INDUSTRIAL policy via Twitter is a new development in economics but
we may all have to get used to it over the next four (or eight) years.
Donald Trump's tweets on the car industry (and his planned cuts to
corporate income tax) may or may not have persuaded Ford to keep a plant
in Michigan, creating 700 jobs. But the problem with such
headline-grabbing is that there are thousands of companies in America,
and jobs are being created or destroyed every day; intervening in all
these situations is impossible. Even in cars, for example, GM has recently announced 3,300 lay-offs, almost five times greater than the Ford additions.
History suggests that the aim of creating large numbers of manufacturing jobs will be a lost cause. In 1979, the high point for American manufacturing jobs was reached at 19.5m. The subsequent recession of the early 1980s caused that number to fall but there were regularly 17m-18m jobs in the 1980s and 1990s. From the turn of the millennium, however, the total fell pretty remorselessly, with the 2008-09 recession proving the coup de grace. The low was just under 11.5m in early 2010. As the economy recovered, some jobs returned and a peak of 12.3m was reached early last year. But since then, the numbers have been drifting down again.
The same kind of declines have been seen across the developed
world, indicating that this is not a particular problem of American
economic policy. This report
from the Congressional Research Service sets the context; America's
share of global manufacturing value added fell 12 percentage points
between 1993 and 2014 but Japan's share fell 14 points over the same
period. Unsurprisingly, China has taken the bulk of the market share. In
terms of employment, the 31% decline in America between 1990 and 2014
compared with a 25% fall in Germany, 33% declines in France and Sweden,
34% in Japan and 49% in the UK.
http://www.economist.com/blogs/buttonwood/2017/01/economics-and-finance
History suggests that the aim of creating large numbers of manufacturing jobs will be a lost cause. In 1979, the high point for American manufacturing jobs was reached at 19.5m. The subsequent recession of the early 1980s caused that number to fall but there were regularly 17m-18m jobs in the 1980s and 1990s. From the turn of the millennium, however, the total fell pretty remorselessly, with the 2008-09 recession proving the coup de grace. The low was just under 11.5m in early 2010. As the economy recovered, some jobs returned and a peak of 12.3m was reached early last year. But since then, the numbers have been drifting down again.
http://www.economist.com/blogs/buttonwood/2017/01/economics-and-finance
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