Global manufacturing activity is rebounding nicely, so let's not put the kibosh on it again

The question is not whether people’s lives are more important than money. People’s lives are the only thing that’s important. Everything else is just to create the circumstances that allow them to live well.

The question is whether you’re really helping people’s lives when you lock them down in an attempt to prevent all risk of death, and in the process prevent them from producing any of the wealth that makes it possible for them to live independently and well.

We spent the entire spring making prevention of all disease risk the only priority – not just the first – and saw the global economy collapse as a result. Manufacturing is at the heart of economic productivity because it’s the most value-added of activities – taking raw materials that can do nothing for you in their basic form, and transforming them into things that enhance people’s lives.

When you squash manufacturing activity, the rest of the economy has very little chance of making up the difference. We need to make things. It fuels the wealth-creation that makes everything else possible.

So the best news of the day also corresponds with the most troubling news. The current spike in COVID cases is going to tempt the politicians to shut down manufacturing again, and the timing couldn’t be worse, because it’s staging a huge comeback throughout the world:

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In the U.S. and Germany, manufacturing activity declined at a slower pace, a sign that the global economy is starting to rebound from a deep contraction, according to IHS Markit, a firm that produced many of the surveys. Manufacturing sectors returned to growth in a number of other countries, including France, the U.K., Malaysia, Vietnam, Australia and Ireland.

“We certainly have a recovery,” said Patrick Artus, chief economist at French bank Natixis. “In June, the recovery seems to be faster than we expected.”

While businesses reported that the lifting of restrictions had made it possible to ease up on layoffs and get supplies or raw materials, they said weak demand from overseas was holding them back. Two surveys released Wednesday showed U.S. manufacturing in June returned to the cusp of growth. IHS Markit said its U.S. purchasing managers index for manufacturing was 49.8 in June, from 39.8 in May. 

It’s unsurprising that global demand remains down, and that does present some problems for manufacturers who are ready to resume full-scale production. You don’t want to make things that never get sold because the public isn’t ready to buy them. But manufacturers also have an interest in getting the most value out of their production capacity, and the way to do that is to manufacture as much as you can and then find a way to get it to market.

Politicians are not helping when they continually hint they might shut things down again. That causes uncertainty and leads to people’s reluctance to buy. The best thing politicians could do at this point is something they will probably not do: Make it clear that, no matter what happens with the virus, the economic reopening is going to proceed.

Because it simply has to. The nation is not fiscally strong enough to sustain endless $2 trillion spending blowouts in which we pay people to sit at home and do nothing. Clearly the virus is not gone, and clearly we need to manage it better than we have. But we’re not helping ourselves if we prevent all wealth-creation, because then we won’t have the means by which to fund these public health initiatives.

It’s great to see manufacturing roaring back. There is nothing the economy needs more. No matter what happens, don’t shut it down again. People know at this point what they need to do to stay safe, so trust them to do it. For those who don’t, we’ll need to deal with the consequences.

But nothing would be worse that what we went through in the spring, especially not now, when the activity we so desperate need is finally returning.