The very prestigious MIT Sloan School of Management, in a piece on its website called “Future manufacturing: How to solve the US productivity paradox,” describes and discusses what it considers “the productivity paradox that is dragging down U.S. manufacturing—particularly, of course, relative to that of China’s manufacturing sector.
Its recommendations - “invest in artificial intelligence”; use government defense contracts as a lever for technology investment; and re-examine industrial policy - it turns out are all involved in having created the problem. That problem is, “real productivity has declined, out of pace with new investments.”
Ben Armstrong, of the equally prestigious MIT Industrial Performance Center, is quoted: “We have about 12%—15% more manufacturing workers today than we had in 2010 in the United States, but … the actual output from manufacturing, or value added, didn’t go up. What we’ve seen since 2010 is actually a decline in real productivity for U.S. manufacturers.”
The article first presents the supposedly surprising fact that manufacturing employment has lost its “premium” as an entry-level job. Nationally, that premium was once 40% and is now 2%; on both coasts and in the South, manufacturing workers start below the entry wages of Amazon or Target employees, for example. This is presented as a cause of low productivity, when it’s actually a result of the next-listed cause—decades of low investment in actually revolutionary manufacturing technologies. And the remedy for that cause, MIT says, consists in investing in AI, and defense contracts (increasingly meaning the same thing).
To get to the point, the recognized “Golden Age of American Productivity”—from the late 1920s to the early 1960s—was marked by very high rates of technological productivity ("total factor productivity"), which resulted from FDR’s and JFK’s infrastructure great projects, including space travel. Ironically, the National Bureau of Economic Research (NBER) determined this, and MIT is a primary participant in the NBER. Infrastructure projects fundamentally new in scale and reach are accomplished by near-continuous major and minor breakthroughs in engineering technologies and sciences, and those, NBER established, spread rapidly through the infrastructure sectors and manufacturing generally, generating productivity.
Have you noticed much of that going on in the 21st -Century U.S. economy? Fusion and plasma technologies, for one example? Fully automated major ports? North American Water and Power Alliance projects? No advancing economic infrastructure, no productivity.
