Propping Up Factory Jobs

by Patrick Appel

Jon Gertner contemplates the future of manufacturing:

On both sides of the world, the fundamental appeal of expanding manufacturing is jobs. It is a curiosity of modern life that information companies can create extraordinary social disruptions and vast shareholder wealth but relatively few jobs. Facebook has about 2,000 employees worldwide. Google has about 29,000. Even in its new, slimmed-down state, General Motors, a decidedly less valuable company, has about 200,000 employees.

Ryan Avent believes nostalgia for manufacturing is misplaced. He sees manufacturing subsidies as a wealth transfer mechanism:

[I]t could be the case that Americans feel that some income redistribution is necessary, and they prefer to do it through effective subsidies to manufacturing employment rather than through disability payments to the long-term unemployed, or funding for retraining, or investment in infrastructure. From an efficiency standpoint, that's an extremely peculiar preference, but from a political economy standpoint it isn't too hard to understand. It sure is troubling that that seems to be the direction of enthusiasm in America, however.

Yglesias expands on that thought.