Oren Cass points out a very arresting fact: labor productivity in the manufacturing sector has been falling for more than ten years. Not productivity growth. Productivity. American factories now require more workers than in 2011 to produce equivalent output.

This is indeed an arresting fact. We are told that productivity is growing, and that indeed this is why we shouldn't worry about manufacturing job losses.

But, as Cass points out, if a company makes ten widgets a month using ten workers, and doubles its productivity, it can fire five workers and keep making ten widgets…or it can make twenty widgets. In the 1947-72 period, manufacturing worker productivity more than doubled, and yet manufacturing employment rose from 14 million to 17 million, because output grew even faster. Meanwhile, notes Cass, "from 2000 to 2022, […] U.S. manufacturing employment collapsed as low as 11 million before recovering to between 12 and 13 million. We are told that this is the result of automation and productivity growth, but there is no surge in productivity growth. In fact, over the entire period, the annual rate has been a bit lower than in the earlier periods and, as noted, in recent years it has even turned negative. For all the talk of automation, no evidence exists that such forces have in fact led to a divergence from the long-run trend."

Cass points out something else about output numbers: "this estimate is known to have a significant measurement error, because in valuing the output of electronics it essentially credits a doubling in the speed of a computer processor as a doubling of output. Thus, government statistics report that electronics output has increased almost 25,000% in recent decades, which obviously is not a useful description of the trajectory for the manufacturing of such products in the United States. Exclude that category and look just at the rest of the manufacturing sector, and industrial output has in fact fallen substantially in recent decades."

Cass's conclusion arrives: "This stagnation or outright decline in manufacturing output is not some natural consequence of economic progress. To the contrary, American consumption of manufactured goods has continued to surge. But whereas, historically, that rising consumption would have created more well-paying jobs in a more productive manufacturing sector for American workers, we have chosen instead in recent years to move existing production offshore and fill new demand via imports. So thoroughly have we eviscerated manufacturing that we are getting actively worse at making things."

Regardless of what policy remedies we think are good or bad, it's still always worth keeping in mind the actual state of things.

Policy News You Need To Know

#Uncommon — Excellent news if you care about the world of ideas: speaking of American Compass, they are launching a magazine, called "Commonplace," in January, and it will be edited by Helen Andrew and Drew Holden, aiming to be a magazine of ideas for the New Right. Andrews just may be the most talented writer and editor active in America today, or close to it. Even if you disagree with the New Right's ideas, you should be happy for a new magazine of ideas staffed by intelligent and dedicated people. You can give them your email here.

#NDAA — Punchbowl has a good overview of the situation on the NDAA and the CR. NDAA looks set to pass, with a slight topline budget increase for the Pentagon, and the biggest item a pay increase for servicemembers.

#Immigration #VibeShift — Well, this is a significant quote, both because of the content and the source. This morning, the New York Times informs us that "the immigration surge of the past few years has been the largest in U.S. history, surpassing the great immigration boom of the late 1800s and early 1900s." (Yes, even relative to population.)

#Healthcare — Since the awful murder of UnitedHealthcare CEO Brian Thompson, we have made the point that a bigger reason for the cost and (relative) scarcity of healthcare in the US is providers and middlemen rather than insurers. A good example is pharmacy-benefit managers, or PBMs, middlemen who sit between pharmacies and insurers. These middlemen have grown and consolidated, and now, three firms dominate the market. Matt Stoller has an overview here. Well, in new bipartisan legislation, Sens. Hawley and Warren (yes) are sponsoring a bill that would force insurers with PBMs to divest their pharmacies, essentially breaking up the industry.

#Tax — Brookings has a new piece on the tax fight which is short, but whose framing we liked—they see four possible paths forward: "go big, permanently; go big, temporarily; go small, permanently; go for two tax cuts."

#Ed — AEI's Rick Hess, who is always worth reading, has a new piece out, we wish we could summarize it, but we can't do better than just quoting the title: "No, the US Department of Education won't be abolished, but there are plenty of changes afoot."

#Energy — R Street's Devin Hartman has a new piece out on an obscure but important topic: the power grid.

#Veterans — Sen. Boozman of Arkansas, a senior member on the Committee on Veterans' Affairs, has an article out at the Ripon Forum on the issue of veteran suicide in support of his Not Just A Number Act, which would "require the VA to examine veterans’ benefits usage in its annual suicide prevention report in order to evaluate the relationship between VA benefits and suicide outcomes." The point is to gather more data on what causes veteran suicides. "Our legislation would allow for the study, from a holistic standpoint, of how these variables factor into the persistently high number of veterans taking their lives in addition to better understanding the scope and scale of services available to them."

#LGBT — On "experts' advice", the UK is banning puberty blockers indefinitely.