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US Manufacturing
ANDREW MORAN has been writing about business, economics, and finance for more than a decade. He is the author of “The War on Cash.” Andrew Moran
Many were offended by recent remarks by the Peterson Institute’s president
The president of an influential think tank has recently come under fire for remarks he made about American factory workers.
Concerns over U.S. manufacturing employment is an obsession for keeping “white males with low education” in “powerful positions,” says Adam Posen, an economist and president of The Peterson Institute for International Economics, a Washington-based think tank.
Speaking at a Cato Institute event on Oct. 6, Posen expressed his disapproval over the constant attention given to domestic manufacturing as opposed to other industries that have experienced job displacement, whether from economic downturns or automation.
“The fetish for manufacturing is part of the general fetish for keeping white males of low education—outside the cities—in powerful positions they’re in in the U.S.,” he said.
Posen explained that there hadn’t been a comparable concern for the displacement of blacks during recessions or single women who were replaced by computers beginning in the 1970s. These developments, he argued, didn’t receive much political attention.
“But when it started being the white male manufacturing people in the socalled Heartland, which by definition was not urban, then suddenly this was a crisis.”
Posen’s comments garnered backlash from many parties, including the Alliance for American Manufacturing (AAM), a nonprofit organization to strengthen domestic manufacturing.
“Not only are Posen’s remarks stunningly condescending, his offensive argument is just factually incorrect,” the group wrote on Twitter.
“What Posen is trying to do, on behalf [of] big corporations who want to keep outsourcing jobs, is convince people we shouldn’t worry when ‘low education’
white workers complain when their livelihoods are taken away in order to pad some shareholder’s bottom line. DON’T FALL FOR IT.”
Rana Foroohar, a Financial Times columnist and author, remarked that his comments show “how out of touch most economists are with how business actually works.”
“If you are a country today with no ability to make crucial goods or access them from allied nations, God help you,” she said.
Matt Stoller, author and director of research at the American Economic Liberties Project, also reacted to Posen’s comments on Twitter.
“I can’t think of a better recipe for inducing racial tension than having D.C. elites financed by Wall Street pushing offshoring and then saying that anyone who opposes having their community and livelihood destroyed is racist,” he stated.
Moreover, critics have pointed out that Chinese tech giant Huawei Technologies donated to The Peterson Institute between 2010 and 2018. The think tank didn’t respond to a request for comment.
The U.S. manufacturing industry has greatly transformed over the past 50 years when many workers would go to work at the local factory and construct everything from automobiles to steel.
National manufacturing output had steadily increased since 2000, topping $2.3 trillion before the coronavirus pandemic. However, during this same span, it has represented a smaller portion of the nation’s gross domestic product, accounting for about 11 percent, down from 15 percent in 2000.
But while domestic manufacturing has enjoyed greater output, employment levels peaked in 1979 at 19.5 million, falling to below 13 million in 2022.
Experts cite two reasons for this trend: China and automation.
Some of the largest companies in America shifted operations to China, resulting in 3.7 million lost U.S. manufacturing jobs between 2001 and 2018, according to the Economic Policy Institute (EPI).
However, there has been a gradual reversal since the COVID-19 public health crisis, with many U.S. companies leaving China and reshoring their businesses in the United States. The Reshoring Initiative reported last month that American businesses are on track to return close to 350,000 jobs this year, the highest on record since records began in 2010.
From supply chain snafus to geopolitical challenges involving China, companies have desired to bring their operations closer to home.
Despite Posen’s contention that this has largely been a problem for uneducated white people, AFL-CIO chief Economist William Spriggs and his team reported that the China trade shock that decimated U.S. manufacturing exacerbated racial inequality by reducing the percentage of black employment and hire rate.
