There have been a flood of opinion pieces and news stories in recent weeks wrongly telling people that it was not trade that led to the loss of manufacturing jobs in recent years, but rather automation. This means that all of those people who are worried about trade deficits costing jobs are simply being silly. The promulgators of the automation story want everyone to stop talking about trade and instead focus on education, technology or whatever other item they can throw out as a distraction.
This “automation rather than trade story” is the equivalent of global warming denialism for the well-educated. And its proponents deserve at least as much contempt as global warming deniers.
The basic story on automation, trade and jobs is fairly straightforward. “Automation” is also known as “productivity growth,” and it is not new. We have been seeing gains in productivity in manufacturing ever since we started manufacturing things.
Productivity gains mean that we can produce more output with the same amount of work. Before the trade deficit exploded in the last decade, increases in productivity were largely offset by increases in output, making it so the total jobs in manufacturing did not change much.
Imagine that productivity increased by 20 percent over the course of a decade, roughly its average rate of growth. If manufacturing output also increases by 20 percent, then we have the same number of jobs at the end of the decade as at the beginning. This is pretty much what happened before the trade deficit exploded.
This is easy to see in the data. In December of 1970 the US had 17.3 million manufacturing jobs. Thirty years later, in December of 2000, it had 17.2 million manufacturing jobs. We had enormous growth in manufacturing productivity over this period, yet we had very little change in total employment.
To be clear, manufacturing did decline as a share of total employment. Total employment nearly doubled from 1970 to 2000, which means…