The Insightful Troll

Rants and ruminations.

America's Advanced Manufacturing Problem

David Adler and William B. Bonvillian writing for American Affairs:

The United States was once the global leader in manufacturing, ushering in the mass production era from the end of the nineteenth through the mid-twentieth century. It is not a global leader in the advanced manufacturing of the twenty-first century. (Advanced manu­facturing can be defined as the application of innovative technologies to improve manufacturing processes and products, adding significant value through productivity advances and innovation. These would include digital technologies, robotics, 3-D printing, advanced materials, bio-fabrication, artificial intelligence, and nanofabrication.)

The United States does not currently have the correct institutional infrastructure and accompanying operational mechanisms to support ad­vanced manufacturing. Industry, government, and academia are largely unlinked when it comes to advanced production technology and processes, and there is a similar lack of interagency coordination within the government. Pathways necessary for diffusing new technologies and getting them to market are missing, including a lack of scale-up financing mechanisms. The vocational education system has withered as has the corporate lab system. The Department of Defense’s (DoD) mission has traditionally been one of military security rather than economic security and assuring a strong American industrial base. Yet economic security and military security are now inseparable, and by failing to pursue innovation in production, the DoD is putting U.S. economic and therefore national security at risk. Financial markets do not reward advanced manufacturing. They favor outsourcing and the disaggregation of integrated firms. Corporations are not rewarded for pursuing production as opposed to, say, stock buybacks. What is sometimes called the U.S. developmental state has many strengths—in basic research as well as applications in the areas of defense technology, software, and biopharma development—but advanced manufacturing is not one of them.

Robert J. Gordon, in his widely read book The Rise and Fall of American Growth, argues that recent generations of technologies are inherently less conducive to job creation, compared to earlier breakthroughs, leading to lower growth. But the real culprit may be the way in which our innovation system was designed, leaving a manufacturing focus out of the innovation equation. The result of all this has been the decline of U.S. manufacturing and the corresponding weakening of the American working class, growing economic inequality, and protracted political confrontation.

Yea - the real culprit can be traced as far back as 1968 when Victor R. Fuchs coined the term “the service economy.” And US policy over the last 4 decades has pushed the transformation of the economy to a predominate service based economy.

The problem is eventually you will hit a brick wall if the US as a country fails to create value. After all in a capitalist society - with the creation of value, all of the money will eventually filter to a tiny percent of the population.