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#MakeAmericaCompetitiveAgain
Donald Trump hit a nerve on tariffs, American manufacturing, and competition from China. A lot of people find the arguments for free trade unpersuasive and feel they’ve been on the receiving end of a bi-partisan policy that that imposes rules on costs on Americans that lets the rest of the world (literally) profit at our expense. I don’t quite buy that narrative but — as I’d wager some of you are thinking — of course you wouldn’t, Meyer. That doesn’t mean it’s totally wrong, though, and of course I want of my fellow countrymen to have every opportunity to find remunerative, useful employment.
My problem with Trump on this matter isn’t so much his calling attention to problems, but that his solutions are bunk. More specifically, I think the kinds of tariffs he’s suggesting are going to hurt people by raising prices, will spark retaliation against our own manufacturing, and will suffer from all the pitfalls that happen when one person thinks he’s smarter than the combined wisdom of hundreds of millions. Trump may have an economics degree, but his reading seems to have stopped before Adam Smith.
Even if Trump’s ideas worked as promised, they still strike me as misinformed. First, most of the manufacturing jobs in China aren’t particularly attractive and don’t make economic sense when you factor for Americans’ productivity and education. As Kevin Williamson and others have said, if you want to build cars, airplanes, firearms, or other high-end manufactured goods, Americans are the people to go to; if you want to make flip-flops, cheap electronics, or things that should be labeled as disposables, you’ll go broke hiring people as expensive as us. Second, the 1950s were an aberration: there were far fewer industrialized nations 60 years ago, and those that existed were still digging out of the Second World War. Third — whether it’s a good thing or a bad thing — we’re living through an emergence of a service economy much like the emergence of an industrial economy that started 200 years ago.
So if tariffs aren’t the answer, what is? My sense is that — while American manufacturing will and should be more expensive than its competitors’ (because it’s higher-quality) — there’s a lot we’ve done to artificially jack that price up. For starters, there’s our absurdly expensive and mandatory healthcare system and the political uncertainty that’s likely added a lot of hidden cost to our jobs. Who wants to hire expensive Americans when you don’t know how much extra their labor will cost?
That’s likely just one part of the puzzle. What else can we do to make sure we aren’t needlessly hurting our own workforce? Over-burdensome regulation? Right-to-Work laws? As much as possible, be specific. And yes, immigration is a totally game answer.
Published in Domestic Policy, Economics
Tariffs are to the right what the minimum wage is to the left. Basic economic education would do this country a lot of good.
Indeed, Germany’s cultural and lifestyle differences play a big role.
Not only are their tax rates much higher – especially on low- and middle-class earners – but their consumption is so low that most Americans (especially the traditional “blue collar worker” we are now focusing on) would consider such a lifestyle downright un-American: living in small apartments in cramped cities, one small car for a family of four, using a bike or public transportation for most trips, etc.
Mendel‘s statement brings us to a broader point overall. For the Trump and Sanders supporters, economics tends to be something where if you get the right guy pulling the right levers, everything will fall into place and we’ll have utopia. The problem is that every pull of a lever causes several other levers to fall out of place. We’ve endured almost a century of government meddling and about 2/3rds of a century of active meddling. The results have been moderately predictable and rarely satisfactory in the long term.
Perhaps- but my take is that a nationalist regime for the United States would be able to take actions that the present globalist regime cannot, because the present regime lacks much of a connection to the American people.
A successful nationalist regime- presumably having won the support of Trump-hearting non-freetraders- should be able to make and sustain the political case against the endless idiotic regulations hamstringing the economy.
Actually, any successful nationalist regime would have to, because freedom is what works.
But I don’t think the present regime even cares enough about the actual United States to make such a case, or try to.
Not as much as you might think, though, and one of the points I tried to make earlier was that technology is driving the jobs shift to a degree people don’t seem to realize.
Actually I’d rather it was not the government’s business. Were I facing stiff foreign competition on given products, the government likely could only intervene with the blunt instrument of tariffs. This would likely keep out the imports, but it would also prevent me (through reciprocal tariffs) from gaining a foothold in foreign markets. I’d be as captive to a fixed customer base as they would to me.
I disagree, but how is the left doing with their crusade for higher minimum wage?
Pretty well, I’d say.
So I’d also say the right should be arguing for tariffs, based upon your argument.
Can’t argue with that. If you were to change ‘should be able to’ to ‘would,’ though, I would have grave doubts.
Hilarious!
I know you intended a defense of Bush, but it only reminded me of what a thorough failure he was.
It turns out that the government itself was and is funding those lawsuits, which Bush failed to stop.
I also recall the Bush attempt to write new labor regulations that would have ended overtime time pay for more than 40 hours of work per week.
Great for business, terrible for politics, also off topic.
Spot on, and I’d have grave doubts too.
I put it that way because the whole goal of replacing the present regime should be to replace it with one that will return the United States to something like what it once was- a free country.
If it is not- sad panda.
In other words, arguing for an economic suicide pact.
That doesn’t answer the question about they both having higher regulations and more labor laws and yet still outperforming us.
Actually, I’m skeptical. Like government spending, over-regulation has a structural asymmetry: it’s not one big line item, but millions of individual items, each of which has a strong constituency behind it.
As experience has shown, a great amount of public support for cutting spending/regulations in general doesn’t translate into enough willpower at the nuts-and-bolts level, because the support for any specific item is inevitably greater than the very diffuse desire to “cut regulations” in general.
Also keep in mind that a large number of those “idiotic regulations” keeping jobs away from the US were designed to protect low-income workers. I’m not convinced that the Trump movement would provide that much political will to gut laws which, superficially at least, protect them. After all, people are pining for the “good jobs” which existed several decades ago.
Again, at least with Germany, there are several answers: 1) much lower take-home pay, 2) much less personal consumption 3) lower standard of living in many areas we value in the US, and 4) a workforce which is often willing (albeit grudgingly) to accept cuts to their benefits for the purpose of staying competitive on the global market.
Having lived in Germany for about a decade, I can say with some certainty that it would be nearly impossible to recreate their success in the US due to cultural/lifestyle reasons alone – leaving aside numerous other important factors.
Richard, when you say “True” to “The cause of American under-competitiveness is the globalist policies of the American government, and the ruinous government meddling is an effect of that,” what do you mean, exactly?
Obviously, ruinous government meddling needn’t be caused by globalism – it’s perfectly possible for a nationalist, mercantilist, or protectionist government to meddle ruinously in its citizens’ social and economic affairs. So what is it about the meddling that our own government does that points to the meddling having a globalist cause, rather than just being meddling?
(I can think of a few possible answers. But I’m interested in why you identified the source of our government’s meddling as globalism.)
It would also blunt your ability to hire or force you into further automation by raising the cost of your inputs.
Ummm, just because they are doing well implementing a bad policy doesn’t suddenly make it a good policy.
Perhaps, but that doesn’t change the politics.
Your call, but as I’m approaching this as a political issue for the US federal government and as a grand-strategy matter for the American people I differ.
For example, in practice, long ago, Japan was able to exclude American products whenever it wanted to by various non-tariff measures. I recall reading that a ship full of American made TVs was never able to unload in a Japanese port.
Eventually, Japan bankrupted the American consumer electronics industry that existed at that time.
That mattered. Bankrupt firms can’t come up with new products, which was a significant advantage for Japanese firms.
Well, you know how nationalist regimes handled that in the past right?
I answered in part, as did Mendel. Canada de-regulated (and is doing well), and Germany maintains a different standard of living and has a government not trying to regulate and spend its way into oblivion (austerity).
I have to go, but I note that Germany has derived significant benefits from the Euro, as the value of that currency has been held down thanks to the inclusion of states such as Greece and Spain which lack various German cultural traits that would likely cause the value of a hypothetical Deutschmark to rise such that it priced German exports out of the world market.
Later folks. Forgive my run-on sentence- but I have to go.
US consumer electronics bankrupted themselves. US consumer electronics designs had been stagnant, their quality was in decline. Japanese electronics would never have gotten a toehold here if that were not the case. I remember well when we ditched our floor model Zenith for a Sony Trinitron. The Zenith had failed after 5 years. That Sony was cheaper than a new Zenith, had a better picture, and had better features. Should we have been made to buy another crappy Zenith, whose design had not improved in any way over the model that had died?
Why don’t you explain what you think should be done, and what the effects would be (including the inevitable trade offs)?
One more point here: there’s a difference between “how many” regulations a country might impose, and how well those regulations actually work.
As painful as it is to hear lefties say it, there is a difference between smart regulations and dumb regulations. For instance, in the US – with our more contentious two-party system – we often have a patchwork of regulations devised by the two parties in which different laws contradict each other or create horrible unintended consequences.
In many smaller countries, a combination of parliamentary government and more political homogeneity means regulations are often constructed in collaboration, and thereby end up being more consistent.
This leads to numerous situations where more regulations actually hurt the economy less. But since we are neither small, nor politically homogeneous, nor have a parliamentary system of government, the US cannot and should not try to replicate those other countries.
This is certainly true and a very fair criticism. But there are two caveats: 1) Germany was already a strong exporter before the common currency/trade zone harmonization.
And more importantly, 2) Germany’s underlying fundamentals are simply stronger than its competitors: its workforce is generally more productive, better educated, more flexible, and more frugal than those of many other EU countries.
I think this is a key point that goes missing in discussions of free trade: the most important factor to a national workforce’s success is the combination of how hard its workers work, how flexible they are, and how much they live above or below their means.
Trade policy can certainly exacerbate or temporarily diminish differences in these underlying fundamentals between countries, but in the end those fundamentals will always win out. And in the case of the US, that means we probably have to go through some pretty painful changes to make ourselves more efficient, no matter what our trade policy is.
I took his point to be that the meddling was the result of a governing zeitgeist, rather than the root cause. My response was intended to point out that a different governing philosophy would just add more meddling, so changing globalism to nationalism was an inadequate solution. I agree with you that bad policies can be implemented by any governing philosophy; in fact, I rather expect that to be the case.
No…it does need labor, just not as much as it used to. That is a normal development for an economy advancing whether that economy is exposed to free trade with other nations or not. How many bank tellers around these days? Why did the agriculture industry mechanize 60-80 years ago? What about telecom?
Are McDonald’s restaurants becoming automated because of free trade? My issue with you guys is that you seem to blame every reduction in demand for labor on free trade which is not true and seem to believe that labor content is directly correlated to the value of a “thing”.
This is nonsense or you simply don’t pay attention to the posts in said threads. Many, many people have pointed out there are are losers in the free trade (or any kind of trade for that matter, including completely domestic trade within the borders of the good ole USA), but those costs are mostly short-term and the benefits vastly outweigh any costs. You still may disagree with that which is entirely your right but either pay better attention or please refrain from creating straw men, or pay better attention.
Freedom works, but you want to actively prevent me or others from purchasing a good made outside of the USA from someone that is willing to sell it to me? Interesting concept of freedom there.
Following that logic, maybe one day we can have so much “freedom” that someone living in Oregon won’t be able to purchase something manufactured in Tennessee. That should make the people in Oregon much more wealthy….
Although this history isn’t all that accurate, let’s assume it it. The upshot is that we Americans have access to all these fabulous electronics at rather inexpensive prices. Sounds like a good deal to me.
Ah. I guess I was asking, what is it about a “globalist” mindset that would bring out domestic meddling in a way other mindsets wouldn’t?
“Globalism” strikes me as a nebulous term, sometimes used to describe free trade between countries, sometimes used to describe other stuff, like the UN. To the extent that the US enacts domestic regulation merely because “the cool kids in other countries do it, or say that we should do it” (for example, through the UN), I guess that regulation can be blamed on “globalism” – but that “globalism” seems different from free trade: by that “globalist” logic, if “the cool kids in other countries” implemented tariffs, then we should implement tariffs, too.
Clarifying further (I should probably say “clarifying”, as I am generally more of an obfuscator unless I am very careful.) I did not intend to say that only globalism drives the meddling. He identified globalism as a driver of the particular meddling under discussion. That meddling is not a root cause, but derives from an underlying belief in what constitutes a desirable end or condition is reasonable to me. If constraining meddling could be effectively enforced (as I believe was the intent of the Constitution) the harmful effects of any governing philosophy would be mitigated. Our political history seems to have validated many of the concerns of the anti-Federalists, hence, my enduring gloom. Turn the government over to any faction, including any Republican faction, and the meddling will change direction but also lead to more ill effects, because there an insufficient political market for withdrawing the government from local affairs, only for changing the preferred direction.