Alan Reynolds

When people talked about the U.S. "exporting jobs" jobs a decade ago, they always assumed the jobs had moved to Japan and Germany. Why? Because those countries exported more than they imported, and thus had chronic trade surpluses. They still do.

The 1992 Clinton-Gore campaign book, "Putting People First," somehow imagined that "Japan and Germany "threaten to surpass America in manufacturing by 1996." The Tokyo-based journalist Eamonn Fingleton's subtitled his 1995 book "Blindside" as "Why Japan Is Still on Track to Overtake the U.S. by the Year 2000." Americans were being sold an economic inferiority complex, and many bought it. Or at least they bought the books.

What was really happening? From 1990 to 2000, industrial production increased by 49.5 percent in the United States, 13.4 percent in Germany and 1.5 percent in Japan. By 2003, Japan's industrial production index was still much lower than it was in 1990. Trade surpluses appeared in Japan and Germany only because their economies, and therefore their imports, grew slowly, not because exports grew rapidly. Japan's merchandise exports grew by only 3 percent a year from 1990 to 2001, slower than Europe's 4 percent pace and only half as fast at the 6 percent yearly increase in U.S. exports.

Manufacturing jobs declined in all three countries, and most others, but industrial job losses were much greater in Japan and Germany. From 1990 to 1995, manufacturing jobs fell by 1.6 percent a year in Japan and by 4.2 percent a year in Germany, but only 0.6 percent in the United States. From 1995 to 2000, manufacturing jobs fell by 1.9 percent a year in Japan, by 0.8 percent in Germany but only 0.1 percent in the United States.

Neo-Luddites who view productivity gains as bad news should take note that annual increases in manufacturing productivity from 1990 to 2001were 3.8 percent in the United States and 2.8 percent in Japan and Germany. The country with by far the largest gains in industrial production and productivity also had by far the least traumatic loss of industrial jobs. That country was not Japan, which probably failed to overtake the United States even in sushi consumption

In the United States, unlike Japan and Germany, the secular trend toward automation of arduous manufacturing tasks was more than made up for by increased employment opportunities in finance, health, education and various professions. From 1990 to 2001 (which includes two recessions), employment rose 1.2 percent a year in the United States, compared with 0.3 percent in Japan and 0.1 percent in Germany.

Alan Reynolds

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