Paul Kasriel has an interesting tidbit on the decline of the importance of manufacturing in our economy since World War II. While he plots the decreasing share of manufacturing profits against other profits, you could just as easily plot the decreasing share of manufacturing activity against the total economy. The results would be similar.
In my opinion, we hear too often that manufacturing is the backbone of our economy. It clearly is no longer so. It hasn't been the backbone for decades. Almost as much economic activity is tied to information technology or health care services as manufacturing, for instance. But the drumbeat goes on, with calls for trade protection or subsidies of manufacturing industries. This is because manufactured goods are what is traded most often, even if they represent only a small proportion of our economy.
My hypothesis is that many people overvalue tangible products in their perceptions and undervalue intangible products, such as services. I certainly did. During my travels in Germany, it became clear that Germans have a similar number and quality of manufactured goods ("useless stuff") as do Americans. But the size of the US economy per person is about 1/3rd larger. Of course, once I realized this fact, I started to question whether American economist were cooking the economic books and whether we really were any better off than Germans.
It was only after a couple of years of thinking about this that I realized that I was missing the point. Most economic activity has little physical result and I was wasting my time looking at how many DVD players or cars or computers a German had. As an alternative, I could look at the results of the construction industry, for instance, but that isn't the backbone of the economy either (an exception to this is perhaps Japan). A much better, but more difficult exercise is to look at the services and intangible products that a German uses versus an American.
I am interested in hearing from anybody with knowledge of the US and Germany to compare services and intangible products.