Economist Scott Sumner explains why, contrary to widespread myths, “America is a manufacturing powerhouse”:
It is important to recall that China has more than 4 times America’s population. Thus, in per capita terms, American manufacturing output is more than two and a half times larger than that of China. Indeed, in per capita terms, the US leads every single country on that list, except for Germany (which has 1/4th our population). We even lead countries like Japan and South Korea in per capita manufacturing output, despite their impressive export sectors.
I suspect that people underestimate American manufacturing because it is a relatively low share of GDP. But that doesn’t reflect the fact that our manufacturing sector is doing poorly—it isn’t—rather, that our other sectors are so productive that our total GDP per capita greatly exceeds that of almost all other countries.
More at this link. China does have unfair trade practices. Still, trade with China has not stopped U.S. manufacturing output from growing, although it probably did slow the rate of growth of U.S. manufacturing output over the last 15 years. American manufacturing output has grown by over 50 percent in real terms since 1991, and America has more auto factories now than it did a decade ago. Cheap goods from China made things more affordable for Americans, raising America’s living standards.
As economists Norbert Michel and Jerome Famularo explain,
Finally, another big problem with the “China shock” narrative is that the overall employment changes during the period were largely balanced. That is, any negative employment effects from increased import competition were offset by a corresponding increase in exports and export-related jobs. (This offsetting effect occurred even with the lingering labor market problems from the Great Recession.)
Overall, the evidence simply does not support that increased trade with China decimated manufacturing in the United States. Even the job losses concentrated in the Rust Belt, whatever their cause, were offset by new jobs in the South. The net effect of these changes has made Americans richer, and policies designed to shrink trade will only make Americans poorer.
Similarly, “in a 2019 paper, Robert C. Feenstra, Hong Ma and Yuan Xu found that the China shock job losses were largely offset by job gains, owing to higher exports.”
America has not been falling behind because of its trade policies:
in the 1990s and early 2000s, America and Europe were similarly affluent. Today the American economy has left the other rich economies in the dust. American G.D.P. per capita is around $83,000, while Germany’s is around $54,000, France’s is around $45,000, and Italy’s is around $39,000.
As The Economist recently noted, “On a per person basis, American economic output is now about 40 percent higher than in Western Europe and Canada and 60 percent higher than in Japan — roughly twice as large as the gaps between them in 1990. Average wages in America’s poorest state, Mississippi, are higher than the averages in Britain, Canada and Germany.”
