Alan Reynolds

Back in 1995, right in the middle of a nine-year economic boom, Louis Uchitelle co-authored an absurdly downbeat series of New York Times articles on "The Downsizing of America." That series was full of opinion polls, as though popular illusions could substitute for facts. More recently, there has been hope that scandals at The New York Times might have given new editors at least a casual interest in factual accuracy. Apparently not. A couple of weeks ago, the unrepentant Mr. Uchitelle wrote yet another weirdly apocalyptic piece claiming, "Manufacturing is slowly disappearing in the United States."

If you were hoping for some proof this time, be prepared to be disappointed again. Uchitelle says, "Manufacturing's share of real gross domestic product . . . has dropped to between 16 and 17 percent, from 18 to 19 percent in the 1950s. . . . the downward trends are alarming." Similar statistical exercises recently led to an interesting debate between my old friends Bruce Bartlett and Paul Craig Roberts. Yet the National Association of Manufacturers' Web site shows that "manufacturing's share of the U.S. economy, as measured by real GDP, has been stable since the late 1940s.

. . . The overall share remains the same over the business cycle." It is impressive for any private activity to maintain a stable share of GDP, since government spending has risen from about 20 percent of GDP in the early '50s to 30 percent since the '80s. Manufacturing doesn't need protection from foreign countries; it needs protection from domestic governments.

Mr. Uchitelle claims "the essence of a great world power is its edge in producing not services but manufactured products." By that standard, the two greatest world powers are Turkmenistan (with 39.8 percent of GDP attributed to manufacturing in 2000) and Cuba (at 37.2 percent). In China, services have risen from 21.4 percent in 1980 to 33.7 percent by 2002. In Hong Kong, manufacturing declined from 22.4 percent of the economy in 1980 to 5.2 percent in 2001.

Mr. Uchitelle claims "the shrinking manufacturing sector is again a source of public agitation, this time because so many American manufacturers are decamping to China and India." Don't editors check the facts? U.S. direct investment in other countries was worth more than $1.5 trillion last year, according to the July Survey of Current Business. Europe accounts for 52.3 percent of American investment abroad, Mexico for 3.8 percent, and China for seven-tenths of one percent. Any "decamping" to India is statistically invisible.

Alan Reynolds

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