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Originally Posted by BBQMan
This is correct - manufacturing employment has been declining and will continue to do so. However, manufacturing output will continue to increase. This is the result of increased productivity. The easiest way to understand this is to look at the ratio of farmers to city dwellers. In the late 1800's/early 1900's 90% of the population lived and worked on the farm and was able to provide enough food for themselves and the 10% who lived in cities. Today, less than 5% of the population lives and works on the farm and they not only feed the rest of us but have enough left over to feed a large export industry.
Farming is reaping the rewards of technology. Manufacturing is now going through a similar transition. A number of critical developments created the need/opportunity for manufacturing to flourish. Key among them, electricity. Their would be no need for washing machines, consumer electronics and a host of other things w/o electricity in the home.
Today we are looking at amazing new technologies in virtually every field. Our great challenge is to find the knowledge workers that can let us develop them and put them into production.
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However, the high-end manufacturing doesn't promulgate the economic cycle as low-end does. Low-end tends to keep the money in local circulation, unless the low-end comes from offshore. Very few people buy aircraft or Cray supercomputers, whereas the number of coffee cups, TVs and radios, under-$500 electronics, appliances of all sizes are in constant sales.
Every consumer purchase of $100 for Chinese goods results in approximately $30 sent to the manufacturer, $10 in international shipping, and the rest to middle-men and domestic transport. The percentages may be off somewhat, but not by a lot. So, that's approximately 40% of the consumer cost for Chinese (and other foreign) goods forever taken out of our economic cycle for each purchase made. Now, if the Chinese imported the same value from the US, then the economic effect would be Zero. However, with our balance of payments way to the negative, their economy is a boomtown, and ours is heading for the dustbin.
You cannot keep having a negative balance of payments and be in a positive economic position.