San Diego, California Talk Radio Station - 760 KFMB AM - 760kfmbA tariff is a tax, too, 2.

Continuing from yesterday's challenge to conservatives: a tariff is a tax!

John wrote me an E-mail:

"Manufacturing is the heart that pumps the money through the economy. Without at least 20% of the economy based on manufacturing we will have decline. The tremendous loss in manufacturing jobs in the U.S. is the reason our economy is faltering."

I'm not sure if John means that 20% of people in America have to be employed in a manufacturing job, or that 20% of our GDP has to be manufacturing output. Either way, I disagree that not achieving this magical 20% leads to economic decline.

Some facts:

There are fewer Americans employed in manufacturing than ever before. That's true, but this isn't unique to America. Loss of manufacturing jobs is a global phenomenon:

"The same factors that have eliminated American manufacturing jobs have also eliminated millions of manufacturing jobs in China."

Where are the Chinese manufacturing jobs going?

Manufacturing jobs are leaving because of automation. Where it used to take 20 people to manufacture a car, it now takes 5.

There are also fewer farmers in America than ever before, but that doesn't mean we have less food. We actually grow MORE good than ever before. Same is true with manufacturing. Yes, we have fewer people in manufacturing, but we MANUFACTURE MORE OUTPUT THAN EVER BEFORE! We manufacture more than Brazil, Russia, India and China COMBINED.

On John's second point, why does manufacturing have to be 20% of our economy? Right now manufacturing is 17% of GDP. That's higher than the world average of 12%.

As a share of GDP, manufacturing has declined in most countries since the 1970s. A few examples: Australia's manufacturing/GDP ratio went from 21.3% in 1970 to 9% in 2009, Brazil's ratio went from 24.6% to 13.3%, Canada's from 21.7% to 11.3%, Germany's from 35% to 19%, and Japan's from 35% to 20%.

We talked much more about this at 6:00:

http://media.worldnow.com/kfmbam/podcast/the_mike_slater_show_6108.mp3

And at 8:00 talked about the number one reason to be for free trade at 8:00 (and we discussed the difference between being pro-business and pro-free markets. They're different things):

http://media.worldnow.com/kfmbam/podcast/the_mike_slater_show_6110.mp3

But don't listen to me talk. Go right to the master and watch this (At least the last 30 minutes):

http://www.youtube.com/watch?v=PJWLt1TmAy4