Tuesday, August 24, 2010

Maybe? It wasn't about China

The Economist suggests that maybe manufacturing job losses in the US aren't about China. Markets are harsh and inherently unstable. They force an unending cycle of improvement or else you die. It might seem bleak - but the flip side of that, is that those who do innovate and meet the needs of customers thrive and profit. With mounting job losses and governments looking for easy targets to blame, China's an easy scapegoat.

Sure, I'm not the least bias source by any means but to put things in perspective (Economist referencing a chart from Paul Kedrosky):

[This is] manufacturing employment as a share of total employment. The downward trend is over 50 years old. It predates the end of Bretton Woods. It predates the union-crushing, deregulating era of the late 1970s and early 1980s. It predates the era of Japanese dominance, the rise of the Asian tigers, and the recent surge in Chinese growth. And what it is driving this trend, overwhelmingly, is technology. Manufacturers have steadily improved manufacturing productivity, routinising and then automating occupations.

A plunging dollar, a "get tough" approach to China, and an embrace of industrial policy won't reverse this trend. Eventually China will face the same dynamic and the same decline in manufacturing employment. Time to accept that reality and figure out how best to prepare workers for the good jobs to come.

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