Ain't gonna happen

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Image by Luis de la Cruz

 

BY DAVID F. RUCCIO | DECEMBER 29, 2016

During the recent presidential campaign, Donald Trump promised to revitalize American manufacturing—and bring back “good” manufacturing jobs. So did Hillary Clinton.

What neither candidate was willing to acknowledge is that, while manufacturing output was already on the rebound after the Great Recession, the jobs weren’t going to come back.

As is clear from the chart below, manufacturing output has grown (by about 21 percent) since the end of the recession and is now nearing pre-recession levels (although still down from its pre-crash level by about 5 percent). But employment in the manufacturing sector is only up a small amount (8 percent) since its post-crash low and is still lower, by about 1.5 million jobs (or 11 percent), than in December 2007.

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So, even if manufacturing production continues to grow, manufacturing jobs won’t (at least at the same rate). That’s because productivity in manufacturing continues to increase—as employers decide to change work rules, reorganize the factories, and introduce robotics and other forms of automation. Manufacturing workers, in other words, are being forced to produce more with less.

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That trend—of employment not matching the growth in output—just represents a longer term tendency in American manufacturing. If we start back in 1990 (as in the chart above, indexed to January 1990), output has increased 75 percent while employment has actually fallen by more than 30 percent.

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And, of course, employers have made that situation work for themselves, especially in recent years. Since the crash, corporate profits in manufacturing have rebounded spectacularly.

As long as workers have no say in how production is organized—including the technologies that are used and the surplus that is created—we can expect both manufacturing production and profits to increase while leaving workers and their jobs behind.

No matter who the president is.


David F. Ruccio is Professor of Economics at University of Notre Dame, and author of over 80 journal articles and book chapters. His most recent books include 'Postmodern Moments in Modern Economics' (Princeton University Press), 'Economic Representations: Academic and Everyday' (Routledge), and 'Development and Globalization: A Marxian Class Analysis' (Rout­ledge). Read his blog and follow him on Twitter: @Dfruccio


Showing 14 comments

  • commented 2017-01-15 13:51:31 -0500
    Paul: I agree. Rick’s argument is sort of back to front. Misguided and over-sentimental liberals used to say that education leads to social mobility. Now we know better. The conditions for social mobility are necessary for education to work as a social leveller. They have not been in the US or UK, which is why the success of education has been limited to the elite and its fringes, and the odd exceptions.

    Unless the conditions for deep systems change are present, coops will remain contained and mostly small and at the first sign that they are really challenging the system, they will be coopted, limited, bought out, or somehow restricted (look at how Right to Work legislation has destroyed unions).

    So we need to understand what those essential minimum contextual requirements are. The fact that capitalism is failing in the myriad ways Rick reveals, is not sufficient. Its been failing in the same way for generations. As long as the majority continue to be vested in the mythology of the American Dream, the essential system will remain intact. When a significant percent of the population listen to the Rev Billy, and stop the xmas, TG and Presidents Holiday spending sprees, the conditions for a change may emerge. The lords of the system understand just how much access to unaffordable credit they can continue to offer, and they can securitise the unpayable debt in any case and make a killing. The first thing that has to go is “the American Dream”.

    But of course, having coops as an option under a system of predatory capitalism, is a virtuous thing. Just lets not believe that under the current system,. they will lead to the overthrow of predatory capitalism. That hasnt happened anywhere coops have been successful. In Cuba, the social conditions may be present, but Obama stated quite clearly that his goal was to make Cuba a capitalist country. There is no serious commitment to accept Cuba as it wishes to be, and the sabotage and dirty trick will continue.
  • commented 2017-01-15 10:18:55 -0500
    Co-ops are not sufficient to make the needed changes in society, but they are necessary. True, there can and will be anti-social coops but as long as power is held in the hands of a few through this vast entrenched non-democratic system, there is no hope.
  • commented 2017-01-05 02:52:35 -0500
    O, just to add a working definition. A major catastrophe is so significant that no one makes profits from it. The “catastrophes” that America typically experiences are massive profit-making opportunities for the elite, and they laugh all the way to the bank. These typical catastrophes, like the current “recession/slow irreversible decline” seriously harm the majority of the people, but they dont shift power. They cement power. The context always determines what is possible.
  • commented 2017-01-05 02:45:31 -0500
    Chuck: “Profits would not be the only motivator. Keeping the company stable and a good work environment would be much more important than short term profits.”

    I have spent much of my life working with NGOs and cooperative enterprises in the developing world. It is risky to sentimentalize this topic. Usually what you find is that as long as profits are adequate to pay wages that compare favourably to the corporate sector, and keep up with the standard of living, profits may not be the only central issue. But as soon as that stability is challenged, it becomes the central issue.

    Because of their corrupt practices, corporations make massive profits compared to coops. Of course, they dont distribute these massive profits fairly. In any case, only a portion of corporate profits are created by workers. A substantial and increasing proportion of profits come from investment. In some large corporations, this exceeds profits from production.

    The corporate world will still have the greatest influence over the economy while corporations are expanding (if that happens). Because coops have very few tricks they can pull (that is the reason we like them), they have few ways in which they can thrive other than through honest production. When corporate profits boom because of mechanization, and have a significant impact on bringing down the price of commodities, do you really believe a coop producing for the same market, will simply be able to ignore what is happening, and focus on traditional production ?

    Just as corporations are able to drive workers out of jobs, so they are able to drive competitive coops out of existence, or take them over.

    Although Richard never minces words about the crimes and dirty tricks pulled by the corporate world and their political prostitutes, he is strangely silent on how the corporate world will respond to a major drive to displace corporations by cooperatives. You almost get the sense that it will be an even playing field with no dirty tricks, and that coops would thrive on their merit. That is not how it would happen. What kind of President do you believe would facilitate such a major re-arrangement of the economy ?

    All bets are off if there is a major economic/environmental/military catastrophe, well beyond anything the US has experienced (like all the coastal cities become permanently flooded by rising seas). But as long as the corporate elite are in control and choose the political representatives for the nation, any major effort to create coops will be fiercely resisted if they are perceived as a challenge. If its just rinky-dink and nice, they will be accommodated just as NGOs are accommodated.
  • commented 2017-01-04 09:00:25 -0500
    Lee Roberts – I am not an economist by any means. But I won’t let that stop us from talking
    I totally agree with your comment about America’s economy. This will not move us to socialism. I would love to hear Richard Wolfe go further into how to implement and what else can be done. I believe he has been focused on the democratic worker co-ops to get the idea out. Now that more and more are interested we need to take it further.
    I personally believe democratic worker co-ops have a few advantages for the workers.
    • They get part ownership and also a vote. I believe this would make a huge difference. Kind of like owning a car compared to a rental.
    • Wage equality would improve. It is very unlikely they would vote and upper management to make 1000’s of times more in pay.
    • Profits would not be the only motivator. Keeping the company stable and a good work environment would be much more important than short term profits.
    • They would be more likely to care about the environmental impact, etc….
    I am not sure there will be a pure socialist system in a very long time. Just like I don’t think there will be a pure capitalist system. Thanks for the feedback.
  • commented 2017-01-04 05:19:48 -0500
    Chuck: To understand the dynamics of economics (I am an economist) you cant just look at the supply side: how commodities are produced. You have to look at the full cycle, especially the way markets operate, the way purchases are financed, the way commodities have been captured and controlled by the futures market and a wide variety of speculation and artificially induced shortages. There is no “free trade” and never will be under capitalism, which is all about manipulating and controlling trade by any means possible, including war and plunder.

    American workers may be willing to work in a coop as long as their wage levels, benefits, and security are adequate (or because they dont have any alternative). But the idea that workers in a coop are fundamentally different to their colleagues working for companies, is baloney. American workers are addicted to consumerism and kept ignorant about the rest of the world. They honestly dont care as long as they can consume and continue to borrow. Sure, working in a coop may be mentally healthier for them. But they also live in a street where they see others buying flash cars they cant afford. A coop doesnt destroy the myth of the American Dream. Neither does it fundamentally change the problems of market competition that America faces, ALL American producers, whether they are coops or corporations.

    To a large extent, America’s economic viability depends on the imperialist acquisition of raw materials. Anyone in America who produces using raw materials acquired through imperialist domination, is exploiting their poor brothers and sisters overseas. You cannot have socialism until America’s relationship with the rest of the world has fundamentally altered. So, reform through coops, while virtuous in its own right, is not socialism. It is liberalism, which is something entirely different.
  • commented 2017-01-03 09:48:02 -0500
    Lee Roberts – I personally feel co-ops should be a large part of the plan. But I totally agree it is only part of the plan. How are you going to implement co-ops? I believe they could thrive if we do some of the following:
    • Give option to turn to a co-op and government help with loans.
    • If a company is being sold, closed or moving give the option to the employees to buy as a co-operative.
    • Give tax incentives to co-operatives
    • Have city planning like Cleveland’s Evergreen
    • Have large companies help sponsor along with government tier suppliers that are co-ops. This could keep the business local and it is long term solution.
    • Have state co-op banks/credit unions.
    Some things that would help with keeping things local would be a carbon tax.
    I don’t see the United States competing with China for example on exporting goods. We have to work on exporting technology/medicine/ideas/services/military/banking. We just can’t compete on exporting cheap manufactured goods.
    I also agree that even though co-ops would be a move towards socialism it would not be a huge move, even though I think it is more ideal.
    The real problem is that the money to back these ideas is not there even if they were perfect. We probably need to change focus from GDP to quality of life as a country.
  • commented 2017-01-03 06:57:41 -0500
    Apologies: “what Lee Roberts said.”
  • commented 2017-01-03 06:56:34 -0500
    Yeah. What Lee Richards said. Plus we need to donate all our cars to various poor countries and totally rethink personal transportation and trucking and road making. This will stimulate local demand. We need not fixate on exports. We also need to make internet deliverable health care. How hard is it to design a chair or bed sensing device that can help with home diagnosis and treatment? Except for x-rays much of health care is delivered in a bedroom setting at a doctors office. After hearing Dr. Raj talk about the investment is self driving cars by all car manufacturers and car parts makers, there is no way internet deliverable flu shots etc. cannot be had.
  • commented 2017-01-03 02:04:19 -0500
    While there is no doubt that worker coops are a more civilised way of organising work, I dont see how that solves America’s economic problems. However America organises work, it remains part of a global, neo-liberal (non-socialist) system. In such a system, capitalists act rationally within the limits of what they control. There is a massive manufacturing glut. That forces down the price of manufactured commodities. Countries with lower standards and/or costs of living, can absorb these lower prices. America with a ridiculously inflated cost of living, cannot do so without workers being pinched. Sure, corporations may be run by ethically challenged people, but they arent the ones creating these economic realities.

    With sky-high private debt, the US domestic market cannot absorb much of the glut, and prefers the cheaper (and recently even superior) glut it can import. So whether you go the coop route, or the corporate route, you face the same problem. The US has to export, and it cant cope well with cheaper imports. Its not as if the cost savings of a coop is going to make a significant difference to these fundamental facts. I have said before that I agree with Richard’s analysis as far as it goes. But it doesnt go far enough. Coops will not trigger a shift to socialism. They will be accommodated within the existing system. There is not sufficient recognition, in Richard’s thinking about the fact that the US workers, are also the beneficiaries of American imperialism. They dont become virtuous socialist workers of the world, when they form a coop. Maybe a weapons manufacturing coop ?? We need to get much deeper.
  • commented 2016-12-30 15:20:20 -0500
    +Chuck Hennemann. Take grain of salt now. I am merely advocating this and am not wed to the idea. In The World is Flat Thomas Friedman disclosed how China has 60 cities with over a million population.

    For every engineer we can occupy at $60k/yr China can occupy 10 or more. I heard a local manufacturer say his oil tool drilling company can get parts made cheaper and better in China than here in the US. The numbers for manufacturing even via human assisted automation are all bad for the US. We have a declining population and dying demand for product. Unless the wealthy corporations are legally required to disgorge of the hoarded unpaid wages which they call: profit and savings, local demand will continue a downward spiral and our population problems will follow Japan as it is doing now.

    We need to let go of manufacturing altogether and focus on political and economic education with all speed.

    There isn’t anything inherently wrong with manufacturing unless one is holding on to a Romantic notion of its necessity for survival. It is better to allow other countries to become wealthy and educated and efficient than to go to war with them over who is going to sell the surplus to whom.

    We need to graduate many educators and advisors who can help the new manufacturing countries know how to avoid the pitfalls our population ran into by following jobs; as Journeymen laborers have done here, for instance. They made great coin, saved no money and ended up homeless but with a skill! We can still educate manual fabrication as an avocation and also employ robot lawnmowers while we take in an edu-tainment type movie.
  • commented 2016-12-30 11:37:49 -0500
    Dan – I agree in general what you are saying. The old assembly jobs will not come back unless there is some weird government control of it. I am talking about automated manufacturing.

    To give you an idea what I am saying. There is a company I helped staff. He sent his manufacturing to China in the early 90’s. He had 200 employees in the plant over in China. He moved it back to Michigan and now has 30 employees doing it because of automation. This isn’t some huge win for the work force. But it does help because that plant needed, designed, built, automation had to be designed/built. The tiers to this company are local now. There is more of a trickledown effect.
    The jobs that are required are good paying jobs. It is better for the environment since the items are not shipped from the other side of the planet.

    If the tiers for automotive could produce parts at a slightly lower cost the OEM Ford, GM and Chrysler/Fiat would more likely keep their assembly local. The automation age is here, IMHO it is better to have the manufacturing in the area.
  • commented 2016-12-30 04:12:02 -0500
    DO NOT CLICK ON “REVIEW SITE RULES” below after you have written your comment. It will erase your comment !

    That said.

    There is an old monkey trapping trick long ago used by villagers. Dig a bell shaped hole and drop an apple in it. When a monkey grasps the apple his hand cannot be removed so long as he is holding the apple. As you approach the monkey his greed will prevent him from releasing the apple so he can escape. Drop a net or cage over the monkey and you’ve got him.

    So it is with the idea of manufacturing jobs being desirable. It is already well known that we have an over capacity to produce. Artificial prices for commodities are in place so that, for example; The price of tomatoes now have a “floor” otherwise the farmers will lose their land.

    Did you notice how well clothed the Syrian refugees were? How did that happen? Where did all the clothes come from? Answer: saturation: manufacturing overflow.

    The idea that having a manufacturing job is a goal is absurd.
    The last election was won by the challenger promising the most apples.

    In his retirement speech Eric Sevaried in 1978 said people need 4 basic things: food, clothing, shelter, and stimulation.

    We are awash in ,food, clothing, and shelter, The idea that education has only a cost and a limited goal of learning how to manufacture; borders on criminal negligence. The value of a more global understanding is obscured. The productive act of becoming educated is not taken into account as productivity.

    In his corollary to the efficiency of Hat Pin manufacturing, Adam Smith taught that having a repetitive job was the surest way to make people as “stupid as it is possible for a person to become”. Sure enough, in the last election, after years of teaching the value of apples (having a manufacturing job) the best apple salesperson won.

    And yet the opposite: having a singular desire to do no work or avoiding education; is equally as valueless as desiring a manufacturing job.
  • commented 2016-12-29 15:18:30 -0500
    I believe both Michigan and Ohio are having elections in 2018 for Governor. I know both states have a large manufacturing base with high demand from automotive. Could the governors run on democratic worker cooperatives using automation. Possibly the state, automotive OEM’s and government could help with the capital to get them started.

    Unless there is a major change the only way we can produce manufacturing at the cost of China is with automation. This is the only way I see us bringing these type of jobs back. Co-operatives if supported could run at slightly lower cost. The workers would be more likely to stay long term. The wages could easily be distributed more evenly.

    This could work in other areas. The great part about this is having more plants producing manufactured goods helps so many other business (restaurants, suppliers, transportation, clothing, etc…).
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