January 28, 2014

Last week, I explained how economists and policymakers destroyed our economy for the sake of short-term corporate profits from jobs offshoring and financial deregulation.

http://www.paulcraigroberts.org/2014/01/25/economists-policymakers-murdered-economy-paul-craig-roberts/

That same week Business Week published an article, "Factory Jobs Are Gone. Get Over It," by Charles Kenny. http://www.businessweek.com/articles/2014-01-23/manufacturing-jobs-may-not-be-cure-for-unemployment-inequality Kenny expresses the view of establishment economists, such as Brookings Institute economist Justin Wolfers who wants to know "What's with the political fetish for manufacturing? Are factories really so awesome?"

"Not really," Kenny says. Citing Eric Fisher of the Cleveland Federal Reserve Bank, Kenny reports that wages rise most rapidly in those states that most quickly abandon manufacturing. Kenny cites Gary Hufbauer, once an academic colleague of mine now at the Peterson Institute, who claims that the 2009 tariffs applied to Chinese tire imports cost US consumers $1 billion in higher prices and 3,731 lost retail jobs. Note the precision of the jobs loss, right down to the last 31.

In support of the argument that Americans are better off without manufacturing jobs, Kenny cites MIT and Harvard academic economists to the effect that there is no evidence that manufacturing tends to cluster, thus disputing the view that there are economies from manufacturers tending to congregate in the same areas where they benefit from an experienced work force and established supply chains.