, , , , , , , , , , , , ,

I’m all for looking on the sunny side of life. Making up the sunny side of life? Not so much. That’s why I find Anne-Marie Slaughter’s recent Financial Times column so disturbing. For the author – a contributing editor of the FT, the president of New America (a tech and offshoring industry-funded think tank in Washington, D.C.), and a former leading foreign policy adviser to President Obama) has just served up an exercise in economic hopium that is almost entirely fact-free, and that repeats a canard that was hopelessly out of date twenty years ago.

Slaughter’s fanciful claim? That the spread of the internet of things throughout American manufacturing is going to spur a revival of America’s hard-hit, industry-heavy midwestern Rust Belt. One main reason, according to the author:

“[T]he next phase of the digital revolution is the internet of things. The Midwest is the traditional home of makers — of cars, tractors, machines and household appliances. Companies such as Deere & Co, Carrier or Ford may have shifted manufacturing abroad, but the design, engineering and innovation is still concentrated back home. Those jobs may be less sexy than billion-dollar start-ups, but they will be stable and well paid. On Thanksgivings to come, Midwest cities seeking to grow their tech sectors should have more and more to be thankful for.”

Although the headline (which Slaughter probably isn’t responsible for) – “The internet of things helps spark a rust belt revival” – signals that the Midwestern renaissance is already well underway, the author herself is honest enough to specify in the text that the only metrics she presents show progress on this score limited to “a fraction of a percentage point.” But it would have been more honest to at least hint at all the data suggesting how pie-in-the-sky her prediction is over any foreseeable time frame.

For example, although there’s no authoritative source of information showing how many employees of manufacturing companies based in the United States (either U.S.- or foreign-owned) work in science and technology positions, numbers are available for the share of American manufacturing workers occupying both blue-collar and white-collar jobs. These aren’t definitive, because many of the white-collar jobs are administrative and management jobs having little or nothing to do with innovation, and because manufacturing companies have tried to eliminate as many as possible to maximize cost savings.

But it’s still surely revealing that, since the offshoring phase of U.S. trade policy officially began when the North American Free Trade Agreement (NAFTA) went into effect at the beginning of 1994, American manufacturing employment falling outside the “nonsupervisory and production” category is down by 956,000 – or 20.45 percent. That’s a smaller hit than taken by industry’s blue-collar workforce – which is down by 39 percent, or 3.418 million. But over the last two-plus decades, the blue-collar/white-collar job split in manufacturing has barely budged, with the former’s share down from only 72.27 percent to 70.21 percent. Does that tell you a dramatic U-Turn is anywhere on the horizon?

Moreover, the U.S. Bureau of Labor Statistics (the source of the above figures) did take a cursory look at the employment of some types of engineers in various sectors within domestic manufacturing. It found that, in May, 2015, between about 38 percent and about 55 percent of the workforces in American information technology hardware production belonged in science and technology categories. But little of this type of manufacturing is located in the rust belt.

The only data set this same study contained that looked relevant to the midwest covered the increase in the number of mechanical engineers employed in the motor vehicle parts and various industrial machinery sectors. Only in motor vehicle parts did the workforces (modestly) exceed 10,000 – and this in an industry whose payrolls approached 564,000 that month, and whose total white-collar workforce came to just over 128,000.

Although it’s true that the statistics could be missing the kind of shift Slaughter expects (and her headline writer regards as already underway), anyone familiar with the way manufacturing typically works would understand why extreme skepticism is in order. In real-life manufacturing companies, and especially factories (as opposed to those imagined by so many think tankers and academics), production on the one hand and research and development etc on the other are rarely activities that are so sharply distinctive that one can readily take place around the world from another. In fact, they are so closely related that knowledge tends to flow back and forth between production line and lab in a continuous, interactive feedback loop. And it’s not remotely good enough to exchange this information electronically. That’s why, in sector after sector of manufacturing, when the production leaves the country, the research and development and design and engineering tend to follow.

And that’s why the only useful purpose served by Slaughter’s article – and the FT‘s decision to publish it – is reminding readers that, as long as American trade and other globalization policies keep needlessly fostering the export of manufacturing, offshoring interests, their hired guns in the think tank world, and their unwitting dupes in the press will strive to portray these losses as all for the best.

As my book, The Race to the Bottom made clear, it was a phony excuse for de-industrialization back in 1997, when former Clinton Secretary of State Madeleine Albright touted the advent of high tech products “designed and begun in the United States and…manufactured in Asian countries,” and it’s no less dangerously off-base today.