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What's the administration's specific aim in bailing out GM? I'll give you my theory later.

For now, though, some background. First and most broadly, it doesn't make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad -- something I don't recommend -- we'd still be losing manufacturing jobs. That's mainly because of technology.

When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.

Factory jobs are vanishing all over the world. Even China is losing them. The Chinese are doing more manufacturing than ever, but they're also becoming far more efficient at it. They've shuttered most of the old state-run factories. Their new factories are chock full of automated and computerized machines. As a result, they don't need as many manufacturing workers as before.

Economists at Alliance Capital Management took a look at employment trends in 20 large economies and found that between 1995 and 2002 -- before the asset bubble and subsequent bust -- 22 million manufacturing jobs disappeared. The U.S. wasn't even the biggest loser. We lost about 11 percent of our manufacturing jobs in that period, but the Japanese lost 16 percent of theirs. Even developing nations lost factory jobs: Brazil suffered a 20 percent decline, and China had a 15 percent drop.

What happened to manufacturing? In two words, higher productivity. As productivity rises, employment falls because fewer people are needed. In this, manufacturing is following the same trend as agriculture. A century ago, almost 30 percent of adult Americans worked on a farm. Nowadays, fewer than 5 percent do. That doesn't mean the U.S. failed at agriculture. Quite the opposite. American agriculture is a huge success story. America can generate far larger crops than a century ago with far fewer people. New technologies, more efficient machines, new methods of fertilizing, better systems of crop rotation, and efficiencies of large scale have all made farming much more productive.

Manufacturing is analogous. In America and elsewhere around the world, it's a success. Since 1995, even as manufacturing employment has dropped around the world, global industrial output has risen more than 30 percent.

More after the jump.

--Robert Reich

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As president of General Motors when Eisenhower tapped him to become Secretary of Defense in 1953, ?SEngine Charlie? Wilson voiced at his Senate confirmation hearing what was then the conventional view. When asked whether he could make a decision in the interest of the U.S. that was adverse to the interest of GM, he said he could.

Then he reassured them that such a conflict would never arise. ?SI cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. Our company is too big. It goes with the welfare of the country.?

Wilson was only slightly exaggerating. At the time, the fate of GM was inextricably linked to that of the nation. In 1953, GM was the world?"s biggest manufacturer, the symbol of U.S. economic might. It generated 3 percent of U.S. gross national product. GM?"s expansion in the 1950s was credited with stalling a business slump. It was also America?"s largest employer, with over 460,000 employees. Its blue-collar workers received (in today's dollars) $60 an hour that year in wages and benefits.

Today, Wal-Mart is America?"s largest employer, the majority of whose employees receive just over $10 an hour. And General Motors is filing for bankruptcy. Wilson?"s reassuring words in 1953 now have an ironic twist. There will be little difference between what is good for America and for GM because it is soon to be owned by U.S. taxpayers who have forked out more than $60 billion to buy it.

But why would U.S. taxpayers want to own today?"s GM?

The answer, after the jump.

--Robert Reich

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