So a common mis-conception is that US manufacturing is in decline. This is empirically not true - the BLS Manufacturing index has been rising over the past decades and continues to rise today.

What is falling is manufacturing employment. This is due to a combination of rising labour productivity and a jump up the value chain (which produces fewer, more sophisticated products).

Regarding arms, the US is the largest arms exporter. And it is all built here. That's not just because of export regulation (ITAR), but because that precision manufacturing basically only exists in the US, Schweiz, Sverige, Deutschland, and Russia (plus a couple more).

This is very true, repeated often by economists, but nobody listens.

It's so ironic this is so often pointed out, since the reality (increasing marginal revenue product of labor) is indicative of something good, not bad.

Is it unequivocally good?

Technology has certainly already disrupted a lot of industries and increased the marginal revenue product of labor (and lowering the number of people employed), and I think we are just getting started. At some point, if we aren't there already, we are going to be in a situation where our long-term labor needs are substantially less than the supply.

In a sense, this is a good thing for our society overall (and very good for the capital-owning segment of society), but what about those whose labor isn't needed? We're not too keen on paying people to not work.

I'm certainly not advocating a Luddite inspired revolt against technology or remaining inefficient for the sake of keeping people employed, but those who argue that the reduced need for labor is all rainbows and unicorns often fail to account for the human element of the labor equation.

That endgame supposes there is a finite space of possible things to do which machines will eventually have an absolute advantage over.

My belief is that it is more likely that as we leverage human ingenuity more with machines, that ingenuity, alongside artificial intelligence, will be freed to pursue greater things. Simply projecting time is correlated with mechanization with is further correlated with job supply decay to Pluto may not be valid.

I do not, at the same time, see a future for un-skilled or semi-skilled labour.

The U.S. probably does have the sophistication, talent, and infrastructure to make the iPhone, if price was no object.

For things that are economical, which mostly means low ratio of employee-hours to value of the finished product, the U.S. does a reasonably good job manufacturing them, which is why U.S. manufacturing output by value is the highest in the world.

China actually imports a substantial amount of the machinery it uses in its factories from U.S. factories, which are fairly competitive in the meta-factory category of building industrial machinery for use in other kinds of factories (China annually imports about $20b in industrial machinery from the U.S.).

Actually, the defense industry sort of proves that we DO have the ability to manufacture myriad high tech devices.

But the analogy fails because the defense department doesn't have to concern itself with profit margins.

That is interesting point of view - and refreshingly optimistic.

So as China become more expensive (that is given), these jobs will come back.

I don't they are so much coming back, as they are probably moving to some other country (e.g. India).

India is already getting too expensive. The Philippines is the hot place now, but wages are rising quickly there also. Companies could start to look to Africa, but the corruption and lack of a government in many of the countries makes that a tough move.

What will happen is as wages rise more and more work will simply be automated. Factories will be built where they most geographically make sense (close to components, raw materials, customers, etc...)

Expect to see mini silicon valleys of manufacturing pop up much like what happened in Detroit with automakers and part suppliers during the hey day.

Also, saying they aren't coming back is ignoring that they never really left. US manufacturing is still growing strong, and the main reason long term for more new factories to not be built in the US will have to do with the EPA more than labor wages.

In related news, one stealth bomber costs 2 billion dollars.

There is no major white label producer in the US like Foxconn.

All the major manufactures of hardware have shops in the US. IBM in New York, Intel in Arizona and Oregon, AMD(back when they did that kind of thing) in Texas, etc, etc. Saying the US lacks sophistication and talent says more about them than it does about the US.

Not at that volume, but yes there are. All of the major EMS companies have a significant presence in the US.

Short answer: obscene amounts of money.

The issue isn't that the US can't make an iPhone, it's that it would be expensive (particularly up-front).

They say the iPhone would be expensive... If they were to tell the truth they would said: our profit margin won't be so high.