Imagine if someone credibly reported something to the effect that education has no statistically significant affect on individuals’ incomes over any stretch of time. That would be considered pretty big news – especially if the nation was in the middle of a big debate over education policy.
So it’s so strange that so little has been made of a major new finding on why so many manufacturing jobs have disappeared in recent decades – especially since it’s come out with Americans in the middle of a big debate on trade policy.
Especially since the North American Free Trade Agreement 20 years ago made trade policy front page news – at least sometimes – the argument has raged: Do such trade deals deserve most of the blame for manufacturing job loss? Or is the main culprit is improving productivity, abetted mainly by dramatic advances in labor-saving technologies? The conventional wisdom, summarized neatly in this USAToday editorial, is that automation “wins” hands down.
But a Brookings Institution duo has just looked at some new data on the use of robots in industry, and found that “there is essentially no relationship between the change in manufacturing employment and robot use” around the world. Indeed, they maintain that countries that have installed more robots proportionately in their factories than the United States have lost a much smaller share of their manufacturing jobs.
Even more interesting – those countries that have led in robotics but fared relatively well on the manufacturing jobs front include Germany, Korea, France, and Italy. None of these economies is close to a paragon of free trade. Further, the countries that have lost the biggest shares of their manufacturing jobs, but that have lagged relatively speaking in robot-izing their industries, have remained wide open to manufactures imports and blase at best about offshoring – the United States, the United Kingdom, and Australia.
Now robot use isn’t the only way manufacturers use technology to boost productivity. And using technology isn’t the only way that manufacturers can boost productivity. Setting up factories differently can have dramatic impacts; so can job offshoring, as the U.S. Labor Department has come to agree.
But given that such offshoring often results from the incentives created by trade agreements and related trade policies (like ignoring foreign currency manipulation), and given this new evidence that more robots aren’t manufacturing job-killers, the process of elimination alone points strongly to one conclusion: When it comes to U.S. manufacturing job loss (apologies to James Carville), “the trade policy, stupid” looks increasingly like a major contributor.
Incidentally, I wouldn’t have come upon the Brookings research had Tim Aeppel of The Wall Street Journal not written it up, so a tip of the hat to him!