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"Service industry" includes financial services, which have been hugely lucrative to the West.

It's a globally integrated supply chain, and cannot be otherwise. There is no way countries are going back to a blast-furnace-to-car vertically integrated manufacturing world. It costs far too much and you couldn't even do it back when Ford tried it. He needed to import rubber, modern cars need to import chips.

The only non-globalised manufacturing chain is defence, which is instead prohibitively expensive.

Manufacturing is popular because it's percieved as a source of blue-collar jobs. Not only has that declined due to automation, but I think that one of the reasons for the decline in Western manufacturing in the first place was union-busting and labour relations issues. Part of the reason Germany has retained its manufacturing reputation is avoiding that failure mode.

> "Service industry" includes financial services, which have been hugely lucrative to the West.

If you buy into the philosophy that it is something other than an elaborate global Ponzi scheme.

Ol' Marx saw capitalism as a 3 way standoff between workers, industrial capitalists, and financial capitalists. And he lamented that while the industrial capitalists would in the long run be better off siding with the workers, they would invariably side with financial capitalists until it was too late.

Why not go a little further and call it a structured asset-backed Ponzi scheme? It sounds more daunting, novelty and official.

>"Service industry" includes financial services, which have been hugely lucrative to the West.

For whom?

>It's a globally integrated supply chain, and cannot be otherwise. There is no way countries are going back to a blast-furnace-to-car vertically integrated manufacturing world.

The most competitive manufacturing though is "blast-furnace-to-car vertically integrated", just not within the same factory (which it wasn't even in Ford's time as you said) but within the same country. That's why China is so much better at it, because it has the whole manufacturing supply chain next door to the final assembly line. Of course you need materials (rubber, metals, oil, etc) but that's something different and at a lower level than manufacture.

For whom is manufacturing lucrative? The capital owners. Isn't that why we had all those labour disputes and replacement of labour with capital? As others have been pointing out this is mentioned in the article: "Because of automation, there are far fewer jobs in factories. But the value of stuff made in America reached a record high in the first quarter of 2016".

Is China better, or just cheaper, due to starting from a low wage baseline in a blank slate with few environmental or worker protections?

Is it just an advantage from not having yet depleted its natural resources? The UK steel industry was built near iron and coal mines, almost all of which are now closed.

China is better. They have a rich, Shenzen style ecosystem for all kinds of manufacturing. They are not perceived as better because of the cultural distance and because of deliberate obfuscation on the part of marketing departments.

The US still has a lead in things that are heavily automated and meant for domestic consumption, and in super design intensive things- machines with engines, maybe Intel's fabs.

> The only non-globalised manufacturing chain is defence, which is instead prohibitively expensive.

It actually is globalised. Things may be assembled in the US, but many components are imported from France, UK, Germany, Taiwan, etc.

> Manufacturing is popular because it's perceived as a source of blue-collar jobs

Totally agree. I would add that in the case of Germany, the manufacturing of industrial machines is very different in nature and volume from that of consumer products, etc.

In addition to this I'm willing to bet that a population largely engaged in the service industry, which doesn't produce anything is a discontented society prone to revolution. I feel that this is at least part of what is happening in the UK and the US at the moment.

People are disconnected by a lack of jobs that they want to do, jobs that provide tangible value, and need to blame that on something. So generally go with immigration, because it's a problem they can (try) and do something about and it must be that the immigrants who took the jobs.

Truth is the country as a whole decided that they'd outsource those dirty manufacturing jobs to a lower class in another timezone. Without really considering what value they'd provide now that they don't actually make anything anymore.

The country goes into decline, no longer producing anything of value, trying to suck money out of the marketing, economic and other forms of lockin they put in place (many of which would be called "service industries). Slowly, the countries actually doing the manufacturing wake up to the fact that they don't actually need that stuff.

From the article:

The value of stuff made in America reached a record high in the first quarter of 2016, even after adjusting for inflation.

It's not that the U.S. doesn't make things anymore, it's that there aren't endless jobs in making things.

There are. If there weren't those jobs wouldn't exist in other countries.

Of course, manufacturing capability is important for a nation from a strategic viewpoint. But even if the manufacturing returns to the country - the fact of the matter, is that those manufacturing jobs are never coming back. It will all be done by robots. This process is already well underway(https://www.ft.com/content/7eaffc5a-289c-11e6-8b18-91555f2f4...)

So those politicians speaking to old people in steel towns are misleading them and giving them false hope. Bringing manufacturing back isn't going to do much to reduce unemployment . That seems to be the point of the article.

I’m finding this robots argument a bit tiresome. Seems more of an excuse to justify outsourcing than the inevitable end state. If for every 10 workers, instead of 9 losing their jobs and 1 managing the robots, couldn’t we have 10 managing the robots and 10 times more stuff. The latter seems the more likely outcome to me of free markets, but instead we seem to have pivoted into a micro-managed (FED, ZIRP) government supported vulture market focused on profit extraction (outsourcing, stock buybacks, tax avoidance, etc.).

There is no distinction between "free market" and "profit extraction". There's no easy way to "10 times more stuff" either: not just natural resource limits but demand limits. People aren't going to buy 10 times more stuff without 10 times as much credit. Or vastly increased wages / basic income.

(There's an aside in Huxley's 'Brave new world' about new sports being invented with elaborate equipment requirements simply to soak up surplus manufacturing capacity)

I could have worded it better: short term profit extraction at the expense of long term capital expenditures and growth through mechanisms such as stock buybacks and outsourcing. [1] Agree there is no easy way to 10 times more stuff but neither is everybody instantly replaced by robots and if everything is 10 times cheaper due to increases in productivity (robots) then more credit / increased wages isn’t required. I do believe the robots arguments is used in a fait accompli way that isn’t necessarily true. [2]

1. http://www.marketfolly.com/2016/05/stan-druckenmillers-sohn-... 2. https://www.brookings.edu/blog/the-avenue/2015/04/29/dont-bl...

The global economy did just take a nosedive, and the modern U.S. economy handled it just fine.

> your previous friendly third world manufactures give you the finger

Countries are not kids on a playground. If a country's economy does a lot of trade with the U.S., cutting off that trade is the last thing they are going to want to do, especially in the midst of a downturn.

Think the government of Venezuela has liked the U.S. over the past 2 decades? But they haven't disliked us enough to stop selling us their oil, or buying our planes and construction equipment.

And, of course, the U.S. today remains one of the top manufacturers in the world. To the extent we are growing services, it is on top of manufacturing, not displacing it.

That said, manufacturing jobs have disappeared--and that's why politicians are obsessed with it. Because they get elected by people who want good jobs, and no one has yet discovered a new industry that will pay millions of high school graduates enough to buy a car and a single-family home, the way manufacturing used to.

> Because when the shit comes to shove and the global economy takes a nosedive or your previous friendly third world manufactures give you the finger, having a "service industry" is worth nothing, but being able to produce the actual shit your businesses design and sell/export, matters.

But the article even points out that these jobs are not being moved overseas, they are being automated away. Thus, it will be an American manufacture giving you the finger.

> but being able to produce the actual shit your businesses design and sell/export, matters.

Good thing we are producing more "shit" than ever before in history.

> From an economic perspective, however, there can be no revival of American manufacturing, because there has been no collapse. Because of automation, there are far fewer jobs in factories. But the value of stuff made in America reached a record high in the first quarter of 2016, even after adjusting for inflation. The present moment, in other words, is the most productive in the nation’s history.

For a relatively angry-toned comment, I feel you hit the nail on the head.

If you or the OP had actually read the article, you'd know that isn't the case:

From an economic perspective, however, there can be no revival of American manufacturing, because there has been no collapse. Because of automation, there are far fewer jobs in factories. But the value of stuff made in America reached a record high in the first quarter of 2016, even after adjusting for inflation. The present moment, in other words, is the most productive in the nation’s history.

I'm not sure there is such a disconnect as you suggest. While value has increased, I might posit that the value is due to the fact that the US focuses on the value-added side of the equation. So if the US produces cars, it doesn't produce the Daihatsus or the Fiats of the world. They focus on $40K cars. It took me moving to Japan to realise that you can buy a perfectly good car for under $10K.

If the bottom falls out, the US may find that there are no customers for their comparative luxury goods and no US citizen willing to work for little enough to be competitive with anything else.

I am, of course, an random guy on the internet and my observations are worth slightly less than that, so who knows ;-)