With modest fanfare, the White House launched Made in America Week on Monday. In the afternoon, the Trump administration held a series of events to show off American products.
We agree with President Trump that making things in America is, as he might put it, marvelous, lovely and fantastic. This country has a big manufacturing base, which should be cause for satisfaction.
But that doesn’t mean America should close itself off to the rest of the world’s products just so more must be made here.
Some people mistakenly suggest that such protectionism will conjur domestic manufacturing into being from nothing. Trump talks this way, too, sometimes. But without exception, such advocates either overlook or avoid acknowledging that American manufacturing is still strong. Today, we make about 86 percent more in real terms than we did 30 years ago. What causes anxiety and resentment is that we’re doing so even while one-third of manufacturing jobs disappeared during that same period. Technology has made the remaining 12 million manufacturing workers three times as productive as they were in 1987.
So one cannot make old jobs “return” with protectionist policies. The jobs went to machines, and we’d be much poorer if the work was again done by hand.
That doesn’t mean America manufacturing employment cannot boom again. The key is to look not backward at how to keep every company’s manufacturing in the U.S. but forward at how to develop and augment America’s advantages so manufacturers want to operate here.
Why do people want to use the “Made in USA” label? American workers are relatively expensive as compared with foreign counterparts. But that’s not the only part of the equation. The U.S. has many things other nations don’t, and Trump can boost manufacturing with policies that augment those advantages.
Natural gas is supplying a new source of cheap and abundant energy crucial to most manufacturing, which many other developed nations lack. America is rich not only in energy but also in every other kind of raw material, including the timber in our national forests. We also still, despite complaints, have among the best infrastructure in the world for easy, low-cost shipping of products. Any factory in the U.S. has physical proximity to the wealthiest large consumer base on the planet.
America, broadly, has business-friendly laws. It has a well-established rule of law and an inviting, clean legal culture. Manufacturers don’t have to worry about paying bribes to keep their operations running or about the government’s expropriating factories or stealing intellectual property.
The U.S. has one other advantage that protectionism would ruin: We generally practice free trade. As George Mason University’s Donald Boudreaux observed recently, more than half our imports are inputs for domestic manufacturing, either raw materials or components brought here for the production process. This is how free trade has allowed foreign automakers to bring jobs to places such as Alabama, South Carolina, and Indiana.
If Trump wants to increase manufacturing employment, he should support policies that help people responsibly exploit natural resources, reform labor laws, and repeal regulations that discourage job creation. Most importantly, he should preserve and expand the free flow of goods across borders. That’s a recipe for seeing more of that “Made in America” label in the future.