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February 24, 2013

FLASHPOINT: You can’t go back again — and that’s OK

By Cecil E. Bohanon and Tyler Watts Indiana Policy Review Foundation

MUNCIE — Our progressive colleagues have been telling us for years that the 1950s were a horrid time. Racial segregation prevailed and women were repressed; conservative cries for family values are naïve and dangerous. Going back to the ’50s is neither desirable nor possible — you can’t bring back Ozzie and Harriet.

We agree with parts of this assessment. Going back is impossible. No one wants a return of Jim Crow or strict gender roles. And although conservatives rightly esteem stable family life, most recognize government can do little to accomplish this.

But now the tables have turned — it is our progressive friends who are pining for the halcyon days of the 1950s. Back then, you see, income was distributed more equally, labor unions were powerful, the rich paid more in taxes and public services were well-funded. Professor Paul Krugman’s Twinkie Manifesto and the Ed Asner-narrated cartoon released by the California Teachers’ Union are examples of this nostalgia.

But the differences between then and now reflect much more “economic fundamentals” than some kind of right-wing policy revolution. The nostalgia-based policies the progressives have in mind are unlikely to bring back the good old days, and stand a good chance of stifling continued economic growth.

Consider manufacturing industries, which constitute 25 percent of Indiana’s Gross Domestic Product — the highest percentage among the 50 states. The good news is that from 1952 to 2011 worker output per hour in manufacturing has increased 7.5 fold, and total real manufacturing output has increased 5.5 fold — an impressive yearly growth rate of over 3 percent in both cases.

The bad news — in progressives’ eyes — is the decline in factory jobs. Over the same time frame, total manufacturing employment fell from 16 million to 12 million, and manufacturing’s share of total workers went from 32 percent to just 9 percent. The overall picture is clear: Manufacturing remains strong (in terms of output) although it has been shedding jobs for decades. The days of the giant factory employing thousands of workers making large quantities of an identical product are gone. It is the small, nimble plant with 50 workers making a variety of products that dominates the Midwest industrial scene today.

These results are the confluence of amazing technological advances and an increasingly competitive, globalized economy. These are good things. They cause job losses in certain industries, but immense gains in others. A similar pattern “destroyed” U.S. agriculture, an industry that used to employ 90 percent of us. Yet few lament this, a la Oliver Wendell Douglas in the 1960s situation comedy “Green Acres”; it’s obvious that the increased productivity of farmers is what made manufacturing, and now, the high-tech service sector, possible.

There will always be some unfortunate ancillary consequences of economic change. Yet we cannot avoid these without generating other more widespread and wrenching negative consequences; it is literally impossible to go back to the days when now-empty neighborhoods in Detroit or Muncie were filled with factory workers. Economic policy cannot take us back again, nor should we seek to.

Moving forward, we should be on guard against anyone attempting to impose some nostalgic vision of economic perfection.



Cecil E. Bohanon, Ph.D., and Tyler Watts, Ph.D., adjunct scholars of the Indiana Policy Review Foundation, teach economics at Ball State University.

 

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