Saturday, 17 November 2012

Manufacturing fetishism

About a month ago Labour, New Zealand First and the Green party set out to create the perception that we have a manufacturing crisis in New Zealand when they launched a parliamentary inquiry into the manufacturing crisis. The use of such a political stunt does raise an interesting question, Why this obsession with manufacturing?

Why is it that these politicians - and others - seem to have a manufacturing fetish? They seem to think that only making physical things counts. "Thinking industries", for want of a better term, are discounted, they are subordinate to the real activity of making things.

Well the economist John Kay make have the answer: it's hard wired into us:
The rear cover of the iPhone tells you it is designed in California and assembled in China. The phone sells, in the absence of carrier subsidy, for about $700. Purchased components - clever pieces of design such as the tiny flash drive and the small but high-performing camera - may account for as much as $200 of this. The largest supplier of parts is Samsung, Apple's principal rival in the smartphone market. "Assembled in China" costs about $20. The balance represents the return to "designed in California", which is why Apple is such a profitable company.

Manufacturing fetishism - the idea that manufacturing is the central economic activity and everything else is somehow subordinate - is deeply ingrained in human thinking. The perception that only tangible objects represent real wealth and only physical labour real work was probably formed in the days when economic activity was the constant search for food, fuel and shelter.

A particularly silly expression of manufacturing fetishism can be heard from the many business people [PSW: and I would add politicians] who equate wealth creation with private sector production. They applaud the activities of making the pills you pop and processing the popcorn you eat in the interval. The doctors who prescribe the pills, the scientists who establish that the pills work, the actors who draw you to the performance and the writers whose works they bring to life; these are all somehow parasitic on the pill grinders and corn poppers. [Emphasis added]
Our politicians should realise that in a globalised world the physical labour incorporated in manufactured goods is a cheap commodity. But the skills and capabilities that turn that labour into products of extraordinary complexity and sophistication, that is the "thinking" that underlies these products, are not.

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