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Wednesday, March 29, 2017

The Purpose of Manufacturing Isn’t to Create Jobs

Jobs are means, not an end.

Funny thing about American manufacturing: The good news about what’s happening at American factories often sounds like bad news to politicians.

Growth in manufacturing did not come in spite of the decline in factory employment but partly because of it.

American factories are one of the wonders of the world, and, in spite of what President Donald Trump, Senator Bernie Sanders, and other lightly informed populists claim, they are humming. U.S. manufacturing output is about 68 percent higher today in real terms (meaning inflation-adjusted terms) than it was before NAFTA was enacted; manufacturing output is about double in real terms what it was in the 1980s and more than three times what it was in the 1950s. As our factories grow more efficient, output per man-hour has grown, too, which is what troubles the populists and demagogues: Our factories employ a much smaller share of the U.S. work force than they once did.

All Jobs Are Temporary

But it is important to keep in mind: That growth in manufacturing output did not come in spite of the decline in factory employment but partly because of it. Automation not only makes current production more efficient but also makes it easier to improve efficiency in the future: More heavily automated factory processes are much easier to upgrade than are those heavily dependent on human labor.

The complaint usually goes something like this: “What good is that increased output if it comes at the expense of good manufacturing jobs?” Often, this will be accompanied by fictitious claims about Henry Ford’s paying his workers more so that they could afford to buy his cars, a complete invention that is one of the favorite myths of economic populists of Left and Right.

All construction jobs are temporary—buildings get built. Projects come to completion, and work gets finished.

Here, we need a little bit less Milton Friedman and a little more Marcus Aurelius: “What is this thing in itself? What is its purpose? What does it do?”

The purpose of an automobile factory is not to “create jobs,” as the politicians like to say. Its function is not to add to the employment rolls with good wages and UAW benefits, adding to the local tax base and helping to sustain the community—as desirable as all those things are.

The purpose of an automobile factory is not to create jobs—it is to create automobiles. Jobs are a means, not an end. Human labor is valuable to the extent that it contributes to human prosperity and human flourishing, not in and of itself as a matter of abstraction.

There are cases in which this is so obvious that practically everybody understands it. When we talk about building new pipelines (and good on the Trump administration for getting out of the way of getting that done), our progressive friends sometimes sniff that many of the new jobs associated with that work are “temporary.” (“Temporary jobs” is a phrase usually delivered with a distinct sniff.)

Here is a little something to consider: Unless you are building the Second Avenue Subway in New York City, all construction jobs are temporary—buildings get built. Projects come to completion, and work gets finished. It is in the nature of construction jobs to come to an end. And it is not only construction: A technology-industry friend attending the recent National Review Ideas Summit in Washington bluntly shared the view from Silicon Valley: “All jobs are temporary.”

Trade is a Technology

Consider this thought experiment: Say that a Star Trek fan manages to invent something like the replicator from that science-fiction series, meaning that all purely material desires can be more or less fulfilled instantly: “Tea, Earl Grey, hot!” and that’s that. Such an invention would be devastating for the employment prospects of billions of people, including pretty much everyone on Earth not working in a purely service-oriented or intellectual capacity along with a great many people working in service jobs, too: There are no chai wallahs on the Enterprise.

Trade is in fact a machine of a different sort: a social machine.

But we would be enormously better off in real terms. There would be no expensive prescription drugs, no shortage of Pappy Van Winkle, no scarcity of ordinary consumable goods at all. Presumably, you could have Michelangelo’s Pietà—arguably the most beautiful thing made by a man so far—in your backyard, provided you could figure out a way to move it there. (Job opportunities, after all!) You could have three of them, if you liked, or three dozen. You could pour a nice 1982 Bordeaux over your Fruity Pebbles, if you liked. Once you sobered up, you could drive around in one of your 1968 Ferrari Dinos.

Consider another kind of machine, a more limited one: Bryan Caplan’s magical idea for a machine that turns corn into cars: “Lo and behold—corn goes in, and cars come out.” It will not ruin Professor Caplan’s M. Night Shyamalan moment to reveal the twist ending to his story: There is such a machine, and it is called trade. “What difference does it make what’s inside the factory?” Professor Caplan asks. “For all intents and purposes, trade is a kind of technology, a creative way to reduce our cost of living and thereby raise our standard of living.”

Trade—and capitalism—is in fact a machine of a different sort: a social machine.

Global capitalism anno Domini 2017 is not quite a Star Trek replicator, but it is something close. What would you do with a replicator? Presumably, most of us would first ensure that we never wanted for the basics of life—food, shelter, clothing, medical necessities—and then we probably would spend a great deal of time enjoying things that once had been reserved to very wealthy people. It would be interesting to see what happened socially after the novelty of that wore off, when a ten-pound diamond became just another rock and there were no more consumer goods that functioned as status symbols.

Unrestrained Ingenuity

But would that really be so different from where we are now? Things that were until quite recently “a millionaire’s whim” are so common and so widely available that we do not even think about them. And what really functions as a status symbol right now—having a Mercedes, or being in really good physical condition, or having a fulfilling and creative job, or having rarefied experiences that money cannot buy? You can lease a Mercedes for less than $100 a week.

Politicians are like children who take apart complex machines without understanding how to put them back together.

If I were a Republican politician or someone paid to advise such creatures, I might point out that the great sources of friction in our public life right now have to do mainly with a few areas in which abundance has not been allowed to emerge. We have one economic model for producing food and mobile phones and automobiles, and a different one for producing health care and education, and to some extent (more in some areas of the country than others) housing.

The typical American today can afford housing that is much better (larger, better built, better furnished) than could the typical American of his grandparents’ generation. He can afford a better car and better food than a millionaire of that generation. And he has access to better health care and educational options, too, but these have not improved at the rate of everything else in his life, and the options for financing them have become a source of insecurity and stress.

The people who have an explicit legal obligation to work not on our behalf but on behalf of their shareholders do a pretty good job of giving us what we want; the people who vow to work on our behalf do not. That is a paradox only if you do not think about it too much, and not thinking about it too much is the business that politicians are in.

If capitalism—which is to say, human ingenuity set free to follow its own natural course—is a kind of social machine, then politicians are something like children who take apart complex machines without understanding what they do or how to put them back together. (At their worst, they are simply saboteurs.) When they rail against capitalism, automation, trade, and the like, they resemble nothing so much as those hominids at the beginning of 2001: A Space Odyssey, shrieking hysterically at something that is simply beyond their comprehension.

A social machine is different from an ordinary mechanical one, but you can still throw sand in the gears.

Reprinted from National Review.