The Manufacturing Sector In Our Economy - From the 1960s to today

 

Economics Without The B.S.**: 

[**  Double entendre intended.]

Let's look at some data.

1. Did NAFTA take our manufacturing jobs? NAFTA went into effect in 1994. From 1994 to 1997 we increased manufacturing jobs.

2. When did we start to lose manufacturing jobs during the Globalization period of the 1990s? It was after the Asian Financial Crisis of 1998. In order to control their capital flows into and out of their countries -- failure to control is what led to the Crisis -- Asian countries, like South Korea -- adopted industrial policies that made them exporting countries, where they tried to control their surplus trade status.

3. And the big drop off in our manufacturing employment was after 2001. That is when China got trade status from the WTO.

Some experts will tell you the drop off of manufacturing employment after 2001 was due to automation in the factories. If that were true the productivity should have increased. But as you see, it was in a declining trendline.

Quite frankly, it is plain to see the 1960s, especially the peak performance years of 1965/1966, as the standout for the manufacturing sector as well as the overall economy. We almost doubled our manufacturing capacity in that decade. And since 2000 the rate of increase in manufacturing capacity has been stagnant. This isn't something that other countries did to us; we did it to ourselves by our economic policies which failed to incentivize investment in this area and instead encouraged investment in other venues.

 

Our capacity utilization was great during 1960s, and has tapered off since. Remember now, the capacity added in the 1960s was almost doubling while we were at maximum utilization. We still have good utilization at 70% to 80%, but we are not adding to capacity like we did in the 1960s.