“The claim that we need a national industrial policy because U.S. manufacturing is in decline is usually based on two trends: the fall in both U.S. manufacturing employment and the sector’s declining share of total U.S. economic output (measured by gross domestic product). Each of these trends, however, started decades ago. And neither tells you anything about the productive capacity of the nation overall or the vitality of the industries being targeted by the industrial policy.
As Lincicome shows, the reduction in manufacturing employment is occurring in every industrialized nation, including those countries with economies more centered on manufacturing than the United States. It’s also occurring in nations with longstanding trade surpluses in goods, and even in those countries that already have aggressive industrial policies. The real reason for a decline in manufacturing employment is mostly due to labor-saving technologies that raise worker productivity. In fact, anyone who wants to understand this reality ought to visit contemporary steel mills. They look nothing like mills of the past, as they’re automated, clean and employ highly skilled and well-paid workers.
The decrease in the share of GDP generated by manufacturing is mostly the result of the fact that our modern economies are increasingly service economies. That’s consumers’ choice. This trend, too, exists in all developed countries.”
“U.S. manufacturing continues to be at or near the top of most categories, including output, exports and investment. Industrial capacity is also growing, and industry-specific data show strengths where it counts (durable, high-value-added goods).”