Rick Santorum took his nostalgia for manufacturing to 2nd place in the recent GOP presidential primary, but lost on his partisans is the simple and happy truth that manufacturing of the labor intensive variety, no matter the tax subsidies, will never return to the United States. Moretti properly sees this as good thing, all the while channeling the late great Warren Brookes (Brookes’ The Economy In Mind another essential read) in reminding readers that yesterday’s (literally and figuratively) manufacturing hubs like Flint, Detroit and Cleveland have repelled capital and talent on the way to becoming ghost towns.
America is not going to manufacture its way to a prosperous future. There’s also this key point which needs to be remembered whenever commentators start talking about Yahoo moving to South Dakota:
Another popular myth of modern times has had to do with the supposed “death of distance”, and the view that technological enhancements mean it doesn’t matter where workers migrate to. Moretti slays the notion with ease given his assertion that “a company’s success depends on more than just the quality of its workers – it also depends on the entire ecosystem that surrounds it.” More to the point, smart, innovative workers like to be around other smart, innovative workers.
Bad news for proponents of localism who foresee (or would like to see) rural areas experiencing a renaissance powered by online work. To put it clearly: Companies to not seek out cheap labor, they seek out productive labor. If your marginal productivity is higher than your marginal cost, companies don’t care how much the “cost of living” is.