Despite all the new competition, the United States remains a manufacturing powerhouse — in fact, the total value of manufacturing output in the United States today is far, far higher than it was in the 1950s. Measured by revenue, profit, or return on investment, U.S. manufacturing is unparalleled, and our factories' output is more than twice China’s. But it is true that many manufacturing jobs have been "lost." They were lost not because U.S. manufacturing can't compete with that of feckless Third World rivals, but because U.S. manufacturing is, to use the technical economics term, awesome. The real productivity of U.S. businesses overall grew at an average rate of 1.5 percent a year from 1973 to 1995, which is a really robust number. But the productivity of U.S. manufacturing businesses grew by 2.5 percent in those same years, which is enormous. As Martin Wolf puts it in Why Globalization Works, that growth in productivity alone would have reduced significantly the number of manufacturing jobs in the United States. Add in the fact that people in affluent societies spend relatively less of their disposable income on manufactured goods and relatively more on services, and that reduction becomes even more dramatic. And so it was. There is an obvious parallel: In very poor societies, large numbers of people are employed in agriculture, and people spend most of their money on food. As they get richer, relatively few work in agriculture, and they spend proportionally little on food. Manufacturing, as Wolf sees it, is the new agriculture. In historical terms, it was not that long ago that 75 percent of the U.S. work force was engaged in farming. Now it's less than 1 percent. But who laments the loss of good farming jobs? (Mostly people who have never worked on a farm, that's who.)
I often ask people to name the country with the largest manufacturing output. China? Japan? Nope. It's the U.S.A. It's worthwhile remembering this.