4.4.17

THE MANUFACTURING FETISH.

There's a marvellous rant by John Kay that with Our President's mobilization of displaced blue-collar workers and his hopes of building lots of pipelines with American Steel is relevant precisely for its contrarian spirit.
Manufacturing fetishism – the idea that manufacturing is the central economic activity and everything else is somehow subordinate – is deeply ingrained in human thinking.  The perception that only tangible objects represent real wealth and only physical labour real work may have been formed in the days when economic activity was a constant search for food, fuel and shelter. Man hunted, fished and made primitive implements. If he was good at these things, his wife and children prospered; if not, they died. The women also worked hard – perhaps harder – but what was seen as economically productive activity was male.

From these primitive times, we have inherited the notion of a hierarchy of needs in which food and shelter rank ahead of chartered accountancy and cosmetic surgery.  Along with the hierarchy of household needs comes a perception of a hierarchy of importance for productive activities – agriculture, primary resources and basic manufacturing rank ahead of hairdressing and television programming.

But such thinking ceased to have economic relevance once technology and economic institutions advanced enough for it to be unnecessary to hunt and till all day in order to get enough to eat – a state of affairs which was reached many millennia ago. Once primitive tribes achieved this level of economic progress, they started to add discretionary activities to the fulfilment of their basic needs.
And division of labor, and the discretionary activities, including accountancy and surgery, becoming perhaps of greater marginal productivity than the cultivating and extracting.  But human institutions, being emergent, change only slowly, and the new activities, all the expanded choice sets they produce notwithstanding, stay tainted.
As economies passed beyond the basic and all-consuming requests for food, fuel and shelter, rewards became divorced from the place activities enjoyed in the hierarchy of needs. You only got paid for producing goods that people wanted, but it soon became apparent that insurance and priestly services were among the things people felt they needed. The earnings from different activities reflected the availability or scarcity of the talents needed to produce them, and your position in the power structure of the tribe.  The first explains why the insurance and repair men did well, and the second accounted for the prosperity of the political leader and the priest.

Those who are lucky enough to possess these rare talents or occupy positions of authority have often felt embarrassed by earning more than those who work to satisfy more basic elements in the hierarchy of needs. Often, they also enjoy occupations that are less arduous and more fun. Such embarrassment at their good fortune is rarely very great, and does seem to have diminished recently, especially in the finance sector. But emphasising the importance we attach to these other supposedly more necessary, but less well-remunerated activities, is a means of assuaging our guilt.
But thus, the manufacturing fetish.
It would be an absurd response to look back longingly on pictures of men with bare torsos covered in sweat working in the light and heat of rivers of molten iron, or heaving coal as they spent half their day working underground; these may have been real jobs, but they were awful jobs, and our society is better off for no longer needing them.
They might have been the best jobs available at the time, but as productive as those men were, all their efforts could not produce what their counterparts, augmented by machines, information technology, and those engineers and innovators (and where on the socially useful scale do you put them?  Between the manual operatives and the hairdressers?) achieve these days.

But a politician can look like he is "creating" or "saving" jobs if he has mascot employers to point to, and paycheck-drawing operatives to gladhand with.  Is it uncharitable of Kristofer Harrison, in The American Conservative, to make invidious comparisons of Big Steel with Solyndra?
Campaign rhetoric cast big steel as a babe in the woods left helpless by low U.S tariffs and Chinese wolves. While it is true that the United States maintains a low 3 percent tariff on most imports, that is not the case for politically sensitive goods like steel. When trade remedies come into play the numbers are positively blushworthy.
And the same Obama administration that funneled trendy corporate welfare to Solyndra raised the tariffs on imported steel. Unfortunately, steel is phenomenally productive these days, and the remaining work force draws payroll in many more states today than was the case when we had an Indiana - Ohio - Pennsylvania steel district with a southern outpost in Birmingham.

That phenomenal productivity?  Not because of convict labor in China or third world wages.  It's trade-tested betterments, conserving on resources by recycling steel more effectively.
Technological change, not trade change nor China. And here's the kicker. Nucor isn't the only minimill operator but it's one of the largest in the world. And it pioneered both the basic idea and many of the refinements to the technology over these past decades. It's a useful shorthand to say that, even if it's not accurate it's shorthand, Nucor killed off those blast furnace parts of the American steel industry.
The full story is richer than that, fortunately for my research projects back in the day!  And Nucor Steel got to where it was in part because the legacy steel companies wouldn't touch the projects Nucor worked on, sometimes for decades.  At the time, Nucor didn't get on board with the trade-protectionist rent seeking common in the American Iron and Steel Institute.  These days, well, never let an invitation from a crony-capitalist go to waste.
And now we've got the ex-CEO of Nucor arguing that the American steel industry needs trade protection?

That's industrial grade brazen chutzpah right there. The people that cut a swathe through an American industry demand trade protection for that industry they cut a swathe through? Almost admirable in its effrontery really.
No, that's how rent-seeking works.  I bet there are plenty of artists and entertainers who have done very well, thank you very much, without ever submitting a grant to one of the national endowments who, today, would like to see continued funding for those endowments.

Mr Trump, the endowments are a small swamp that perhaps ought to be drained.  There are larger swamps, listed on the maps as corporate welfare, that are also worthy of draining.

1 comment:

David Foster said...

Manufacturing fetishism is a reaction to the opposite spirit which has prevailed until very recently: dismissiveness toward, and even demonizaton of, manufacturing. Indeed, it has been quite common to refer to Manufacturing and to Knowledge Work as if they were somehow opposites.

See my posts Faux Manufacturing Nostalgia:

http://chicagoboyz.net/archives/11680.html

and

Myths of the Knowledge Society:

http://chicagoboyz.net/archives/10347.html