Weak dollar, more direct investment help push a manufacturing revival?
Making Things in America
By PAUL KRUGMAN
Original URL: http://www.nytimes.com/2011/05/20/opinion/20krugman.html?_r=1Some years ago, one of my neighbors, an émigré Russian engineer, offered an observation about his adopted country. “America seems very rich,” he said, “but I never see anyone actually making anything.”
That was a bit unfair, but not completely – and as time went by it became increasingly accurate. By the middle years of the last decade, I used to joke that Americans made a living by selling each other houses, which they paid for with money borrowed from China. Manufacturing, once America’s greatest strength, seemed to be in terminal decline.
But that may be changing. Manufacturing is one of the bright spots of a generally disappointing recovery, and there are signs – preliminary, but hopeful, nonetheless – that a sustained comeback may be under way.
And there’s something else you should know: If right-wing critics of efforts to rescue the economy had gotten their way, this comeback wouldn’t be happening.
The story so far: In the 1990s, U.S. manufacturing employment was more or less steady. After 2000, however, it entered a steep decline. The 2001 recession hit industry hard, while the bubble-fueled expansion of the decade’s middle years – an expansion marked by a huge rise in the trade deficit – left manufacturing behind. By December 2007, there were 3.5 million fewer U.S. manufacturing workers than there had been in 2000; millions more jobs disappeared in the slump that followed.
Only a handful of these lost jobs have come back, so far. But, as I said, there are indications of a turnaround.
