Great point. Shall we tackle "healthy protectionism" in our next podcast?
E Sent from my iPhone > On Dec 29, 2016, at 08:28, Chris Hahn <[email protected]> wrote: > > This is an important lesson in economic history, by George Will. Trump’s > campaign rhetoric makes it seem as if he is unaware of the dangers of > protectionism, or that he doesn’t care. I hope he gets the message from > somebody. > Chris > > > > December 28. 2016 10:39PM > > George Will: Making America 1953 again > By GEORGE WILL > <image001.jpg> > > > It is axiomatic that if someone is sufficiently eager to disbelieve > something, there is no Everest of evidence too large to be ignored. This > explains today’s revival of protectionism, which is a plan to make America > great again by making it 1953 again. > > This was when manufacturing’s postwar share of the labor force peaked at > about 30 percent. The decline that began then was not caused by manufactured > imports from today’s designated villain, China, which was a peasant society. > Rather, the war-devastated economies of competitor nations were reviving. > And, domestically, the age of highly technological manufacturing was dawning. > > Since 1900, the portion of the American workforce in agriculture has declined > from 40 percent to 2 percent. Output per remaining farmer and per acre has > soared since millions of agricultural workers made the modernization trek > from farms to more productive employment in city factories. Was this trek > regrettable? > > According to a Ball State University study, of the 5.6 million manufacturing > jobs lost between 2000 and 2010, trade accounted for 13 percent of job losses > and productivity improvements accounted for more than 85 percent: “Had we > kept 2000-levels of productivity and applied them to 2010-levels of > production, we would have required 20.9 million manufacturing workers (in > 2010). Instead, we employed only 12.1 million.” Is this regrettable? China, > too, is shedding manufacturing jobs because of productivity improvements. > > Douglas A. Irwin of Dartmouth College notes that Chinese imports may have > cost almost one million manufacturing jobs in nearly a decade, but “the > normal churn of U.S. labor markets results in roughly 1.7 million layoffs > every month.” He notes that there are more than 45 million Americans in > poverty, “stretching every dollar they have.” The apparel industry employs > 135,000 Americans. Can one really justify tariffs that increase the price of > clothing for the 45 million in order to save some of the 135,000 low-wage > jobs? Anyway, if tariffs target apparel imports from China, imports will > surge from other low-wage developing nations. > > The Wall Street Journal’s Greg Ip, who reports that there currently are > 334,000 vacant manufacturing jobs, says that when Jimmy Carter tried to > protect U.S. manufacturers by restricting imports of Japanese televisions, > imports from South Korea and Taiwan increased. When those were restricted, > Mexican and Singapore manufacturers benefited. > > In his book “An Extraordinary Time: The End of the Postwar Boom and the > Return of the Ordinary Economy,” Marc Levinson recalls the 1970 agonies about > Japanese bolts, nuts and screws. Under the 1974 Trade Act, companies or > unions claiming “serious injury” — undefined by the law — from imports could > demand tariffs to price the imports out of the market. Of the hundreds of > U.S. bolt, nut and screw factories, some were, Levinson writes, “highly > automated, others so old that gloved workers held individual bolts with tongs > to heat them in a forge.” A three-year 15 percent tariff enabled domestic > producers to raise their prices, thereby raising the costs of many American > manufacturers. By one estimate, each U.S. job “saved” cost $550,000 as the > average bolt-nut-screw worker was earning $23,000 annually. And by the > mid-1980s, inflation-adjusted sales of domestic makers were 15 percent below > the 1979 level. > > Levinson notes that Ronald Reagan imposed “voluntary restraints” on Japanese > automobile exports, thereby creating 44,100 U.S. jobs. But the cost to > consumers was $8.5 billion in higher prices, or $193,000 per job created, six > times the average annual pay of a U.S. autoworker. And there were job losses > in sectors of the economy into which the $8.5 billion of consumer spending > could not flow. The Japanese responded by sending higher-end cars, from which > they made higher profits, which they used to build North American assembly > plants and to develop more expensive and profitable cars to compete with > those of U.S. manufacturers. > > In 2012, Barack Obama boasted that “over a thousand Americans are working > today because we stopped a surge in Chinese tires.” But this cost about > $900,000 per job, paid by American purchasers of vehicles and tires. And the > Peterson Institute for International Economics says that this money taken > from consumers reduced their spending on other retail goods, bringing the net > job loss from the job-saving tire tariffs to around 2,500. And this was > before China imposed retaliatory duties on U.S. chicken parts, costing the > U.S. industry $1 billion in sales. Imports of low-end tires from Thailand, > Indonesia, Mexico and elsewhere largely replaced Chinese imports. > > The past is prologue. The future probably will feature many more such > self-defeating government interventions in the name of compassion as > protectionist America tries to cower its way to being great again. > > > George Will’s email address is [email protected]. > > -- > -- > 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 > > --- > You received this message because you are subscribed to the Google Groups > "Centroids: The Center of the Radical Centrist Community" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/d/optout. -- -- 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 --- You received this message because you are subscribed to the Google Groups "Centroids: The Center of the Radical Centrist Community" group. 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