"Decline of Manufacturing" is Global Phenomenon: And Yet the World Is Much Better Off Because of It

By Mark Perry.

The chart above shows manufacturing output as a share of GDP, for both the "world less the U.S." and the U.S. alone, using United Nations data for GDP and its components at current prices in U.S. dollars from 1970 to 2010. We hear all the time from Donald Trump and others about the "decline of U.S. manufacturing," about how nothing is made here any more, and how everything that used to be made here is now made in China and other low wage countries.  An underlying assumption of most of those claims is that if the manufacturing base is shrinking in the U.S. (the "hollowing out of U.S. manufacturing"), that there is an offsetting manufacturing gain that is captured elsewhere in the world, as manufacturing output supposedly shifts from the U.S. to other countries, with world manufacturing remaining constant. 

In reality, the chart above shows that the decline in U.S. manufacturing as share of GDP between 1970 and 2010 is really a global phenomenon as the entire world becomes increasingly a service-based economy.  The manufacturing/GDP ratio in the U.S. fell from 24% to 13% between 1970 and 2010, while the world ratio fell at almost the same rate, from 27% to 16%.   

As a share of GDP, manufacturing has declined in most countries since the 1970s. A few examples: Australia's manufacturing/GDP ratio went from 22% in 1970 to 9.3% in 2010, Brazil's ratio went from 24.5% to 13.5%, Canada's from 19% to 10.5%, Germany's from 31.5% to 18.7%, and Japan's from 35% to 20%.

Bottom Line: When we hear claims that "nothing is made here anymore," it's not really the case that somebody else is making the stuff Americans used to make as it is the case that we (and others around the world) just don't manufacture as much "stuff" any more in relation to the growing levels of national income, which the graph above clearly shows. 

The main reason that the manufacturing/GDP ratio has declined in the U.S. and around the world is that productivity gains for durable goods have significantly lowered the price of those goods relative to: a) the prices of services, and b) household incomes, as I pointed out in this CD post on the "miracle of manufacturing." In other words, the declining manufacturing/GDP ratio reflects declining prices for manufacturing goods, which is a sign of economic progress, not regress.  The standard of living around the world today, along with global wealth and prosperity, are all much, much higher today with manufacturing representing 16% of total world output (including the U.S.) compared to 1970, when it was almost twice as high at almost 27%. And for that progress, we should celebrate, not complain about the "decline of manufacturing."  

Alex Tabarrok on Innovation.

By Russ Roberts.


But there are exceptions, as you point out. So, you would not get rid of patents on pharmaceuticals. Why? So, pharmaceuticals are really the classic case of where the innovation-to-imitation costs are extraordinarily high. It costs about a billion dollars to create a new pharmaceutical. The first pill costs a billion dollars; the second pill costs 50 cents. So, that's a classic case where imitation costs really are low. That's the best case for patents, in a field like that. But my question is: Why does every innovation deserve or require the same 20-year patent? Why do we have a system which gives a one billion dollar pharmaceutical--where there's $1 billion in research and development costs--we give that a 20-year patent and one-click shopping gets the same 20-year patent? That makes no sense whatsoever. So, what I suggest is a more flexible system. I'd like to have a 20-year patent, maybe a 15-year patent, maybe a 3-year patent. Something like that. And then we could say: You want to apply for a 3-year patent? We are going to get this through the system quickly; we won't look at it so much. Hurdle to make the case for it smaller. Exactly. You want a 20-year patent, though: You'd better show us that you really are deserving and put some costs in there. Now, a side-note on the pharmaceuticals--I'm surprised you didn't mention this. Maybe you are just trying to be strategic. It's true it costs a billion dollars to develop a new drug; but there's a reason it costs a billion dollars. A lot of that cost is to no avail. It's replicating tests that sometimes already happened in Europe. A lot of it is the regulatory structure around the drug industry. People who are worried about drug pricing--one of the ways to solve the drug pricing problem is to remove the patent or shorten the patent. I'd like to shorten, reduce the research and development costs and the approval costs. Are you with me there? Absolutely. So, we have drug lag and even more importantly, we have drug loss. There are lots of drugs today which probably could be invented, but people know going in the costs are just too high. So, sure, I would like to see those costs come down. As a theoretical point, however, I still think that the pharmaceutical industry is the best case for a patent in that the innovation/imitation costs are very high. But there are other things we can do to bring those costs down. 


You are looking for evidence of how innovation has been reduced in highly innovative fields. But these highly innovative fields--the Internet and smart phones and so forth--they've been innovative not because of these patents but despite them. And I think the situation is becoming worse in these fields. So, what we are seeing right not is firms like Google and Microsoft buying up these patent arsenals. And they are not doing it because they need access to those technologies. They are doing it because another firm can't sue them and prevent them from innovating. Well, what's bad about that? What's bad about that--I call this the Mutually Assured Destruction--and mutually assured destruction I think was not the greatest way to maintain peace. Probably not the greatest way to maintain innovation either. And I think what the real problem of this idea of innovation through strength--we will be able to innovation because we have this patent arsenal behind us--is that small firms don't have that. So, we are seeing a kind of Intellectual Property (IP) feudalism. We are seeing these very big companies get ahold of these arsenals so nobody can attack them. But that means the small firms can't attack them either. Small firms are being crushed. And what do we know about really disruptive creative disruption? That often comes from the small firms. So, I am worried that we are going to see--yes, you can get innovation if it's from big Google, but what about the little google, the google of 20 years ago, the next google? Which doesn't exist because it can't have the legal department, at its small size, that its competitors have. So, the innovation we are not seeing, that's the invisible innovation. We are not seeing it; we can't look for where it is. 


Any other ideas? Would you stop some things from being patented at all? The remarkable thing is that the extension of patents to software and semi-conductors and business methods and the broadening of the interpretation of these patents has been almost all judge-driven. This is actually not legislation so much. It's judges. Judges have decided to interpret these patents in these broad ways. And they don't have to do that. The law hasn't actually changed that much. I talk a little in the book about Thomas Edison and the light bulb, and there actually was a previous patent. Sawyer and Mann had patented to make the incandescent filament. Any fibrous or textile material. And Edison came along, and he tried 5000 different materials before he hit on the one--it happened to be bamboo, and not just any bamboo but bamboo that he had dispatched a man to Japan to find the right bamboo. So he had gone through all of these different types of materials and yet Sawyer and Mann sued him and said: We have a patent on any fibrous material. And the court looked at that and they said, this is crazy. You can't give such a broad patent. Sawyer and Mann didn't actually investigate all 5000 of these. And if we were to give such a broad patent, this would actually discourage innovation. So, they said no to the Sawyer-Mann patent and let Edison go ahead. We could do more of that today. The trouble today is we have not done what the judges did in the Sawyer and Mann case. We've said: You can get a patent on any fibrous material, analogously in many other fields. We've given these broad patents. And that actually discourages people from doing the real work of implementing, of creating a product. Now you can just patent an idea. It's like a science fiction author can patent ideas; long before they are every even possible to be implemented you can patent the idea. Even before it's technologically possible. And that has actually discouraged innovation. 


A point I want to make about education, by the way, is: There's probably no other area where we can have as much as an opportunity to increase innovation and growth than in education. Think about it this way: Almost all U.S. workers will go through the U.S. education system. Not all, but almost all. So, think about if we improved our education system tomorrow. Well, at first we are only going to get a small gain because only the new workers will come in under the new system. But as we get more and more workers coming in under the improved system, that means that we have 100 million people educated a little bit better. We are talking about trillions of dollars of potential gains there. So there's no other place, bottleneck, where we can have as much influence on the U.S. economy or society as the U.S. education system, because it's where all of our workers are going to be channeled at some point, through that system. So a small change there means a big change over the next 40 years. That sounds good; I'm not sure that's true. A lot of what we learn in life, we don't learn in a classroom, and so I'm not sure how--I think there are many ways in which they will become more productive and skilled, and we figure those ways out. And we sometimes do that in spite of our education. And sometimes our education is what allows us to do it. I think it's fascinating--you think about your education and mine--we logged a lot of hours in the economics classroom as undergrads and graduate students. And we learned a lot there. We learned a huge amount. But I'm amazed at how much I've learned since then. You could argue that's what helped me learn how to learn. Certainly there was a basic framework there. But we're in a really narrow technical field. Somebody who goes through the standard K-12 educational system and then goes on to study, it doesn't matter what it is, in college--I just have a feeling a lot of what they learn comes afterwards anyway. Maybe we ought to be shortening the whole process and getting people out into the world at an earlier age. If they were mature enough. Maybe. I think there's some truth to that for college for sure. For K-12, I think it's going to be more important. I would say you are right--people like you and I who have alternative sources of education, our parents, family, friends, peer group. All of these things are working in our advantage. But for a lot of kids in high school, they don't have those other factors working in their advantage. So the one we can really move, the one lever we have, we need to do everything we can to shift that lever. I totally agree.


[H]igh-skilled immigration I think is such an obvious, such a completely clear thing to do, that it's shocking that we haven't done it already. It's literally easier to win the lottery than it is for a person of advanced and high skills to get a visa into the United States; and what I mean by that is we give out more visas in the lottery program--random allocation--than we do to these people of extraordinary ability. Now that's insane. How can you have a system like that, where you just randomly give out visas and there's more of them than you give to people of extraordinary ability? That's crazy. We need to cut back on regulation and we need to think about it as not simply thinking about regulation as each regulation comes up. We need to think about pebbles in the stream. We need to think about what happens when you accrete, what happens when these things build up. I would like to see us change our mindset from the warfare-welfare state towards innovation.

Víctimas, 3 de enero: Constantino Ortín Gil y Joaquín Martínez Simón

Libertad Digital.

El 3 de enero de 1979 ETA dejó su impronta con el asesinato en Madrid del general CONSTANTINO ORTÍN GIL. El gobernador militar de Madrid fue asesinado en torno a las tres de la tarde cuando entraba en su domicilio, por cuatro individuos que le dispararon a bocajarro. Uno de los disparos fue en la frente, mortal de necesidad, por lo que la víctima ingresó cadáver en la Residencia Francisco Franco. Era natural de La Ñora (Murcia), casado y sin hijos.
Años después se sabría que el asesinato fue ordenado por Txomin Iturbe Abasolo al grupo etarra Argala, un grupo secreto formado exclusivamente por ciudadanos franceses, dirigidos por Henri Parot, que cometió una treintena de asesinatos en 12 años. La historia de esta célula secreta de ETA terminó en 1990 con la detención en Sevilla de Parot. Este hecho tuvo su importancia en la mejora de la colaboración hispano-francesa. En 1991, Henri Parot fue condenado a 27 años por este atentado.
El 3 de enero de 1981 fallece el industrial JOAQUÍN MARTÍNEZ SIMÓN, que no pudo superar las graves heridas que le produjo el brutal atentado cometido el 27 de noviembre de 1980 con un coche bomba situado enfrente de un bar de Logroño. Su amigo, el inspector de policía Carlos Fernández Valcárcel, sobrevivió hasta el 2 de diciembre, mientras que Miguel Ángel San Martín Fernández falleció en el acto.
Martínez Simón fue intervenido durante tres horas de heridas múltiples en todo el cuerpo, fracturas en ambas piernas y quemaduras, y fue preciso amputarle las dos piernas a la altura de la rodilla. Sin embargo su estado fue agravándose con el paso de los días. La muerte le sobrevino poco antes de las tres de la tarde del 3 de enero de 1981 en la Clínica Universitaria de Pamplona, como consecuencia de un shock séptico debido a las heridas provocadas por la metralla.
Sólo sobrevivió el cuarto amigo, José Luis Hernández Hurtado, que el 27 de noviembre de 2010, treinta años después, relataba en larioja.com que todavía sueña con el atentado. José Luis tenía entonces 40 años: "Lo recuerdo como si hubiese sido ayer (...) Salvé la vida milagrosamente ya que el cuerpo de Miguel Ángel San Martín me hizo de coraza". José Luis recuerda hasta el orden de salida del bar: "Primero Carlos, luego San Martín, que medía 1,85 metros y pesaba cien kilos, y después yo, que mido 1,69 y pesaba 68 kilos. El último, Joaquín".
Como consecuencia de la explosión se abrió un gran socavón en la calle. El turismo Seat 124 saltó por los aires a 25 metros de altura y algunos de sus restos se hallaron a 50 metros de distancia. El etarra que preparó el brutal atentado fue Juan Manuel Soares Gamboa, hoy arrepentido. Sin embargo José Luis Hernández Hurtado responde tajantemente sobre la posibilidad de perdonarle: "No lo voy a perdonar nunca. Una cosa es despreciar, olvidar... pero, por favor, perdonar no". Soares Gamboa fue condenado en 1996 a tres penas de 17 años de reclusión menor por cada una de las muertes que provocó este atentado. Anteriormente, en 1982, fue condenado por el mismo atentado el etarra Isidro Echave Urrestrilla.
Joaquín Martínez Simón, industrial propietario de Manufacturas Ruxi y Corsetería Marta, tenía 45 años, estaba casado y era padre de cuatro hijos.

Emil Gilels: Live in Moscow (vol.2) - Mozart (1979/1983)

Vyacheslav Ovchinnikov, conductor

Piano Concerto No. 27 in B-flat major, K. 595
I. Allegro
II. Larghetto in E flat major
III. Allegro
State Academic Orchestra of the Soviet Union

Piano Concerto No. 10 in E-flat major for 2 Pianos, K. 365
with Elena Gilels, piano
I. Allegro
II. Andante
III. Rondo: Allegro

Piano Concerto No. 27 in B-flat major, K. 595
I. Allegro
II. Larghetto in E flat major
III. Allegro

State Orchestra of Moscow Symphony

El mito sueco

Por Carlos Rodríguez Braun.

Suecia ha sido el paradigma socialdemócrata. Tras la crisis de los noventa, su crecimiento actual y la catástrofe de parte del mundo desarrollado han hecho renacer el modelo sueco como la demostración palpable de que, efectivamente, otro mundo es posible, a saber, el nirvana progresista donde suben los impuestos pero el crecimiento es sostenido. Los socialistas, así, no matan la gallina de los huevos de oro, sino que la alimentan.
Un historiador económico de la Universidad de Umea, Olle Krantz, aporta datos que cuestionan esta versión: “Economic growth and economic policy inSweden in the 20th century: a comparative perspective”).

A finales del siglo XIX, Suecia empieza a aparecer en el horizonte económico con fuerza: se realizan grandes inversiones en infraestructuras, en el sector siderúrgico y en la silvicultura, y al tiempo nacen y se desarrollan los gigantes de la industria sueca: Ericsson, Asea Brown Boveri y SKP. Señala Olle Krantz factores cruciales en lo económico y lo político. Por un lado, Suecia es un país pequeño, y esos países tienden a tener economías abiertas y competitivas. Aún con sus elevados impuestos, los cuatro países nórdicos siempre figuran entre los países más globalizados y flexibles; para que nos demos una idea, son más abiertos que Estados Unidos o Alemania. Por otro lado, Suecia no participó en ninguna de las dos Guerras Mundiales.

Es lógico que el ritmo de crecimiento no crezca indefinidamente, ni siquiera que se mantenga. “Pero el asunto –apunta Krantz– es la virulencia de la caída: ¿por qué se produjo el cambio de un crecimiento económico claramente por encima de la media de los países industrializados a uno claramente por debajo de dicha media?”

Lo que empezó a suceder a mediados del siglo XX fue, mire usted por donde, el socialismo. Los políticos empezaron a intervenir en los mercados, sobre todo en el laboral, y a aumentar los impuestos para financiar su criatura por excelencia: el Estado del Bienestar. Se aliaron con los sindicatos y las grandes empresas para cerrar los mercados y fomentar los privilegios de una economía cada vez menos competitiva. El gasto público creció espectacularmente y pasó del 31% en 1960, una cifra comparable a la del resto de Europa, al 60% del PIB en 1980.

En ese proceso de elevación sostenida de los impuestos y de intervencionismo rampante en los mercados, el crecimiento se frena marcadamente en los años 1990 y la renta per cápita de los suecos cae al nivel más bajo de toda la OCDE. No se trata, pues, de un paraíso socialdemócrata, y los socialistas, efectivamente, matan la gallina de los huevos de oro, o al menos la ahogan hasta que los votantes los echan del poder, como hicieron en Suecia, que debió detener y corregir el intervencionismo para volver a crecer.

¿Se han vuelto liberales los suecos? Qué va, ya me gustaría. Padecen impuestos todavía muy elevados y similares dolencias progresistas que revisaremos otro día.

Las víctimas del terror montonero no cuentan en Argentina

Entrevista a Victoria Villarruel por Carmen Muñoz.

Victoria Villarruel por Ernesto Agudo
Su abuelo fue víctima de la violencia guerrillera de izquierdas que Argentina sufrió en los 70 a manos de los montoneros y el Ejército Revolucionario del Pueblo (ERP). Victoria Villarruel preside el Centro de Estudios Legales sobre el Terrorismo y sus Víctimas (Celtyv), una ONG que defiende el derecho de 18.331 víctimas directas documentadas a «la Justicia, la verdad y la reparación». Han llegado a esa cifra, dice, investigando recortes de prensa, libros y revistas de las guerrillas. De ellos, 1.355 perdieron la vida.
—¿Qué reclaman al Gobierno?
—Le exigimos que abra los archivos sobre esa época, para que podamos completar nuestra investigación, y una comisión de la verdad. Pero el Gobierno discrimina en razón de la ideología y de quién cometió los crímenes. Solo reconoce a una clase de víctimas, a las de los abusos del Estado. Si fuiste montonero tienes derechos, pero las víctimas del terror de izquierdas no cuentan.
—¿Por qué denuncia que especialmente durante los mandatos del matrimonio Kirchner no se ha reconocido a estas víctimas?
—Porque en todas las estructuras del Estado, incluido el Poder Judicial, hay personas que formaron parte de los montoneros o del ERP, o estaban relacionados con estos grupos. Es difícil lograr justicia cuando el poder está en manos de quienes agredieron. En los últimos diez años no ha prosperado ninguna causa judicial nuestra.
—¿Cuál es el perfil de los afectados?
—El 70% de las 18.331 víctimas eran civiles apolíticos, por eso no reclamaron sus derechos al Gobierno. No se conocían, eran sindicalistas, jueces, judíos, católicos, extranjeros... El 30% eran uniformados agredidos en situación de descanso, por lo que son civiles según el derecho internacional.
—¿Hay alguna víctima española?
—Sí, Arturo Mor Roig, político nacido en Lérida que fue asesinado en un restaurante (de la Unión Cívica Radical, ministro de Interior durante el Gobierno de facto de Alejandro Lanusse).
—¿Mantienen contacto con alguna organización de víctimas española?
—Nos hemos inspirado en la Asociación de Víctimas del Terrorismo (AVT), con la que colaboramos. Vemos con preocupación que España le conceda ser parte a ETA en las negociaciones del final. Un grupo terrorista no tiene que ser parte, tiene que entregar las armas, pedir perdón y hacerse responsable de los crímenes. Cualquier cierre que no tenga estos puntos no es acorde a la pacificación.
—¿Cómo cerró su país ese capítulo?
—Queremos difundir nuestra experiencia para que no se repita en España, donde ETA asesinó a 829 personas en 43 años, mientras que los montoneros y el ERP causaron 1.355 en una década. Estos se insertaron en el Estado y sus víctimas quedaron eliminadas de la memoria histórica.
—¿Se sienten amenazados?
—Es un tema tabú. Por defender o asesorar a estas víctimas nos ponemos en peligro y nos llaman fascistas.

8 grandes ideas para mejorar la sanidad

Fuente: Doctor Casado.

Olivia De Berardinis (1948)

Devil's FoodDevil’s Food
Cat & Mouse (Bettie Page)Cat & Mouse (Bettie Page)
Cotton CandyCotton Candy
Angel CakesAngel Cakes
Lavender & LaceLavender & Lace
Sticky BunsSticky Buns
Nylon JungleNylon Jungle
unknowntitle unknown

Fuente: American Gallery.