Transcripts For CSPAN3 Manufacturing Jobs 20180123

Test test test test test test test test test test test test test test test declines in employment rates especially among less educated men and women. We have a relatively low Unemployment Rate today, but we still see in the form of very weak Earnings Growth and very low Labor Participation rates among the less educated, sort of greater structural problems in the economy that, at least in some way, he lated to the decline of manufacturing employment and theres been evidence on that. Okay. Also, as i mentioned, the loss of manufacturing production has led to the loss of research and development, which has longer term implication dollas for theh of the u. S. Economy. So, to conclude, my main point is, is that claims that automation primarily cause the relative and absolute decline in manufacturing employment are just simply at this point in time not supported by the evidence. Im not saying that automation played no role, right . Certainly automations have. But theres no prima facie evidence, nor is there evidence for the 2000s surge in automation was the primary cause of what weve been seeing. Studies do find they played a significant role in manufacturing employment declines in the 2000s. But i want to emphasize the research is incomplete. Theres big holes in the data. Foreign competition does spur investments in automation and that causality is a. Mbiguous. In the precipa tus decline in the 2000s has had any large affect on work and the economy. Im not going to talk about trade policy, but this raises questions about policies that may have triggered the sudden shift in global structure of production. I am guessing that carolyn and josh will weigh in on it, but thank you very much. [ applause ] thank you so much to dr. Susan houseman from the upjohn institute. Now wed like to welcome carolyn frien from the peter institute for economics and the world bank. Wed like each of to you stick to about seven minutes. Thanks. Thanks. Its my pleasure to be here. Let me see if i put a powerpoint here if i can get it on to the screen. Is someone doing it from there . Okay. Its the this one. So, you know, let me start by saying i agree with most of what susan said and i think she gave a really nice presentation. I think im going to gibl aboqu about the size of automation and skillbias Technology Cal change and demand shifts and things like that versus trade. But i do agree that especially in the 2000s increased imports, you know, especially from china, played a role in the decline in u. S. Manufacturing. I do want to take a step back and remember why we like to trade because when you just focus on manufacturing you can ignore that part of it. The main reason is actually there are consumer gains. So consumers gain when you go to the store and prices are lower. Thats a real income gain for people, and especially, especially for people who are the most vulnerable, the poorest people who spend a really large share of their income on goods. So i dont think we should forget about that when we talk about this because while there are the workers in the Manufacturing Sector, theyre also all the people who work in the service sector, actually the majority of americans who are benefiting enormously from this. And especially some of the poorest. And if we do want to think about the loss in jobs for manufacturing, the right policies are probably about training, adjustments, et cetera, as opposed to the restricting trade. And then finally, this was a really special period. It was a period when china was running, you know, current account surplus of around 10 at some point and the u. S. Was having a big consumption boom. Think so we have to take macropolicies into consideration that in some sense we drove this ourselves not do with trade policies, but to do with our policies that discouraged savings primarily. And then finally, in terms of just a broad overview, lets also not forget that 500 Million People were lifted out of poverty in china from the early 80s until since the early 80s until 2010 or so. And part of that was because of productivity improvements there, reforms there, and trade. And thats another bonus of global integration that we dont want to forget about. And, you know, some would also argue that integration, talking with other countries, business links, et cetera, have supported a long period of peace. So just to think about those as an overview. In terms of the kwibquibbles wi this paper one is i think demand matters a lot and it has to do with the size of the economy. And im going to go back to this kind of relative productivity hypothesis that susan talked about that productivity of manufacturers increases, but how many tvs you can have . How many cars can you buy . And thats going to put a constraint, deand some shifting towards services as countries get richer. And so we just cant expect jobs to be coming from there. I also have a quibble that i and ive seen this before, its been a Common Thread in this literature of lets take out the computer sector and show, its nowhere else. If were going to take out one sector we should take out other sectors too because now were waving it towards the sectors that had the lowest productivity growth since we took out high productivity one and im going to show you some data that that would matter as well. And finally im going to talk about just some other things like macrocontext and other knit picks one could have with the data besides the computer price index. So, first, this is the alternative picture that people show instead of looking at the number of manufacturing jobs, lets look at the share in employment. And there this period of rapid decline is not there. So its been kind of a steady decline in manufacturing employment. And the difference has to do with the fact that during the early period when manufacturing growth was stable, so the last pictures pretty much the same picture that susan had where you do see the precip tus decline in manufacturing employment, part of it was because productivity was increasing but demand was too as workers were coming on the labor force, incomes were overall income was going up as a result of that and demand, as well as there being plenty of workers to hire. In this later period, you look at the workingage pop tlation w population it was much more stag meant. So that made competing for employment much more which makes it more difficult to maintain employment and also theres less of a demand boost for all those goods that theyre producing. And heres what what the technology looks like. And i just put a few sectors here just to give the idea if we take out computers of some other for some other sectors actually if computers were on this chart on the left of labor productivity, it would be way off of the scale. Its at like 11, where this scale in productivity growth it is much smaller so youd get the flat lines that susan showed for other things that computers just dominate. But there is a difference even within some of these other sectors. And what you really see is that even primary metals, machinery, transport equipment, et cetera, had much higher productivity growth than our services, than hotel and food services, truck transportation. Wow, i have one minute, so let me just quickly go through the rest. And you can see it in prices as well, that the prices have fallen much more for goods than for services. So thats where the consumer gains come in, but also this leads to a shift in part because of this demand for services, the prices are rising there, but the share of what people are spending as countries get richer they spend less on goods. And because prices are falling you spend less on goods. And you can see this very clearly in this shift towards consumption of services. This is where, in this picture, you can see, again, im trying to distinguish between industries that if we want to take out computers and electronics we should take out probably apparel and textiles as well on the other side or something of equal size so the size of the bublds are tbles are of the sectors. And it shows the employment change, had is kind of exaggerated here because of the scale, versus the output change. They both are, you know, going to roughly. 8. But the point being that, one, all sectors experience the decline in employment, it wasnt specific to the declining sectors because the productivity was rising, in part. In the thumb sectors where output and employment declined it was probably more related to trade, ill concede that. But we also saw really big productivity gains, especially in transportation equipment. And i think that should be recognized. Its a huge sector that had a big productivity increase, not as big as computers, but big. And finally, the other issues that i wanted to talk about, one, and i said it at the beginning, the macrocontext matters a lot. Average unemployment in this period was very low. The consumption share of gdp was increasing. If you look at imports to gdp, looks very much like other countries over this period. Whats really different is exports to gdp. So something was wrong in the u. S. That as we were as competition was affecting our Manufacturing Industry, we werent growing our exports in the same way as other countries. And finally, if were going nitpick the data and just take out one sector and say, look, then there are other nitpicks as well. Transfer pricing and Profit Shifting matter a lot. Theres incentives out there to overinvoice, imports to a company, or imported inputs which then pull your profits down and your taxes down, and to underinvoice exports. And some have estimated this alone is half of the u. S. Trade deficit. And then the price index on autos and machinery probably nund stat understates advances. I lease a car vand not hand i hd a price increase on my car and yet i keep getting tons and tons of new features for the last eight years or so. So theres something going on that if were going to argue about the price index on computers, then we should probably look into some of these other price indexes that may understate real increases. And ill wrap up there because i think its time. Thank you. [ applause ] thank you very mitch, carolyn. Next well here from dr. Josh bif venezuela from the Economic Policy institute. Sorry, im going to try to find my powerpoint. There we go. Okay. Thank you. So im going to say a couple words. Ill start by saying i think susans paper and presentation are thought provoking and admirably careful in their claims about what Economic Analysis is really precisely say about the various facets of globalization and manufacturing job loss. And so im going to take my job to be a little less careful and basically say its true, we cant be super precise about this, but we can look at some broad brush data and try bracket the effect of rising trade deficits on manufacturing employment and its going to be hard to escape the condilution those effects ever pretty plarth. So before get together precise question at hand, i have two quick asides. First one the extent of globalizations pressure on the libzation of workers is not equal to its manufacturing employment. We could have bald trade and there might be large downward wage pressure on noncollege wages in the u. S. Economy. These wage effects cumulative are larger than the ross they put on American Workers than damage done by manufacturing job displacement. I think the displacements, theyre the most acute damage felt by individual workers for sure. Its much twors completely lose your job than to have injury wage pushed down over a long period of time, but the wage effects are really big. Thats one aside. Second aside, trade deficits can certainly have effects on overall employment, not just manufacturing employment, particularly when the economys growth rate is demand constrained. I mean, yes, when the economy is unambiguously full of employment, trade deficits change the comp siftion employment pushing jobs out of tradeable sectors in nontradeable. We have not been in an unambiguous full economy for a long, long time. Graph im showing you here is Interest Rates and if you concentrate on the far right of that graph weve had Interest Rates essentially bumping right above zero for about a decade. In the standard story for how trade deficits do not harm overall employment is, yes, the trade deficit reduces employment all else equal, but you get this big inflow of capital that pushes down Interest Rates and that creates job plos pushes down. Capital inflows push down Interest Rates. Okay. We do not need lower Interest Rates in the u. S. Economy for job growth, we need Something Else because weve had zero Interest Rates for essentially a decade. I would argue the counter veiling effect of pushing up jobs over the past decade has been extraordinarily week. Trade deficits can have impacts on overall employment not just manufacturing. And finally this is boring but its worth saying. If were going to tolerate a really large trade deficit and we want to be at full employment, then we have to tolerate a really large budget deaf fit or indebted household sector. Theres no getting around that fact. Someone who wants to say were at full employment and we have a large trade deficit and thats fine, i dont want to hear them talking about how we need to reduce the budget deficit. Unless you think theres a oneway causality from budget deficit to trade, but theres not. So lets get to the real question at hand. Trade deficits and manufacturing job loss, this i realize is just exactly the same graph that susan put in hers in the is, to me, looking at the right, its the implosion post 2000 that, to me, is the interesting thing here. Its one thing to say manufacturings employment share has gone down for a long time. It has. The overall level was extraordinarily stable for about 35 years, between anyone teen 65 and 2000 and then it falls off a cliff. And, again, my contribution to sort of dismissing the really easy it was all automation explanation for this, if you look at productivity growth between 1960 phi and 2000 when manufacturing employment was really stable and you look at that time post 2000 when its not stable at all, its hard to see much difference there. Productivity growth was fast in manufacturing from 65 to 2000 and we did not lose 33 of the jobs in a 16year period. And so basically theres a second column is basically hours, thats employment in the industry, thats the annual loss over that time period. So the way i match up these two things, i think at best a quote unquote acceleration of productivity of 0. 2 in the latter period maybe it gets you 10 of the explanation of what happened post 2000. I think thats actually even a little high. So, can we be more precise than this . If we dont think its productivity what can we say that it is . And i in the interest of meeting my seven minutes will skip one slide. Focus on the bottom expression here. Ill tell what you that means in one second. But the logic is going to be the changes in manufacturing employment are basically just equal to the change in domestic output, how much stuff factories in the United States are produce, minus the dmang productivity. So if you produce 4 more stuff but productivity rises by 4 employment doesnt change at all. You didnt need to hire anyone else to produce that 4 , your existing workforce just got more efficient. One thing we often miss is the change in output is a function of two things, a lot of things but two things. Domestic demand, what do you u. S. Consumers actually want to buy from the Manufacturing Sector . And then the wedge, the trade deficits introduce between that domestic demand and domestic output. So maybe u. S. Consumers want to buy a trillion dollars worth of manufacturing output in a given year but in f on net 200 billion of that is satisfied by imports youre going to see a wedge of what they buy and what is produced by u. S. Factories. So thats whoa im trying to get at with this last expression with the little hats over it. That l with the hat over it thats employment in manufacturing and thats going to equal the growth of domestic demand, thats that yd with the hat. Plus, the change in the wealth introduced by the trade deficit, thats that little d. And then minus productivity growth over that time period in the will let us do a very simple accounting decomposition. First thing i want to convince that you little d, the wedge that the trade deficit puts between what u. S. Consumers demand from manufacturing output and what producers actually produce, its pretty big. This, the sort of blue area is output, real output in u. S. Mafring and then the red is domestic demand. Im defining domestic demand as basically just output plus manufacturing imports minus manufacturing exports. So it is the manufacturing goods demand that sticks in the United States. Im taking out exports because thats foreign, but im adding the imports in. So this is the wedge that rising trade deficits are putting between output, between demand and output. And you can see it started to become big and its grown significantly over the past couple of decades. And so if you just take that expression from before that had employment as a function of domestic demand, the wedge between output and demand and productivity, you can actually get some numbers. And the numbers i looked at are between 1997 and 2016 for a couple of reasons. Choosing these years, one, actually 1998 is the manufacturing employment peak in the u. S. Economy. Thats pretty striking because 19 1997 and 2000 the u. S. Economy was roaring. It rose by 10 . Thats an extraordinarily fast growth rate yet manufacturing employment declines. Whats going on there in 1997 . Its the asian currency crisis. We see trade deficits develop because of whats happening elsewhere in the world and thats one reason to choose 1997, because thats when i would argue our modern era of large trade deficits begins. And then, two, datas much easier from 97 in these series so thats why i chose it. If you look at ours, basically people have shown this before were we see about a 34 decline in employment hours and manufacturing. Over the same period, we actually have domestic demand rising by 34 over this time period. There was actually relatively robust demand growth in that time. But the wedge between demand and output, that trade balance wedge, that knocks about 18 Percentage Points as a shafer manufacturing output off of that. So thats domestic demand, u. S. Consumers wanting to buy washing machines and dining room tables and tvs but its not being satisfied by Domestic Production its being satisfied by foreign demand. That leaves us with output growth of 16. 4 . Some so when people say productivity growth and manufacturing employment, they really mean the interplay between demand and productivity growth. No one thinks that employment should have declined by 50 . They basically say productivity rose faster than demand so its sort of the domestic influences. So those domestic influences, domestic demand growth minus productivity, that only explains about little less than half of the total employment decline in manufacturing over that time. That wedge from the rising trade deficit explains about half. And so to my mind, just looking at this aggregate data, its hard to not see the rise in manufacturing trade deficits is really colead with what has happened to manufacturing employment over that time. And then final ten seconds, so why did manufacturing trade deficits rise substantiately over this time period . U. S. Still has a very overvalued dollar, did for a lot of that period. That should ann laser focus for people who are concerned about thee infect of trade deficits on employment. Thank you. [ applause ] thank you, josh. And our final discussant was to be professor Michael Hicks. He wasnt able to be here because of weather. The former epi president is going to read professor hicks prepared remarks. Thanks, larry. Thank you. Michael was concerned that the expected snow would allow him to get here but not to leave. And i guess he doesnt like washington. Okay. Im going to read his remarks and as supplemented by an email from them this morning. He starts out acknowledging the significant decline in factory employment thats been very disruptive. And he writes, at the same time both real gdp and real value added production in u. S. Manufacturing likely peaked in 2017 and absent Business Cycle disruptions have grown steadily across the historical horizon of data. Likewise, the United States has experienced negative net exports since nine fiend 80 and the balance of trade with china was roughly 350 billion in 2016. Given these data, a significant body of research has attempted to explain the causes and consequences of these employment changes. Dr. Howsmans paper offers a useful, concise restatement of much of this analysis. She does so as her title suggests in two parts, which i discuss in turn. The cause aftion job losses is an important ingredient to policy interventions. Despite common perception, data employment output suffers significant conceptual challenges so such issue as domestic outsourcing of nonproduction tasks, imprecise trade data and equality all affect conclusions which can be drawn from these data. Dr. Hawesman explains much of the research on these issues but there are two issues that be merit comment. First, the limited work on bls bias, some of which is not reported, suggests more sim metro than this review suggests. And just to summarize hes sayi saying sooug sue says there are studies which show that the bls productivity is overstated. Hes pointing out that he thinks theres study that say its understated. Second, dr. Houseman corrects a common error to economists to two casually atribe bugt gains to simple automation. This was covered in her earlier work with michael men dell and in other papers. They may uncover such diverse contributions as better education, changes in union strength, and robotics. My only real critique of this section is that i believe it overstates the disagreement regarding the relative contribution of trade and productivity reported in the literature. Part of the disagreement is tort logical. There was a surprising consensus across several studies using different techniques that identify pure traderelated manufacturing job losses during the 2000s as between 750,000 and 1. 5 million, between 10 to 30 . Theres also agreement that some of the productivity job losses are motivated by competition induced by imports. Do we call this a trade or productivity related job loss . I think an important contribution of this work is to motivate economists and policymakers to talk more broadly about measurement issues. I do think that dr. Houseman is right in that theres unlikely to be that there is unlikely to be agreement on the figure but i think theres less disagreement among researchers than appears in either the policy debate or in the media. The consequences of manufacturing job loss are as in dr. Houseman suggests, among the most robust findings in labor economics. In conclusion, dr. Houseman has inn deuced another important analysis of the puzzle regarding the effect of productivity and trade on manufacturing employment. I asked dr. Hicks to expand his remarks in order to directly comment on the in one of the main issues that sue raises, which is can we attribute the erosion of manufacturing employment to automation or to, you know, rather than anything related to output related matters or trade. And okay. So heres what he says. While i concur that slow output growth say contributor to lower levels of manufacturing employment growth, i dont think it is necessarily relevant to exclude computers from the discussion. Susan may be correct theres a theme here. Susan may be correct that bls waiting biases upward productivity growth but a full accounting of its total effect on manufacturing would require conducting some of the same analysis for noncomputer inputs. That was the point i attempted to make about earlier criticism of the bls. Manufacturing goods are increasingly platforms for computing capacity that alter the value consumers receive from the product. That value likely exceeds the value of the products produced separately. Thank you. [ applause ] thank you very much, larry. Dr. Dr. Ball in absentia. Before we go to the audience id like to gift panelists a chance to go back and forthwith each other. A couple of issues had been raised here and one of them until particular for sue is whether its arbitrary to exclude computers from the manufacturing output and what why it is that we make that choice and what that tells us. And invite carolyn also to respond. Thanks. Sure. Well, first i want to make really clear i think is it . Is it on . Its on. Sorry. I want to make really clear that i am not arguing that the adjustment of price deflators in the computer and Electronics Product industry is wrong. Im not saying that productivity is biased. That the government estimates of productivity growth. There is a very row boat bu robust debate within the small corner of the economics provision that pays allot of attention to price deflators, okay. And it is, you know, about whether these adjustments are too big or too little. And there is a very large debate going on right now about whether we should be more better adjusting other sorts of products and services, goods and services, particularly i. T. Goods and Services Better for changes in product quality. My point, rather, is really twofold. One is that these productivity changes are not picking up automation. And too often in the public discussion were pretty sloppy about that. Were assuming that productivity growth is, you know, implicitly or explicitly were very often assuming in this debate the productivity growth is picking up automation. Its not, okay. And secondly, the reason i take out i think its useful to take out computers is because when you are looking at the manufacturing numbers, the trends are just so dominated by whats happening in that one industry that its really hard continue to interpret. I think that statistical agencies will be moving increasingly towards a better adjustment for product quality i think its going to make things very difficult, more difficult for people to interpret the statistics in the way that theyre used to interpreting them. Carolyn, do you want to add anything . Yeah, i would. I would just add that i think there is there tends to be a view when we talk about productivity growth and automation that were saying the industrys losing jobs because these jobs were all the mated. I think thats part of it, but i think its a small part. The point im making is the really big part is about price elasticities income elasticities. Theyre just not big enough so that when productivity rises and prices come down that people want so many more of these goods. And then if people want the same amount of these goods or maybe a little bit more and productivitys risen a ton, thats going to cost jobs. So its not automation thats costing jobs, its this relative the relative price problem. And short of structural change as well on top of that, which has led us to consume more services than goods. So i think the productivity still plays a really big role, in my mind, automation in combination with this relative productivity hypothesis is the lions share. I still think trade in this period, you know, was probably, you know, the 20 to 40 people want to allot it. I dont have a problem with that. And it is important we do have to think about it like josh, i think it is much more do with the Real Exchange rate than trade policy. And then just on taking out one industry, you know, why should i take out one industry . I have the whole set of data, lets do that with all our data, take out one industry and i can show you almost any correlation. So i do think its problematic to take out to take out one industry or at least then lets talk about all industries because theres some interesting things going on, as i mentioned, especially in transportation equipment, machinery, you know, things that the u. S. Is really good at producing that we should also focus on. So if were going to take out one industry, lets at least look at all disaggregated data, not computers, everything else. But carolyn, do you agree that theres something unique about the oh, yeah. Computer indexes and the way we calculate price changes and quality changes so that you have this kind of small very small industry which is actually in decline. And i think it is contributing to the counterintuitive sense where i think a lot of americans certainly manufacturing employment and job and trade was a huge issue in the 2016 president ial election and has been a tribute ter to growing inequality and the dedplien communities particularly in the midwest. And then people have this sense and then a lot of pund dants come out and say youre all wrong, youre i did yolts theres nothing wrong with manufacturing because manufacturing output is growing and theres nothing happening here except that youre all itioti idiots. What sue is trying to pull out is the idea theres something strange that happens in the data. The adjustment that happens which is when you say, you know, your computer this year has twice as much Computing Power has it had last year and temperature costs pretty much the same or 10 to dollars more, then you all of the sudden have bought twice as many computers so that both the what we see about the health of output of gdp and productivity is rescued by some necessary adjustments to computer prices and quantities. But that they are also misleading us when we try to think sensibly about whats actually happening. I think thats a i think thats a fair point. I would just say that i think we have to be careful, then, do that in other industries as well. That doing that only with computers rescues the discussion in one direction. But, susan, does that fix the problem if you took out textile and apparel, for example . I dont think that the other, you know, the productivity growth in the other sectors isnt going to make that much difference in terms of to change the overall picture if the what changes the picture, and i have experimented with this, but it doesnt change the overall picture. Another industry where there is a difference is autos. Ive taken een out autos but its not enough to make a difference. Computers is unique among itself in sort of the magnitude in the changes. I want to while i have the microphone dr microphone, i did want to reply to one of carols one other comments. And its very common to say, well, this study, repeat being what repeating what i said, this study found 25 , that study found 30 so the rest is probably automation. Thats a problem. Right now what you should be saying is what was the Technology Shock that occurred in the early 2000s that caused a nearly 20 decline . Now near 30 decline in employment . And people that have tried to look at that have come up short. Now, i emphasize that theres holes in the research. The debates still open. But thats the question that you have to answer. Its not sort of saying, because research is slow, its hard to kind of, as you know, carolyn, its hard to get sort of very convincing causal evidence. So its looking at this trade policy on employment and so forth. So its not complete. What needs to be done is for researchers to come up, if you really believe the automation storys going on for some compelling evidence that there was a Technology Shock in the early 2000s that caused the collapse and that it was specific to manufacturing to that caused that decline. And then just quickly, i completely agree with carolyn, the trade and i perhaps didnt make it as clear as i should have during my talk, you know, we all benefit a lot from trade. Nobodys, you know, at least not im certainly not arguing for, you know, throwing up walls at the border, okay. I think that what was really unique and special or special isnt the right adjective but what was really unique about the early 2000s was just the ago tude of the shock. I was trying to get at that in my discussion about dislocated workers. The size really matters. And we had a very large trade shock then. And thats where i think the problem is most serious. And its that its its that policies, whether its good change rat Exchange Rates or anything else, may have led to large, sudden shifts in the structure of Global Production that can be especially problematic for an economy. I just i just wanted to add about this thing that while if its not trade and we dont have this big productivity growth then it has to we have to come back to trade, that if you really look at the data and just the timing of when the job loss happened, its one thing, recessions. So in recessions, thats when the job loss happens and so then it goes back to the demand. The demand suddenly drops, youve been Holding Workers for a long time as productivitys been increasing, and then during the recession you let those workers go. So i dont think if we look at the timing of when they fall versus the technology in trade its the right way to look at that time because its extraordinarily lumpy when that job loss happens. It wasnt a continuity over this period when china was increasing exports to the u. S. , it was really two distinct periods when a lot of job loss happened that happened because of, you know, holding too much labor and then a recession hits and that forces this readjustment. Okay. Yeah, on that point, because its related to what i wanted to talk about. I think one way to think about this, the way i think about it, is productivity growth as weve all shown, its basically been on relatively the same pace for a long time. Its the background music to the Manufacturing Sector. And then what changes to cause sort of job losses is whats happening to output growth around that. And i think two things. Post 2000 you basically have a huge decline in output growth relative to sort of the trend and relative to productivity. And i think, one, theres the obvious answer of rising trade deficits that thats to put that big wedge between what u. S. Consumers demand and what they produced. And its true, weve had a slow growing macroeconomy since 2000. Thats where puf got the background productivity going fast in production and you you will down shift the overall level of growth youre going to run into some problems in that sector. In regards to the lumpiness of job losses, theres two tells that its not just to resessions. One the evidence that i talked about in my talk, we had a roaring economy from 97 to 2000 and zero mafring growth, it declined as trade deficits rise. After the 2001 recession which was heavy in manufacturing but mild overall, we got none of those jobs back before the Great Recession hit. And we got none of them back because as the overall economy grew and consumers wanted to buy things again, they were much likely to buy imports over china during that time. Most of it happens during recessions but the complete failure to pount any recovery at all between those recessions to me say big tell that sort of the trade deficits were a big player. Thanks very much to all the panelists and we do have time for some questions. Wed like to open to the audience. Please wait for the microphone. State your name and affiliation, if you have one, and well take maybe two or three questions and then allow the panelists to respond. Hi, robert leccer from American University and in the interest of full diskwlos youre im an epi research associate. I would like to actually challenge the idea that we have to accept the productivity numbers from computers. I understand that im not talking about the exact numbers. But, to me, the way we measure variables should depend on the purpose of our analysis. So if we want to know, and i think Michael Hicks put it very well when he said the value consumers receive from Something Like a laptop or your car, yes, we do the adjustment, of course, that computer is far more powerful than the ones we used to have. But if we want to know how productive are the workers in the factories to put the chips in and put it altogether or even the workers in the Assembly Line somewhere who make the chips, theyre not making more chips or more laptops or more cars than they used to, its just things are plugging in because of knowledge increases and technological innovation create more value for the consumer. But i would challenge the idea that in terms of productivity thats really different. Second point, some of this conversation at the end, how do we account for the fact that theres this precipa tus decline in the total amount of manufacturing productivity sorry, manufacturing employment and yet this continuous decline with no change in the trend in the share of manufacturing employment . And the answer has to do with something josh was hinting at at the end, this stagnation of the remembering, secular stagnation since somewhere around 2000. If you look at the total number of jobs created in the u. S. Economy, from 1960 to 2000 it was about 2 million jobs a year. Since 2000 i havent got the latest numbers but well under 1 million. There was less than half of the annual rate of job creation overall. Now, why are rehaving thwe havi stagnation . I dont have time go into that. But the only arent ratio ha is doing the same thing when the numerator has gone off the charts sbaus the dee nominator is not doing very well. Pat. Theo, thank you for put thong terrific program. I want to make two points. I was on the Banking Committee staff from 83 to 97, and i saw the movement from stakeholder to shareholder capitalism, which is and there are two chapters under the back called the golden passport about the history of Harvard Business school which describe this phenomenon. The second thing, i was on the China Commission for ten years and saw the movement of what happened once we got china in the wto. People say we didnt give china a different tariff after they were in there, but what we did, we zbaf it to them permanently. We could always take mfn away from them until they come into the wto. Without that, they would have faced a 42 tariff in the u. S. , with mfn was probably lower than 4 . Thats a key thing. And he then when our companies are driven by shareholder value to increase their posts for their shareholders and the other countries are offering them subsidies, underpriced Exchange Rates, its going to cost them. Theyre going to move your production from here to there. Im wondering, have you guys focused on shareholder capitalism as a problem ors as factor of all of this ha thas has happened to the American Worker over the last 15 years which has led to the results in the last election . Thanks, pat. Hi, im alan and i write the reality check blog and thank you all for this great conference and thank you all for these very highquality exercises in Economic Analysis. And ive got one observation and then one suggestion that i hope youll all react to. One, its really a shame that its all necessary. And i say that because you all agree that there are big data flaws here that youve got to try to work around and circumvent and try to explain, and yet there is a big body of data that is out there that could explain a great deal that no one looks at because theres no obligation on the part of the Major Players to make it publicly available. And what i mean by that is the Major Players, especially when it comes, you know, to job offshoring are, of course, for the American Economy u. S. Based Multi National companies. They know exactly how many workers theyve moved all around the world. They know exactly what they make because if they didnt have this information, they probably couldnt be profitable. So wouldnt it be great if every company in this country at least above a certain size had to report every year how many jobs have you moved overseas . How many jobs back . We do have actually, of course, Labor Department data that tells us how many workers have lost jobs from foreign competition, but we have got flaws there too because a lot of because a lot of the folks who lose jobs dont know that they have this option which leads, you know, down the road to various retraining programs. So it would be great if all the organizations up here and everybody else who studies trade policy started pressing washington to force Multi National companies to release this data and then we could know whats happening rather than have to engage in all of very sophisticated but ultimately unsatisfying Economic Analysis. Thank you, alan. One more quick question and then well let the panelists. Sorry, just want to squeeze it in. Quick question but a large one. Im carolina young, warners of. I believe our office has been very concerned about future of work and supporting workers in the Manufacturing Industry in particular. So one of the questions that i had for the panel was sort of policy recommendations for the future of manufacturing in particular. There are lots of little there are lots of policy recommendations that are, you know, that are part of this debate in terms of wage stagnation, in terms of, you know, Exchange Rates, in terms of all sorts of things, upscaling for workers in particular, so id love for the panel to talk about those different things. Thank you, carolina. Thats a great last question. And with that, id like to allow the panel, starting with sue, going down the road here, to respond to all four of those questions, which were all excellent. Thank you. Okay. So, first, on roberts questions question about computers and should this productivity growth really be show up somehow in the Manufacturing Sector. Not to publicize my own work, but ive actually argued within an article with tim sturgeon at m. I. T. My colleague at the upjohn institute, that probably the great productivity growth in computers is to a large degree being driven by research and development, and that probably should be not booked to productivity. To manufacturing, rather. The problem is that were not we dont know how to adjust, yet, services, prices to book that productivity growth to the services industry. Its really a huge challenge. Its way beyond the scope of this. But i bottom line, i would agree. We dont we dont really know how to develop reasonable measures for r d services. Interestingly, as production in the sectors is moving overseas, and you get, perhaps, some of the r d staying here, you may see it showing up less and less as productivity growth in the United States in the u. S. Economy, simply because we dont sort of measure it very well. That productivity growth. That improvements to products coming out of r d. I do agree with very much with pat malloys comments about kind of the change in the way corporations are run, the movement from stakeholder to shareholder value, that that has, you know, certainly had a big effect, and the pressure on companies, which is very real, to increase margins, maximize profits, is perhaps and almost certainly to some degree pushed companies to shift more quickly overseas to increase margins than one would have seen in the past. I think its an important phenomenon. Some people are looking at it, but its arguably understudied. Alan, i always favor more and better data. And i actually do think that, you know, kind of the globalization of things has just made it harder to measure stuff, and we need to think more broadly about collecting better data to better understand the competitiveness of domestic manufacturing and other industries. I mean, sort of need to rethink the architecture of our statistical system in that way. Finally, carolina from mark warners office, policies, wow, theres a whole host, and i think that my colleagues will have more to say about that. But certainly, you know, theres theres a host of macro policies. I think theres broad agreement that and appreciation or overvalued Exchange Rates is a huge problem and we should be cautious about that happening allowing that to happen in the future. And as josh has argued, perhaps theyre still overvalued, but im going to stay out of that debate. In terms of the of the nittygritty nittygritty, the theres certainly a lot of very good Vocational Training programs and the like that can make a big difference for the skills of wo workers in manufacturing, theres a big demand for that and i think that sort of Vocational Education should be expanded. Great. Great questions. Let me start with the pntr one, because i really fundamentally disagree with that view that pntr had a big effect. Before china was granted pntr, there was no time when it reverted once it got, you know, preferential or the mfn status. We never reverted away from that. So, whats to make us think we would have . And we did have two really important tools, which we still use which the u. S. Still uses today, which are, you know, antidumping and countervailing duties, which were used very heavily against china. So, i think that there were policies in place, but let me turn to research on the topic. Theres a great new paper by mary, john, rob, and one other person, and what it shows is that it wasnt about anything other countries granted china. To the extent you want to argue it was wto accession, it was chinas own liberalization. So the fact that all of a sudden in china, you had access to cheaper intermediates and you could enter into Global Supply chains and all this had a much bigger effect on chinas export growth than anything other countries granted. So we pushed china to liberalize but remember that some of that liberalization is going to improve their own productivity, so its reforms china made that really had the biggest the biggest impact. In terms of policy recommendations, before i went on leave from the institute, chad and i were working on two policy briefs, exactly on this question. And one compares looks at the decline in u. S. Labor force participation compared to other countries and tries to understand. The other one looks at lessons from other countries on labor market policies, because while other countries have very similar experiences overall in terms of gdp growth and declining manufacturing, what they didnt have was some of the the declining Labor Force Participation that the u. S. Had. And why is that . And one, we spent a lot less on labor market policies than other countries in the oscd, in particular job placement policies, training, but thats not going to be enough if theres really a structural change and demand felt, so then you need to turn to policies like wage insurance, potentially public works, though i visited the hoover dam over the holidays, and was amazed that, you know, it was finished two years early and employed all these people at a time of great difficulty. So i think i think given the state of infrastructure in this country, there is a way to boost demand through infrastructure, and then on top of that, have these policies for labor that could do a lot. And then finally, just to say that if we really think, you know, its about and i think most people do, that the trade deficit, when were not at full employment, is going to be making it more difficult for workers, i think theres Research Showing that fiscal policy is important. So, if youre going to run a fiscal deficit, that means the governments consuming more than it has in revenues, than its production, and some of that is going to go to imports, and so thats going to pull the deficit and so forth. So, why dont i stop there, but those were great questions. Thank you. Yes. Ill say a couple words on policy first because that is a very, very long discussion and so just the headlines. If youre really worried on sort of the narrower issue, and its a big issue, but its narrower relative to all the other problems in the American Economy of manufacturing employment, to my mind, dealing with misaligned Exchange Rates is the really key one. And dealing with them in a way thats credible in the long run. I mean, its one thing to say, you know, we should make the dollar go down for a couple of years. That wont do a lot. I mean, there needs to be real credibility that the u. S. Is now committed to never again allowing the dollar to just annihilate the u. S. Manufacturing sector. That means doing Something Like weve got a Federal Reserve that monitors this one really important macroeconomic price that is the interest rate. We say, that is your job, to adjust it depending on economic conditions. It seems to me we should probably have Something Like that for the exchange rate. Its an extraordinarily important macroeconomic price and thats one we just allow to whip all around and it causes a lot of damage. I think big picture ideas on how to credibly commit to never allowing the dollar to do what it did to manufacturing again is a big part of the story there. I would also agree. I think Infrastructure Investment would be really key for a couple reasons. One, i think we need it. I think weve underinvested in it for a long time. I think we have some slack to be rung out of the economy and its particularly good for manufacturing. It buys a lot of inputs from the Manufacturing Sector so i think that would be a very good thing. I think turning to pats point for a second about, you know, these policies are sensible enough, why havent they happened, i think his point is really interesting because it reminds us that most trade policy, if you think of it as a u. S. V. China or u. S. V. Mexico, you will get it wrong every time. Trade policy is about people within the United States and people within china and within mexico and how the interests collide and to be really clear on this, everyone agrees that the Chinese Government managing the value of their currency for competitive gain in the early 2000s, and made many people may have been like, why is the u. S. Allowing that to happen . Which u. S. . Walmart loves this. Walmart gets really cheap imports from this policy. So the fact that manufacturing workers in some states are getting hammered and walmart likes it, well, who do you think wins that policy debate most of the time . So i think the really key thing i take from pats comment is exactly that. These are not nations versus nations conflicts. These are really classbased conflicts within nations. Thats the way you need to look at this stuff. Thats a great note on which to end. Id like to please join me in thanking our panelists. Thank you all for coming out today, and i hope this will be just the beginning of an ongoing conversation about policy in the important area of trade, automation, manufacturing, and the future of work. Thank you very much. Thanks to cspan and we hope to see you again soon. The Senate Energy and Natural Resources committee is holding a hearing this morning to examine the impact of major weather events on the electric power system. The federal Energy Regulatory Commission Chair Kevin Mcintyre will testify. Live coverage here on cspan3. This should start in just a moment. Call this hearing to order. I want to welcome everybody here. Senator murkowski will be here shortly for this hearing. Its titled, examining the performance of the