Actually, we still do make things in America

A common complaint by folks on all points of the political spectrum is that "we don't make stuff in America anymore, people just sit in offices shuffling papers around." It turns out that this is in fact just not true, as you can see from the chart below, which shows that, except for periodic recession-related dips, industrial production in the US has grown at a pretty steady clip and is currently more than double what it was in the 1970s. In fact the U.S. manufacturing sector, at $3.7 trillion in 2008, was bigger than the entire economies of all but Japan and China.

I think the reason we hear so much about "America not making things anymore" is threefold.

First, we don't make a lot of the name-brand commercial goods that actually carry a tag: clothes are made in Indonesia, Mexico etc., TVs in Taiwan or Japan, etc. Many of the products made in the US don't have "made in the USA tags" because they're things like industrial chemicals, computer chips, or building materials; or they're things like planes (Boeing) or heavy equipment (Caterpillar). The big change from the 1950s is that, other than cars, the US doesn't make a lot of durable consumer goods, other than computers.

Second, another big change from the 1950s is that the American manufacturing sector employs far fewer people. Companies have automated many of their processes, so as a percentage of the workforce, factory workers are far fewer than they used to be.

The third reason we hear the "we don't make things in this country any more" refrain so often is that the media (who are often the ones pushing this story) are typically quite isolated from areas where actual factories are located. Back in the 1950s (and earlier) factories were often located in central cities to be close to the workforce. For various reasons (white flight, rising land cost in popular downtown areas, taxes) factories decamped to smaller cities, rural or exurban areas, and especially to low-tax and anti-labor areas in the South. At the same time, the national media concentrated even more heavily in the very coastal cities (NY, DC, LA) being vacated by manufacturers. During this same period, the US experienced increasing educational stratification, where starting as early as elementary school, kids bound for desk jobs and kids bound for the factory floor wound up in different classes or different schools. Increasing population mobility meant that more people left their hometowns (and their hometown friends) when they went to college. The upshot of this is that in many cases, political and media elites don't actually know anybody that works in manufacturing - they know their classmates from college or law school or journalism school or whatever, but have lost touch with their former neighbors who may have gone on to work in factories. Of course to these people (myself included) it seems like we don't make anything anymore - we don't know anyone who makes anything!

The ultimate lesson from this is that a.) we should stop freaking out about how we don't make stuff anymore. (We do! However, we do need to figure out how to export more goods to other countries); and b.) as Matt Yglesias (from whom I borrowed the above graph) notes, this means that the problems of displaced industrial workers are to some degree different from the issue of whether the US is doing enough manufacturing.