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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

My Latest Column: Against Manufacturing Fetishism



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My latest column for The Daily is on the iPad and the virtues of open platforms. I want to tease out one section of the column and discuss it in broader context:

The emergence of new innovative ecosystems like iOS has lowered the barriers to entry for creating innovative new products. Few of us would bother carrying around a dozen single-purpose devices to keep ourselves informed and entertained, but downloading a dozen apps on to your iPad is a snap.

Moving from single-purpose devices to apps isn’t just about reducing clutter, however. When we solve problems by creating new physical objects to perform certain tasks, we rely on manufacturing to make ourselves better off. And manufacturing has been commoditized. Breakthrough ideas like total quality management and enterprise resource planning and Six Sigma that transformed manufacturing for the better have now spread throughout the world, and it’s hard for even the most innovative manufacturing firms to stay ahead of the competition for long. Since manufacturing requires expensive investments in plant and equipment, seeing those investments become obsolete in a faster and faster cycle is sobering indeed.

App development is quite unlike manufacturing. Rather, it is a form of knowledge-intensive service work, in which the most important investments are in people and their skills, not in plant and equipment. In this new environment, the most successful firms are those like Apple, Google and Facebook that create open platforms that other entrepreneurs and service workers can build on.

While our political debates tend to fixate on the importance of manufacturing employment, the United States is well served by being home to the firms that, like Apple, set the rules of the road for emerging global industries. Unlike the Dells and HPs of the world, Apple doesn’t fear cut-rate competitors that can sell PCs for less. That is because Apple has a tremendous amount of leverage over the firms that play in its sandbox.

As you probably tell, I’m implicitly criticizing manufacturing-fetishism. In the Washington Post, Vivek Wadhwa gives us more reason to abandon manufacturing-fetishism — the rise of AI is going to spark a return to artisanal production:

Digital manufacturing is another piece of the competitive manufacturing puzzle. It refers to a spectrum of capabilities that include the ability to imagine new products and test them virtually using design checkers and simulators, specify the design of three-dimensional objects in computer software and send that design to a 3D printer. These materials printers can render the design in plastic, composites, or metal in a matter of minutes or hours, depending on the size and complexity of the design.

Today, simple desktop 3D printers produce relatively crude objects. These 3D kits sell for between $500 and $1000. Imagine a toothpaste tube of plastic or other material held vertically in an X-Y plotter that squirts out thin layers of tiny dots of material that are built up, layer by layer, to produce a 3D replica of the design in the computer. The resolution of 3D printers varies with cost, but relatively inexpensive machines have a resolution of 100 micrometers. These manufacturing machines are evolving rapidly, dropping in price and increasing in capabilities. By the mid-2020s, we will develop advanced nanotechnology or molecular manufacturing which will allow us to program molecules inexpensively, with atomic precision, according to Jacobstein. Molecular manufacturing will do for our relationship with molecules and matter what the computer did for our relationship with bits and information. Specifically, it will make the ability to program molecules into precise 3D objects inexpensive and ubiquitous.

What happens when you combine AI, robotics, and digital manufacturing? A manufacturing revolution, that will enable U.S. entrepreneurs to “set up shop” locally, and create a wide variety of products. As Kinko’s is for 2D digital printing on paper, we will have shared public manufacturing facilities like TechShop where you can print your 3D products. How is China going to compete with that?

Wadhwa is essentially arguing that the cost of manufacturing will soon fall so fast that the manufacturing industry will become “more creative, less expensive, more local and more personal,” more like the fashion industry, perhaps, than traditional manufacturing.

This vision is particularly interesting in that it runs counter to manufacturing as instrument of nostalgia. Barack Obama and Rick Santorum want to give manufacturing more favorable tax treatment than other forms of economic activity because they want an America that is “built to last,” and that harkens back to midcentury prosperity (and midcentury solidarity and midcentury virtue, respectively). But if Wadhwa is right, this is an illusion. Manufacturing, like the fashion industry and the software industry, is evolving in a more creator-driven direction, in which we can expect an intensification of the superstar dynamics that have contributed to increasing wage and wealth dispersion. That is, those who seize the opportunities presented by the “maker movement” will profit mightily from the further commoditization of manufacturing capacity. Less-skilled workers who look to manufacturing work as a source of stable, predictable work, however, will find that their labor market position will continue to deteriorate. Some will thus reinvent themselves as makers — and others will presumably turn to in-person service work, which we will (hopefully) continue to upgrade.

But the “upgrading” of service work depends on a prosperous consumer base, with a good deal of disposable income. We are thus reminded of the central challenges we face: a dysfunctional health system and a highly inefficient public sector that is absorbing an ever-growing share of our wealth. It’s addressing those twin challenges — not encouraging manufacturing — that should be the primary policy focus of our leaders and of this election campaign.  



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