And Yet Another Open Letter to Oren Cass
Oren Cass
Chief Economist
American Compass
Oren:
In your December 9th essay you urge your listeners to “amaze” us economists with “one stupid party trick” – namely, to point out to us that manufacturing-worker productivity has turned negative since 2011 (“Here’s How the Return of American Industry Will Actually Look”). You assure your readers that they’ll LOL! as we economists make fools of ourselves by either denying this reality or fumbling for feeble explanations.
How fun!
But on second thought, perhaps not. Earlier this year, two such economists (Phil Gramm and I) wrote the following in the Wall Street Journal:
Annual worker productivity growth in manufacturing hit its peak in 2011 and then began a slow annual decline. From 2011 to 2017, manufacturing worker productivity fell at an average annual rate of 0.65%. It then grew in 2018 with the implementation of the Tax Cuts and Jobs Act. But in 2019, when the Trump tariffs were fully in effect, the productivity of manufacturing workers plummeted by 2.2%—a larger decline than in any prior year dating to 2011.
Not only do we explicitly mention the decline in manufacturing-worker productivity, we dive into its details to discover that greater use of your favorite policy tool, tariffs, corresponded to a worsening of this productivity.
At the risk of being a party pooper, I point out also that manufacturing-worker productivity turned negative only in 2011 (as the graph you offer shows). That’s 11 years after what you yourself identify as the start – in 2000 – of a period of “rapid globalization.” For the first decade of the present century this productivity rose nicely. Maybe, just maybe, this fall in productivity was caused not by globalization but, instead, by the significant domestic-policy changes that occurred following the Great Recession. If, as many say, the dreaded ‘age of neoliberalism’ ended with the Great Recession, then perhaps a better place to look for an explanation of this fall in productivity is the decline of liberalism – no prefix necessary.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
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