Industrial Output and National Security

One argument for protectionist trade policies that I have found somewhat sympathetic in the past is the neccesity of maintaining sufficient domestic industrial capacity for national emergencies.

Thomas Bray, writing in the New York Sun today comments:

But the death of manufacturing in the United States is vastly overstated. While manufacturing jobs have indeed contracted 20% or so just since 1996, and by 50% subce 1970, manufacturing output itself has remained fairly steady when adjusted for prices, according to the Economist magazine.

Which puts an interesting spin on things. If domestic manufacturing capacity is constant, then labor force reductions in the US are due to productivity gains, not capacity moving overseas. Increased capacity overseas reflects increased consumption not decreased domestic capacity, which still might reflect a danger to national security in some sense, but in a different way.

It’s easy when a company closes a plant in Dubuque and opens one overseas to think of it as “jobs moving overseas”. It might be more accurate to say that the jobs have evaporated in productivity gains in South Bend and the company is just changing to a different business.

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