MENU

Reason.com

Free Minds & Free Markets

Trump Launches Solar Panel Trade War with China

Will the economic and social benefits of the solar panel tariffs outweigh their costs? Not likely.

SolarPanelslifedeDreamstimelifede/DreamstimeThe Trump administration is imposing a 30 percent tariff on solar panels and modules imported from China. The first 2.5 gigawatts of imported solar cells will be exempted from the tariff. The tariff will drop 5 percent per year falling to 25, 20, and 15 percent in the second, third, and fourth years respectively. Largely due to the import surge of lower-priced solar panels, 25 U.S. solar panel manufacturers have gone out of business since 2012.

Last year, solar panel manufacturers Suniva and SolarWorld filed Section 201 the Trade Act of 1974 petitions at the International Trade Commission (ITC) arguing that Chinese imports constituted a "substantial cause of serious injury" to their businesses. Interestingly, a Section 201 finding does not require a finding of an unfair trade practice, as do the antidumping and countervailing duty laws; merely losing to competition is enough.

The ITC subsequently determined that the increased imports of Chinese solar panels were indeed a substantial cause of serious injury to domestic producers. Under Section 201, factors supporting a finding of serious injury include idle or shuttered production facilities, layoffs and other termination of employment, and a decrease in the financial performance of domestic producers.

The Trade Act also requires that any action taken by the U.S. government must facilitate a positive adjustment to import competition and provide greater economic and social benefits than costs. It is worth noting that the ITC issued a report last year that found that removing current significant import restraints, e.g., tariffs and quotas, would increase annual U.S. welfare by $3.3 billion per year by 2020.

Will solar tariffs save or create American jobs? The Utility Dive industry newsletter reports:

[The Solar Energy Industries Association] estimates the job losses will number 23,000 for this year, and result in "billions lost in investment." SEIA President Abigail Hopper condemned Trump's decision in a statement.

"While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs," she said.

The majority of the current 260,000 solar jobs are in installation, with only 38,000 (or 14%) in manufacturing. Moreover, the case threatened two-thirds of future utility-scale solar installations set to come online in the next five years, which is the biggest and most vulnerable solar market.

It is true that the Chinese solar panel manufacturers have received lots of subsidies, so too has the U.S. industry. Overall the U.S. solar power industry has benefited from tens of billions of dollars in subsidies, loan guarantees, tax credits, and state renewable portfolio standards that require utilities to sell a specified percentage or amount of renewable electricity to its customers. Note again that the ITC did not find that the Chinese solar panel companies are "dumping," that is, selling their products below their manufacturing costs.

Analysts like Information Technology and Innovation Foundation's Stephen Ezell warn that the Chinese government is pursuing a policy of "innovation mercantilism" that aims to make China "competitive across virtually all advanced-technology industries and that the techniques it is using to become so pose a direct, even existential threat to America's high-tech industries along with foreign counterparts." Ezell further asserts that "China fundamentally rejects the notion of comparative advantage and instead seeks absolute advantage." If that's true, should we be worried? Not really.

Basically, the idea of comparative advantage is that each country should specialize in producing and exporting only those goods and services which it can produce more efficiently (at lower opportunity cost) than other goods and services (which it should import). Nineteenth century economist David Ricardo illustrated comparative advantage using the example of wine and cloth production in England and Portugal. As Policonomics explains:

Portugal can produce cloth and wine with fewer inputs than England. However, for Portugal the opportunity cost of producing wine is lower than that of producing cloth, whereas, in the case of England the opportunity cost of producing cloth is lower than of wine. If Portugal specializes in producing wine and imports cloth, and England specializes in producing cloth and import wine, both countries could make the most of its comparative advantage.

If Ezell is right, China is somehow seeking to incur no opportunity costs, that is, the country's leaders apparently believe that they can create a world in which China produces everything while giving up nothing. Really? Perhaps when robots make everything for "free" then no trade between countries or people will be necessary.

The current handwringing over China is reminiscent of the Japan As Number One: Lessons for America hysteria of the 1980s. It turned out that Japan's rapid growth was was driven by financial leverage and overinvestment. Property values and share prices soared. The Nikkei Stock Market Index peaked at over 38,000 points in 1990 and declined slowly to under 8,000 during the Great Recession. It is currently at around 23,000 points. Since the mid-1990s, Japanese GDP has grown by less than 20 percent whereas U.S. GDP rose by nearly 60 percent.

Like Japan before it, China is currently pursuing credit-fueled growth as it practices "innovation mercantlism." The ultimate results are likely to mirror what has happened to Japan.

Will the economic and social benefits of the solar panel tariffs outweigh their costs? It's hard to tell for sure given the labyrinthine complications of energy and tax policy. Let's just get rid of all subsidies to all energy technologies and see if solar power advocates' claims that it is as cheap as conventional power are true. In the meantime, the Trump administration's new tariffs will not save or create more American jobs; it will do the opposite.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • AlmightyJB||

    Solar panels? What about plaid pants?

  • Tony||

    Highly not recommended for Trump's body shape.

  • ||

    Highly not recommended for Trump's body shape.

    Huh? Trump's body shape is *exactly* what plaid pants were made for. It's like that craze from the early 90s where people who didn't want you to look at the shape of their legs wore Zubaz pants. Or the way people grow beards that send the clear message 'my face looks better covered by unkempt hair'.

  • Trigger Warning||

    Or the way being a douche on the Internets says "neener neener neener."

  • ||

    Exactly.

  • BestUsedCarSales||

    My face does look better covered with unkempt hair. I'm just working with what god gave me. Why you got to fucking hate?

  • AlmightyJB||

    What are you trying to hide!

  • Don't look at me.||

    Dude, you don't want to know.

  • AlmightyJB||

    How about these

  • Francisco d'Anconia||

    Looks good on you hough.

  • Francisco d'Anconia||

    t

  • Incomprehensible Bitching||

    #WorseThanCankles

  • Bubba Jones||

    It's possible that China's "opportunity costs" approach zero.

    Even if they don't, then their decision to produce wine is an indirect subsidy of Britain's cloth.

    I think they should pay more attention to the jobs being lost in installation if they are going to do this kind of math.

    Maybe the installers need better lobbyists?

    After all, it was the federal employee union that killed the shutdown...

  • colorblindkid||

    Environmentalists should applaud this measure, however. Solar panels manufactured in China have a much larger CO2 footprint than ones produced here, even before accounting for transporting them across the ocean. Now if only they let mines open up in America to get rare earth elements and other raw materials.

    Even a moderately regulated mining operation here is far cleaner and better for the environment than the toxic mines in China and third world countries where we have to get all our raw materials from.

  • Trigger Warning||

    Ron. Title. Not cogent.

  • AlmightyJB||

    Declares...On?

  • Trigger Warning||

    All the woke kids know Trump is launches.

  • Ron Bailey||

    TW: Launch: (5) to set going; initiate:

  • ||

    Trump's Launches = Trump is Launches? Launches belonging to Trump?

  • AlmightyJB||

    Lucy would have caught that.

  • Ron Bailey||

    TW & mc: Grrr. Sometimes it goes in one eye and out of the mother. Thanks.

  • Trigger Warning||

    RB: wasn't hating. Great post, extremely cogent.

  • Entropy Drehmaschine Void||

    Solyndra!

  • Palin's Buttplug||

    The Con Man also went after washing machines:

    That new washer could be as much as 20 percent pricier because of new Trump tariff
    Goldman Sachs is now forecasting an 8 percent to 20 percent increase in the price of a new washing machine, thanks to new tariffs.
    The new tariffs are being lauded by U.S.-based appliance manufacturer Whirlpool, which has lobbied for more trade protections.

    CNBC

  • BestUsedCarSales||

    Yeah, I believe there was a whole article about this a month or so ago.

  • stuartl||

    All part of the master plan to save coal.

  • Rev. Arthur L. Kirkland||

    How dumb would one need to be to expect a president to reconstitute economic fundamentals in a manner enabling half-educated, superstitious, bigoted goobers from our depleted backwaters to prosper at the expense of advanced-degreed, accomplished residents of our modern, successful communities?

    Ask any ardent Trump supporter.

    Or you could just look at a Trump supporter.

  • Red Rocks White Privilege||

    half-educated, superstitious, bigoted goobers from our depleted backwaters

    But enough about Silicon Valley.

  • trashdoveluvsu||

    What an awfully verbose way to stand up and proclaim "I'm a myopic bigot".

  • Rockabilly||

    When Trump goes to Davos...

    How Donald Trump Could Could Shake Up Davos

    https://www.youtube.com/watch?v=JTDcpJEqLhw

    Trump is like the Rodney Dangerfield character in Caddyshack.

    https://www.youtube.com/watch?v=ZW-enbDAsAg

  • Rockabilly||

    Trump does Caddyshack

    https://www.youtube.com/watch?v=nhRCD6MQ0Ps

    fuckin A !

  • Hugh Akston||

    Interestingly, a Section 201 finding does not require a finding of an unfair trade practice, as do the antidumping and countervailing duty laws; merely losing to competition is enough.

    Daaaaaaaadddddyyy!! the other kids are better than me! Make them go home and give me the first place trophy!

  • Diane Reynolds (Paul.)||

    Why don't we just give everyone a trophy, all the time?

  • Hank Phillips||

    If Communist China can no longer dump slave-produced panels here, it will have little incentive to have its brainwashees shrieking like Millerites about impending doom and Global Warmunism as temperatures cool. That alone would make the policy more bearable.

  • JoeBlow123||

    "Like Japan before it, China is currently pursuing credit-fueled growth as it practices "innovation mercantlism." The ultimate results are likely to mirror what has happened to Japan."

    I would like to think this is true. And it probably is. But what if it is not? Maxims are true until they stop being true and we cannot model the future on events that have never occurred, a lesson the quants at Long Term Capital Management learned hard.

    China has been engaging in a tremendous push to crush competition and steal their way to the top in nearly every industry, blackmailing countries for market access to China by forcing them to transfer technology and knowhow. They fight dirty and as a giant cartel with the CCP in charge, crushing foreign competition and forcing them to pay tribute to the CCP God Emperor. Their humongous trade surplus is a testament to their ability to transfer wealth, knowledge, power, and technology to their country.

    The Chinese government is incredibly duplicitous, they are waiting in the wings for the West to implode and slowly eating away at the liberal world order that was established first by the UK and then by the USA. I am hoping they democratize first and join the club, but we have been waiting for them to do this, predicting they will since Tienanmen Square. It is an implied theory that you become rich then democratize. Hasn't happened to China yet, they appear to give approximately zero about political rights in that country.

    * continued below *

  • JoeBlow123||

    The West and companies keep debasing themselves, transferring technology, and compromising on principles such as freedom of expression in order for the mirage of market access to the billion consumers in China. Despite the fact China engages in massive corporate espionage to transfer technologies to their companies. And the CCP keeps using this to keep engine China rolling while companies continue to beg for market access that NEVER DEVELOPS.

    I hope their economy implodes and it forces their government to liberalize. Until that happens I do not like trusting the fact that just because it happened to Japan in the past it will happen to China.

  • Sevo||

    Joe, you keep proving yourself to be a mouth-breathing ignoramus:
    1) "China has been engaging in a tremendous push to crush competition and steal their way to the top in nearly every industry, blackmailing countries for market access to China by forcing them to transfer technology and knowhow."
    You mean offering value which others buy? That sort of "blackmail", you idiot?

    2) "The Chinese government is incredibly duplicitous, they are waiting in the wings for the West to implode and slowly eating away at the liberal world order that was established first by the UK and then by the USA."
    Tin foil hats just for you, Joe! Aisle #6.

    3) "The West and companies keep debasing themselves, transferring technology, and compromising on principles such as freedom of expression..."
    Uh, well, perhaps, if purple is on Wednesday.

    What an idiot.

  • Old Mexican's Speedos||

    You're not the only one dealing with imbeciles, Sevo. Believe me, I've read worse. Much worse.

  • JoeBlow123||

    *shrug* I do not like the Chinese government. They do not care about democracy, liberalism, or any of the other things I find good about our world. I also do not particularly like the idea of Western trade enriching a government that is stealing technology and training to destroy the American military.

    But hey, they sure make a bunch of cheap shit for us so yeah they must be a fantastic bunch right Sevo! Nothing is more important than cheap shit and $1 fidget spinners, glad I can afford enough for every finger and toe I have thanks to the CCP!

  • Sevo||

    Idiot proving to be idiot:
    JoeBlow123|1.24.18 @ 12:37AM|#
    "*shrug* I do not like the Chinese government. They do not care about democracy, liberalism, or any of the other things I find good about our world."
    I don't either. So what?

    "I also do not particularly like the idea of Western trade enriching a government that is stealing technology and training to destroy the American military."
    If you would prefer to be considered other than an idiot, you might try posting comments that aren't idiotic, idiot.

    "But hey, they sure make a bunch of cheap shit for us so yeah they must be a fantastic bunch right Sevo! Nothing is more important than cheap shit and $1 fidget spinners, glad I can afford enough for every finger and toe I have thanks to the CCP!
    Fucking idiots like Joe would much prefer people pay $10 for those things (which they wouldn't do) since Joe is a fucking idiot!
    Hey, Joe? Two days with the Fucking Idiot Award! You must be proud, beating out SIV, turd, Tony, mike, and other real contenders.
    Grow up.

  • Sevo||

    Or, probably STFU.

  • JoeBlow123||

    Do any prizes come with this award and if so how do I go about collecting them?

  • SIV||

  • SIV||

  • Sevo||

    Yes, there are reasons it's effectively zero:
    1) Production requires what China has in abundance
    or
    2) China's government wants to subsidize US solar panel purchases.
    Either way, Trump blew it.

  • Sevo||

    Sevo's Law really doesn't apply here; the market is already screwed five ways to Sunday. But adding more screwishness isn't helping anything.
    Trump screws the pooch.

  • Chrisward||

    Thanks for the information.

  • Chrisward||

    Thanks for the information.

  • vek||

    Ya know, I don't really like stuff like this... But I think a lot of libertarians really do get lost in theory too much sometimes on this issue. When you have a state actor, like China, who DOES have a sovereign currency, and IS intentionally manipulating their currency and markets for geo political reasons... Well traditional free trade theory just doesn't cover all the angles at play. It also leaves out the power politics angle. This isn't just commerce for them, it's a form of war in peace time.

    For instance, in China their opportunity loss is essentially zero. A subsistence peasant farmer who perhaps generates $1,000-2,000 a year in productivity feeding their family. That's their alternative. If they can subsidize production to the tune of say $2,000 (or even $5,000) a year and turn that peasant into a factory worker generating $10,000 a year in productivity then they have won. Using the above made up math, they could subsidize by 50% and STILL be coming out way ahead as a collective group. Remember they ARE collectivists. That is the game they're playing, and the math pencils out for the collective group as a whole.

    If they don't subsidize so they can export, and said farmer keeps farming rice, then they're worse off. They're doing an "if you build it they will come strategy" more or less by building out production capacity ahead of time knowing they can export if they subsidize it once it's going.

  • vek||

    Also, this isn't just Mr. Wang Chang doing it just to make a buck. This is the STATE doing this as a political power play. They don't care if industries are losing money for 10 years like a private company would, they just care that they're literally destroying their foreign competition so that they will be in a dominant position in an important industry in year 11 of the plan. The fact that the economics worked out okay in the long run is incidental to them in some cases, like with steel, semi conductors etc. The destruction of the foreign industry was every bit as much of the goal as the growth of their own, because this leaves them with POWER over the other country now.

    This is why governments have always played at this game in strategic industries. I don't know that there is a perfect way to combat this sort of shit, but I really don't think laying down and letting a hostile foreign government kick your entire economy (they're going after almost every major industry) in the nuts is a great way to deal with it either. This type of stuff will probably calm down as they become more dominant globally, as there are diminishing returns to this type of strategy at a certain point, but that will take a lot higher wages in China and a number of years to happen IMO.

  • Jordan||

    I don't know that there is a perfect way to combat this sort of shit, but I really don't think laying down and letting a hostile foreign government kick your entire economy (they're going after almost every major industry) in the nuts is a great way to deal with it either.

    Paying somebody to take your products is not what I would consider kicking them in the nuts.

  • soflarider||

    You're paying someone to take your products (i.e. selling them cheaper than a competitor) as a way of kicking your competitor in the nuts.

  • vek||

    You clearly missed my entire point about it being about more than the dollars and cents. In America, and probably the western world in general, we have bought into certain types of thinking so hardcore that we seem to not be able to conceive of there being other motives.

    Mercantilism has worked throughout history in KEY INDUSTRIES, because key industries matter, and are politically important. Egyptian grain allowed the Roman Empire to exist. No grain, no Rome, no empire. Today oil is a decent fill in in some respects. But so are many other massive industries.

    The Chinese are not thinking in terms of next quarters profits like the short term thinking Wall Street CEOs are. But that does not mean their thinking is wrong. As I illustrated above, even with massive subsidies their country can still benefit versus being a peasant farmer. That they ALSO get to knock the wind out of their main geo political opponents, all the better!

    In pure Wall Street dollars and cents this stuff doesn't make a lot of sense, but in a long term power play scenario it VERY MUCH DOES. And that is their thinking. If you can't grasp how things like controlling the global supply of oil, or steel manufacturing or WTF ever is important beyond cash then you need to think it through further until you get it.

  • vek||

    Personally I think we should threaten across the board high tariffs on all Chinese goods unless they ACTUALLY open up their market to real foreign competition. Which they have certainly not done up til now. It's like what we did to Japan in the 1800s, but without the ACTUAL cannons. LOL

    We have the power to force them to actually trade freely, but none of our politicians had the brains/balls to demand it of them as a precondition BEFORE we became so "dependent" on them... Thing is we're not actually dependent on them, they NEED US, we don't really need China. We can get cheap labor from anywhere else in the world. If we cut off China we'd just get cheap Indian bobbles instead of Chinese. If they lose us their economy tanks. That's why in the game of negotiating they would 110% be the first one to flinch and bend to our demands. Then we could have actual free trade and see where everything lands then. It would theoretically be best for both of us in the long haul anyway!

    The fact that previous politicians didn't do this infuriates me. If I were president I could negotiate the broad points in an hour and hand it off to the lawyers to fill in the legalese. It would be that simple. They know they need us more than we need them. The piecemeal nature of stuff like this solar thing is dumb and does nothing, it needs to be an across the board new deal.

  • JoeBlow123||

    You did a fantastic job of explaining all of this. Thumbs up. I was much more animated in my attempt to describe what you did in a much more calm and evenhanded manner. Mostly it is because I am continually disgusted/amused by every Western leader traveling to China to kiss the ring and beg for market access. Macron just did it, Merkel has done it, we have done it, May and Cameron did it, everyone does it. Everyone goes to beg for market access and the Chinese do absolutely nothing. But hey *insert next UK PM* maybe next time you can convince the CCP to finally give you market access if you beg hard enough! I find it an absolute sham they are in the WTO too. So they officially have tariffs at the near zero range in line with WTO guidance... what about non-tariff barriers and currency fixing? Sham.

    I am not sure it would be easy to negotiate a deal quickly, there are a lot of forces that like the status quo and do not what to offend the Chinese. Facebook, Google, France, Germany, UK, Siemens, Apple, whoever. The Chinese can just lean on someone else to hurt any attempts to unify against their practices, it is a real Prisoner's Dilemma. They do this continually with ASEAN with all the junk in the South China Sea, splinter resistance by attacking it piece by piece or waiting out a dangerous situation (like the Philippines with the UN ruling on Scarborough Shoal and SCS water the Chinese are claiming is territory of China) for a new retard to take over (Duterte in this case).

  • vek||

    Thanks!

    Yeah, it's just a mess. The fact is the USA, or I guess the EU as an entity, are the only two that actually have the oomph to pull it off. It basically just takes throwing the "nuclear option" out there, publicly, and knowing that they will back down because they have no other choice. When you have all the cards, like we do as the biggest consumers in the world, you can demand whatever you want.

    China has dick all nothing we need. There are billions of impoverished people in the world for cheap labor to replace them. Western politicians have become so scared of ever offending foreigners or not looking morally superior enough that we constantly ignore our own interests, when we could easily get our way.

    I'm not saying we should be raging dicks, but there's nothing unfair about demanding equal market access as a precondition of trade with some other country. We can and should still be fair and reasonable in international dealings, but the status quo in recent years has been to do things that are detrimental to our interests instead of fair for both parties... That shit has to stop.

  • Leader Desslok||

    Well traditional free trade theory just doesn't cover all the angles at play.

    That is exactly the problem. Free trade theory only works, and assumes that all players will be honest and on the up and up. China is anything but honest and up and up. There are far to few people, whether it be Joe citizen or policy makers, who understand that.

    Everything China does trade wise is about one thing only, to make China in to a superpower and to "erase" the humiliation they feel after their collapse as a great power in the 1400s.

  • vek||

    Yup. It is actually far too simplistic in a lot of its assumptions, especially in the modern world.

    Where is the bit in free trade theory where it EVEN MENTIONS THE CONCEPT OF UNEMPLOYMENT???

    It doesn't. Theory here assumes 100% employment at all times. Why? Probably because back then it basically didn't exist. If you couldn't be put to a higher use, you subsistence farmed. Well that's not a very viable option nowadays is it? So now you have to factor that into the math.

    What about welfare for the unemployed? If you save 20% on a bobble by importing it, but it loses a person a $15 an hour job at the factory (or call center, whatevs), and now instead of being a net tax payer he is a net drain of a couple grand a month... Was that 20% cheaper bobble actually cheaper... Or did it in fact cost you twice what the original item produced locally did?

    It's more complicated than the original theories from the 1700s/1800s accounted for.

  • Leader Desslok||

    Where is the bit in free trade theory where it EVEN MENTIONS THE CONCEPT OF UNEMPLOYMENT???

    It doesn't. But nor is it supposed to. You are confusing free trade and economics. While related the two are not one in the same. Trade is simply a part of a nation's economy and free trade is simply the most efficient way of partaking in it. But some times, as you pointed out, the cost of trade are not worth it. That is were political economics comes in.

    However, taken on the whole, more often than not free trade is still the better economic policy.

  • vek||

    I agree with what you say generally. But the thing is when talking about trade economics has to come into play, while when talking about economics you don't necessarily have to talk about trade. One is a sub section of another, so talking trade without overall economic impact seems pointless since the economic impact is what people are really interested in.

    You seem to acknowledge reality, but many don't. I get very frustrated by the people who say that it is IMPOSSIBLE in ANY situation for trade to not work out in the best interests of both nations. It's simply not true. Math says otherwise, as do many other "social cost" issues etc. I agree free trade is generally the way to go, and usually will work out better for both versus managed trade...

    The problem is people confuse managed trade, like with China, with free trade. When one partner is rigging the system specifically to benefit themselves, and the other isn't even looking out for their own interests, it is easy to get "taken advantage of" in a sense. It's kind of like how government spends willy nilly to provide services compared to a private company, they also don't negotiate trade deals that are good for the country either! It's a combo of greed and incompetence IMO. This is what our politicians have done to us. I have no doubt true free trade with China would be FAAAAAR better for the USA than the status quo we have now, which is why we need to use our leverage to force them into it.

  • vek||

    I used to be a 1000% hardcore free trade proponent, but I've always been very math centric in my thinking... Eventually I actually thought through some of the math, and related things like how money recirculates through local economies, etc and basically came to the conclusion that there is a point beyond which (in the modern world especially) you can in fact lose overall prosperity and income by buying cheaper things. Not ALL trade is a bad deal of course, if you reduce costs by 90% by importing it's almost certainly a good idea to do so, but the stuff that's on the margins can in fact end up negative.

  • Sevo||

    "That is exactly the problem. Free trade theory only works, and assumes that all players will be honest and on the up and up."

    No, it doesn't.
    It has been shown that any tariffs harm both parties, even unilateral tariffs.

  • vek||

    Horse shit dude. I can run through simple math that shows otherwise when you're talking about overall economic impacts, which is what 99% of people care about when considering trade.

    If a company starts manufacturing an item abroad instead of domestically because it saves them 20% on production costs (a figure that is quite accurate in many industries after factoring in shipping/logistics costs, etc), the costs to them and the consumer saved are no where near as valuable to the overall economy as the 80% of the production cost that now went overseas. The small savings simply does not make up for it. $20 invested as brilliantly as possible is not able to replace that value. Sure it will be invested in some other good/service, but it's just not enough to replace the value lost.

    Also, as mentioned above, IN THE REAL WORLD this often causes unemployment, welfare spending, social problems out the ass, and many other issues. The whole thing assumes 0 unemployment and/or somehow these people moving up to something MORE valuable than the job lost. This simply has not happened in the real world. There aren't enough IT jobs to replace the millions and millions of jobs lost in advanced economies. Hence in the real world we've just created millions of fewer labor force participants, a reduced tax base, increased welfare spending, and just generally sucked wind.

  • vek||

    There are plenty of situations where outsourcing makes sense, like when you can manufacture something abroad for 20% of the cost of making it here... But very few items are that much cheaper to make overseas. Some DO exist where there are high man hours required, low levels of automation available, etc that makes it a big cost difference, but just not that many things fit the bill. You can go buy numerous brands of Made In USA jeans, shirts, jackets, etc for a couple dozen percent more in terms of price compared to cheap imports, and garments are notoriously labor intensive and un-automated. Many things are the same cost or lower to make here, which is why they are. Things like molded plastic goods, much of which is still made in the USA. Think Rubbermaid stuff.

  • vek||

    It is often not a big advantage like people imagine if you actually read industry info as I have done at different points. If Rubbermaid thought they could shave 10% off of manufacturing costs they would probably outsource the shit... But it would be such a small cost savings over all that it would in fact have a negative overall impact on the US economy. It's that simple. This has happened on the scale of millions of jobs, and it has very much hurt our economy. If we'd only exported stuff where the advantage was huge it wouldn't be an issue, but major companies have done it even where the gains are negligible just to squeeze a few pennies extra profit out of things, and those job losses have never been replaced. That's reality.

    This nothing that something either ALWAYS has to be the best, or ALWAYS has to be the worst is fucking retarded. The fact is that it depends from case to case.

  • I am the 0.000000013%||

    Money that isn't invested in solar panels in the USA will be invested somewhere. Since solar panels aren't exactly a barn burner product and they are easily commodified, letting China prop up a long term loser like solar panels is a good thing for the USA.

  • madam margaret||

    ricardian arguments only work if both players play fair. china is a government controlled business where the price has little to do with the cost to produce… they are a 'dumper'. trade war is the only fair response to dumpers.

  • joooooO||

    Species of Various insects and Pest Control Method Make it clear some pest in company of control pest http://controlpest.org/

  • joooooO||

    Best insect control company https://elnqaa.com/

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online