The Biden-Trump Economy of Nostalgia

Rather than prepare the U.S. for the challenges of the 21st century, they want to bring back the 20th.

By Robert B. Zoellick. Excerpts:

"The Cato Institute has reported that—contrary to conventional belief—U.S. manufacturing accounts for a larger share of global output than Japan, Germany, South Korea and India combined. America’s productivity is far ahead, too. In 2019, the value added by the average American manufacturing worker was $141,000, exceeding second-place South Korea by more than $44,000 a worker and China by more than $120,000.

Global markets reflect this strength. Between 2002 and 2021, U.S. manufacturing exports more than doubled, with sales second only to China, which dominated low-end production. Foreigners understand American industry better than Joe Biden or Donald Trump does; they invested $2.1 trillion in U.S. manufacturing, including $121 billion in 2021, before Mr. Biden’s subsidies.

America’s success is thanks to its ability to move from low-tech, less-productive sectors to higher-value ones such as computers, pharmaceuticals, medical and scientific instruments, aerospace, and electrical machinery. The U.S. even understates its performance because our definition of manufacturing is as old as our presidential candidates. The late George Shultz said Washington could solve a political problem by treating software as a manufactured good. Software now accounts for about half the value of a new car. Politicians who see manufacturing only as bending metal are out of touch."

"The 21st-century economy, including modern manufacturing, will depend on innovation in artificial intelligence, quantum computing and general-purpose technologies. American manufacturing is productive, requiring fewer workers. Consider even the much-protected steel industry. U.S. steel output increased 8% between 1980 and 2017, despite a workforce less than a quarter its prior size. America isn’t the only country moving to higher-productivity manufacturing with fewer workers. From 1976 to 2016, manufacturing employment fell by almost half in Germany and two-thirds in Australia."

"Research by the Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis shows that manufacturing workers earn less than the average private-sector worker. Manufacturing workers in higher-tech sectors, with greater productivity, fare better. These jobs benefit from trade"