Creative Destruction and the Decline of Low Skilled Labor in America - Encounter Books

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Creative Destruction and the Decline of Low Skilled Labor in America

By Ben Weingarten | August 26, 2016

One of the central narratives proffered by Republican presidential nominee Donald Trump is that free trade has enriched America’s elites while hollowing out America’s manufacturing centers in places like Appalachia and America’s Rust Belt.

Writing in The Federalist, Eric Cunningham challenges this notion, at least as it pertains to his hometown of Hickory, North Carolina, the subject of a recent Wall Street Journal feature consistent with the Trump theory of America’s “forgotten men.”

The Journal positions Hickory as the typical manufacturing town—in particular furniture manufacturing—devastated by free trade. Indeed, the value of furniture and fixtures imported from China has increased almost five-fold from $4.4 billion in 2000 to $20.4 billion in 2015, which has correlated with significant losses in furniture-related jobs in Hickory and elsewhere throughout the United States. Consequently, the Journal finds many residents in places like Hickory to be sympathetic towards Trump’s positions on China and the trade agreements of the last two decades.

But Cunningham contends that there is another side of the Hickory story. He writes:

At the height of Hickory’s furniture boom in the 1990s, another boom was beginning: technology. The rising popularity of the Internet led to rising demand for access. Even as the dot-com bubble imploded, telecommunications kept flourishing, and Hickory had become a hub for it. By 2000, Hickory produced 40 percent of fiber-optic cable in the world. Rather than being content with furniture and textiles, the region had—wisely, in retrospect—expanded its reach and diversified into fiber optics.

Today, two multinational fiber-optic cable corporations, both reliant on trade and globalization, call Hickory their home: CommScope and Corning Optical Communications. Although Corning is set to move its headquarters to a new building in Charlotte, this won’t affect the hundreds of jobs at their manufacturing plant.

This sort of capital-intensive manufacturing produced safer, higher-skill, and higher-pay jobs than the ones in the furniture industry. Crippling hand injuries from furniture machines were not uncommon in my hometown, and they didn’t just cause short-term job loss but also led to a long-term inability to find work in other fields.

With respect to the manufacturing industry, all is not lost either:

North Carolina furniture manufacturers have transitioned into custom, high-end products—just the type of things you’d expect to be made in the wealthy and developed U.S. economy. Also, as is often the case with protectionism, efforts to insulate the industry from low-end import competition just didn’t work.

Certainly, manufacturing jobs have declined here (as they have nationally and around the world), but the state’s unemployment rate is now at or below the national average and our labor force participation has bucked the national trend by actually adding 100,000 workers in the last year. Remarkably, the Hickory region now boasts a 4.6 percent unemployment rate—lower than the state unemployment rate of 4.9 percent and lower than in some of the state’s larger cities like Fayetteville and Greensboro.

The Hickory story calls to mind John Tamny’s Who Needs the Fed. In the book, Tamny suggests that, so long as we remain free enough to enable innovation, American will experience improving living standards from Hickory to Honolulu.

During our interview, Tamny asserted that we should celebrate the mass destruction of jobs by robots and automation. Competition and trade may further eliminate existing jobs but, as Cunningham shows, the elimination of existing industries often gives rise to new opportunities that we cannot yet imagine—while also allowing everyday Americans to save by acquiring products at a cheaper cost than they would if produced in America.

As Tamny told me, “It is the destruction of jobs—think the computer, the internet, the ATM, the car—that leads to economic progress.”

Hickory’s story, like the one Tamny tells in Who Needs the Fed?, is that of a dynamic, can-do nation of resilient entrepreneurs who are constantly striving to improve their lot, and in doing so improving the lives of millions of others in this nation and abroad.

Be sure to check out my full discussion with Tamny below, or download it in the iTunes store:

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BEN WEINGARTEN is a Senior Fellow at the London Center for Policy Research, Senior Contributor at The Federalist and Founder & CEO of ChangeUp Media LLC, a media consulting and production firm dedicated to advancing conservative principles. You can find his work at, and follow him on Facebook and Twitter.

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