The real reason manufacturing jobs are disappearing | Augie Picado

Summary

This script addresses the misconceptions surrounding protectionism and its impact on global trade. It uses Cuba and North Korea as examples of restrictive trade policies and argues that protectionism, often touted by politicians, is not a solution to domestic economic issues. The speaker, a supply chain professional, explains that automation, not offshoring, is the primary cause of job losses in the U.S. manufacturing sector. The script highlights the interconnectedness of global supply chains, emphasizing the benefits of shared production for efficiency and cost-effectiveness, and warns against the high costs of protectionist measures.

Takeaways

• 🚗 The script begins with a comparison of Cuba and North Korea to highlight the negative effects of protectionist trade policies on economies and citizens.
• 🚀 It mentions that North Korea is often associated with missile tests and leadership rather than an open economy, contrasting with the common perception of countries with protectionist policies.
• 📢 The speaker aims to use Cuba and North Korea as examples to discuss the broader issue of protectionism and its impact on global trade and domestic industries.
• 🗳️ Protectionism has been a significant topic in recent political discussions, including the 2016 U.S. presidential election, Brexit, and the French elections.
• 🏭 The script argues that while some believe protectionism can protect domestic industries, it often leads to a loss of jobs and economic stagnation.
• 🛠️ Automation, not offshoring, is identified as the primary cause of job losses in the U.S. manufacturing sector, accounting for 87% of the losses.
• 🌐 The speaker, a supply chain professional, emphasizes the interconnectedness of global manufacturing and the complexity of modern trade networks.
• ✈️ An example of an aerospace company's manufacturing process illustrates the global nature of production, involving multiple countries and components.
• 🏠 The script encourages the audience to look at the labels on their products, which often reveal a blend of domestic and foreign parts, indicating shared production.
• 📈 Economist Michael Porter's concept of focusing on efficient production and trading for the rest is highlighted as a beneficial approach for countries.
• 💡 The script uses the analogy of a general contractor coordinating different experts to explain the importance of specialization and efficiency in production.
• 🛃 The potential economic consequences of imposing tariffs, such as increased costs for consumers, are discussed, emphasizing the interconnectedness of the U.S. and Mexico trade.
• 🛒 The script concludes by questioning the logic of driving up prices through protectionist measures to save jobs that are likely to be lost to automation anyway.

Q & A

What are some common perceptions about Cuba and North Korea?

Common perceptions about Cuba include classic cars and good cigars, while North Korea is often associated with missile tests, their notorious leader, and the unusual friendship with Dennis Rodman.

What is protectionism and why has it been a topic of discussion in recent years?

Protectionism is a trade policy that restricts imports and protects local industries. It has been discussed in recent years during events like the 2016 U.S. presidential election, Brexit debates, and the French elections, with political leaders advocating for it as a beneficial strategy.

Why do some people blame trade for the loss of high-paying U.S. manufacturing jobs?

Some people believe that trade agreements like NAFTA and the Trans-Pacific Partnership allow companies to move operations offshore to countries with lower-cost labor, leading to a decline in U.S. manufacturing jobs.

What is the actual cause of job loss in the U.S. manufacturing sector?

The majority of job losses in the U.S. manufacturing sector, about 87 percent, have been due to improvements in productivity through automation, not offshoring.

How does the speaker describe the global supply chain and its impact on manufacturing?

The speaker, a supply chain professional, describes the global supply chain as a highly connected network of manufacturers from around the world collaborating to produce products. This interconnectedness makes it nearly impossible to produce products in just one country.

Can you provide an example of shared production from the script?

An example given is the manufacturing of airplane tail assemblies in Mexico, using panels made in France and components from the U.S., which are then assembled in Canada with other parts to form a complete airplane.

What does the speaker mean by 'shared production' and why is efficiency important in this context?

Shared production refers to the collaborative manufacturing process where different parts of a product are made in different countries. Efficiency is crucial as it allows countries to focus on producing what they can produce most effectively, trading for the rest.

How does the speaker compare shared production to the process of building or renovating a house?

The speaker compares shared production to the process of building or renovating a house, where a general contractor coordinates the efforts of various specialized contractors, emphasizing the importance of using experts for efficiency and quality.

What is the economic impact of imposing a 20% border tax on imports from Mexico, according to the script?

Imposing a 20% border tax on imports from Mexico could lead to a tit-for-tat situation where Mexico imposes a similar tax on U.S. imports, potentially increasing duties by more than 40% and adding an extra 80 billion dollars in costs.

How would increased duties due to protectionist policies affect the prices of consumer products?

Increased duties could lead to significant price increases for consumer products. For example, a Lincoln MKZ car could increase in price from $37,000 to $48,000, and a Sharp 60-inch HDTV could go from $898 to $1,167.

What is the speaker's final argument against protectionism?

The speaker argues that protectionism drives up prices to the point where many people can't afford basic goods, and for the purpose of saving jobs that might be eliminated due to automation in a few years anyway, which is not a sensible trade-off.