Our economy is not about what we make

The U.S. no longer produces anything. Manufacturing jobs are being lost or sent overseas. The US economy is being lapped by the Chinese.

This type of political rhetoric is misleading and untrue. Even a recent editorial in The Augusta Chronicle reports of the recent job losses in manufacturing in this recession and how manufacturing employment is at its lowest level since World War II. The U.S. has lost nearly 5 million manufacturing jobs over the last 10 years.

Wow. There is no denying that we are reallocating our work force, which is a good thing. For example, we could be the leading producer of typewriters, but who is going to demand such a product. What about horse-drawn carriages? In fact, did we send those jobs overseas or did we replace those workers (or retool them) to make automobiles?

So, what are the facts of the state of the manufacturing industry? Due to enhancements in technology and increased productivity, we have been able to reallocate 5 million manufacturing jobs and not just maintain the same amount of manufacturing output but double it over the last 10 years. Yes, the U.S. has doubled the value of its manufacturing output over the last 10 years while reducing the amount of labor needed.

In addition, it should come as no surprise that U.S. manufacturing exports reached an all-time high in 2006 (latest data available). Not bad for a country that "no longer produces anything," as some would say.

One question I continue to get is how the U.S. can compete with China and the impact China has had on our manufacturing sector. This is where the public hears how jobs are going overseas or how we can no longer compete. First things first, the U.S. leads the world in manufacturing output. Furthermore, U.S. manufacturers generate $2.50 for every $1 produced in China's factories.

Surprised? You should not be. Every country must decide what to produce, how to produce, and for whom to produce. We all face scarcity and tradeoffs. We produce some of the highest quality products that many people (from all over the world) want. We have one of the most skilled and productive work forces, along with an economic system that rewards workers for their creativity and ingenuity.

We need to continue to reward such innovations, continuously and rigorously educate our current and future work force, and freely trade with countries.

The kind of thinking that the U.S. should make or produce everything is flawed and impossible. We simply do not have the resources to do that. I would also ask a question (from economist, Don Boudreaux), "What do you want your children to be when they grow up?"

I do not want my daughter to aspire to be a factory worker. I would rather she be a lawyer, doctor, or economist. Whatever her dreams and aspirations may be, our society values these services.

As such, our economy is not about what we make.

MARK A. THOMPSON IS THE CREE-WALKER PROFESSOR OF BUSINESS ADMINISTRATION AND MBA PROGRAM DIRECTOR AT AUGUSTA STATE UNIVERSITY. HE CAN BE REACHED AT MTHOMPSON@AUG.EDU.