This article at the Weekly Standard, ostensibly on U. S. debt and Chinese investment, can be summed up in one sentence. The United States is running a very large trade deficit with China.
We might rejoice over our good fortune but for one fact. Since in effect the Chinese are exporting goods and importing employment, we are not all equal beneficiaries of China’s benevolence. If you can figure out a way to help the guy who’s lost his job making tires in Akron and has no real prospects of getting another equivalent job without China ending its one-way autarky, I’m dying to hear it.
.” If you can figure out a way to help the guy who’s lost his job making tires ….”
You can’t. But you shouldn’t beg the question and fail to note the benefits to consumers. Lord know they have needed it. We all know how the corrective mechanisms are supposed to work. But they don’t. Sorting that out rather than jumping on one side or the other would be worthwhile, but I’m not holding my breath
I will say, just as Trump is looking for a breather to sort out immigration we should be looking for a breather on trade. But we can see how pure and principled (snicker) the Dems have suddenly become on immigration despite absolutely Trumpian positions taken previously by Clinton and Obama.
And the band played on…..
There are several problems. First, while benefits to consumers are very distributed the harm to workers is very concentrated. Second, net benefits may not actually be realized at all. A while ago I posted the results of a study of the effects of NAFTA which found that the benefits to the US amounted to .08%. .08% is one part in 10,000 or, said in yet another way, too small to measure.
Yep, and as we have seen with this recent election, the guy in Akron has political agency that China and amorphous US consumers lack. Or, said another way, the theorized net positive economic effects of offshoring don’t matter much if the result is a net negative in terms of harmony in our domestic political community.
I think I’d articulate it a little differently. The suckers are beginning to catch on to the con. They’ve put the powers-that-be on notice that they need to up the ante.
Honestly, I’m not convinced that the powers-that-be can up the ante other than from their own pockets which they will strenuously resist. What good is being a Master of the Universe if your income isn’t 150 times (or 1,500 times or, if you’re Bill Gates 15,000 times) that of the average Joe? I suspect that they’ve created an international order in which the net effect is to transfer wealth from American workers to American elites and people overseas and there isn’t nearly enough consumer surplus in the transfer.
I have no idea who to make sure the guy in Akron gets a decent job when creative destruction occurs. No one else does either. The problem is that it has always been assumed by the pro-market contingent that markets really are magic. Somehow a good job will be created. Maybe in the long run that might be true, but in the short run that guy can end working at a fast food joint, or have no job. It just isn’t trickling down. Those who have been displaced finally decided to vote on their (perceived) economic interests.
Now, the fact that they responded by putting a bunch of entitled rich people from the FIRE sector in charge is another issue. I like to think that is just PT Barnum’s observation at work.
Steve
There’s clearly a difference of opinion among the regular commenters here on this subject. Some think that all jobs are disappearing into the maws of automation and globalization.
My view is that we’re actively blocking the “creative destruction” process you mentioned in your comment. IMO the first line of attack should be either to remove the roadblocks or restore the situation to the status quo ante. If we continue to do that I think we’re both morally and socially obligated to provide those hurt by our preferences with incomes.
The International Federation of Robotics has reports showing that South Korea, Japan, Germany all have 2x the number of industrial robots per 10000 employees as the US (http://www.ifr.org/news/ifr-press-release/survey-13-million-industrial-robots-to-enter-service-by-2018-799/). Those three countries employ as much or more people in manufacturing as a percentage of the workforce as the US.
My conclusion from those two data points is that we could double the number of robots used in the US AND keep the same proportion of people working in manufacturing.
Also, automation vs outsourcing have different effects. Automation keeps the production local, so the city retains a tax base to fund retraining, infrastructure, to offset the job losses and create new jobs. Also it incentivizes suppliers and R&D to stay close by. Outsourcing does none of that, so it can devastate whole communities as whole clusters of factories close and the city with no money to deal with it.
I would add that the top 10 industrial robotics exporting countries are:
which suggests that but for other countries’ nationalism there is probably plenty of room for growth in U. S. robotics exports.
However, that doesn’t tell the whole story. Amazon, for example, makes the robots it uses in warehouse automation but it no longer sells them because it’s using them as fast as it can make them. I suspect that’s true of other U. S. countries.
Taking jobs that should be eliminated by automation and replacing them with manual labor should have been a clue that what was occurring had nothing to do with classical economic theory. As our host has noted, the creation half of the equation has been stifled, often intentionally.
US robots replacing US workers at jobs in US manufacturing facilities should have begun two decades ago. The more automation and technology that can be used to destroy US jobs with other US jobs will increase employment, and it will employ the quality of jobs.
Not all workers are qualified to do every job. Technology will allow workers who would not be qualified for certain jobs to be able to perform them.
Many people who think their jobs are well above the knuckle-dragging level of requirement that the displaced factory worker are sadly mistaken. Many people are only able to do their job today because technology and innovation have created tools and methods that make them seem smarter and more capable than they really are.
Take away the fancy integrated development environments (IDE) and replace them with a text editor, and we will see how many new factory workers are suddenly available for the unemployment lines. Do the same thing with the regular applications but let them code in assembly or be nice and do C.
I am sure that @Gray Shambler knows of a few changes from the “old days” that have made it easier for less capable to become truck drivers, and if he is not old enough, I am sure he knows somebody who is. If nothing else, the electric starter allows the less muscular to get the thing running.
The reason that technology and innovation never have the results predicted by the Malthusians is because their premises are wrong. Robotics and automation will allow more people to do jobs that they would not be capable of otherwise. Some software programmers should be factory workers, and some truck drivers should work in the mailroom, and some warehouse forklift operators should be panhandlers, and …, but they are not because of technology and innovation.
I saw a documentary on the CERN particle accelerator. It should have been built in the US, but the physicists could not show what the the financial gain would be. Because a bunch of eggheads could not come up with a Return on Investment (ROI) on a scientific research project, it was built in Europe.
(To my friends on the Left, I think the Republicans and the Right were the ones leading this effort. I do not have the time to gather names and places to beat them mercilessly, but I hope that you all would take the opportunity.)
One of the scientists explained it this way: When radio waves were first discovered, they were not radio waves because there was no radio. At the time, nobody knew or could have known what would have become of the thing they were studying.
OT: In addition to NASA, the US should have government research facilities. I would have state, regional, and local ones as well, and I would have facilities open to the public.
The US should have the most and best research centers in the world. There is no knowledge too small, and this includes shrimp running on a treadmill.
Power Steering. Power Brakes, GPS, Automatic Transmissions, yes in big rigs, Air Conditioning. All true.