Economics

Trump and Clinton Pretend Protectionism Has No Price

Emphasizing jobs over value, they sacrifice the interests of consumers.

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Donald Trump talks about cutting taxes and regulation. Hillary Clinton, not so much. But their economic visions, laid out in dueling speeches last week, reflect a strikingly similar fear of what happens when people are free to engage in peaceful, consensual transactions without government interference.

Those transactions would not happen if they were not mutually beneficial, and the same truism applies when the two parties happen to be on different sides of a political border. But Trump and Clinton fear the unpredictable consequences of free (or relatively free) markets, which reward consumers and businesses that serve them well while punishing those that can't compete.

"All of our policies should be geared towards keeping jobs and wealth inside the United States," Trump says. Clinton promises to "stop any trade deal that kills jobs or holds down wages."

Both candidates claim to appreciate the benefits of international trade. But those benefits come from specialization that generates the greatest value at the lowest cost, which cannot happen without shifts in employment. If you oppose trade that "kills jobs" or that fails to keep them within the United States, you oppose trade, period.

"Let's go out and build the future!" Clinton exclaims. Trump says Clinton is "the candidate of the past," while "ours is the campaign of the future."

The future they have in mind looks a lot like the past. If American prosperity was once based on manufacturing, they say, it must always be so.

Trump, who thinks a reduction in manufacturing jobs is ipso facto evidence of economic decline, promises to "put our coal miners and steelworkers back to work" and "put new American metal into the spine of this nation." Clinton emphasizes "how important it is [to] build things," saying, "We are builders and we need to get back to building!"

This manufacturing fetish is no more reasonable than pining for the days when most Americans were farmers. The share of the U.S. labor force employed in agriculture fell from nearly 80 percent in 1800 to 1.5 percent in 2012, mainly because of dramatic improvements in productivity. That trend involved a lot of "lost jobs," so according to Trump and Clinton it was a disaster.

Two major causes of the decline in manufacturing's share of employment are rising productivity and competition from more-efficient producers in other countries, both of which are a boon to consumers—i.e., all of us. The government cannot prevent or reverse the loss of those jobs without sacrificing those gains.

Trump recognizes that regulations represent "a hidden tax on American consumers," who pay more for products made by companies subject to the government's costly mandates. But he refuses to admit the same is true of restrictions on trade, which by design protect domestic producers from lower-cost foreign competitors.

Clinton and Trump both want to punish American companies that take advantage of lower production costs in other countries to offer their customers more value for their money. Trump complains that such companies "ship products into the U.S. tax-free," while Clinton promises a "more patriotic tax code that puts American jobs first," including "a new exit tax" for companies that "move their headquarters overseas."

As a businessman, Trump understands why making products in America does not always make sense. As Clinton points out, "He's made Trump ties in China and Trump suits in Mexico."

Clinton's campaign created a web page listing U.S.-based alternatives to the foreign manufacturers of various Trump-branded products. It says these companies are "ready and able to produce the goods he makes overseas"—at a higher cost, of course.

Clinton never mentions that part, because she does not want to admit that an arbitrary preference for domestic producers takes money out of American' pockets. Maybe she could defend the protectionism she and Trump advocate even while acknowledging the cost it imposes on consumers. But she prefers to pretend there is no price to be paid, knowing her Republican opponent will never keep her honest.

© Copyright 2016 by Creators Syndicate Inc.

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  1. First, you create an “exit tax” to keep the people in.

    You don’t need to build a wall until they’re broke.

    1. How does a 10% exit tax “keep the people in”? It needs to be bigger – 10% is peanuts, 50% is better, 55% is just right.

    2. My last pay check was 9700 dollar working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can’t believe how easy it was once I tried it out.
      This is what I do,…. http://bit.do/FOX92

  2. Good article. It’s depressing how fast both parties threw free trade under the bus at the first hint that blue-collar voters might matter this year.

    1. I was called selfish and uncaring by a Trump supporter. And that government force and coercion isn’t a bad thing but trade with China is.

      When I pointed out that the Americans I know don’t need protection by government – that the Americans I know are scrappy fighters, and was the Trumpkin admitting Americans aren’t exceptional after all? – I was called a sociopath.

      There’s no debating these people. It’s pointless. It’s worse that debating Tony or Michael Hiln.

    2. It’s not a good article. It is economic gibberish. The notion that only consumption/spending matters in an economy is pure Keynesian macrononsense that has nothing at all to do with economic freedom.

      Production MUST equal consumption in the long-term. This is not rocket science. It is simple bookkeeping/arithmetic – and no one is ‘free’ from the laws of math. The only way it can avoid being directly equal in the short-term is via the issuance of debt – but sooner or later, that debt needs to be paid back – and not just rolled over or ‘bailed out’ by transferring it to taxpayers. Debt creates its own dynamic for crises – esp when debt starts being used to finance consumption rather than investment in future production. That merely moves debt/leverage in the entire system towards a Minsky moment (when debt moves from sustainable to speculative to Ponzi). Whenever that debt crisis occurs in EVERY system where money itself is a form of debt; then it will become a political crisis – and creditholders will then force the govt to bail them out at the DIRECT expense of every one else.

      Trade in a Ricardian or comparative advantage sense does NOT break the connection between production and consumption. The reason blue collar folks can see the nonsense of the current ‘free trade’ meme is precisely because they are the ones who can no longer increase their incomes via production – and they are no longer eligible for the free lunch of financing consumption via debt.

      1. You were expecting better economic analysis from Reason? You need to lower your expectations.

      2. “Production MUST equal consumption in the long-term.”
        Probably somewhat true, but are you implying that it must hold within every border of every country or within all things on maps with lines around them?

        Is debt a horrible thing when I take out a loan (mortgage) to finance the purchase of a home? Or car? Or TV?
        Or, if it’s on a credit card, groceries?

        1. are you implying that it must hold within every border of every country or within all things on maps with lines around them?

          It is true for every entity that can produce a balance sheet. At the national level, a trade or current account ‘deficit’ is the bookkeeping offset for a debt ‘surplus’/export. Every ‘free trade agreement’ that is designed to perpetuate a net trade deficit is, literally, protectionism for debt export. Subsidy of the financial sector (creator/producer of that debt) at the expense of ALL OTHER sectors of the economy.

          Is debt a horrible thing when I take out a loan (mortgage) to finance the purchase of a home?

          Umm – yes. Considering that the lenders get trillions of dollars in subsidies/bailouts – and will get more; the borrowers get tax subsidies solely because of that debt decision; the price of capital gets distorted for artificial reasons; those who don’t own property and/or ‘save’ are forced to subsidize the increase in property prices (and get paid nothing for those deposits). The Federal Reserve Act explicitly EXCLUDED mortgage lending from the functions that were protected by govt in exchange for a grant of bank monopoly over money supply. The sole banking function that is part of economic ‘money’ is working capital financing. And yet – look where we are.

          1. are you implying that it must hold within every border of every country or within all things on maps with lines around them?

            And it is true even in the relatively short-term if you look at current account deficits by country. The only two massive perpetual deficit countries (multiples larger than any other countries) are UK and US. Both of which explicitly subsidize their financial sector at the expense of every other sector in order to maintain ‘reserve currency status’. Every other country right now falls into one of three categories – commodity-based exporters whose deficit is temporary and is going to be balanced by either currency decline or short-term debt issuance; basketcases (Turkey, Lebanon, Egypt) whose deficit will ultimately be balanced by both currency decline and intl bailout; and the perpetual bookkeeping oddball (India) whose gold/silver imports count as ‘stuff’ rather than ‘money’ even though its a form of money.

    3. Isn’t that how the whole political game works?

  3. Free trade doesn’t exist in our current global community.

    Arguing about the different flavors of protectionism is really pointless. Until we break away from fiat currency and the rampant currency manipulation that makes it impossible to compare fair value of labor or goods, the concept of free trade is just that….a concept.

    Sure…fight for the concept longterm, but arguing about the incremental changes of a Trump, Clinton, or Johnson administration is just silly.

    1. So there’s no difference between implementing 40% tariffs or not?

  4. “Two major causes of the decline in manufacturing’s share of employment are rising productivity and competition from more-efficient producers in other countries”

    this is false. The vast majority of the decline in manufacturing is not related to “efficiency”. China does not produce more efficiently than the US. they produce more cheaply, due to almost non-existent environmental or labor restrictions and large scale Chinese government currency manipulation and trade protectionism.

    US manufacturing is far more efficient. Amazingly more efficient. Regulations, graft, corruption is what is killing US manufacturing.

    Arguing against Trump/Clinton statements about supporting manufacturing is na?ve idiocy. We have nothing anywhere close to Free Trade, nor will we in the foreseeable future.

    1. Getting rid of unnecessary regulations and corporate taxes would go a long way in improving our competitiveness.

    2. Isn’t our productivity somewhere in the 90th percentile? I would imagine that translates to damn good efficiency, which always leaves me baffled with those kinds of statements.

      1. Yes. Our productivity is through the roof. If there was a regulatory/free trade/union fair-playing-field on the global market there are very few industries where the US wouldn’t be the hands-down low-cost-provider.
        Easy access to raw materials, energy, skilled labor. Top-notch infrastructure and mobility. Access to the best universities and research facilities in the world.

        Manufacturing isn’t leaving because other countries are more efficient. That is laughable. Manufacturing is leaving because of the huge regulatory costs and the crony protectionism that gets added into our so-called “free trade” agreements.

        1. An imbalance of trade rules is also at play, to some extent. We lower our tariffs by $0.15 on the dollar, they lower their tariffs by $0.15 on the dollar, but ours were $0.30 to begin with whereas theirs were $0.70. Now there’s still an imbalance of tariffs, which is (in this example) even greater by ratio than before.

          1. Nonsense. The world overall – and the US in particular – has been at the historically lowest tariff barriers to trade for 40 or so years now. And the historically lowest non-tariff barriers to trade for over 20 years. This IS the Golden Age of ‘no trade barriers’ and has been for our entire adult lives. And to a lot of people who are looking at their own situation, the marginal value of ‘yet more trade grease’ is nonexistent. They, IMO correctly, perceive that that ‘grease’ is no longer about ‘free trade’ but about something else entirely.

            To pretend that we are just coming out of trade wars and Smoot-Hawley tariffs and that ‘protectionism’ is some existential never-before-experienced threat is dishonest.

        2. And why is it that a “fair” playing field is supposed to mean one where everyone else’s regulatory/union laws are increased to match ours? Why don’t we reduce some of our regulations to match theirs?

          1. I don’t disagree. My only point is that too many Reason writers act like we have “free trade” and Trump/Clinton are going to hurt that. Sadly, we are currently about as far away from “free trade” as one could conceivable get without having armed guards at the ports shaking down the incoming ships.

            anything Trump/Clinton would do relative to FreeTrade/Protectionism is so negligible as to be unworthy of discussion.

            1. What Trump Clinton have hurt is the potential to move towards freer trade in the future. In general the past has been more protectionist, and we’ve been getting freer via deals like NAFTA and the WTO. Trump/Clinton want to return to a protectionist past.

              If Johnson was President, freer trade would move forward. And he would be a better negotiator towards actual free trade than either one of them.

              1. Wouldn’t it be sweet if a state’s could be protectionist? I believe that the blue state model would crash and burn if Texas refused to trade with New York or California Those green environazis would be run out of Dodge faster than you could say “Sam Houston” once the gas lines formed.

            2. Well, don’t tell Breitbart or alt-right that. They’re banking on their “revolution”.

            3. So says Mr. Smoot . . .

            4. we are currently about as far away from “free trade” as one could conceivable get without having armed guards at the ports shaking down the incoming ships

              Compared to WHEN? Name ONE time in actual history when tariffs/barriers were even in the same universe of ‘free’ as they are now? Are you comparing the current environment to some fantasy world of fairy tales?

              1. Read some history. The global protectionism is enormous these days relative to 100, 200 years ago.
                Yeh, there were worse times in the 20th century and we’ve seen some improvement.

                But what I find hilarious is that so-called “free trade agreements” are typically not. Just flowery descriptors for mutually agreed crony kickbacks to favored industries.

                The original point is that articles like this describe a fantasy world of ‘free trade’, when in reality if you were to put in on a scale of 1 (complete freedom) to 10 (complete fascism), we’d be around a 7. so complaining about Trump or Hillary’s impact on Free Trade is like complaining about a guest pissing in your pool because it raised the water level.

                1. Read some history. The global protectionism is enormous these days relative to 100, 200 years ago.

                  I have read lots of history. And wiki has the stats – see ‘Tariffs in United States history’ page.
                  And before about 1960, most of the world was divided into colonial blocs with enormous barriers between the blocs and manipulated/tilted trade within the blocs. Which by the way is why the US decided not to be a colony.

                  But hey I’m sure if you assert some factless fantasy even more emphatically that it will make it a bit more truthy.

            5. I don;t have a problem with Trump strong arming economically conniving and thuggish nations like China to cut out their weaselly bullshit designed to crush American businesses that compete with them. Apparently a lot of the commentariat here prefer things that way. Because ‘Trump sucks’, or something.

              1. A lot of the commentariat prefer that the vast majority of American citizens not have their rights to buy stuff from Japan curtailed because the UAW wants a better “deal” in the Japanese market.

                And FYI, China isn’t even a party to the TPP. The TPP is about bringing East Asia into the American economic sphere so it wpon’t be in China’s economic sphere.

        3. But we do have advantages. Which would be multiplied if government would back off.

      2. The government claims it causes our efficiency. PPP & Vox say so.

    3. China does not produce more efficiently than the US. they produce more cheaply, due to almost non-existent environmental or labor restrictions and large scale Chinese government currency manipulation and trade protectionism.

      I think this is kind of a self-serving delusion. Rah-rah, America makes everything better. Boo, they’re just cheaper because they don’t have our environmental regulations. it’s the sort of thing that an American who doesn’t want to confront the reality that some other country might actually do something better would tell themselves to avoid having to change anything in the US.

      Particularly when it comes to those same regulations. Perhaps some of out regulations are excessive and unnecessary. Instead of dealing with that fact and changing our regulations, let’s just put up a bunch of trade restrictions and bury our heads in the sand.

      1. As an engineer who deals in both US and China manufacturing, I can state with good confidence that the US makes almost everything better than China as well as most of the rest of the world. There are exemptions, notably Germany, Japan, and SKorea in certain industries, but for the most part, due to a huge range of natural advantages, the US rules the global manufacturing efficiency/productivity comparison. There is nothing self-serving or rah rah US about it. Its just the facts.
        China is probably 30 years behind us in manufacturing efficiency. Talk to anyone in industries and you’ll hear the same thing.

        1. You know what you’re getting when you buy Chinese goods though, something cheap but good enough for a particular job.

          http://www.popularmechanics.co…..ings-test/

        2. We’re better at making stuff but it’s not necessarily a good idea to make absolutely everything yourself if you can outsource the stuff you are least productive at.

          If I suck at ironing and I make $80 and hour writing patent applications, it’s better for me to outsource the ironing to the dry cleaner. The day when local US-based unskilled labor becomes cheaper to employ than Chinese unskilled labor (including shipping costs), people will outsource to local unskilled labor.

          1. Eh, I stated that wrong. Let’s say I’m really good at ironing, but I make $80/hour writing patent applications and it costs me $40 to save an hours worth of ironing. I’m better off by $40 if I take my laundry to the cleaner.

          2. We’re better at making stuff but it’s not necessarily a good idea to make absolutely everything yourself if you can outsource the stuff you are least productive at.

            Yes, this is the principle of division of labor. But the U.S. is a very diverse nation and, for the most part, absent government-mandated and -subsidized inefficiencies, there isn’t really anything that we’re inherently “least productive at”.

            1. That’s totally nonsensical. if you can measure anything at all, you can put dots on a line and determine which dot is the lowest.

              1. That’s totally nonsensical.

                Yes, well, that’s because you missed the point entirely. The U.S. is a very diverse nation (in natural resources, in people and talents, in basically every form of capital) which means we aren’t limited to just a small set of economic competencies.

                If you put the dots on the graph, you can find the lowest. If I draw a vertical line on the graph and say “you are forbidden from putting certain dots above this line”, well that kind of changes the picture, doesn’t it?

                1. Another nonsensical statement.

                  If I’m missing the point here, it’s because you’re being deliberately obscure.

                2. k, if there are any places or people in the United States where they can produce anything that the US market wants, they’ll be competitive and successful.

                  What’s missing is that there are places and people around the world whose products are ‘good enough’ for many consumers in the US and elsewhere and whose products’ prices are appealing At The Level Of Quality that’s Acceptable to those buyers in the marketplace.

                  So, ‘acceptable quality at the right price’ trumps efficiency, trade barriers and everything else which might make a difference to economists and politicians but not to the consumers.

                  That’s why so much ‘junk’ from the Far East is “reasonably-happily” purchased by Americans, no matter where it’s made.

        3. However, our efficiency can be easily copied. It’s not something that ONLY white Americans can do well.

          1. No, it can’t be copied easily. And no, I’m not a racist. fuck you very much.

            Efficiency in manufacturing is related to the infrastructure, skilled labor force, natural resource availability and rule of law.

            the first two take time to build up, but can be copied with time.
            the third is fixed (which is an enormous US advantage over most of the rest of the world)
            the fourth takes decades, if not centuries to develop. (thank you Britain)

            1. Yeah, it can be easily copied. How many Corollas have you built, racist?

              1. Yeah, it can be easily copied. How many Corollas have you built, racist?

                For someone throwing around the label of “racist” so much, you seem to be implying that the Japanese didn’t develop efficiency on their own. While there are other factors to the sudden rise of Japanese automobiles in U.S. markets, the “Andon Cord” and other Japanese developments in “lean” manufacturing were not just “copied” from the U.S.

                1. Dude, I worked at NUMMI. I built Toyota and GM vehicles – over 7 million cars & trucks. Back off – it was a trick question to Mike.

                  1. Ok, whatever.

              2. You obviously haven’t read the whole comment stream and are just nitpicking bits to fit your butthurt agenda.

                Nothing I stated in the above comment is racist, you dolt.
                And no, it can’t be copied easily. Japan is one of the few countries where western industrial innovations where adopted and built upon. There are a very small handful of countries that have been able to do that. And since the friggin industrial revolution was a friggin century ago, that fact alone says it isn’t easy.

            2. White people, and just being white are fucking awesome. That;s right, I said it!

  5. Actions have no consequences to politicians in a country full of subservient sheep.

    When you can distract tote populous with frivolous antics every 5 days and it is a surety that the citizenry will never read a snippet of information about market economics or the perils of Keynesianism or Marxism, then policies are not worth discussing. Do you think the average Hillary voter has ever heard of smoot-hawly? Much less market signals or creative destruction?
    Discussing elections in morally bankrupt country is absolutely a waste of time.

    Reason should spend more time educating people about person to person transactions and how underground capitalism can function in a failing economy like Argentina.

    1. Did you know that the vast majority of people don’t really have enough interest in economics to want to read about it? True story.

  6. It’s “interesting” how the same people who say, “Trade creates winners and losers, and we cannot allow that,” will merely shrug their shoulders and say, “Them’s the breaks,” when it is pointed out that raising the minimum wage to $15 will create winners and losers.

  7. Reason should spend more time educating people about person to person transactions and how underground capitalism can function in a failing economy like Argentina.

    Just yesterday, I was reading something (sorry, don’t remember off the top of my head where) about the “baffling!” disappearance of people in the younger end of prime earning age from the labor force. My guess is they’re working, but not where the Bureau of Labor Statistics can see them.

  8. Is that any worse than libertarians pretending “free trade” has no costs?

    Free Trade Is Dead

    1. So the United States got rich as a disciple of mercantilism.

      Yes, and so did the British. Both were disciples of laissez-faire mercantilism. You know what mercantilism without laissez-faire domestic economic policies is? A recipe for stagnation and decline.

      Free trade among large nations is not the only route to economic success, but it is the only route available under the regulatory-welfare state.

      1. “Laissez-faire mercantilism”? Don’t hear that term much.

        1. Indeed, but that’s essentially what was at play: within the countries that prospered most under mercantilism, there was a relatively high degree of economic freedom coupled with respect for property rights.

        2. Put another way, mercantilism stifles the exchange of goods, services, and ideas among nations. That’s not necessarily crippling unless the exchange of goods, services, and ideas within the nation is also stifled. Although mercantilism wouldn’t work so great for e.g. Singapore or Hong Kong, regardless of how free the internal economy is, because there is little in the way of natural capital.

          1. Right. I don’t disagree with the idea, just the term itself is contradictory. Internal libertarianism, external restrictionism.

            AnCap Hans Hoppe has said the same thing, essentially, the US would be *relatively* fine under a mercantilist system because we have enough developed industries, people, and natural resources.

            1. Relative to what?

              We’re in a global market now. Going back to a national market would *unquestionably* be a massive reduction in GDP.

              1. Going back to a national market would *unquestionably* be a massive reduction in GDP.

                Not necessarily. If you ramp down domestic economic restrictions slowly while ramping up international trade restrictions slowly, it might not come at any expense to GDP.

                Recall that GDP = C + I + G + (X?M). You can offset a loss in G and/or X?M with an increase in C and/or I.

                1. How about we ramp down our domestic regulations and NOT ramp up our international trade restrictions?

                  1. How about we ramp down our domestic regulations and NOT ramp up our international trade restrictions?

                    What part of anything I said implies otherwise? I’m all for that. You, me, and the 0.5% of the population that’s consistently libertarian.

                    1. Sorry, but I’m not willing to sacrifice free trade in exchange for some sort of vague assertion about domestic deregulation, especially if the person or group promising to do so is an egomaniac with no consistent principles or political philosophy.

              2. Relative to our current lifestyles.

                “We’re in a global market now. Going back to a national market would *unquestionably* be a massive reduction in GDP.”

                In the short run, yes. Not necessarily in the long.

                (This isn’t to say the GDP is actually important, it’s a terrible metric in itself)

                1. Are you fucking insane or stupid? Obviously, a global market is going to be net more efficient than a bunch of segregated domestic markets. In the long run, the most efficient outcome of all would be a global free market with all of the legal institutions we have in the US.

                  In the long run, it is practically definitional that a national market is worse than an international market.

                  1. In the long run, the most efficient outcome of all would be a global free market with all of the legal institutions we have in the US.

                    Yes, with a generous helping of qualification on what “all of the legal institutions” means, this is true. Property rights + economic freedom is a recipe for economic growth and development, regardless of the who, what, or where.

                    In the long run, it is practically definitional that a national market is worse than an international market.

                    I know what you mean, but that’s a misuse of the word definitional. Anyway, a tightly regulated international market is not inherently superior to a loosely regulated national market. In fact, part of what makes free(er) trade effective in the world right now is a disparity of regulatory conditions from nation to nation. An international market is only superior to a national market ceteris paribus. But if you can stipulate “all else being equal”, then so can anyone else. It is precisely because all else is not equal that division of labor functions. A lot of what isn’t equal isn’t likely to change soon.

                    1. Deregulation of our national market does not necessitate closing it to international markets. We’re the ones with the high regulatory burden, not them. We’re the ones trying to export our regulations onto them. They aren’t being forced on us from outside.

            2. Hmm, yes from an “internationalist” perspective it does seem contradictory. From a “nationalist” perspective, it would seem not only cohesive but desirable (“we” agree on certain things that “they” don’t, which leaves “us” vulnerable to expoitation by “them”). Honestly, I’m finding it hard to truly square a strictly individualist perspective with the scale of human population. Internationalism brings its own set of contradictions to individualism, just as nationalism does.

              1. “Honestly, I’m finding it hard to truly square a strictly individualist perspective with the scale of human population. Internationalism brings its own set of contradictions to individualism, just as nationalism does.”

                Well, this is well put. Short of anarchism (which opens a host of other issues), I don’t think it’s achievable. The best compromise I’ve found is simply smaller and smaller nations.

                1. The best compromise I’ve found is simply smaller and smaller nations.

                  I think the federal system as originally envisioned for the U.S. is a better compromise. People of conscience forming smaller and smaller nations without a concrete and lasting defensive pact is a recipe for conquest by more powerful and less conscientious nations.

                  1. I think the federal system as originally envisioned for the U.S. is a better compromise. People of conscience forming smaller and smaller nations without a concrete and lasting defensive pact is a recipe for conquest by more powerful and less conscientious nations.

                    Well, that system failed fairly quickly. I’d be happy to try it again though the Swiss model may be a better one. Still, it seems like you could produce smaller and smaller nations and still maintain defense agreements. Probably depends on the peoples character though.

                    1. And inside each of these smaller and smaller nations they are all going to be internally economically self-sufficient? They’re all going to have a bunch of trade restrictions to (effectively) force the middle class to finance jobs for the lower class? Why is that better than just having a bunch of welfare. That’s basically the ACA writ large – make the middle class pay extra for stuff to finance the consumption of the poor.

                    2. And inside each of these smaller and smaller nations they are all going to be internally economically self-sufficient?

                      … he didn’t say that or even imply it. In fact, smaller and smaller nations would inherently have to cooperate more and more because of increasing specialization.

              2. I’m finding it hard to truly square a strictly individualist perspective with the scale of human population.

                Why is this hard? All men are created equal and are endowed by their creator with certain inalienable rights, and that among these rights are the right to life, liberty and the pursuit of happiness.

                What isn’t scalable about that?

                1. What isn’t scalable about that?

                  It scales just fine to you, me, and Tak Kak here. It doesn’t scale so well to you, me, Tak Kak, Genghis Khan, Josef Stalin, and Muhammad.

                  We already at a point of “not respecting the rights of all men”. We are arguing over positivism; what works and what doesn’t work. If trading not respecting these rights for not respecting those rights results in a different outcome, is it really so unfathomable that some people might prefer that outcome over this one, without libertarianism (or more generally, liberalism) being advanced or hindered either way?

                  You are arguing in your head against arguments I’m not making.

                  1. If you have rights that conflict, then you haven’t defined them correctly.
                    If you can’t respect the rights of all men, then some of them aren’t really rights. That’s why positive rights don’t work. What system of rights “works” is defined by whether it is possible to respect everyone’s equally.
                    If you acknowledge rights that you won’t respect in others then you’ve lost the moral high ground.
                    If you think some things aren’t rights you have to explain why, instead of simply enforcing an outcome that you prefer, absent a moral justification. Can’t extend universal rights to Mohammed? Figure out why.


  9. Is that any worse than libertarians pretending “free trade” has no costs?

    When did libertarians (other than the ones in your head) pretend free trade has no cost? The point is not that there is no cost, it’s that there is a large net gain.

    1. Show me the large net gain. It’s not exactly clear where it’s in evidence, and a number of factors indicate exactly the opposite has happened.

      1. Observe the GDP of the US in the years immediately after NAFTA went into effect.

        1. So NAFTA caused the start of the dot-com boom?

          who knew!?!

          1. Can you mathematically separate the parts of GDP that were caused by the dot-com boom from the parts caused by NAFTA?

            1. No…absolutely not. Which is why I question the implication that the 90s boom and NAFTA are at all related.

              1. GDP isn’t a particularly reliable (or useful) figure but for what it’s worth the CBO estimated that the impact of NAFTA had less than 1% impact on the US GDP increases.

      2. The problem is that “free trade” doesn’t exist anywhere on the global market. No one can point to a net gain, because it only exists in the theory. Its a fantasy.
        Fiat currency and manipulation, the huge regulatory disparities, as well as the hundreds of pages of crony protectionism that makes up our so-called “free trade” agreements is the reality of global trade.

        1. All currencies are subject to manipulation. Fiat currency is not especially unique in this regard. The reason for the rampant inflation we’ve seen in the last 80 years is simple and soon stated: paying for all the free shit that voters want.

          1. “The reason for the rampant inflation we’ve seen in the last 80 years is simple and soon stated”

            Wow. You mean the inflation that drastically ramped up when the dollar went off the gold standard?

            It has nothing to do with the free shit army.

            1. What good is the “gold standard” when the same lying shitheels are in charge of setting the exchange rates? What is $20 worth of gold? It’s whatever the government says it is.

              The largest drivers of increased Federal expenditures are SS + Medicare. To say or imply that the deficits lead the spending is to put the cart before the horse.

              1. You don’t understand “hard currency”. You are thinking of the cost of gold relative to the fiat dollar. If the dollar can fluctuate at will, then yeh, who cares what the “dollar-price” of gold is.

                Hard currency is pegged to a commodity like gold, because it has a universal value recognition. There is a known cost in labor and energy to collect that commodity which keeps the value relatively constant.

                In a hard currency, the “lying shitheels” don’t set the exchange rates….its the other way around. the global value of gold or whatever its pegged to sets the value of the currency.

                1. I think you add some transparency which is sorely needed but it isn’t a cure all for government monetary shenanigans.

                2. Ok, well that’s a different animal. When was the last time the U.S. Government actually adhered to such a standard, honestly?

                  Moreover, what is to stop the government from confiscating privately held gold as FDR did in the 1930s?

                  1. I’d also posit that even if going off the gold standard, as you’ve defined the term, was the enabling factor behind rampant inflation, it was still not the driving factor. Spending drives deficits; easy money/credit only enables them.

                    1. The dollar-pegged-to-gold inhibits the central bank from printing money.

                      Without the peg, the central bank can print at will leading to inflation/devaluation of the currency.

                    2. Ok, so take what I’m saying in context of what you’re saying. Inflation is the cost of the regulatory-welfare state. How do you convince people to forgo inflation without obviously selling the regulatory-welfare state that they want down the river?

                  2. -1971 was the death. The decline starting in 1933.

                    -civil uprising

  10. In the past Trump has openly acknowledged that the cost of some goods would go up under his protectionist plans, just that it would be worth it. He probably doesn’t emphasis that much though.

  11. Show me the large net gain.

    The gains are diffuse. For every former textile worker, there are millions of Americans who benefit from lower costs.

  12. I think an important note that is being missed is that the “consumers” in question aren’t just end-user consumers, but also intermediate producers. For example, manufacturers that buy parts from China, and assemble a finished product in the US. Trade barriers don’t just impact the consumer, they impact the supply chain. Attempting to relocate the entire supply chain to the US would vastly decrease efficiency and make American-made products way more expensive in global markets. That manufacturer that can import parts from China and make a cheaper product can then export that product and create jobs in advanced manufacturing.

    The reality is pretty simple to understand. The fewer barriers to trade there are, the more efficient the supply chain for every product is, the more stuff gets produced, the greater the overall prosperity. Making stuff less efficiently is simply not a good way to enhance the welfare of the least skilled.

    1. Making stuff less efficiently is simply not a good way to enhance the welfare of the least skilled.

      EPA: Fucking the poor and working class since 1970!

    2. “Attempting to relocate the entire supply chain to the US would vastly decrease efficiency”

      that simply isn’t true. There are almost no goods that can’t be made more efficiently in the US. Localization of the supply chain is typically the ideal that manufacturers strive for. It is very cost inefficient to run a global supply chain. the 6-8 week shipping time alone is a huge cost.

      Detroit. There are a gazillion widget makers that supply parts to the auto industry. 10-20 years ago those widget makers were dying out because China implemented huge incentives to encourage the building of manufacturing in China. Because of this artificial market manipulation it was more cost effective to source parts from China rather than buy from the guy down the road. Once China had the plants built and they stole the technology, they removed the incentives and business started coming back to the US widget makers.
      the US consumer gained nothing on that. the only gain possible would be if china lost money on those endeavors. And that is laughable because china was using currency manipulation and funding it off the backs of the clueless US consumer through inflation and debt financing.

      1. the US consumer gained nothing on that. the only gain possible would be if china lost money on those endeavors. And that is laughable because china was using currency manipulation and funding it off the backs of the clueless US consumer through inflation and debt financing.

        I’m starting to get the impression that you don’t understand how debt works.

        China did lose money on those endeavors. That was the entire point of the exercise — to lose money but gain human/intellectual capital (if largely by theft/copying). You said as much yourself. However, the problem is that China failed to foster a sufficiently strong domestic market for those parts. As you also note, the parts manufacturing returned to some degree once China jacked up the prices. They gained the ability to manufacture them without depending on U.S. supplier arrangements but they lost the demand for them by trying to leverage that apparent independence. The debt they accrued didn’t pay off to their benefit, but it also didn’t do irreparable harm to the U.S. because we still have the domestic market.

        The Chinese are awash in debt with little to show for it. Especially when combined with the revanchist Communist leadership that’s taken charge in the last couple of years, they are heading away from the rampant growth of the late 1900s and early 2000s towards stagnation and decline.

        1. “China did lose money on those endeavors.”

          I strongly disagree with that and I think the evidence points to the opposite. China’s largest period of growth, occurred at the height of the protectionist focus, and at the same time the US and EU economies slowed.
          China was raking in money hand over fist and using that to buy up massive amounts of US debt. The US consumer suffered through dollar debasement with higher costs for everything local. Chinese imports are cheap, but local inflation is through the roof. Everything you need (local produced…food, land, commodities) is vastly more expensive and everything you don’t need is cheap (imported manufactured goods)
          the US citizen is poorer now then they were 10-20 years ago. Far less savings, far less retirement/pension, less equity in the house, lower home ownership, while the Chinese are far richer. I think the evidence strongly points to them making out pretty well on the deal.

          1. First of all, the Chinese have been selling off a lot of the U.S. debt instruments they’ve held. Instruments which were created and sold by the U.S. government, not the Chinese government. Again, you imply that the cart leads the horse. We don’t sell buy bonds because the Chinese want(ed) them, we sell bonds because the voters and politicians want to spend more money than the U.S. government takes in.

            Second, I’m talking more about Chinese debt, as in the debt that the Chinese government has directly or indirectly created by its policies. The U.S. consumer’s buying power and savings have been debased by his own actions and those of his government; the Chinese consumer’s buying power was mostly ephemeral to begin with and is starting to evaporate.

            1. We sell bonds because we want to. But the price of those bonds is dictated by global demand. We can’t just automatically sell sell sell. There has to be a market. China artificially fueled that market, driving dollar debasement.

              china’s recent selling is in large part due to the US’s newer policy of no longer caring about dollar debasement. The global currencies are in a race to the bottom to see who can debase theirs the most. Inflation is the best way to get rid of the many trillions of debt. China is selling as much as possible to get the hell out of the dollar why it still holds value.

              1. china’s recent selling is in large part due to the US’s newer policy of no longer caring about dollar debasement. The global currencies are in a race to the bottom to see who can debase theirs the most. Inflation is the best way to get rid of the many trillions of debt. China is selling as much as possible to get the hell out of the dollar why it still holds value.

                Ok, I can see how this might make sense, except that China is ahead of us in this race, and this “newer policy” hasn’t really manifested in inflation numbers yet. We are standing at the tail end of this race, at least as far as sizable nations go, and largely watching the others (China included) run ahead of us. China selling U.S. bonds is more indicative of short-sighted policy (get the money now and don’t wait for the interest) and is not really harmful to the U.S. except insofar as the U.S. government is the (re-)buyer of those resold bonds.

                More concerning, to my mind, is the US’s “newer policy” of pretending that we’re not in stagflation again.

          2. Also, you’re kind of implicitly conceding the worthlessness of the welfare state while also shrugging it off as an important factor. The debt issued by the U.S. government was used to pay for programs like Social Security and Medicare (not to mention government contracting/employment).

            If the issuance of that debt debased the U.S. currency so severely, then it stands to reason that what was bought with that debt was worthless. Otherwise, the debasement would not have been so severe or even would not have occurred. Taking on a debt is not inherently bad; credit is just a tool. A tool that perhaps governments should not have in general, but that is a bit beside the point.

      2. that simply isn’t true. There are almost no goods that can’t be made more efficiently in the US. Localization of the supply chain is typically the ideal that manufacturers strive for. It is very cost inefficient to run a global supply chain. the 6-8 week shipping time alone is a huge cost.

        Even if that was the case (and it’s not) it doesn’t make sense to make everything in the US because of comparative advantage. China has a lot of cheap labor. We can employ that cheap labor to make the stuff we are least good at in China and focus on making the stuff we are most good at.

        Back to the first point, in theory you could make everything very efficiently in the US, if all the inputs and output markets were local to the US. But in reality, a lot of the supply chain for electronics is in asia, and *given* the consideration that your small parts manufacturers are local to asia it is more efficient to locate the next stage in asia. There are many steps in the supply chain. If the people making resistors and capacitors are in asia, and the people making chips are in asia, it is more efficient to locate your PCB board assembly in asia. Even if *in theory* it would be more efficient to assemble PCBs in the US.

        1. Cheap labor is only useful for labor-intensive industries. what are those??? Service, crop picking, lumber/mining/petro, construction. All local. Cheap labor impacts very little of the cost savings of making most goods outside the US.
          Manufacturing is very low labor cost outside of a few industries….textile/clothing for example. the US and most of the western world dominates due to automation which reduces cost and more importantly reduces defects. Labor intensive manufacturing is prone to huge quality issues which significantly drives up cost and no one is backtracking down the automation pathway due to ‘cheap labor’.

          the electronics moved to Asia to be more local to the leading electronics manufacturing hubs in SKorea and Japan. It didn’t move there for the cheap labor….it moved to minimize supply chain cost.

          1. the electronics moved to Asia to be more local to the leading electronics manufacturing hubs in SKorea and Japan. It didn’t move there for the cheap labor….it moved to minimize supply chain cost.

            Which also mostly goes back to the EPA making it much more difficult and costly to do the same things here. It’s not like the U.S. has no silicon, lead, copper, etc. in the ground.

          2. That’s precisely my point. It’s more efficient, due to supply chain issues, to manufacture basic things in Asia, and then do the more complex finished assembly in the US. Throwing up trade barriers would prevent US manufacturers from accessing asian supply chains and force them to either make the entire product for export in China (thus avoiding import tarriffs), or else rely on more expensive US suppliers in the US market.

          3. That’s precisely my point. It’s more efficient, due to supply chain issues, to manufacture basic things in Asia, and then do the more complex finished assembly in the US. Throwing up trade barriers would prevent US manufacturers from accessing asian supply chains and force them to either make the entire product for export in China (thus avoiding import tarriffs), or else rely on more expensive US suppliers in the US market.

            1. Molly, I can’t see what you’re saying

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  15. Let’s not exaggerate! All these politicians did was elide a modifier. By jobs both looters mean GOVERNMENT jobs just as by schools both looters mean GOVERNMENT schools.

  16. I believe in theoretical free trade. However in the actually observable real world there are issues. As mentioned earlier by MikeP2 and others most of these other countries DON’T actually out produce the USA/Europe/Japan, they’re simply cheaper. There are lots of reasons like regulation, their lower standard of living AKA lower wages, currency manipulation etc.

    IMO we should reduce our ridiculous regulations, which naturally helps level the playing field in a positive way. We should then implement what I would consider fair OR free trade, depending on the partners own choice… Which is to say we should have exact mirroring of tariff rates. Many countries DO have far higher rates on our goods than we have on theirs. This is stupid, or as The Donald would say “a bad deal.” Even he is right about something once in awhile! Why in gods name should be allow ourselves to actively be accepting deals that are bad for us as a country, which ultimately does trickle down to individuals as society at large is harmed? I’m a business owner, and I don’t enter into bad contracts because it’s a dumb shit move to go into a bad deal knowingly.

    1. That would be step one. You want no tariffs coming into the US, we get no trade tariffs going into your country. That is fair. The best way would probably be non industry/item specific, like 10% for everything coming in from Mexico if that’s what Mexico wants to have on us, VS 10% for tires and 12.5% for air conditioners etc. The less bureaucracy the better as it leaves less room for cronyism and nonsense. We could insist on it being for ALL products if we wanted to keep it fair and simple.

      That alone would probably help prompt free-er trade both ways, which is good. I still worry that due to the low cost of labor we’d probably still have a big trade deficit. People who ignore this as a problem are dumb. If we had a hard currency, or even weren’t the world’s fiat reserve currency, the trade deficit could not exist as it does.

      Anyone who thinks a nation can exist that has a trade deficit that is larger than the total growth of the economy overall every year indefinitely is insane. By the math that means the country is actually losing net worth every year, and ultimately their capital, and assets, are slowly being owned by foreigners. Eventually that leads to a country that owns no capital, owns no assets, and are essentially slaves to the owners of their debt.

    2. That’s a really bad idea. We’re literally almost at that point in the USA. If we had an even slightly stronger manufacturing base in the USA our overall GDP growth would have been far more robust the last 10-20 years. It’s not like we don’t have unutilized labor capacity, what with labor participation rates the lowest in damn near half a century… So if you don’t want to be slaves it has to be balanced SOMEHOW.

      Also to believe that in the future manufacturing of actual goods will be a completely unimportant factor (the app economy will employ everybody!!!) is also small minded. Physical items, be it food, TVs, cell phones, chairs etc will always consume the majority of our income. They will be manufactured more efficiently and with fewer workers, but they will still be the bulk of the economy in terms of raw dollars and cents. Having more vs less of that take place inside your borders is a good thing, while allowing for valid comparative advantage existing between nations. If Japan kicks our ass at TVs then fine, because we got them beat on furniture, because we have more forest land to harvest wood from or whatever.

    3. But you cannot completely write off doing any manufacturing in a nation of our size. Lichtenstein can because they’re so tiny they can pick a niche (like banking) and stick to just that, but not a country our size. There isn’t enough money in specialty high value industries to completely offset losing the bulk of the manufacturing economy. I read an interesting paper that went through the pure math of the MYTH of the “service economy” and how it can literally never mathematically work because all of those industries simply don’t involve enough money, or enough employees, to actually make up a small fraction of the jobs lost in manufacturing. Even allowing fluff room for unforeseen job opportunities there is an upper limit to how many jobs can just be writing software and/or making lattes for people. If a nation is going into perpetual debt every year in a truly free trade situation then MAYBE some greater measures may be called for.

      In our particular case I take comfort in the rapid rise of wages in Asia and other developing nations which is already making manufacturing in the USA/Europe/Other high wage nations more attractive again. Give them another doubling of wages and things will naturally level back out to far more sustainable levels, even with the international trade system as is.

    4. The question I guess could be is it worth letting our entire economy, and taking on all the social strife associated with the downsides (keeping in mind there are upsides) of blue collar workers lives going to shit, for a couple decade run which will inevitably reverse once Chinese wages reach the point where we become cost competitive again on a large swath of “commodity” manufactured items? I dunno. As a pretty staunch libertarian I really don’t want the government to get involved, but I can also switch into “real world pragmatist” mode and see how letting saaay our entire apparel manufacturing industry disappear from about 2000 through now, only to have it all have to be completely reconstituted in the USA in saaay 10 more years when the math changes kind of ALMOST makes sense. Obviously a lot of people see it that way.

      This is one of the few areas where I am squishy on the real world, ALL THE WAY HARDCORE libertarian mindset. In pre-nuclear days it would have also been a huge threat just for military reasons alone to have lost your manufacturing ability. Since we got the bomb, I don’t think China will be invading anytime soon, but they could theoretically hold us over quite a barrel is less dramatic ways.

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