Monday, January 9, 2017

Why Trump Won't Bring Manufacturing Jobs Back To US

This article describes the affect of automation on the global manufacturing labor market.  The use of robots, especially in developed countries like China, is growing very fast.  Even low wage countries will have an incentive to replace workers with robots in manufacturing.  "Premature Deindustrialization" will likely occur in developing economies.  That will have a big impact on the path towards a higher consuming middle class in developing countries.  Developed economies will find it more difficult to export expensive manufacturing products to developing nations.  Shrinking demand for manufacturing labor means that US manufacturing jobs that were outsourced to low wage countries are not coming back to the US.  The services sector will also be affected by digital technologies.  Self driving vehicles will replace truck drivers and cab drivers and new technologies will make it easier to engage in many activities without the help of high paid professionals.

Donald Trump's attack on globalization helped him to win an election but the outsourcing of manufacturing jobs to low wage countries may be yesterday's problem.  His efforts to jawbone manufacturing firms in the US is primarily a political activity.  It won't bring jobs back that have been lost to robots.  The major problem for developed nations will be to adjust to a world in which less labor is needed to produce much of what we consume.  Perhaps that is why so much effort is taking place in developed nations to capture a larger share of government spending on education, medical services, prison services and military services by for- profit businesses..

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