The current issue of our magazine (a subscription makes a perfect gift!™) has a two-part cover-story package. One is Charles Fishman's "The Insourcing Boom," which concentrates on GE and argues that U.S.-based manufacturing companies are finding it more attractive to do more of their work within our borders. The other is my "Mr. China Comes to America," which says that increasing costs and friction of doing business in China, and shifts in technology that allow very rapid-cycle production close to the market inside the United States, will encourage new companies to do more of their manufacturing work here rather than outsourcing it to China.
Alan Tonelson, of the US Business & Industry Council, is a long-time friend with whom I have often agreed on questions of U.S.-Japanese trade frictions. He completely disagrees with the premise of these two articles. In the spirit of free-and-full discussion, I turn the floor over to him. I have a brief response at the end.
The Insourcing Boom that Isn't
By Alan Tonelson [right]
According to the two feature articles in December's Atlantic, manufacturing in the United States is making an historic comeback. In particular, changes in wages, energy costs, and technology around the world mean that China and other Asian locations no longer hold all the cards as manufacturing locations. Even better, large and small American businesses increasingly are recognizing that producing - and innovating - back in the United States has become their most lucrative option.
Moreover, both "The Insourcing Boom," by Charles Fishman and "Mr. China Comes to America" by James Fallows state that much more is involved than domestic manufacturing's cyclical rebound from an historically painful recession. As the former contends, the manufacturing revival "cannot be explained merely by the ebbing of the Great Recession, and with it the cyclical return of recently laid-off workers." In the latter's words, domestic industry's outlook is better today "than at any other time since Rust Belt desolation and the hollowing-out of the American working class came to seem the grim inevitabilities of the globalized industrial age."
Both authors provide numerous and seemingly impressive examples of insourcing and corporate start-ups that support these claims. They also present statistics on energy prices, U.S. and Chinese wages, and the post-2010 rise in American manufacturing employment. But neither gives their readers the most important information they need to know about domestic industry's current circumstances and future prospects - that virtually no national- or global-level data show that American manufacturing is even continuing its recovery from recession, much less stealing the march on Chinese and other foreign rivals. Indeed, nearly all of the most comprehensive statistics portray U.S. industry as still slipping further down the international ranks.
For example, during an historically sluggish American recovery, a U.S. manufacturing sector in renaissance mode should be growing faster than the rest of the economy. That was true in 2010 and 2011. But the out-performance is already over. This year, the entire U.S. economy has expanded by only 2.06 percent after inflation. Manufacturing output, however, has actually fallen - by 0.54 percent.
A manufacturing sector engineering a big secular rebound should be gaining share in its own home market - the world's largest single national market, and the one its companies should know best. Yet new government data analyzed by the U.S. Business and Industry Council show that more than 100 advanced domestic manufacturing industries collectively lost American customers to imports worldwide last year.
In 2011, foreign-based producers supplied a record total of 37.57 percent of total American purchases in industries ranging from semiconductors to pharmaceuticals to ball bearings to machine tools and dozens of other capital-and technology-intensive sectors. In 2010, when the industrial renaissance supposedly was stirring, the import penetration rate was 37.07 percent and in 1997 - the earliest data year - only 24.49 percent. In fact, imports accounted for half or more of everything Americans bought in nearly a third of these industries, including construction equipment, metal-cutting machine tools, laboratory equipment, turbines and turbine generator sets, and of course autos and heavy-duty trucks alike.
Companies losing market share rightly are almost never described as winners or viewed as promising. Do industries losing market share deserve better reviews?
Nor is the growth of exports compensating for these losses. Since plummeting during the Great Recession as American economic demand nosedived across the board, America's manufacturing trade deficit has rebounded much faster than the economy as a whole, and indeed hit a monthly record earlier this year. This shortfall's strong comeback is an especially important and bearish indicator of U.S. industry's global competitiveness, since mainstream economic theory teaches that trade flows are the means by which market forces create the optimal global division of labor. In other words, the countries that trade a given product most successfully are those that eventually will produce it most successfully, and vice versa.
The China story told by these data also clash with that told in the December Atlantic articles. As fast as imports worldwide have been grabbing share of U.S. advanced manufactures' markets, the inroads being made by imports from China have been much faster. And although these shipments started from a considerably lower base, they supplied more than six percent of all American purchases of these capital- and technology-intensive products last year.
As robustly as the overall U.S. manufacturing trade deficit has risen recently, the China deficit has recovered just as dramatically, and from a much shallower trough. In fact, so far this year, the manufacturing trade gap with China has increased more four times faster than America's global trade gap.
Signs of American industry's weakness also emerge from comparing its growth rate with those of leading competitor countries. Last week, the U.S. Labor Department reported that between 2009 and 2011, American manufacturing output expanded more slowly than industry in Germany, Sweden, Korea, Taiwan, and Singapore, and only slightly faster than manufacturing in Japan, whose industry is widely described as hemorrhaging competitiveness. These years of course cover the period when the U.S. manufacturing renaissance allegedly was well underway.
Data for China were not provided in this survey of high-income countries. Yet the consulting firm IHS reported this earlier year that in 2010 and 2011, America's share of world industrial output not only has fallen behind not only China's, but has been falling faster than that of the 27-nation European Union, whose economic problems are by now all too well known.
Other major problems with the articles revolve around insourcing claims themselves. Do the new investments in U.S. manufacturing mean that outsourcing has stopped or has slowed significantly? None of this essential context is presented. But last July, a major Bloomberg News investigation spotlighted a study reporting that continuing outsourcing neglected by the news media has entirely offset the job creation credited to insourcing.
In addition, improved American competitiveness is far from the only reason for insourcing. Scratch an instance of reshored manufacturing, and significant federal, state, and local government subsidies can often be found beneath the surface. For example, according to GE official Kim Freeman, the $800 million Louisville appliance investment detailed in "The Insourcing Boom" was keyed by $100 million in such supports. Over the last year, two New York Times articles have made clear that subsidies have been "increasingly important" spurs to new and retained domestic manufacturing investments.
Using taxpayer dollars to pay manufacturing companies to move or stay may make perfect sense in many cases. And certainly most of America's major trade competitors engage in such practices pervasively. But relying substantially on government inducements is likely a losing proposition for domestic manufacturing advocates. After all, industrial rivals like China, Germany, and Japan are financially strong. The United States remains saddled with enormous debts - many owed to these very countries, and is unlikely to win a worldwide subsidy competition.
American manufacturing still retains many strengths. Some of it, moreover, may boast considerable growth potential. But no one should underestimate the continuing weaknesses and challenges made clear by the most comprehensive, most detailed data. Without presenting this readily available big-picture evidence, accurately describing domestic manufacturing's present circumstances and realistically assessing its prospects simply is not possible.
Alan Tonelson is a Research Fellow at the U.S. Business and Industry Council, which represents nearly 2,000 small and medium-sized domestic U.S. manufacturers. The author of The Race to the Bottom (Westview Press, 2002), Tonelson contributes to the Council's AmericanEconomicAlert.org website, and can be followed on Twitter @AlanTonelson and on Facebook at Tonelsonontheeconomy.
I will leave to Charles Fishman any response to the specifics in his article. For my part I will say that I don't think Alan Tonelson engages the main point I was making.
As my article said, we have been through a relentless decades-long period in which every observable trend seemed to be, and was, working against the feasibility of manufacturing within the United States. Alan Tonelson and his USBIC have been in the vanguard in chronicling those pressures. But, I explained, people close to the factory-floor realities in both the United States and China told me that changes beginning to be visible now seemed likely to alter those pressures. I wrote the story because people whose track record and judgment about technological trends I have learned to trust, over the years, told me these changes were worth noticing. Since they were talking about shifts that are just getting underway, the early trends they were talking about would not be captured in past manufacturing statistics, even those from 2011.
If the pattern of decline that Alan Tonelson lays out still prevails in 2015 or 2018, then the people I quoted will prove to have been wrong. If the pattern changes, their explanations will be part of the reason why. Thanks to Alan Tonelson for laying out his case.
James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne.
American politicians are now eager to disown a failed criminal-justice system that’s left the U.S. with the largest incarcerated population in the world. But they've failed to reckon with history. Fifty years after Daniel Patrick Moynihan’s report “The Negro Family” tragically helped create this system, it's time to reclaim his original intent.
By his own lights, Daniel Patrick Moynihan, ambassador, senator, sociologist, and itinerant American intellectual, was the product of a broken home and a pathological family. He was born in 1927 in Tulsa, Oklahoma, but raised mostly in New York City. When Moynihan was 10 years old, his father, John, left the family, plunging it into poverty. Moynihan’s mother, Margaret, remarried, had another child, divorced, moved to Indiana to stay with relatives, then returned to New York, where she worked as a nurse. Moynihan’s childhood—a tangle of poverty, remarriage, relocation, and single motherhood—contrasted starkly with the idyllic American family life he would later extol.
The Utah Republican is making no claims that he—or anyone else—can defeat Kevin McCarthy when the 247-member House Republican conference gathers behind closed doors on Thursday to elect their next leader. But Chaffetz’s theory of the case is that no matter what happens in that meeting, McCarthy can’t get the 218 votes he’ll need to formally win election by the full House as speaker. At least 30 arch-conservatives in the House Freedom Caucus will oppose McCarthy during the floor vote on October 29, and then the House will be deadlocked.
That scenario is precisely what frightens rank-and-file Republicans.
The House could become institutionally paralyzed until it found a candidate that a majority of its voting members supported as speaker. And if the Republican leader fell short on the first ballot, there’s no guarantee the party would quickly settle on someone else. “We’ve got to figure out how to get to 218 before we get to the floor. Because otherwise we could be literally doing this through the fall,” said Representative Tom Rooney, a McCarthy ally from Florida.
Americans’ enthusiasm for reheating last night’s dinner has faded as the nation has prospered. At times, it’s been a moral act; at others, a groan-inducing joke.
Irma Rombauer said she wroteThe Joy of Cookingwith “one eye on the family purse.” Maybe it’s not surprising, then, that the original 1931 edition had so much to say about leftovers. Rombauer carefully inventoried all the recipes in the book that could serve as vessels for leftovers, and she enthusiastically detailed her favorite all-purpose techniques, such as folding chopped leftovers (it didn’t really matter what) into waffle batter or mixing them with cream sauce and stuffing them into hollowed-out vegetables.
These tips resurfaced in editions of The Joy of Cooking published well after the Depression, but the tone on leftovers steadily shifted. In the early 1950s, Rombauer noted for the first time that too much budget-minded cooking could incite “family protest,” and she urged cooks not to think of leftovers as dreary. By the 1963 edition, the first published after Rombauer’s death, her daughter Marion Rombauer Becker drastically condensed the leftovers section and started it with a joke: “‘It seems to me,’ the minister said, after his new wife placed a dubious casserole on the table, ‘that I have blessed a good deal of this material before.’”
In an NPR interview, the Pretenders singer compared comments about her book—and its description of her sexual assault—to a “lynch mob.”
In maybe one of the most uncomfortable NPR interviews since Joaquin Phoenix went on Fresh Air, the Pretenders singer Chrissie Hynde spoke with Morning Edition’s David Greene on Tuesday about her book, Reckless. Or, more specifically, about the mass outrage sparked by the section in which she writes about being sexually assaulted at the age of 21 by a group of bikers, and of taking “full responsibility” for it.
GREENE: I’ll just read a little bit here: “The hairy horde looked at each other. It was their lucky day. ‘How bout yous come to our place for a party.’” And you ended up with them, and then you proceeded to describe what they were asking you to do. “‘Get your bleeping clothes off, shut the bleep up, hurry up, we got bleep to do, hit her in the back of the head so it don’t leave no marks.’” This certainly sounds like an awful, awful experience with these men.
HYNDE: Uh, yeah. I suppose, if that’s how you read it, then that, yeah. You know, I was having fun, because I was so stoned. I didn’t even care. That’s what I was talking about, I was talking about the drugs more than anything, and how f***** up we were. And how it impaired our judgment to the point where it just had gotten off the scale.
Here’s what happens if astronomers make contact with a civilization on another planet.
The false alarm happened in 1997.
The Green Bank Radio Observatory in Green Bank, West Virginia, was picking up some unusual signals—and Seth Shostak, then the head of the Center for Search for Extraterrestrial Intelligence (SETI) Research in Mountain View, Caifornia, was convinced that they had come from intelligent life somewhere in the universe.
“It looked like it might be the real deal,” Shostak recalled. Within a few hours, he had a call from The New York Times.
But within a day, it became clear that the source of excitement was actually a European satellite. To make matters worse, a second telescope in Georgia, which would have told the scientists about the true nature of the signal, wasn’t working.
National Geographic Magazine has opened its annual photo contest, with the deadline for submissions coming up on November 16, 2015.
National Geographic Magazine has opened its annual photo contest, with the deadline for submissions coming up on November 16, 2015. The Grand Prize Winner will receive $10,000 and a trip to National Geographic headquarters to participate in its annual photography seminar. The kind folks at National Geographic were once again kind enough to let me choose among the contest entries so far for display here. Captions written by the individual photographers.
Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole.
And if thy brother, a Hebrew man, or a Hebrew woman, be sold unto thee, and serve thee six years; then in the seventh year thou shalt let him go free from thee. And when thou sendest him out free from thee, thou shalt not let him go away empty: thou shalt furnish him liberally out of thy flock, and out of thy floor, and out of thy winepress: of that wherewith the LORD thy God hath blessed thee thou shalt give unto him. And thou shalt remember that thou wast a bondman in the land of Egypt, and the LORD thy God redeemed thee: therefore I command thee this thing today.
— Deuteronomy 15: 12–15
Besides the crime which consists in violating the law, and varying from the right rule of reason, whereby a man so far becomes degenerate, and declares himself to quit the principles of human nature, and to be a noxious creature, there is commonly injury done to some person or other, and some other man receives damage by his transgression: in which case he who hath received any damage, has, besides the right of punishment common to him with other men, a particular right to seek reparation.
Forget the Common Core, Finland’s youngsters are in charge of determining what happens in the classroom.
“The changes to kindergarten make me sick,” a veteran teacher in Arkansas recently admitted to me. “Think about what you did in first grade—that’s what my 5-year-old babies are expected to do.”
The difference between first grade and kindergarten may not seem like much, but what I remember about my first-grade experience in the mid-90s doesn’t match the kindergarten she described in her email: three and a half hours of daily literacy instruction, an hour and a half of daily math instruction, 20 minutes of daily “physical activity time” (officially banned from being called “recess”) and two 56-question standardized tests in literacy and math—on the fourth week of school.
That American friend—who teaches 20 students without an aide—has fought to integrate 30 minutes of “station time” into the literacy block, which includes “blocks, science, magnetic letters, play dough with letter stamps to practice words, books, and storytelling.” But the most controversial area of her classroom isn’t the blocks nor the stamps: Rather, it’s the “house station with dolls and toy food”—items her district tried to remove last year. The implication was clear: There’s no time for play in kindergarten anymore.
The psychologist Sherry Turkle argues that replacing face-to-face communication with smartphones is diminishing people’s capacity for empathy.
Many of my daily conversations don’t involve eye contact. My roommate texts me from a neighboring bedroom. My boss sends me an instant message from a few feet away. Sometimes, the substitution of face-to-face talk for words on a screen makes me uneasy. Yet other days, it slips past unnoticed, and I too reach for a keyboard instead of finding someone’s gaze.
Sherry Turkle, a clinical psychologist and sociologist at the Massachusetts Institute of Technology, has spent the past 30 years observing how people react and adapt to new technologies that change the way we communicate. In her latest book, Reclaiming Conversation: The Power of Talk in a Digital Age, Turkle argues that texts, tweets, Facebook posts, emails, instant messages, and snapchats—simultaneous, rapid-fire “sips” of online communication—have replaced face-to-face conversation, and that people are noticing the consequences. Over-reliance on devices, she argues, is harming our ability to have valuable face-to-face conversations, “the most human thing we do,” by splitting our attention and diminishing our capacity for empathy.
It’s time to stop fooling ourselves, says a woman who left a position of power: the women who have managed to be both mothers and top professionals are superhuman, rich, or self-employed. If we truly believe in equal opportunity for all women, here’s what has to change.
Eighteen months into my job as the first woman director of policy planning at the State Department, a foreign-policy dream job that traces its origins back to George Kennan, I found myself in New York, at the United Nations’ annual assemblage of every foreign minister and head of state in the world. On a Wednesday evening, President and Mrs. Obama hosted a glamorous reception at the American Museum of Natural History. I sipped champagne, greeted foreign dignitaries, and mingled. But I could not stop thinking about my 14-year-old son, who had started eighth grade three weeks earlier and was already resuming what had become his pattern of skipping homework, disrupting classes, failing math, and tuning out any adult who tried to reach him. Over the summer, we had barely spoken to each other—or, more accurately, he had barely spoken to me. And the previous spring I had received several urgent phone calls—invariably on the day of an important meeting—that required me to take the first train from Washington, D.C., where I worked, back to Princeton, New Jersey, where he lived. My husband, who has always done everything possible to support my career, took care of him and his 12-year-old brother during the week; outside of those midweek emergencies, I came home only on weekends.