Hi Billy, On Apr 24, 2012, at 12:54 PM, [email protected] wrote:
> 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 I agree with the problem, but disagree with the solution. Focusing on manufacturing industries in this context misses the boat. The real job-killer for manufacturing is productivity. We simply don't need as many manufacturing workers as we needed 50 years ago. Manufacturing is down to 9% of jobs, yet America still has 1/5 of the the world's manufacturing output. We're never going to get back to the post-World-War-II era when we were the only undamaged industrial economy. We might move the needle a bit by clamping down on a few areas, but trying to use this as the savior of the American job market simply isn't going to happen. I would reframe the problem as "How do we increase American exports?" Simply protecting domestic industries for domestic consumption is almost a zero-sum game. If you want to create jobs, the real challenge is to make domestic industries competitive enough to sell globally. > ( 2 ) Compromise of American security, both military & cyber, and economic > security I agree it is a goal, I disagree that it is a problem. We're going to have to agree to disagree. In general, I think we do an adequate (if imperfect) job with keeping military hardware; I disagree that we should do the same with every interesting industrial product, though. I actually think American security is enhanced by the fact that our economy and China's are deeply intertwined. Neither of us is going to risk a war that would destroy our respective economies. Globalization is the new MAD. Even the fiscal imbalance means China actually has a greater motivation to keep the dollar strong than we do! > 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. It's not an assumption, it is an argument. Here's the basic logic: a) Companies primarily respond to market forces, such as price and competition b) Companies are mostly doing an optimal job of responding to their current circumstances d) By protecting certain industries from foreign competition, we reduce competition. e) When we reduce competition, companies have less incentive to innovate or keep prices low Do disagree with that logic? Or with specific assumptions? Or are we talking past each other? > If you're trying to protect against the consequences of stupid managers, then > aren't you protecting stupidity? > > This question is beside the point. Your point seems to be that companies could actually operate more efficiently and effectively even with protections in place. That implies that you disagree with point (b) above; you think companies are NOT acting optimally (i.e., are behaving stupidly). Is that a fair characterization? > 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. Okay, maybe we're really quibbling over terminology. I consider things like "fuel efficiency standards" as *incentives* rather than *protection*. Perhaps a better term is "standards". Having *standards* for how companies should behave, even standards for locally-produced content, can make good economic sense. That creates incentives for companies -- even foreign-companies --- to innovate and compete in novel ways. We already do that with cars, to some extent: http://globotrends.pbworks.com/w/page/14808471/local%20content%20requirements http://news.consumerreports.org/cars/2011/06/how-much-of-your-car-is-made-in-america.html If that's what you mean by protection, I withdraw my objection. > 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. Here we agree in principle, we just disagree on the facts. I think the existing requirements around military procurement being sourced in the U.S. are mostly sufficient to protect national security. > The corollary is that in any number of fields / industries it isn't necessary > to sacrifice efficiency. That would imply that it would be just as efficient to build and buy those things in the U.S., but people aren't doing it, which brings me back to the stupidity assertion above. :-) I actually don't mean that facetiously. I think Steve Denning is right that the real problem is a focus on *short-term* thinking which led companies like Dell to make incremental decisions which led to them being hollowed out and replaced. But if that's the issue, then the solution isn't protection, but restructuring incentives to force companies to think long-term, and for both them and the government to invest in ensuring sustainable economic growth. > 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 Actually, I think we're still talking past each other. Let me summarize what I believe. 1. National Security is important 2. Economic Security is important 3. The best way to support both is to have a robust, innovative domestic economy 4. The best way to foster such a domestic economy is to ensure it can compete effectively in the global market 5. The best way to ensure that is to create incentives that promote long-term investment 6. In the short-term, regulatory standards (e.g., around fuel efficiency or locally-produced content) that discourage short-term, profit-centric thinking would help 7. Protecting a specific contemporary industry against foreign competition or displacement would be counter-productive, except for critical military hardware 8. We do need to articulate a comprehensive yet flexible long-term industrial policy to guide domestic investment and education 9. Traditional manufacturing jobs are becoming an increasingly small portion of the economy due to improvements in productivity, and should thus be a proportionally small focus of our industrial policy. I think the only thing we actually disagree about is #7, and maybe #9. Right? -- Ernie P. -- 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
