4/24/2012 10:42:59 A.M. Pacific Daylight Time, [email protected] writes:
What are you protecting against? ( 1 ) Loss of American jobs; protection of economy, including consumer driven economy ( 2 ) Compromise of American security, both military & cyber, and economic security If you're protecting against lower cost foreign competition, isn't that the same as encouraging inefficiency? Absolutely not ; that argument, as I just said, assumes that any industry being protected will necessarily continue to do business exactly as always. There is no reason to make any such assumption. Why is this assumption made ? Free traders who are invested in their ideology and simply cannot see any interpretations but those that favor the arguments they habitually make, and labor unions. If you're trying to protect against the consequences of stupid managers, then aren't you protecting stupidity? This question is beside the point. I'm with DRB and the libertarians in this one. You can't regulate in a way that forces efficiency. Why not ? Regulations are now on the books requiring better fuel efficiency in cars on a time schedule over the nest X number of years. Similarly with respect to local building codes that now require such things as better insulation for new homes ( energy use efficiency ). The way it seems to me there is no reason why protection cannot be attached to something like bankruptcy processes, in which a reorganized industry ( protected industry ) would be free to become more efficient by renegotiating contracts, using more labor saving equipment, etc. OK, there may not be as many jobs in protected ( reorganized ) industries as before but there still would be some jobs and , with them, some degree of the jobs multiplier effect. MUCH better than shipping a whole industry overseas simply so that shareholders can reap oversize profits. Sure, as Posner says, there's a place for ensuring fair trade on both sides, and protecting crucial munitions. But I don't see any way to protect an industry without that protection distorting the market. I don't agree that distortions are always a concomitant but even if this was true, what is the justification for invariably ignoring national security , which is the prime ( prime ) argument being made ? The whole point is that some things are more important than the bottom line. The corollary is that in any number of fields / industries it isn't necessary to sacrifice efficiency. The arguments that you --by no means only you-- seem to always make assume that the only valid yardstick is pure profitability. My yardstick is actually at least two yardsticks, profit and national security. Actually I'd like to add # 3, cultural / values as essential to a healthy society. Saying all this my guess is that your next rejoinder, if any, will once again completely ignore national security as a basic consideration. Not saying that it would be easy to always identify authentic national security needs nor that the effort would be free of political pressures, just saying that the effort is necessary and that if there are trade offs that is better than a policy that treats the bottom line as all-sufficient, since it is not. National security is more important. Billy ============================================= Maybe in a some cases the distortion is worth it, but to deny the distortion is dangerous. E Sent from my iPhone On Apr 24, 2012, at 10:20, [email protected]_ (mailto:[email protected]) wrote: Ernie : Why are a set of assumptions made repeatedly --not just by Posner-- to the effect that promoting manufacturing and manufacturing jobs must necessarily mean subsidies and toleration for inefficiency ? Similarly for protection, which many writers assume must mean protecting inefficient and obsolete plants and industries. These kinds of assumptions are self serving --and are assumed by people who think that unbridled free trade is always and necessarily for the good. Which is nonsense. Free trade can be for the good ; but that does not mean it will always be for the good, and it may well undermine national security needs. As for protection and manufacturing, we have been over this ground before so no need to repeat that discussion. But basically, whenever something gets protected, gvt policy should insist upon efficiency and cost effectiveness as a price for that protection. My view, anyway. Billy ----------------------------------------------------------- 4/24/2012 9:20:46 A.M. Pacific Daylight Time, [email protected]_ (mailto:[email protected]) writes: Contrarian but well-argued. I mostly agree. E Decline of U.S. Manufacturing—Posner _http://www.becker-posner-blog.com/2012/04/decline-of-us-manufacturingposner .html_ (http://www.becker-posner-blog.com/2012/04/decline-of-us-manufacturingposner.html) ____________________________________ The only secure ground for the government’s subsidizing a producer is that the goods or services that he sells are likely to confer external benefits, which is to say benefits that, because they are not paid for by the buyers, do not contribute to covering the producer’s costs. The total social benefits, private as well as public, that his production creates may exceed his costs, but he will not produce if the private benefits (the payment he receives from customers) do not cover those costs. Some manufactured products, vaccines for example, confer external benefits: when most of the population is vaccinated against some disease, the risk to the rest of the population may be so slight that they stop buying the vaccine: they are benefiting from it but not paying for it. Another example is intellectual property that, in the absence of patent or copyright protection, could easily be copied: the original producer of the intellectual property would be conferring benefits on the copiers for which he would not be paid. External benefits are actually rather pervasive in manufacturing as in other sectors of the economy. For example, consumers who value a product much more than its market value derive an external benefit, because (by definition) the manufacturer does not capture this “consumer surplus [value].” But there is no reason to think that manufacturing confers greater external benefits than other sectors. There is a general anxiety about becoming dependent on foreign nations for products that are vital to our nation. That is a legitimate concern when one is talking about products that are essential for national security or economic welfare, such as military aircraft; and obviously our military production is heavily and justifiably paid for largely by the government, although some is paid for by foreign buyers. The foreign “products” that might be thought essential to our security and welfare are not manufactured goods at all, but commodities such as oil and rare earth metals. The United States is still the world’s largest manufacturing country, accounting for a fifth of total world industrial output. Becker points to the analogy of agriculture. Employment in agriculture has plummeted, leading to anxieties spurred by agricultural companies about the decline of the “family farm” and the loss of the imagined virtues of the independent farmer, to combat which agriculture continues to be heavily subsidized. The subsidies are widely recognized to be a pure social waste, and the same would be true of subsidizing manufacturing. Like manufacturing, American agriculture is thriving with its historically small labor force. The decline in agricultural employment is a product of technological advance, and likewise the decline in manufacturing employment. Subsidizing manufacturing will no more increase employment in manufacturing than subsidizing agriculture has prevented the precipitous decline of agricultural employment, for a manufacturing subsidy will be used to speed the automation of manufacturing tasks and so accelerate the decline of manufacturing employment— unless the subsidy is conditioned on increased employment, which would mean diverting workers from more to less productive work. We would not be better off if 40 percent of the labor force were in farming rather than 2.5 percent, or if 28 percent of the labor force were in manufacturing rather than 9 percent. Some concern has been expressed that we need to boost manufacturing in order to reduce our trade imbalance, because many manufactured goods are exported. But a recent article in the New York Times (April 10) points out that the United States is the world’s largest exporter of services—and would be larger still if we took steps, such as loosening visa restrictions that impede international provisions of services and making the same efforts to pry open foreign markets to American services as we do to pry open foreign markets to American goods. The politicians know all these things. The push to promote manufacturing is political in origin and may (one hopes will) be abandoned after the election. Its political appeal is related partly to the fact that unions still have a foothold in manufacturing, and partly to the fact that America’s prowess in manufacturing (think of the vast output of munitions in World War II) is associated in the public mind with the epoch of greatest American world power. I have no objection to efforts to negotiate with foreign countries trade agreements that facilitate U.S. exports (they also of course facilitate imports—and that’s fine too). Such efforts are the centerpiece of the Administration’s program of stimulating employment in manufacturing. But the efforts should be extended to services. I can think of no rational basis for putting manufacturing ahead of services. ____________________________________ (via _Instapaper_ (http://www.instapaper.com/) ) Sent from my iPhone -- Centroids: The Center of the Radical Centrist Community <[email protected]_ (mailto:[email protected]) > Google Group: _http://groups.google.com/group/RadicalCentrism_ (http://groups.google.com/group/RadicalCentrism) Radical Centrism website and blog: _http://RadicalCentrism.org_ (http://radicalcentrism.org/) -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org
