Not really. As people become more affluent, they’re often more willing and able to spend on restaurants, entertainment, travel, and other services. Contrary to the claim that U.S. manufacturing has been “hollowed out,” the sector has grown substantially. In inflation-adjusted terms, the value of U.S. factory output is more than two-and-a-half times what it was in 1970.
However, manufacturing has declined as a share of the overall economy — not because it shrank, but because other sectors grew faster, including some that barely existed in 1970, such as information technology and digital services, and some that didn’t exist at all, like cellular telecommunications.
Thanks for your comments, Richard. Your first couple of points are exactly what I said in my article.
However, your assertion that manufacturing hasn't been hollowed out is itself hollow. See the chart below for steel production, for example, which declined by 50% in the '70s and '80s and has stagnated since, while China's share has skyrocketed. And production of textiles has all but disappeared in America - we now make just 3% of what we wear. Those same trends are true in a number of other manufacturing sectors.
Finally, the notion that the rise of sectors like IT must mean a relative decline in manufacturing is not entirely accurate, since those sectors themselves open whole new realms of production that didn't previously exist. The extent to which the US has offshored that production is almost worse than hollowing out: we never even got into the game.
The U.S. steel industry has been one of the most heavily protected sectors in the economy for decades, shielded by tariffs, quotas, and “Buy American” provisions. The fact that it remains weak despite (because of?) all this protection should raise serious doubts about the effectiveness of industrial policy — not serve as an argument for more of it. An industry that’s been subsidized and sheltered for years and still can’t thrive isn’t a victim of neglect; it’s a case study in the failure of government intervention.
While China has become the world’s dominant steel producer, it supplies only about two to three percent of the steel consumed in the United States. Most U.S. steel comes from domestic producers or close trading partners like Canada and Mexico. The fact that China produces more steel globally doesn’t mean it’s “hollowing out” our market — it means it’s supplying the world, often inefficiently and at great environmental cost.
Clothing manufacturing is low-value-added, labor-intensive work. Offshoring it isn’t a sign of national decline — it’s a reflection of comparative advantage. By outsourcing these industries, the U.S. has freed up capital and labor for more productive, higher-paying sectors like medicine, technology, aerospace, and advanced manufacturing. That’s not hollowing out; that’s moving up the value chain. I’ve been to clothing factories — they’re not exactly uplifting places to work.
As for the claim that we “never even got into the game” in emerging sectors like IT, it’s simply not true. The U.S. didn’t miss the tech revolution—we led it. American firms design the chips, write the software, and create the intellectual property that powers the global digital economy. Yes, much of the assembly happens overseas, but most of the value, innovation, and profit remain here. That said, given our reliance on Taiwan for semiconductors, I think Biden was right to offer incentives for domestic chip production.
Overall, U.S. manufacturing hasn’t been hollowed out so much as it has evolved — shifting away from low-margin, labor-heavy sectors toward innovation and information-driven industries. Trying to reverse that trend through tariffs or industrial policy might offer short-term benefits to a few politically connected firms, but it’s more likely to drag the economy backward than to revive some imagined golden age of American manufacturing.
Not really. As people become more affluent, they’re often more willing and able to spend on restaurants, entertainment, travel, and other services. Contrary to the claim that U.S. manufacturing has been “hollowed out,” the sector has grown substantially. In inflation-adjusted terms, the value of U.S. factory output is more than two-and-a-half times what it was in 1970.
However, manufacturing has declined as a share of the overall economy — not because it shrank, but because other sectors grew faster, including some that barely existed in 1970, such as information technology and digital services, and some that didn’t exist at all, like cellular telecommunications.
Thanks for your comments, Richard. Your first couple of points are exactly what I said in my article.
However, your assertion that manufacturing hasn't been hollowed out is itself hollow. See the chart below for steel production, for example, which declined by 50% in the '70s and '80s and has stagnated since, while China's share has skyrocketed. And production of textiles has all but disappeared in America - we now make just 3% of what we wear. Those same trends are true in a number of other manufacturing sectors.
Finally, the notion that the rise of sectors like IT must mean a relative decline in manufacturing is not entirely accurate, since those sectors themselves open whole new realms of production that didn't previously exist. The extent to which the US has offshored that production is almost worse than hollowing out: we never even got into the game.
The U.S. steel industry has been one of the most heavily protected sectors in the economy for decades, shielded by tariffs, quotas, and “Buy American” provisions. The fact that it remains weak despite (because of?) all this protection should raise serious doubts about the effectiveness of industrial policy — not serve as an argument for more of it. An industry that’s been subsidized and sheltered for years and still can’t thrive isn’t a victim of neglect; it’s a case study in the failure of government intervention.
While China has become the world’s dominant steel producer, it supplies only about two to three percent of the steel consumed in the United States. Most U.S. steel comes from domestic producers or close trading partners like Canada and Mexico. The fact that China produces more steel globally doesn’t mean it’s “hollowing out” our market — it means it’s supplying the world, often inefficiently and at great environmental cost.
Clothing manufacturing is low-value-added, labor-intensive work. Offshoring it isn’t a sign of national decline — it’s a reflection of comparative advantage. By outsourcing these industries, the U.S. has freed up capital and labor for more productive, higher-paying sectors like medicine, technology, aerospace, and advanced manufacturing. That’s not hollowing out; that’s moving up the value chain. I’ve been to clothing factories — they’re not exactly uplifting places to work.
As for the claim that we “never even got into the game” in emerging sectors like IT, it’s simply not true. The U.S. didn’t miss the tech revolution—we led it. American firms design the chips, write the software, and create the intellectual property that powers the global digital economy. Yes, much of the assembly happens overseas, but most of the value, innovation, and profit remain here. That said, given our reliance on Taiwan for semiconductors, I think Biden was right to offer incentives for domestic chip production.
Overall, U.S. manufacturing hasn’t been hollowed out so much as it has evolved — shifting away from low-margin, labor-heavy sectors toward innovation and information-driven industries. Trying to reverse that trend through tariffs or industrial policy might offer short-term benefits to a few politically connected firms, but it’s more likely to drag the economy backward than to revive some imagined golden age of American manufacturing.