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Manufacturing Fallacy Debunked

The fetishization of manufacturing is a persistent delusion in modern American politics. The media and the airwaves offer no shortage of doomsayers bemoaning the fact that America “doesn’t make anything anymore” and that the shift to a service economy is leaving millions in the dust. Instead of making tangible products of real value, they argue, Americans will be reduced to mere desk jockeys while machines (or foreigners) build things.

At Via Meadia, we’ve largely considered this fear overblown—creative “service” jobs offer real intellectual challenge and stimulation. In an excellent new column at the Financial Times, John Kay takes on the manufacturing fetish:

When you look at the value chain of manufactured goods we consume today, you quickly appreciate how small a proportion of the value of output is represented by the processes of manufacturing and assembly. Most of what you pay reflects the style of the suit, the design of the iPhone, the precision of the assembly of the aircraft engine, the painstaking pharmaceutical research, the quality assurance that tells you products really are what they claim to be. . . .

Many of those who talk about the central economic importance of manufactured goods do so from an understandable concern for employment and the trade balance. Where will the jobs come from in a service-based economy, manufacturing fetishists ask? From doing here the things that cannot be done better elsewhere, either because of the particularity of the skills they require, or because these activities can only be performed close to home. Manufacturing was once a principal source of low-skilled employment but this can no longer be true in advanced economies.

Most unskilled jobs in developed countries are necessarily in personal services. Workers in China can assemble your iPhone but they cannot serve you lunch, collect your refuse or bathe your grandmother. Anyone who thinks these are not “real jobs” does not understand the labour they involve. There is a subtle gender issue here: work that has historically mostly been undertaken by women at home – like care and cooking – struggles to be regarded as “real work”.

This is exactly right. Design, creativity, service and style are how people will be making a living in the future. People once thought that the only people who produced anything of real worth were farmers, and that urban artisans and all others were mere parasites. This is an exact parallel to the current ridiculous ideas about manufacturing. The world became almost infinitely richer as farming shrank in terms of employment and its share of GDP; the same will happen as the Manufacturing Age sinks into the past.

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