s immense wealth. The average worker in New York City is too valuable and too talented to waste on assembly inside a factory. The latter is similarly true for nearly every American worker, and it’s merely an expression of what market signals regularly communicate to us: low factory pay around the world is the market’s way of telling us that the human element of assembly is no longer as crucial as it once was. Translated, Americans are too productive to work in factories.

Politicians, economists, and pundits like to rationalize the decline of cities through the loss of manufacturing jobs, but that’s like saying that Brooklyn suffered decades of decline thanks to the departure of farming from land on which it was once abundant. But the alleged “loss” of a certain form of work would never signal a city’s deterioration.

More realistically, New York City booms today precisely because it’s no longer #1 in manufacturing. If it were, it would be a very poor city. Lest we forget, it’s where the talented migrate, and the talented disdain low-wage, back-breaking manufacturing work.

Changing the Way We Work

The non-departure of specific work is the bigger signal of looming demise.

Brilliant people make cities and states prosperous, and the brilliant long ago put factory work in the rear-view mirror. So have American workers of all stripes left manufacturing employment behind. It doesn’t pay enough.

So while it’s popular to say that the disappearance of some forms of work tells the story of a formerly glorious city, state, or country’s demise, the paradoxical truth is that the non-departure of specific work is the bigger signal of looming demise. Investors are the creators of all jobs, and they want dynamism.

Locales defined by static working conditions are the opposite of dynamic, and as such, they’re an investor repellent. New York City thrives by virtue of it having shed its manufacturing past, while Flint languishes for it having not shed manufacturing work quickly enough.

Investors want change, simply because profits are, like luxury, an historical concept. Just as entrepreneurs commoditize luxuries every day to our benefit, so do they aggressively compete away profits. This explains why the nature of work is constantly changing. It simply must. Where it doesn’t is where opportunity is slight mainly because investment is.

Bringing Back Yesterday’s Jobs

All this should be considered the next time readers hear a politician, economist or pundit talking about how their policies will “bring back manufacturing jobs.” If so, they’re promising policies consistent with sub-minimum wages, along with stagnation that will make today’s growth seem Singapore-like by comparison.

Factory work conducted by humans is increasingly a yesterday concept.

The simple reality is that it’s only in impossibly poor countries that the nature of work remains the same, or where things look the same across centuries as they do in Afghanistan. The U.S. is an impossibly rich country, and by extension, a magnet for the world’s poorest, precisely because factory work conducted by humans is increasingly a yesterday concept.

Though we’re told that bringing back the work of the past is part of “Making America Great Again,” nothing could be further from the truth. The day that policies succeed in reviving the past is the day that ambitious Americans start knocking on the doors of other countries, and when immigrants don’t bother sneaking into the U.S. at all.

Reprinted from Forbes.