About Those "Bad Trade Deals"- Part II


As regular readers know, I've been wondering about the "why now?" phenomenon as the country wrings its hands over the loss of manufacturing jobs. After all, I pointed out that we have been seeing this for decades, and even Bruce Springsteen wrote his paean to America's closing factories, "My Home Town," back in 1983. Isn't this old news?

Well, someone just gave me the answer, and I probably should have seen it myself.

I saw an interesting piece on my Twitter feed from Josh Marshall of Talking Points Memo titled "This Chart May Stun You (or not.)" And here is the stunning chart, covering the number of workers involved in manufacturing starting in 1990.

And when I saw it, I said to myself, "Hey, that looks really familiar." Here is my chart from a piece I wrote over a year ago, called "The Shape of Things to Come in the World of Work." This shows how we produce a lot more cars with a lot fewer workers.

Shame on me for not seeing this sooner, because I should have READ this thing more closely. Note the red line showing auto employment plummeting with strong correlation to the chart above BEFORE the fiscal crisis.

Know what it doesn't show? Look at the top chart again, please: NAFTA was signed on January 1, 1993. For the next seven years, it seems to have absolutely no effect we can see on manufacturing employment. It remains elevated, and with a somewhat positive lilt, right up until 2001.

It seems the tale we were told about NAFTA killing our manufacturing employment might have been a bit.......exaggerated. But there was a shrewd political angle to exploit here based on this narrative of resentment. While the damage was done before the fiscal crisis even started, many voters may have thought that this could have been repaired and restored. Alas, the decline was merely arrested, which apparently wasn't good enough, and that could explain the anger and disappointment. Manufacturing output is back strongly. But the number of workers needed to bring it that level to us is perhaps, irreparably decimated. People are angry about something that more than likely had absolutely no effect on them.

Yesterday, with the glare of the issue focused with white hot intensity upon him, Sergio Marchionne, the CEO of Fiat Chrysler, announced a $1 billion investment in new plant and equipment in America. Although decided 16 months before, someone else decided they could take credit for it. The billion dollar investment is slated to create 2000 jobs.

About the same level of job creation the U.S. economy produces in just three hours on any given work day.

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Donald R. Davret, Investment Advisor Representative

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