History vs. Nostalgia: A Tale of US Manufacturing

We compare the 1950s, and the 1980s Japanese scare to today to learn how manufacturing, as part of our economy, has changed.  

Transcript

Nostalgia is Not History: A Tale of US Manufacturing

April 2025

“Remembrance of things past is not necessarily the remembrance of things as they were.”

Marcel Proust

“We are homesick most for the places we have never known.”

Carson McCullers

“The most powerful force in American politics is not anger; it’s nostalgia.” 

Pete Hamill

A group of online history buffs, led by a Brit named Steven, are obsessed with the Middle Ages.  And not just knights or castles but the issues of the time.  Were the Byzantines Roman or something else?  Was Richard I (lionheart) a good king or a reckless warmonger?  Were the Middle Ages some drab, muddy-faced peasant-dominated time of endless toil as depicted farcically in Monty Python and the Holy Grail (“Bring out your dead!”) or the period that built the great cathedrals of Europe? A little bit of both.  

Given their extensive knowledge and my inability to read minds, I do not ascribe nostalgic longing for the Middle Ages to Steven and his followers.  They just like the history.  However, many pine for aspects of earlier times and wish to inhabit those environs.  This is ignorance.  The Middle Ages were also a time of plague, Famine and six days a week of back-breaking work with the hope that one might see the grand old age of 50.  It is not nostalgia to want to have been a Knight back then, but the odds were 20 to 1. 

In terms of prosperity, health, opportunity, and liberty, the best time to be alive is … now.  However, that does not prevent people from wistfully recollecting a bygone time, even if that time never really existed.  This is nostalgia vs history. 

Some of us remember things more poorly than they were.  However, the opposite seems to be true in our politics on the right.  That there was some halcyon time in our distant or not-so-distant past that represented better days and should be resuscitated by today’s policies.  Thus we arrive at the fallacy that we can replicate the glory days of American manufacturing and in so doing, bring on a new “golden age.”  

In 1910, the United States accounted for approximately 30% of global manufacturing output, a number that would be stable until 1940, even allowing for the Great Depression.  By 1950, that number had ballooned, producing approximately 60% of the world’s manufactured goods. Incredible! We ruled the factory roost then, so why not do it today?  Because every single one of the leading manufacturers in 1940, Great Britain (once the leader), Germany, France, the Soviet Union, Japan, and even Belgium had seen their manufacturing bases wrecked over the next five years.  

The dominant position of the US in the 1950s and 60s was unsustainable.  Other nations were and did rebuild their manufacturing infrastructures.  Nor, given the advantages that the US enjoyed at that time, was it viable for the US to maintain in perpetuity the worker policies employed.  We could afford specific labor regulations and compensation when we had a near monopolistic hold on the sector.  

Because history does not stand still, by the 1970s, that number had shrunk to 30%, the same as pre-war years. The US economy and workforce have changed even further since that period.  It has moved more into service sectors such as finance, education and healthcare.  This change was coupled with the move of nations that had no manufacturing footprint prior to the 1950s, such as China, India, and South Korea, into manufacturing.  The number has been relatively stable over the past 10 years, at 16% of the share.   

But were the 1950s and 60s, the height of manufacturing so glorious for the American people? We can automatically say for African Americans and Latinos, especially those in the south? No. Women? Not really.  Fears the Soviets would bomb us?  That was a thing.  

And economically? One hears a lot about how many families had single incomes.  There were more in the past but two incomes were not unheard of.  And a few other differences.  Avg home size in 1950 was 983 square feet. Today it is more than twice that.  One car per family, not two or three. One TV per family, not four or five.  Less than 2% of family homes had Air conditioning.  Wealthy and middle class families ate out about once per week.  Vacations were limited. International travel was only for the swells.  No Internet, no iPhones (maybe that was a benefit) no video games, cable TV, streaming services or Amazon at home delivery.  Two things true at the same time, we were the manufacturing leader and are number 2 today.  But we were poorer, much poorer then compared with today.  

As a centerpiece of Donald Trump’s economic policies, there is a desire to move back into manufacturing with the belief that will make us wealthy, again.  This is akin to a 50-year-old who has had a solid business career, raised a family, and is a pillar of his community, still thinking his best days were the time in high school when he scored touchdowns at will and was able to date any cheerleader of his choice.  The past was good, but our 50-year-old has hazy impressions of it as opposed to the incredible life he now enjoys. And that past?  Well he did not score nearly as much as he remembers in terms of touchdowns, or cheerleaders. Nostalgia. Our manufacturing preeminence was not a fabrication, but the position we held was anomalous, something not realized by leaders on the right, or left, today.  And we were not as rich then as we are in 2025.  

What I find so curious is that every sole ranging from gazillionaires like Donald Trump, Commerce Secretary Howard Lutnick, or Treasury Secretary Scott Bessant to advisors Peter Navarro and Stephen Miller, former author and hedge fund manager JD Vance, columnists such as Kurt Schlichter or commentators like Tucker Carlson all extolling the virtues of factory work, yet have never, in fact, worked in factories.  Trump grew up in a vastly wealthy family, attending boarding schools and Ivy League universities.  Miller graduated from Duke and immediately went into politics, working for Congresswoman Michelle Bachman. Not only has Miller never worked in a factory, but he has also not worked for a private sector company that has owned a factory.  Schlichter served in the military, but his entire career was spent as a lawyer, columnist, and writer of political novels.  Can not one advocate for those wonderful days of factory work, you know, have spent time working in a factory?  

Maybe it is an awesome life for others or they learn a ton of stuff, and if so I applaud and appreciate them, but I am not going to join the legion of hypocrisy staffed by Trump and his administration.  I worked in business and home offices throughout my careers and grateful for that.  

Now, let us differentiate the concept of manufacturing from that of manufacturing jobs.  In 1960, during the heyday of American manufacturing, our nation’s roads saw only Fords, Chevys, and Chryslers.  At that point, we produced 7.9 million vehicles.  Today, with the addition of Toyotas, Kias, and Volkswagens, we produce nearly 14 million vehicles and many of those factories are Toyota and Volkswagen.  The difference is that in 1960, 2.4 million Americans were employed by the automakers, and today is around 1 million. Nearly twice the number of vehicles with half of the workforce.  Part of that is outsourcing specific jobs, such as parts manufacturing, to nations such as Mexico.  However, a big piece is robotics.  This is nothing new. Before Henry Ford implemented the moving assembly line in 1913, building a car, like the Model T, took around 12 hours and 13 minutes, but with the assembly line, that time was reduced to 90 minutes.  More cars, fewer people.  

For all of the “manufacturing” cries, the US is still number 2, with $2.3 trillion in manufacturing.  We trail only China in that regard, and China achieved its number status through its massive population and incurring vast debt to build out its infrastructure.  The first is aging fast, and the second is untenable.  We can achieve manufacturing prowess, but not with the same number of people, which is confusing on both the right and the left.  

When you hear the Lutnicks and Vances of the world complain about lack of manufacturing, they are talking about jobs.  In 1960, manufacturing contributed approximately 28% of the United States' GDP.  In 2019, 11%.  In 1960 the labor force % in manufacturing was 28%.  Today it is 8.5%.  Again, more with less.  

Given the shrinking size of manufacturing there are still certain industries, partly due to national security, where we have protected manufacturing.  For example, shipbuilding makes sense to me.  Except that since through unionized workforce and general apathy that always accompanies monopolistic entities, we are pretty crappy at shipbuilding.  

Commercial shipbuilding in the US is virtually nonexistent: in 2022, the US built just five oceangoing commercial ships, compared to China’s 1,794 and South Korea’s 734. The US Navy estimates that China’s shipbuilding capacity is 232 times ours. Building a ship in the US costs roughly twice as much as elsewhere. “But no matter the number of shipyards, they need workers, and US Navy Secretary Carlos Del Toro says China has a numerical advantage there, largely because it is free of the restrictions, regulations and economic pressures that affect labor in the US.”

In this case, the issue is not tariffs but much-needed reforms to everything from labor regulations to building better deep-sea ports. Moreover, Trump’s tariffs do not address any of this.

And what about the rest of manufacturing, not in terms of outputs but jobs?  According to a 2024 National Association of Manufacturing survey, we cannot fill the jobs. If workforce challenges are not addressed, more than 1.9 million of the up to 3.8 million jobs likely to be needed between this year and 2033 could go unfilled.  Some 65% of manufacturers polled said attracting and retaining talent is their primary business challenge. One of the reasons why so many US-based manufacturing companies turned to robots was not because of a too-expensive labor force, though that is a factor. In the simple case, they cannot fill the jobs.  It is the same reason that at most fast food and casual sit-down restaurants, we now order our food from kiosks and get our own drinks.  Part of it is cost, and part of it is that they cannot retain workers.   

Allysia Finley, in her piece entitled “A Good Man for U.S. Manufacturing Is Hard to Find,” states, “A common lament among employers, especially manufacturers, is they cannot find reliable, conscientious workers who can pass a drug test. Single women might commiserate: A good worker, like a good man, can be hard to find these days.” 

Finley goes on to note a situation that the Trump administration is not addressing, at least indirectly.  

The government showers benefits on able-bodied people who do not work while at the same time subsidizing college degrees that don’t lead to productive employment.  I am still getting my arms around how Columbia University gets a thin dime of public money when sitting on a $15 billion endowment.  The university should foot the bill if someone wants an Art History, Sociology, or African Studies degree.  

The result is millions of idle men and millions of unfilled jobs—what an economist would call a deadweight loss to society.  Forty percent of small business owners in March reported job openings they could not fill, with larger shares in construction (56%), transportation (53%), and manufacturing (47%), according to last week’s National Federation of Independent Business survey.  

It can be perilous to use anecdotal evidence, but try two things.  Go to a housing construction site and see who is doing the work.  Then call for a plumber and see how long it takes.  According to the Bureau of Labor Statistics, the median annual wage for plumbers, pipefitters, and steamfitters was $61,550 in May 2023.  That is median, meaning half of them make more than $61,000.  Is the Trump administration suggesting that a factory owner making Nikes can pay their workers that much?  

The Labor Department’s Job Openings and Labor Turnover Survey of businesses tells a similar story. There are twice as many job openings in manufacturing as a share of employment as in the mid-2000s. Save for during the pandemic, America’s worker shortage is the worst in 50 years.

Finley adds, “About 17% of working-age men are on Medicaid, 7.4% on food stamps and 6.3% on Social Security (many claiming disability payouts), according to the Census Bureau. Many spend their days playing video games and day trading. Consider: According to the New York Federal Reserve Bank, the unemployment rate among recent college grads with a sociology degree is 6.7%, and their median wage is $45,000. Sociology grads could earn twice as much working on an auto assembly line, which pays on average $100,000 a year. Good gig, but not many want it.”

So, we do not have a manufacturing issue or, even necessarily, a manufacturing jobs issue.  We do have entitlement, regulation, and people issues.  Trump is like the Orthopedic surgeon who thinks amputations work in most instances.  When confronted with a cancer patient, he does not give them chemo treatments or bring in an oncologist. Rather, he amputates the leg.  

Part of that belief was borne out of Trump’s experience in the 1980s, the first time he burst onto the scene with his New York real estate schemes and writing of the Art of the Deal.  I was surprised by how many people on social media were unaware of the Japanese scare.  Today, Japan is known for producing Hondas, Toyotas, and a few other brands.  Some might consider Sony, but not really much else.  China is the general threat.  However, back in the 1980s, it was Japan.  From the end of World War II until the 1970s and détente our Cold War enemies were the Soviet Union, Communist China, and their minions.  Nevertheless, the US was still number 1 in all things.  That is why it was such a shock to wake up and see Japan not as the satellite of the past 30 years but as a viable rival.  Japanese success created a certain American paranoia, especially for one prominent builder from Queens.  

Writing for the BBC, Nada TawfikIn writes, “Living in the cut-throat world of New York real estate, Trump had a front-row seat from his Fifth Avenue skyscraper of Tokyo’s buying spree in the 80s of iconic US brands and properties, including Rockefeller Center. Then, his worldview on trade and America’s relations with its allies was formed, and his fixation on tariffs, a tax on imports, began. “He had a tremendous resentment for Japan,” says Barbara Res, a former executive vice president at the Trump Organization. She says that he watched with jealousy as Japanese business people were viewed as geniuses. He felt America was not getting enough in return for assisting its ally Japan with military defense.

To be fair, Trump was in good company.  Everything from Japanese businesses purchasing Golf Course Pebble Beach to iconic New York building Rockefeller Center, Trump’s home turf, instilled in Americans a sense that though we won the battles in the 1940s, we were losing the war.  

Even the great Reagan, normally a Milton Friedman free trader, succumbed to the panic. He imposed as high as 100% tariffs on Japanese electronics, including those provided by Sony. 

Books ranging from nonfiction to fiction, Agents of Influence and Rising Sun, noted how Japan was building a superior business model and even evincing a superior culture.  

Adam Thierer, in his piece “’Japan Inc.’ and Other Tales of Industrial Policy Apocalypse,” noted that “authors and other American intellectuals of this period tended to admire Japanese culture. They stressed Japan’s supposedly superior commitment to working in a communitarian fashion. One scholar argued that the Japanese better appreciated “the values of group life.” Others simultaneously denounced America’s individualism and culture of independence that shunned top-down authority and obedience to the plans trusted elites established for society.

A 1981 New York Times op-ed by John Curtis Perry even called on Japan “to come here, occupy us, and do exactly those things we did for them from 1945 to 1952.”  As outlandish as it was, Perry’s essay reflected many believers warm embrace of Japanese culture and top-down planning during this period.

So, forty years later, how did that work out?  “Just as Japan phobia was reaching its zenith in the early 1990s, Japan’s fortunes began taking a turn for the worse. The Japanese stock market crashed in 1990 due to real estate overvaluations, monetary policy miscalculations, a variety of other macroeconomic factors, and a lot of garden-variety corruption, from government officials down to average citizens. The Nikkei Index peaked at 38,915.87 on Dec. 29, 1989, then began a dramatic fall. It has never reached that level since,” Adds Therier. 

In 1990, Japan’s GDP reached $3.133 trillion, while the US GDP was $5.98 trillion. Today, it is $4.2 trillion. The US? $27 trillion. In 1990, the US economy was 53% larger. Today, it is 642% larger.  Side note: Long before the Apple iPod, the mobile listening device of choice was the Sony Walkman.  Where is Sony today?  

So much hollowing out.  

In addition to pining for factory work, there is also the conflating of manufacturing jobs with middle-class achievement. The overused hollowing-out term is applied to both.  

Norbert Michel is vice president and director of the Cato Institute’s Center for Monetary and Financial Alternatives. He writes, “Populists such as Vice President JD Vance argue that free-trade agreements cause middle-class wages to fall, hollowing out towns across America. However, the only way to make this argument is to cherry-pick the data to death.

The US middle class has thrived over the past 40 years. In fact, Americans of all economic backgrounds have done well. The share of households earning more than $100,000 has tripled over the past five decades, and the share earning less than $35,000 fell by 25%. For most of this period, workers in the bottom 10% of income distribution experienced stronger wage growth than those with higher incomes.

The middle class has shrunk only in the sense that former middle-income earners have moved up the income ladder. Materially, Americans are much better off than they were in 1970. Over the past 40 years, 70% of working-age Americans spent at least one year among the top 20% of income earners. Furthermore, 80% never spent more than two consecutive years in the bottom 10%.

However, do not worry; the reality of prosperity is nothing compared to the chimera of a great job on the factory line. Adds Commerce Secretary Lutnick, former CEO of Wall Street financial investment firm Cantor Fitzgerald, “The army of millions and millions of human beings screwing in little screws to make iPhones -- that kind of thing is going to come to America,” 

Yeah. Cannot wait.  If only my grandchildren could aspire to such heights.  

This is not to say there are no serious trade or manufacturing problems, especially with China.  Their business practices are abhorrent, including local shakedowns and intellectual property theft.  China’s ability to export has produced revenues that enable its current bellicosity, symbolized by its superiority in naval assets.  They have moved aggressively into the South China Sea. They threaten every neighbor from Vietnam to the Philippines, and especially Tawain.  And a certain amount of manufacturing homeshoring is necessary to combat that.  For example, Taiwan’s dominance in chip manufacturing is a massive Achilles heel to the US if (when?) that country is invaded by China.  Aside from Trump’s newfound love of TikTok (hint: a big donor has a stake), there are no clear policy goals on how to curb all of this.  However, we will not best China with false memories of unsustainable manufacturing prosperity and unsustainable jobs.  

We bested Japan in the 1980s and three out of the four BRIC nations in the 2010s.  The real answer is the one upon which 230 years of increasing prosperity has always been forged.  Get the government (and the unions) out of the way of our businesses and entrepreneurs. That is what history has taught us.