Automation

[andrewducker]

This shows you how many people are employed in manufacturing:


Which tells you that less and less people are employed in manufacturing over time.

This shows you how much stuff we manufacture:

which shows you that we're actually producing more than we ever have (well, up until a suddent dip a year ago).

So UK manufacturing isn't actually a problem - it's just that we're automating it more than ever before. Which shouldn't really be a surprise to anyone.

Of course, we're also running large deficits, due to finance being a massive part of the economy and prone to bubbles. Oh, and buying more than we can really afford.

Comments

[matgb]

I really like that second graph, it's a point I make repeatedly but people don't believe me when I say it ("the decline of manufacturing" is a problem, apparently).

What's the source? Also, any idea what dataset or figures they're using to define "manufacturing"?

[andrewducker]

http://www.theregister.co.uk/2010/02/22/manufacturing_figures/ is the source, working off the data you can find here:
http://www.statistics.gov.uk/STATBASE/Product.asp?vlnk=6230

Not an ecomomist either

[missedith01.livejournal.com]

We also consume a lot more, of course, so (if manufacturing were being maintained as a facet of our economy) wouldn't an increase in output be expected even were productivity static? What's important is the degree to which consumption outstrips output ... which I think is just another way of saying our trade deficit is too big?

[matgb]

Ah, article written by Timmy. Which explains it; I nearly made that graph for him, y'know, but the stats as sourced are a PITA to get into shape (govt datasets are designed to obfuscate, I'm sure of it).

Still, excellent, would've got to that eventually but it's a damn good point to keep repeating.

Re: Not an ecomomist either

[matgb]

We no longer have fixed exchange rates, the £ floats, so it's not possible to have a big trade deficit long term, as the pound readjusts--we import stuff and pay for it using £s, that money has to go somewhere, and normally gets spent on UK based services or investments.

But productivity has been rising even faster than actual output, which is why employment in the sector is so much lower.

And the reason we can consume more is because of productivity improvement, that's largely what economic growth actually is.

Re: Not an ecomomist either

[missedith01.livejournal.com]

I don't doubt that productivity is higher, but I don't think that that fact shows our manufacturing industry is in good health, because it would be possible for output to increase via improved productivity and for us to manufacture a smaller proportion of what we consume at the same time - the two things are not mutually exclusive?

I suppose what I mean is, so what if we're making more widgits because we have a widgit-making-machine, if we're consuming many more widgits than we make, surely we should be making even more widgits than we are?

Aren't we able to consume more because the cost of what we want to consume is going down and our wealth is now being created through service industries and b/f/i?

[cangetmad.livejournal.com]

As usual, completely misses out two entire sectors of employment, helping to preserve the illusion that the CBI actually are "the employers' organisation".

Re: Not an ecomomist either

[matgb]

Correct, no and yes.

We could make more ourselves, but we would be doing so at the cost of not doing something else (opportunity cost). The analysis seems to be that others are better at making widgets than we are, and will do it cheaper, so we should buy from them, thus raising their income and our purchasing power, assuming we continue doing other things that we are better at.

Tis imports that make us rich, the exports just pay for them.

Honestly, trying to get my head around comparative advantage remains hard work, but it's pretty much proven these days, Ricardo was, again, right. Understanding it is hard, explaining it harder :-(

[miramon.livejournal.com]

So what happened 10 years ago to suddenly cause manufacturing to stop going up and become level?

[heron61.livejournal.com]

That looks like it matches up pretty well with the dotcom crash, followed by a small recovery, and then the current problems.

Re: Not an ecomomist either

[missedith01.livejournal.com]

Does taking into account opportunity costs make sense when we are underemployed?

[matgb]

YUp--his point about manufacturing output being more volatile due to demand fluctuations is a good one.

The UK didn't go into recession during dotcom because George was asked to inflate the housing and credit markets a bit, but we would have otherwise.

Re: Not an ecomomist either

[matgb]

Yes--if you're employed in a sector that is uncompetetive, all the costs of employing you, including your time, hurt the overall economic situation. I think.

In a recession, we get more underemployment (I'm on a ten hour a week contract currently), but that gives people the opportunity to do other things, including possibly other paying part time or contract work (which is what I'm trying to do).

We do need to improve the cushions for those that hit the bottom, and we definitely need to do more to reduce barriers to entry.

The ideal would be that if a factory is to shut down, the workers that think they're being treated badly should be able to take it on and do the work themselves, but in the UK barriers to entry are so high (capital costs, etc) that it rarely happens; it's very common in S America, apparently, although I really need to follow up and see how the Argentina stuff is going.