In 1987, 28.8 percent of US employees worked in companies with more than five thousand employees. Thirty years later, the percentage was 33.8. Today, the number of employees working in companies with more than ten thousand employees exceeds the number who work in businesses with fifty or fewer employees.

8: The Decline of Manufacturing

“As Smith noted, the division of labour was limited by the extent of the market, and the growth in the geographical scope of markets has steadily increased the geographical division of labour. Switzerland and Denmark are among the richest countries in the world, but neither produces automobiles.

Contrary to many people’s images of a society focused on tourism and banking secrecy, Switzerland is an outlier in the Global North, with 20 per cent of the working population engaged in manufacturing, particularly speciality chemicals and precision engineering. But little of this manufacturing is of the kind that requires its exhausted workers to wash off the dust and sweat of the day as they return home.

A 2012 story in the New York Times reported that Apple needed to hire nearly nine thousand industrial engineers in the earlier days of iPhone production. The company’s analysts expected recruitment to last nine months to hire that many engineers in the United States. In China, they were able to do it in two weeks. A large pool of good labour increases the speed of design and production cycles. As Tim Cook once said, “In the US, you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China, you could fill multiple football fields.

Now it’s more obvious that the departure of manufacturing has created economic and political ruination for the United States. We are still only beginning to understand how much it set the country back technologically.

Many of the United States’ most storied companies have been ailing. Detroit’s automakers, having limped along for decades, are now stumbling through the transition to electric vehicles. US Steel, General Electric, and IBM are shadows of their past selves. Intel, mired in cycles of blown product timelines and layoffs, went from a semi-conductor trailblazer to a clear laggard behind Taiwan’s TSMC.

Germany and Japan are mighty exporters with, respectively, eight million and ten million manufacturing workers. A country doesn’t need so many people to have a robust semiconductor industry: A few hundred thousand highly trained workers are enough. In 2025, China will graduate more than twice as many PhDs in STEM fields as the United States— and many in American universities are Chinese nationals likely to repatriate.