Written by Keith Quincy   

On February 18, RSN published an article by Robert Reich. In the article, Reich claimed: “Even if we didn’t have to compete with lower-wage workers overseas, we’d still have fewer factory jobs because the old assembly line has been replaced by numerically-controlled machine tools and robotics. Manufacturing is going high-tech.”

This is the popular view, but it needs a great deal of qualification. Consider this observation from a forthcoming book, “Worse Than You Think” (pages 65-66):

"By 2008, most of what we manufactured was low-tech. Many of our factories were not dust-free buildings where workers used precision machines. They were places of gore, slaughterhouses where millions of carcasses moved on conveyor belts from station to station to be cut up with power saws. Only the buzz of the saws and clanking of the belts told this was a factory.

"Not everything we made was so bloody. We produced breakfast cereals and snack food, soap, and fertilizer. We made basic chemicals like dye. We smelted iron and aluminum ore into ingots and metal sheets and supplied them to companies (often overseas) that made finished products. We also made pottery and glass. We produced pipes for plumbing. Our factories turned out nuts and bolts, furniture, clothes, lumber, and paper. We drilled for oil and mined coal.

Nearly all of these things were big deals back in the 1920s. Today, they are what poor nations produce when taking their first steps toward industrialization. Yet these same items make up nearly 50 percent of what America produces today."

It is true that productivity in low-tech industries cannot match the productivity in high-tech factories. Between 1987 and 2007, the productivity in some fields of advanced electronics shot up 2,000 percent, and in some cases 5,000, percent. Over the same period, the productivity in many low-tech industries merely doubled or tripled. Still, this far outpaced the productivity in services. Fast food restaurants may look like efficient assembly line operations but over the same period their productivity increased only 15 percent. In some services, the change in productivity was actually negative. If America brought its outsourced manufacturing home, including the low low-tech (which is the majority), overall productivity would rise dramatically. Workers would produce more for the same hours worked, justifying higher wages.

Persuading employers to raise wages, even when deserved, is another matter. As Reich correctly notes, this requires unions. Also, to bring the factories homes requires tariffs, plus other forms of protectionism, that would make “Made in America” goods cheaper for American consumers than imports. America was protectionist for the first 145 years of its history. It was why American workers earned the highest wages in the world and why America shot past Free Trade Britain to become the largest economy in the world.