Look at the photo heading this article and understand what McCarthy fails to — Trump's business buys imported furniture and goods for the hotels it manages. When he built buildings, he used scab immigrant labor and Asian steel. The organization hires foreign labor for hotels/resorts, too, using a guest-worker visa program. Why do Republican rubes not know this? Why does the media fail once again?
5
There are a other reasons for keeping manufacturing in the USA aside from the high probability that the think they are racially superior Han Chinese will attack the rest of Asia and us American, Australian, New Zealand ... "barbarians" in a few years and we will not be able to defend ourselves if all our factories are in China. And that if we do not have a strong middle class Americans will see no reason to fight Chinese aggressors who are no worse than our own greedy treasonous American 1% who by then will have open borders shoved 90% of Americans into poverty. Specifically addressing woodyrd who seems to think that repeating magical 'innovation' platitudes is sufficient. Much "innovation" takes place on the factory floor where engineers "system engineer" how to make lab inventions durable and cheap enough that they can be produced efficiently and in enough quantity so many can benefit from them. Second there is little logical motivation for taxpayers to "invest" in education, research grants, and provide subsidy incentives to new industries, OR FOR AMERICAN STUDENTS TO EVEN STUDY STEM SUBJECTS when the pay off of jobs and tax revenues will be lost - when for example the latest efficient solar panel technology is unbolted from the floor and shipped to China within several months of a US factory being built. This by the way occurred regarding technology invented at Colorado State University at the cost of many millions in research grants and subsidies to build a local plant.
2
Yes, this article is a breath of fresh air because economic efficiency is not equivalent to equitable distribution. But I do have issues with McCarthy's analysis. He downplays the impact of technology on jobs. Even if the US were a closed state and had no outside trade, big US corporations will NOT generate enough employment for industries that are becoming increasingly automated, especially those in the rust belt. Labor doesn't generate economies of scale as technology does.
Moreover, as my economics classes have taught me, free trade increases social welfare in the economy as a whole, but domestic consumers gain at the cost of domestic producers. This is not all that bad because countries *should* be producing goods over which they have a comparative advantage. Tariffs are a short-term solution for a new and automated reality. We need to retrain producers and incentivize them to adapt to a new economic landscape. This requires significant investment in public education, which the GOP isn't talking about at all!
4
The big lie "if we dismantle unions, lower corporate taxes, starve government of funding and offer free trade it will create more jobs". How has that worked out for you America?
Though to be honest I am pro-free trade but it was never about bringing more jobs to the US it's always been about exporting jobs to lower wage nations and taking advantage of cheap labor. Ask yourselves why there is no free movement of labor? Always.
6
Wow. I am surprised that the Times published this op-ed. But I find it so refreshing. Thank you New York Times' editors for giving this issue some light, for offering an alternative, unorthodox voice on this overlooked debate. I wish the Times would really give voice to more dissenting points of view. So much of the content is so predictable. I feel pleased by seeing this piece in the New York Times.
11
Tariffs on Chinese metals, yes. But no to tariffs across the board on imports from allies with whom we've had satisfactory and mutually beneficial trade agreements. There is every reason in the world to maintain trade as usual with Mexico and especially Canada.
It's par for our economic course that Mr. Trump himself thought buying cheaper imports was “the American way” when he bought $350 million-worth of Chinese aluminum for the Trump Hotel in Chicago and tons of steel for construction of other properties.
https://aflcio.org/2016/10/12/six-facts-donald-trumps-use-chinese-steel
(btw, are his brand ties still arriving from China?)
Our “do what I say, not what I do” protectionist, duplicitous president needs to throw away his numb-skull campaign promises (bring back coal and say Merry Christmas) and pay attention to our most precious resources – science, technology, research and development, education, climate, environmental treasures (like our now-battered and at-risk national parks) and innovation.
Tariffs can’t protect our future.
2
The Tariffs are just another ‘Look over there, don’t look at Russia’ side show. Instead of tariffs, Trump could of announced that the US will invigorate the economy with a mass fast rail system and use only
domestic steel as part of his ‘America First’ program. Regional
towns could be linked, workers could go from home to work enjoyably, small towns could prosper. The problem is that the US lacks the technology and intellectual capability, and the will to catch up with Asia and Europe without having to shop abroad for
all the components.
2
Regressive thinking at its best! Progressive thinking is training people who lose their jobs in a very competitive and dynamic global economy. There is no good argument for protectionism. National security? Seriously! Future wars will not require much steel or aluminum. this is clearly about political gain at the expense of the country. Mr. Bush put on tariffs too. It resulted in a loss of 200,000 jobs. China is not a major exporter of steel, yet the buffoon US president is always citing them. Similarly, picking on our allies is definitely not good for nationa security. This is all nonsense!!
2
Yeah,sure; Trump's tariff is to protect the middle class. Right; and Nixon was really the defender of the "Silent Majority."
Ha! A Conservative dares to claim that they act to defend the middle class. That's rich. In the six decades I've followed American politics, Conservatism has always, in every instance and iteration, defended the wealthy and afflicted the rest. The Golden Rule of American Conservatism is to protect those with the Gold.
This nonsense about the benefits of economic nationalism sounds great...as long as you ignore the consequences that have followed whenever the policy has been adopted in the past.
You make as much sense as the Orange Underwear Stain, proclaiming "Trade Wars are Easy to Win."
Idiots both. Conservatives seeking to 'protect American Industry' gave us Smoot-Hawley, which not only exacerbated the Great Depression but also led directly to World War II. Trade wars produce real wars; look it up.
Anyone who ignores history gets to repeat it's hardest lessons.
4
There's one glaring error here which nullifies everything in the article.Despite Mr McCarthys claims, free trade did not buildup the Peoples Republic of China while hollowing out the factory towns that made America great. That outcome is almost entirely due to the fact that the factories of America became old, labor intensive, obsolete and economically unviable. China on the other hand has been able to build modern up to date factories during the last two to three decades. That's the stark difference.
4
ummm. True - free trade did not build up China's economy. China relied on well-designed industrial policies, with the goal of acquiring the means of production -
consistent with their Marxist tradition. Our neoliberal free trade policies gave China every opportunity to capitalize (sorry) on our eagerness to trade short term profit for long-term economic well-being - consistent with our Capitalist tradition.
McCarthy's point is that our neoliberal free trade approach to globalization is exhausted - socially, politically and economically.
4
Economists know everything after it has happened, not before.. fact is, this may be good for the US steel industry, regardless of the blow back from other countries. No other country but the US has no protections to its base industries. Free trade globalists do not believe in sovereignty of nations, only capital controlled by investors foreign and domestic, without difference. So, they do not care if your country has environmental, labor or such regulations, race to the bottom fore everyone but them.
3
anyone who uses the terms free market capitalism and economic nationalism as arguments in favor of the same thing simply does not know what he or she is talking about.
This would make perfect sense if we were an economy like Uruguay or Zimbabwe. Under-resourced, lacking education and research, at the mercy of distant powerful nations. In the 1800s the US was just such an economy. It has no relationship to where we are today.
Why don't Democrats kindly ask the European nations to take down their tariffs on US goods? If the lack of tariffs is so good for an economy the Europeans will thank them.
4
Excellent observations. Basic infrastructure is crucial to national defense and competing with planned economies is not free trade.
3
With regard to major changes in foreign trade, I don’t think it’s surprising that the question of whether the prior conditions are seen as the status quo or the subsequent conditions are seen as the status quo seems to depend on who benefits.
1
The free traders ignore the social cost of outsourcing jobs. As the author states it is only the unit cost (for example to make a washing machine) that counts. When workers in Indianapolis lose their jobs to Mexico, there is not just lost income to the individual worker but also a hollowing out of their local community.
If a brand wants to sell in the US, then that company should be required to make at least 75% of the product sold here in the US. On that basis, the recent tariff on LG washing machines was overdue. If LG prices increase, then GE, Whirlpool and Frigidaire (all made here) will replace the units no longer competitive. However, LG and Samsung announced plans to build factories here - a big win for US workers.
Both Mercedes and BMW have major production here and BMW exports more than half of their output. Why not Audi and Porsche?
Access to the US market has a cost - make most of it here.
7
Mr. McCarthy’s 2nd point of this article, that economic nationalism is required for the resurrection of the middle class, fails to recognize that it was UNIONS that created the middle class. There is nothing about manufacturing jobs that inherently mandate that they pay a higher wage, than let’s say, service jobs; it’s that these industries have been previously unionized - period.
It’s the demise of unions that has shrunk the middle class, not the demise of manufacturing jobs. It has been the conservative/Republican priority over the past 40 years to crush unions with so called “right to work” laws which have decimated unions - and with it the middle class. If we had strong unions in ALL job sectors, we would have a stronger middle class. There is no reason why service jobs, that require a high degree of customer service, a valuable skill, shouldn’t pay more. It’s just a lack of strong unions to represent the interest of workers that keep workers in those unrepresentative sectors low wage jobs — they are not necessarily low skill jobs. In fact, an argument could be made that they require a higher skill set than most “traditional” manufacturing jobs.
9
If we had strong unions in all sectors, we'd be even less competitive than we are now. No one has a right to a job and certainly isn't entitled to the salary they desire. Quite a few jobs don't justify much in her way of salary at all. How much should someone make stocking shelves, "patrolling" a mall, changing oil or filling g potholes?
1
In addition, along with the desire to drive down wages and dismantle unions, neither government nor the corporations whom either automated or outsourced their jobs to lower wage countries, spent very little, if any, money to help re-train those workers that were displaced. Many of these fed-up workers were those that voted for Trump thinking he would improve their situation. You don't help workers by hiring Goldman Sachs millionaires whose main purpose is to implement tax cuts for their rich cronies while increasing the deficit ultimately using that as an excuse to cut social security, medicare and medicaid, let alone providing money for re-training.
5
Sit,
Odd isn't it that Forbes rates Denmark as the best place to do business in?!
It was Sweden last year.
Power house Germany has been doing extremely well with strong unions in all sectors, for decades.
All those countries have higher min. wage and safety nets than we do.
If a person works 40hr. a wk. they should earn a living wage. Period!
If the business model cant cover that, it isn't a good business plan.
America should not be subsidizing Wall Mart by paying its employees food stamps and welfare.
4
Mr. McCarthy for those who willing accept a $20 trillion debt without a blink of an eye, public policy for America first is a bitter pill to swallow. And it really doesn't matter if they have a D or an R next to their name.
DC has become a cartel. free wheeling no consequence global trade contributes to that. All things being equal, the same goods manufactured in the US are taxable by the US Treasury. Their loss.
They all went nuts when a $1.5 trillion tax cut over 10 years was passed. What about an $8 trillion trade deficit over the same period? Crickets. $8 trillion that is not taxed by the US Treasury.
You have to start somewhere. China still has a population three times the that of the US, still working the fields. Now that is a scary thought. 25% tariff on steel? Not so much.
1
The D & R you make reference to are ultimately "owned" by their corporate benefactors to whom they ultimately serve, not the bulk of their constituents.
All the policy you refer to is dictated to them by the Koch Bros. and others of their ilk.
1
This piece does not make the case for tariffs. It makes the case for economic nationalism. Whether the next war will require steel remains to be seen. But it will require something, and we should be capable of whatever that is.
And yes, we need a blue collar middle class. But we cannot simply play the country music record backwards and get our wife back and our dog back and our jobs back. We cannot go back the the industrial past. There is no future in it.
We need new solutions to creating a middle class. Massive infrastructure work would be a start. It would create jobs for skilled workers doing what America does best: moving things in the fullest sense of the word. Imports have to get where they are going. If our comparative advantage exists in being the best market in the world, then we must get about the business of BEING the best market in the world. That means the best airports, the best roads, the best rails, the best bridges, and the best power grids. That's where China is leaving us in the dust.
None of this requires tariffs. Indeed, tariffs are counterproductive. We should borrow the trade deficit money and spend it to make exporting to us more attractive, not less attractive. And then we must find even better ways than marginally lower interest rates and consumer prices to share the benefits of trade. These are the tests we have failed so far, and that's why Donald Trump is President.
2
if "america first" economic nationalism really wants to address the problem of "hollowed out" manufacturing cities (which it should), then it must take up the activities of "private equity" in pursuing leveraged buy-outs, etc.
we do have a public interest in protecting "stakeholders" in our manufacturing base. wall street and its hired guns have eliminated attempts to restrict corporate takeovers by those primarily using the credit or assets of target companies. in short, the interests of the financial community frequently diverge from the interests of suppliers, workers, and communities.
as in so many things, "economic nationalism" should, if it wishes to help the economies of our heartland, "follow the money," by placing checks on wall street backed corporate concentration and takeovers.
You can have unregulated capitalism or a strong middle class but not both. Countries such as Germany have figured this out. We are our own worst enemy because we allow the wealthy to hoard their wealth without investing into the country that made it possible. Happy countries have rules and higher taxes. They invest in their country for the good of their country.
4
Free trade, along with other examples of "unfettered"capitalism, read lacking reasonable offsetting regulation to protect the citizenry from its excesses and corruption, is not only bad economic policy. It is heartless, soulless and significantly contributes to the inevitable alienation, mistrust, social polarization and unconscionable income inequality we see today. That said, President Trump's typically ham handed and manipulative approach to this issue sows only more mistrust of American policy.
Daniel McCarthy is an editor at large of The American Conservative. He has worked as an internet communications coordinator for the Ron Paul 2008 presidential campaign. He is a graduate of Washington University in St. Louis, where he studied classics. He has no degrees in economics. He clearly lacks even a basic understanding of trade and economic policy.
1
Tariffs only ever hurt consumers. Americans will pay more for anything and everything made with steel. American steel producers will raise their rates, because: Why not? They'd be fools not to. Americans who buy stuff made of steel with see higher prices - for instance, cars will cost more.
1
There is another important benefit not mentioned by the author. Limited and targeted tariffs such as those imposed by the administration serve to dissuade other trade partners from cheating in other areas. American workers have been victimized by foreign tariffs and non-tariff barriers alike. It’s time our leaders pushed back.
2
Well written piece. There are some issues....please remember that the tariffs of 2002 place on steel imports by President Bush, were so detrimental to the economy that President Bush rescinded those tariffs a year later, in December 2003. Global steel employment has been severely reduced since the 1970s. In the past 25 years, steel employment has decreased by about 1.5 million. This is a result of 1) automation 2) less demand for steel, and 3) less demand for iron ore being that 50% of steel is produced for recycled materials. The market is the cause of the decrease in steel employment and not global competition.
1
One possible way to increase factory growth in the USA is to mandate a higher percentage of American content in automobiles manufactured here. Automobile plants often have several thousand suppliers, and manufacturing jobs teach good skills and pay well.
Trade: a buyer, a seller, and a transaction between them
Free trade: a seller is free to sell to any buyer, a buyer can purchase from any seller
Economic nationalism: one way or the other, it is government restrictions, either the government telling sellers that they can't sell, or restricting who you can buy from, or imposing a tax on consumers (in the form of a tariff).
I am not buying the argument that government-dictated restrictions in the name of nationalism will be beneficial -- particularly when made by a US administration that is backward-looking, focused on protecting 19th century industry, and operating in a political environment increasingly driven by campaign contributions and money politics.
As for preparations for war, the arguments for economic nationalism assume that 21st century threats can best be met with strategies that may (or may not) have been important in the 19th and 20th centuries. In the 21st century, diplomacy, missiles, and building up cyber technology/defense make more sense.
1
Re: "Economic nationalists are intent upon protecting not only certain industries but also a multilayered free-market political and economic order that is anchored by a healthy middle class."
Please. If conservatives actually cared about the interest of industrial workers and really viewed them as the backbones of a healthy middle class, they would not have spent more than a century working night and day to destroy the labor movement and to wreck any leverage that workers have to maintain a decent standard of living.
6
Egypt Steve: you hit that nail squarely on the head. And isn't it odd that the very same conservative Republicans who revile subsidies to encourage research and innovation that could grow the next generation of manufacturing, and who spent decades chanting 'government should not pick winners and losers,' are now proponents of economic manipulation akin to the 'five year plans' of the bygone Soviet Union?
'Conservatives' also always ignore the external costs of for-profit industries. If we ramp up industrial production, using the dirty fuels of which 'conservatives' are so enamored, who will pay to clean up the mess? Who will pay the health care costs for those affected by contaminated air, water and soil?
I forgot. 'Conservatism' means 'privatize the gains, socialize the losses.' So the 99% will pay to clean up the mess left behind so the 1% can profit from manufacturing operations subject to 19th century regulation.
Sorry, Mr. McCarthy, we aren't getting on your Gilded Age Way Back Machine to the 1890s. My grandmother worked in New York City sweatshops after she came through Ellis Island. She and her immigrant husband toiled to put four kids through college - one was my mother.
I don't intend to have my daughter work in one of your non-union factories a century later, so a hedge fund trader can build another 30,000 square foot palace in Greenwich and protect his wealth by bankrolling the campaign of a right wing demagogue leading chants of 'USA, USA, USA.'
1
Incredible that this essay does not even mention the service economy (engineering, R&D, finance, insurance, software development, etc) which has grown to replace the fabrication economy of the last century (of course, participation in this economy requires one or more degrees behind your name). Fabrication went to places where it could be done cheaper, but this is only temporary, as ultimately fabrication will be done almost completely by robots, which don't care where they live, don't sleep and don't get sick. Attempting to use tariffs to change this is like Canute commanding the tide. It is indeed ironic that the sitting president, who is implementing these tariffs, is himself the perfect embodiment of the service economy: offering hotel development and management services worldwide.
1
"The United States had the raw resources, the energy capabilities and the factories necessary to conduct a two-front war. Such capacity in the service of national defense will sooner or later be needed again." Does Mr. McCarthy know something the rest of us don't?
We are currently fighting multi-front wars in Asia and Africa. We don't seem to be short of raw resources or steel or aluminum.
If Mr. McCarthy is talking about flat out WWIII, then we won't need domestic steel and aluminum. We'll need domestic sticks and stones.
"I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones." Albert Einstein, 1949
2
Economic nationalism supports the middle class? The Germans before WWII thought this and it did not work out so well for them. Economic nationalism is a hot bed for authoritarianism as it at least to the dictator requires a strong hand to direct that nationalist economy. Turning in wards as happens in this model keeps the nation out of touch with the rest of the world whose influences tend to keep a nation in touch with the realities of world situations and other people.
Economics as with everything else is a balance between looking at our internal interests and working with everyone else. If we deny the need for this balance we risk internal collapse or authoritarian rule.
Your assertion here is that we will all be better off, or even if we sacrifice a little GDP, our middle class will come back as a result. But this government response will have the cure killing the patient. While this tariff may bring back jobs in a temporary way, the hollowing out of the middle class has been as much due to productivity gains as trade problems. The oil industry was in a depression in 2013/14. It is now back bigger then ever: but with 1/3 less employment at production levels greater the 5 years ago. Their price out of the ground is 30% less because they automated with 30% less employment. Companies win big here claiming they are helping employment. Big PR efforts win every time. These new mills will not employ nearly as many as people think. Talk to the Carrier people about promises made before the election.
It also assumes other country’s retaliation won’t matter. But the job losses will be much larger then the gains. And the attendant corruption of foreign lobbyists looking for lower rates and industries looking for specific tariffs will now enter local elections.
The big issue though is you can’t sustain a middle class on the basis of labor heavy industries that aren’t globally competitive. You can delay it with tariffs, but you certainly can’t build a middle class around it. Fun fact: the US has a $230 billion services trade surplus with the world. That is what we are best at. Let’s build on that. Not perfect but better then building on the past!
1
I think the average person would be more apt to accept unrestricted free trade if the Owner Class would accept slightly higher taxation on themselves - or even just an extra $2.00 per week contribution to strengthen Social Security in order to maintain the middle class they say they need for security, but Congress (read "Republican", mostly) will have none of it ! Hence we have Donald Trump and sprouting economic nationalism. I didn't vote for him, but in this instance I'm cheering him on.
1
When folks on the Left criticize trade agreements they often focus on the non-tariff parts, insisting that the rules on foreign investment and such are more important. No one seems to be talking about this now.
I never really understood exactly what they were talking about but was willing to believe they might have a point. Where are the left-wingers?
The author talks about strengthening and protecting the middle class, but simply imposing tariffs will not have that effect. In the 1950s, many people achieved middle class lives with the help of UNIONS, which bargain for a liveable wage, decent benefits, and a pension for post-retirement. Reagan started the end of all that. Now unions are on the decline, "right to work" (better termed "right to exploit workers") states are on the ascent, pensions are gone or under assault, benefits are gone, and wages have stagnated since Reagan. If you want a middle class in this country, we must revive unions and workers' rights. Period. Otherwise, we are exploited slaves of capital.
2
Organized or not, there's no such thing as negotiating by employees. Call it what you wish but underneath, it's extortion: "Give me what I want or I'll damage your business as I take my labor elsewhere." Look at the turnover at Walmart. A legal form of economic assault by employees who go unpunished.
Talk about projection...
Walmart treats its employees like the indentured servants, offering scant benefits, hours or security. Try such a job and see for yourself. Capital has more power than most menial employees, and capital continues to chip away at the labor movement.
"But they are a first attempt at finding an alternative to a free-trade system that has built up the People’s Republic of China while hollowing out the factory towns that once made America great".
And yet Trump's tariffs initially effected numerous close allies (Japan, Canada, Mexico and South Korea), but not China - which already had its steel exports subjected to tariffs. What the author advocates, which is somewhat reasonable, is not Trump's scattershot approach. However, the article is still flawed. What we really need is fair free trade, i.e. retaliation against those countries that don't play by the rules, like China; what the article suggests is unilateral tariffs just because we want them. Like the Smoot Hawley act, they will result in retaliation, trade wars, and international economic disaster.
Germany has been able to maintain its world class industrial base through a combination of targeted tariffs, free (to student) advanced technical training, comprehensive industrial policy and universal healthcare. Thanks to these factors combined with a cheaper-than-deutschmark euro, Germany consistently racks up huge trade surpluses.
Contrast this with the simpleminded one-off tariff bludgeon being wielded by the current White House occupant that will likely temporarily stabilize the shrinking steel and aluminum workforce at the expense of layoffs in other steel and aluminum dependent sectors.
Of course "socialist" concepts like industrial policy, advanced technical training and universal healthcare are anathema to Republicans and conservatives. I mean, how dare anyone interrupt the rightly deserved flow of most of our national income into the coffers of the rich and super rich, just to build and maintain a robust industrial sector that benefits society as a whole?
2
I am so glad to see column in the NYT that is not a cheerleader of the endless "free" trade is good echo.
I don't expect Trump to bring off an intelligent or nuanced approach to implementing economic nationalism and diminishing the damage "free" trade policies have done. But I do believe there is a very strong case to be made for economic nationalism and Daniel McCarthy has made it.
1
First, I want to thank the NYT for publishing a variety of views, but sticking to facts on the news.
This author makes the mistake of limiting himself in considering options. It’s easy to see when you don’t agree with him, and if you do agree with him then you may feel all the qualifiers were necessary and well said. Sort of as Galileo argued for a different view of the universe, the older astronomers found it necessary to add in more qualifiers to make their case hold.
For the first argument, of having war materials and resources at hand, are not Canada and Mexico sufficiently within your orbit to make the need for them to be manufactured in the USA unnecessary? Besides, modern war is unlikely to go as long as the previous big wars did, if it involves the US and on its soil.
For the second argument, of having a middle class, might one consider many other options? Like not having a tax cut that favours the rich and more favours the rest? Like not cutting so many services that support the less rich? And even with a service economy, many of its jobs can be middle class, from the professions to the trades to entrepreneurs.
Finally, the argument that free traders, as presented by the author, are so narrowly defined as to be indefensible serves his argument but otherwise presents a straw man for the purpose of having a third argument. Free trade, generally, has enriched the world, and made more of its citizens’ governments interested in good lives than war.
1
Here is a prime example of the problem with this approach. The sum and substance of the argument is basically a very long sound bite - the middle class is being hurt by free trade. Viscerally, it is appealing - and that's what todays so-called conservatives are about - arguments that appeal to the gut -but don't pass muster when properly thought through. And the author uses a straw man - "free-traders." Other than those who want totally unregulated markets (and sensible regulations) - there aren''t many orthodox free-traders. There is a total lack of economic information in the article as to the actual effects of tariffs. If you bring the very real possibility and consequences of trade wars, we all lose.
1
Free-traders have no one to blame but themselves for the rise of economic nationalism. They made promises that they could never keep. Like "a rising tide will lift all boats" and so on. Lots of workers bought in. They did what they were asked. Did their part. Eschew unions, 401ks instead of traditional retirement, share health care costs, merit pay, etc. Their reward... you can work retail at 1/3 the wage (and no benefits). The "good paying" jobs that were supposed to replace the old out-of-date jobs never materialized. The "re-training" that was promised. Never happened. Or if it did, was entirely ineffective (HVAC). It wasn't just the workers who lost. Local employers lost. Entire communities lost. Of course, the folks who have a media platform and talk about the benefits of free-trade live in D.C., NYC, L.A. and never quite make it to Utica, NY and tons of other towns to see what their policies have wrought. They just come out of the woodwork to spout the same old bromides... cheaper products, efficiency, etc. while tossing the old "dog bone" of the "few" displaced workers can be re-trained, blah, blah, blah. Or the now common "we could do a better job of re-training displaced workers. They have been saying that for 30 years but it NEVER, ever happens. They just exist in the bubbles oblivious to the world outside their line of sight.
2
No. First, the next war won't be fought with steel mills. It will either be fought out of inventory and we spend trillions each decade to be ready, or it will be a cyber war. Have you paid attention to the Russian hacking? We need diplomacy and a well staffed State Department more than we need steel mills. Second, the middle class thrives on invention, on new industries that need lots of people of all skill levels to build infrastructure. The best job for non-college people today is wind-turbine technician. Check the Bureau of Labor Management. Industries move to low wage areas as they mature. Look at textiles. The industry was founded in the British Midlands and has traveled around the world in search of cheap labor. Textile manufacturing is a rung on the economic ladder. Steel-making also. Protecting old line jobs instead of letting them go while inspiring entrepreneurship is silly pandering. The real problem is that there isn't enough synchronization between those industries leaving and those being born. But this is all part of long economic cycles called K-waves. We've been through 5 K-waves including the Industrial Revolution and we happen to be at the end of #5. Focus on infrastructure, renewables, and carbon capture and the problem of economic nationalism goes away. I wrote a book about it.
How about retraining programs available to workers whose jobs are antiquated by technology or by job functions that are moved to less expensive locations (such as foreign countries)? + honor the trade professions.
Partnerships and negotiated agreements with business, gov'ts, and individuals, so citizens can transition from "old" jobs to "new" jobs.
I would consider if a very sensible and "conservative" behavior. I suspect I might be considered a progressive-conservative in the 20th century Republican tradition of Theodore Roosevelt, FDR, Ike, Reagan, & Clinton (much as I deplore his personal behavior).
$ spent to improve worker productivity = good investment. Spend $10 to reap benefits of a $20 return = retraining workers.
Why don't "conservative" MOC or state legislatures support tax dollar assistance via community colleges or undergrad college and universities. I gladly pay taxes for that.
Don't punish workers for outdated skills, why not boost them up with new skills and promising future?
Trumpster is wrong and stuck in the 17th century. It isn't a zero sum game. We want to build resources for the future; not preserve antiquated biz of the past. It's not one side wins and the other side loses except when one plays a dysfunctional, stacked deck as Trumpster does.
When we upgrade and improve, we help our nation, and help other nations. They can take over the less skilled and more labor intensive jobs.
they become our customers, we become their customers, and we all win.
If individual choices, fate or birth place you in a dying industry, why should you expect a rescue? Where's the benefit of sound choices and good timing?
What I have in mind is a "helping hand." = opportunity to become productive again.
To abandon a worker or group of people in "dead ends" doesn't benefit anyone, does it? By using joint efforts of the business and gov't to help retrain workers, I expect the "lost" worker(s) will become productive once again and, if in the same area, will help the entire town to recover into another type of business.
On an individual level, the decisions of what business or job to perform, where to live, and fate are largely matters of chance. "Being at the wrong place at the wrong time." Do we help our fellow citizens or do we ignore or punish them for their bad luck or poor decision?
Helping to restore individuals and/ or entire towns will help restore ibute with energy & tax dollars & restore his/ her ability to and I don't view any benefit to anyone or our society, in general, . Are meting out punishment or do we want the worker to become productive, again? I see the latter but not the former.
Considering the time required to change professions and to upgrade skills via retraining will delay one's job / vocational progression, eh?
But, providing temporary support for training will turn that worker who lost their job into a productive worker again + enable that retrained worker to earn more $, build a new career path, repay his cost of retraining, and become again a tax paying and useful member of society.
...and Trump has yet to say Word One about reviving unions, which is the best way to benefit workers he purports to champion. Good grief!
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The op-ed mixes political propaganda with economic rhetoric. In reality, Trump and his party is not conducting a trade war, but a war on the middle class. Tax breaks structured to widen wealth inequality and ensure that the the federal government will lack to funds needed to develop the technology and well trained work force needed to bring the US into the 21st Century.
Furthermore, the hated "globalists" understand a reality that "nationalists" avoid ostrich style: there are existential threats and challenges that require global cooperation. Of course, climate change is #1 on the list. But so are pandemics, and combating global hunger and poverty.
The GOP has also undermined unionization, labor, health, safety, environmental , and financial protections which will boost corporate profits at the long term expense of the shrinking "middle class."
The middle class would be better served if the US sought to be the leader of the world in seeking a peaceful technologically advanced society serving the interest of all humanity, rather than pursuing a wasteful arms race as is proposed here. The nationalism proposed in this op-ed is backwards in it's perspective; innovative forward looking policies are needed.
What is so great about working in a factory? It's the 21st century and automation is here to stay. It's time to move forward, not back.
Funny now this "conservative" is all of a sudden concerned about "free trade" after years of the ultra-right wingers in congress making it possible for any corporation to move their operations wherever labor is cheaper, and ignoring illegal immigration to satisfy their corporate masters who need cheap labor in the US. And we have not even discussed the massive tax breaks given to corporations that make the tax code a bad joke. Maybe McCarthy has not received enough bribes from corporations lately so is feeling left out.
After all, as Noam Chomsky has said, "No corporation worth it's campaign donations is ever forced to engage in "free trade."
Nice to have an economic piece finally speak to the importance of the middle class. Now if we can end the Republican and conservative war on unions / collective bargaining, perhaps we can begin to pay workers good, sustainable wages.
Your arguments are valid, but I still feel the expenses of economic nationalism outweigh the benefits. Most importantly, and to oversimplify the issue, our country's ability to remain competitive depends on our producing what people want at a competitive price.
Temporarily imposing steel tariffs to increase company cash flows so they can reinvent their processes (and they'll automate the heck out of production anyway) is far different from US steel companies using the increased cash flows to pay dividends. Imposing tariffs in a decentralized system like ours most likely will only lead to further inefficiency and an inferior product we can't sell in a global market.
This article implies that pursuing economic nationalism will bring back the middle class. What nonsense. The main cause for loss of middle class factory jobs has been automation. And the reason wages have stagnated or declined is the demise of labor unions, a huge victory for conservatives over several decades. The article also avoids that reality that economic nationalism in the form of tariffs to protect American industries leads to trade war and a weakening of military alliances. Mr. McCarthy fails to recognize that we live in a different kind of world now dominated by computerized production and fast delivery of goods. We can't return to the first half of the 20th century.
The Trump administration might find more success convincing the public that these tariffs are part of a wider strategy aimed at retaining a strong middle class if not for two significant issues. The first is the completely incoherent explanation of the greater policy aims when the discussion moves beyond the simple help the middle class statement. Add in the completely unnecessary posturing and prodding of our trading partners and allies through talk of trade wars and it’s little wonder this action appears so damaging.
The second is the administrations attempt to prop up legitimately aging industries that technology has allowed our economy to move beyond, like coal mining; progress that has benefited our economy, our infrastructure and our environment. It’s particularly damaging when the explanation as to why those industries are in decline are full of outright lies.
Belligerence and unpredictability may produce the occasional success, but it almost never produces policies and partnerships that are sustainable and that can lead to lasting positive change. When you add in the hodgepodge of competing actions, and the general weakness and inaccuracy in their arguments, there is little wonder these discussions remain in the sewer of political argument, and have little chance of fostering a healthy policy debate that could produce wildly accepted policies that more than die hard political partisans would support
Trump's "America First" approach is a phony ploy--its just about gaining votes for a party that will then follow up with legislation to help a few by further undermining the outlook for the great majority of Americans. It will probably work, at least in the short term. Trump is no fool.
Tariffs or not, I propose we move toward taking advantage of the advancing technology and outsourcing of factory jobs in America, since its apparently inevitable. By this, I mean let technology benefit all of us, and particularly those who have been losing ground. Let's use the lion's share of the extra profits to support the industrial communities that were once the backbone of our economy. Provide a decent safety net so that people can be creative, experiment, get educated, be entrepreneurs and take risks, without the prospect of starvation and homelessness if they fail. The current situation discourages creativity and risk-taking, instead forcing people into menial and mindless jobs that only pay enough to survive. The human mind is a beautiful and powerful thing when it is free from daily fears of not making ends meet
So, America used to be great? Exactly when? Maybe when there was racial and gender inequality? When there were no controls on air and water pollution? Or perhaps when violent crime was sky high? Or, maybe when there were 800,000 people locked in mental institutions on a given day? Or how about the stifling and creepy conformity of the 1950s? Or during the depression of the 1930s? Or the Vietnam War and civil rights unrest of the 60s and 70s? The the AIDS crisisof the 1980s? Or maybe, going way back, when we slaughtered native americans? Maybe before the FDA was around, when the food people ate had no regulations? Or, I know, when the average lifespan was 65! If you were wealthy, white, and male, things were probably pretty good, in the "good old days".
No war, not even a trade war, is easy to win when the rest of the world is against you.
Trump is making us into an economic ISIS.
"...hospitals, in effect, and universities, in most cases, are not (capitalist institutions)."
Yeah, they are.
In every right wing op-ed, there is a basic lie. Mr. McCarthy states, "To reduce public policy to a single dimension, as free-trade ideologues do, is foolish and dangerous." The lie he promotes is liberals believe they can solve public policy problems by promoting 100% free trade. The writer then goes on to say that only tariffs and protectionism will rescue dead or dying mill towns in the rust belt. A single dimension, silver bullet. He then predicates himself that maybe this will not work.
The people who argue against tariffs do so not from ideology, but from history. Tariffs are proven to not work as intended.
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Here is a great example where protectionism or if you want to call it economic nationalism worked for Reagan. We can thank his quotas for the large and vibrant foreign car manufacturing industry in the USA today.
http://www.nytimes.com/1985/03/31/business/japan-s-made-in-america-cars....
Author wonders aloud how all of this industrial devolution was allowed to happen yet never questions his party's willful destruction of unions; its sacralization of the corporation as an individual actor in pursuit of market purity and profit for the stockholder; its consistent defunding of public school systems; and its support of an expanding American Empire & Military Adventures in a DOD Budget gone berserk that underfunds a more productive American industrial policy. Nuts.
I'm a conservative and a libertarian who has long accepted the idea of economic efficiency in the division of labor as explained hundreds of years ago by Ricardo and Smith. But given the fact that Trump is now the leader of my party, I've been revisiting my thinking on free trade.
While I agree that reconsideration is overdue, I find McCarthy's arguments unconvincing and maybe even dangerous:
1. Global Politics - McCarthy makes a neo-con argument that we need managed trade in order to preserve "industrial strength" to defend our allies. "The United States had the raw resources, the energy capabilities and the factories necessary to conduct a two-front war." That argument governed the right for too long - and does little to explain how Japan and Germany are economic powers without making concessions to war-making.
2. Middle Class - The idea that we should enact preferential treatment for some to preserve the middle class is a dangerous one. The same argument can be used by the left to justify sclerotic unions and regulatory over-reach.
Instead, I am partially persuaded of the benefit of protection by MIT economist David Autor. His argument is that the benefit of free trade tends to be small but widely felt - like buying a t-shirt imported from China for a few dollars ... but the pain is often concentrated in US manufacturing. See link.
http://www.econtalk.org/archives/2016/03/david_autor_on_1.html
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What one hand gives, the other takes. Canceling the TPP hurts cattle ranchers. Tariffs on steel hurt the automobile industry. Tariffs on aluminum hurt anyone who uses aluminium. On top of that, there is usually fallout as other countries respond in-kind. Protectionism is a game of picking winners without necessarily knowing who you're picking as losers.
I might add, the US industrial system was caught on the back foot in almost every major war we've ever fought. Do you know how long it took for the US to mount a mass offensive against Japan? When did the P-51 Mustang reach the European theater. We weren't ready to go to war on day-one and the war winning economy wasn't even invented yet.
Finally, I need to state the obvious: Preparing for war generally leads to war. The military needs to justify its own growth and continued existence. The phenomenon is something like focus target asphyxiation. If you constantly envision a war with a certain enemy, you'll eventually find a justification to attack them. Witness Iraq.
Interdependence is a much more peaceful option. You only need to make sure your enemies rely as much on you as you rely on them.
Let's not conflate a reasonable argument with a horrible messenger (Trump). Tariffs on steel and other manufactured goods from China should have been introduced 10 years ago when China was literally dumping products into the US and wiping out these industries in the Midwest Off course our CEOs, bankers and lobbyists played their part also. Unfortunately these tariffs are 10 years to late and will have little impact besides the political message that Trump cares for the workers. Would have been nice if the Democrats had done more to promote this message. Actually I am still waiting for the Democrats message on supporting the worker class with jobs rather than just a safety net.
Hyper-intense Pure Capitalist hypocrisy. To argue that the protective tariff will bring a more secure and healthier middle class is to say that increased income will be shared by monopolists in the form of wage increases. It hasn't worked that way for about 20 years.
American protectionism coming from a guy who and whose daughter both manufacture the clothing with their names on it overseas.
Hypocrite much?
The fundamental economic issue in the rust belt and elsewhere in this country is not bringing back the blue collar jobs that provide a living wage but educating those workers and giving them skills to flourish using current technology.
Of course having said that and having his least qualified (and that's a strong statement) cabinet member as education czar does not leave me holding my breath that things will change for the better.
I do not agree with this author, but I like this article. Rather than trying to shout louder than "the other side," he makes arguments I can understand and follow. Thank you!
The "national security" aspect of "economic nationalism" has some validity in advanced technology, ie, staying at least ahead of the rest for as long as possible, but not in mass production of commodities. Anyone, anywhere, can make steel or aluminum and if our neighbors are good at it and are our allies why would we fret about it? The fact is we make as much steel now as 30 years ago, but it is done in small automated mills, not hulking mills that employ thousands. The world has changed, get a clue!
This is all to obfuscate the fact that Trump & Cronies are working off a 50-year old philosophy that was close to being outdated 50 years ago. Trump & Cronies simply have not gotten past whatever biases they leaned in their 20's and so that is all they know to do today. You can cut and past Trump's words from the 1970's into today's speeches and their is no difference whatsoever. They really do not have a clue how the world really works. Truly Dotards in every sense of the word!
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I disagree with this viewpoint. Stay with free trade and free markets. If I get a say in it, that's my say.
There's a point here. Mindless free trade is an issue for the health of the American economy. But this is mindless protectionism. The number of workers this will help is far outnumbered by the people who will be harmed by it. Trump, whose idea of physical work is limited to walking from his limo to his golf cart, has no idea of which working class jobs are the most important to our country and which we don't need. As for invoking WWII, are you really suggesting that in some future war, we will be fighting Canada? Punishing Canada and Mexico when China is the problem is just typical of the Rumpian brain and will not help us at all.
Funny how you mention Bush imposing steel tariffs yet forget to mention that he removed them quite soon after imposing them. Why not try honest argumentation?
Plus it's nice that you mention the counter argument that you're advocating Luddism but where's your counter counter argument? This is a new weird style of argument that seems to be based on the belief that mentioning a counter argument can counter it. Not so!
You recognize that technology is a major factor but fail to see if it isn't the dominant factor. If it is then that's where we have to focus and your economic nationalism would be a pure distraction.
Overall grade: C-
One wonders if the conservative war on unions has anything to do with the following out of the middle class.
A determined rationale to excuse Trump's bumper sticker analysis and knee jerk reactions. Mr. Trump has not the patience, interest or intellectual curiosity to enact thoughtful policies. Mr. Trump spurns the abundance of data and facts for the emotional satisfaction of being powerful while being the center of attraction.
Mr. McCarthy appears to argue for an economic policy based on political theory. Others have noted the holes in these arguments: https://www.forbes.com/sites/stuartanderson/2017/02/25/economists-say-ec... ("Economists Say 'Economic Nationalism' Is Economic Nonsense," posted 25 Feb 2017). From that essay:
"Economic nationalism is not a real economic theory that explains how markets function in a global economy. It is instead a set of political arguments aimed at blaming foreigners for America’s problems. In sum, “economic nationalism” equals economic nonsense. ...
Virtually no economists believe that it makes sense for the U.S. government to attempt to balance imports and exports with each country. ...
Economists have understood for centuries that trade deficits are not a good indicator of a country’s economic well-being. For example, the U.S. trade deficit has been lower in times of recession. Moreover, the U.S. “trade deficit” is “exactly offset” by America’s “investment surplus” that reflects our ability to attract foreign investment, ...
“If politicians try to ‘fix’ the trade deficit, they will only succeed in cutting off the net inflow of foreign investment.”...
On trade and immigration, Donald Trump and Steve Bannon have attempted to take dislike or resentment of foreigners and craft it into an economic theory. That doesn't change the fact that it is still economic nonsense."
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Protectionism has an ignoble historical result.
Taxing all American consumers to bolster workers who struggle to compete in markets is poor policy. Is Trump really willing to tax Americans to buy foreign cars, too. Better tax Americans for buying Mexican tomatoes and Canadian airplanes. I’m sure American workers in those industries would love you.
White House photo op!
This is rich.
A conservative, who's political henchmen have done everything they can over the last 50 yrs to destroy unions, fair wages, pensions, and tax, healthcare and education policies that might sustain American workers, now turns around and argues the importance of a middle class.
Nice try. You can't have it both ways, pal.
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If there is a case of Trump’s tariffs, McCarthy hasn’t made it. His three points are either ill-chose or just plain outdated:
Point One: The outcome of both the Civil War and WWII are ill-chosen examples. Technology and a 50-year processes of “free trade” have made these examples useless in the discussion. One company armed with AR-15’s has more fire power than a Civil War regiment. The US’s ability to outproduce war products was useless in Vietnam. Besides, countries likely to be WW III adversaries already have the capacity to arm themselves. Word: the US didn’t fight a two-front war alone.
Point Two—a mistaken interchangeability between “middle-income” and “middle-class.” Example: what “class” replaces “lower-income?”
Point Three: Middle-income people aren’t the ones who can create new jobs—in industrial societies, that has always been the “middle class.” That is even more so in post-industrial societies.
The changes in Pittsburgh from a steel and coal producing city to a post-industrialized one wasn’t done by middle-income workers in those industries but, a middle-class with different skill-sets did create a post-industrial Pittsburgh.
Mr. McCarthy, at least read “Smoketown” to update your analysis of Pittsburgh.
This column is full of red herrings and takes a myopic view of what helps the middle class.
Using beliefs of "extreme free traders" is a red herring. Trade agreements are not just chaotic free trade as implied by Trump and this article. They are negotiated trade meant to maximize the strengths of each country and avoid poorly planned tariffs. Centuries of trade agreements have maximized number of good jobs worldwide, not merely maintaining companies with the ear of the President.
Mr. McCarthy implies the ridiculous idea that economic protectionism alone will make or break the middle class. Monopolistic and plutocratic control of the government is far more important. Mergers and acquisitions are rampant. Borrowed money for M&A benefits shareholders, increases "efficiency" by laying off of workers, and increases prices to pay off loans.
Recent tax laws were for the rich, with bogus claims of investments in more jobs, when industrial leaders told Congress ahead of time that they would invest the money in stock buybacks and reducing debt. Those measures artificially make stock valuations go up to benefit the rich. No investment in equipment or jobs or production cost reduction. Then with no improvement in productivity, those self same companies are forced to export manufacturing overseas, further reducing jobs.
Tariffs and "economic nationalism" cannot make up for a government that only creates laws that benefit the upper class.
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There are two types of leaders: those who wish to recreate a supposed golden past, and those who accept that nations must evolve to meet the future.
Guess which type we have now.
Correction: everyone observes the economic decline of the US
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Or the "tiny capital-controlling elite" could pay the "vast population of Amazon warehouse workers" a little more.
Faced with the prospect of being bludgeoned at the polls because of grass-root-repugnance at the willingness of conservatives to prostrate themselves for and on behalf of wealth, conservatives suddenly care about the middle class.
Oh wait ... it's not the people on the middle class, it is the necessity of having a middle class to enable a defense industry. This is the true window to their soul.
The crosses conservatives must bear in these times. Think of it: fellow citizens. What a pain.
Do American consumers what to pay the true cost goods made in America?
`It has been said that the factory of the future will consist of two employees: a man and a dog. The dog will keep everyone out and the man will feed the dog. But soon we will have a robot to feed the dog.
Where are the Republicans who, during the Obama years, kept decrying "crony capitalism?"
What is wrong with this writer? Preserve a "middle class" by pumping up the steel industry while simultaneously losing many, many more jobs in manufacturing because the raw materials are more expensive? A child can see that is a failed strategy.
sure, lets make it fair- give american steel workers the same (higher) wages and (universal) healthcare that Canadian workers get-understand? if anything, americans have the advantage, yet are losing. China is a different story but you can't beat them, then go after your closets allies.
Good grief.
It is one world.
Competition is everywhere. The US is no longer the Boss, thank God!
Yes, I am a "globalist."
Did you know that some alt-right people use this term as a synonym for "Jew"?
Did the Pres of the US call someone a globalist?
His former chairman of the Council of Economic Advisors?
Think for yourself?
You know who will be a net beneficiary of this steel/aluminum tariff?
Russia.
Russia is the single largest importer of pig iron in the US, and the second largest importer of bauxite in the US. Pig iron and bauxite are required for steel and aluminum production, respectively. If US steel and aluminum production rises, so too will the demand for pig iron and bauxite.
Now just let that sink in for a moment.
Everyone 'talks their book'. I notice that pro-free-trade comments are weighted toward the large coastal areas where benefits accrue to the financial superstructure that facilitates free trade. Anti-free-trade comments often come from flyover country.
But I think "free trade" in these discussions is just a proxy for inequality. For example free trade could be managed with intelligent surcharges on goods and services produced under wretched circumstances. Somehow these provisions in trade agreements never get implemented.
The overriding problem is inherent in free market capitalism. Without restraints capitalism is a simple engine that transfers wealth to the very top and makes sure it stays there. Global trade insures that capital can easily avoid sharing. Comparative advantage is real. So is inequality.
More Conservative malarkey from a Conservative who specializes in faux conservatism. Now free trade needs help? Please, free trade and unfettered capitalism is what destroyed the American worker, good jobs, and the "Good Corporate Citizen" ever since the dark days of "raging reagan". Free market, conservatives claim, will drive the best companies to the top;that's what they all claimed for the health insurance disaster that perverted health care ever since businesses took over not-for-profit hospitals, health care was a nightmare until the Affordable Care Act but then racist&liar McConnell worked to destroy it & in this fool on the hill,he got help;no we're back to high rates, low coverage,tax cuts for murderous health ins. companies;republicans hate regulation, free trade conquers all, except when it doesn't and now the free trade conservatives are begging for tariffs&protectionism;the hypocrisy of the conservatives is endless. And despicable.
What deceptive blather, disguised as concern for the middle class and the nation.
Its the old "Despicable levels of greed and self-interest, enabled by uncontrolled capitalist policies implemented in an environment of dishonesty, elitism, and Conservative politics bordering on Facism don't crush the middle class and corrupt the nation, people do."
Free trade did not hollow out cities, ruin lives, enervate the middle class; wealthy executives unchecked by law, tradition, or morality did. They made decisions to abandon their workers and their home communities for the sake of profit, and were supported in doing so by conservative politics, as they still are.
Yet here you come, snowing us under with promises of shared and wide-spread prosperity, with intimations of policies designed to support poor workers cast aside by the advent of automation and the heedless, heartless decisions of corporate executives and their attendant political acolytes.
You even hint at willingness to accept less profit or growth if its going to be somehow good for the laboring classes.
False promises all, shade cast over your responsibility for decisions that brought us to this pass.
The opposition is not between free trade and economic nationalism, it is between a liberal vision of the worth of every citizen and commitment to foster their well being and potential, and conservative visions of the moral superiority of accumulation and willingness to subvert all other values for their sake.
First, why is it that Mr McCarthy's op-ed is open to comments, but Mr McAuliffe's pro-free-trade op-ed is not? The free-traders are finally being called to account for the unimaginable levels of inequality their system has fostered, and they have no answer.
if you want to promote manufacturing in general shouldn't the tarrifs be on finished products vs raw materials? tax luxury cars, not steel
Did the factory towns make America great? I wonder what Thomas Jefferson would say about that?
Our president is in league with our enemies
He is all hat and no cattle
Lots of talk, no policy and the orders he signs benefit the wealthy and some foreign governments
Who loses? The American people as he destroys our agencies, neglects our infrastructure and allows weapons of mass destruction in the hands of children and the angry unemployed. Sounds like a chaos plan to me
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The writer forgot to mention that Bush’s tariff of 2002 was such a disaster for the industry it bled 200,000 jobs and in 2004 the tariff was cancelled.
What a fraud this conservative is (as are most, in my view). Conservatives have happily participated in the gutting of unions, in protecting the bankers making student loans that keep young people almost forever in debt, in obstructing womens' reproductive rights so young women, particularly, who have an unplanned pregnancy end up as single mothers, in a country with no true safety net, no livable child care etc, and who cheer a "tax reform" bill that enriches the very richest and throws crumbs to the masses in the hope they won't notice the rest. Anything that would truly assist working class Americans - like infrastructure, like making college far less expensive, if not entirely free, making blue collar training available outside of "for profit" gougers, anything like that -- they object to. What a joke.
it's rather tiring to hear the country with the largest economy, a military permanently on steroids and which hasn't been bashful of protecting its own interests by punishing other nations in just about any way you can think.....
whine about every other country taking advantage of their timidity and patience.
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This is Ignoratio Elenchi. Even if we accept this premise, there is no evidence that this slapdash "policy" would do anything to change it. If anything, there are plenty of arguments that it would do the opposite and hurt American workers and industry. The idea that we must take action no matter what is and has always been foolish. If you want to live in a country where people do things just for the sake of doing them without regard for consequence, be my guest. I'd prefer my government to use evidence and reason when making decisions.
Do any of you want to live next to a belching soot producing steel manufacturer? Do any of you remember the pollution of our air and water to the point of unlivable conditions? I do, it wasn’t that long ago and it was far from great. I remember children refusing to educate themselves cause daddy would get them a good paying job at the plant. How did that make us great, multiple generations of functional illiterates expecting middle class wages. I also remember severe disloyalty and contempt of the company where they toiled. The inevitable decline of manufacturing and union middle class jobs was accelerating by greed and political indifference, and they were loyal democrats. Now they are old and pathetic.
Right-wing nonsense, free-trade all bad, all bad - you can hear the whining.
The free-trade policies of the United States are NOT accountable for the rise of China.
Mr.McCarthy has hit the center of the bullseye. Add in the problems associated with “hollowed out” small towns across America—drugs, depression, suicide, crime and broken dreams— and you realize China’s attack on our industrial middle class is indeed a matter of vital national security.
"When goods don't cross borders, soldiers will": usually attributed to Frederic Bastiat (1801-1850)
Never read such a shallow commentary in the NYT
1) You don't need tariffs to be military strong. All the time we lived without tariffs did not make us weaker. What is weakening our military is fighting wars that have no end.
2) You don't need a trade war to have a middle class. You can do it with a progressive tax system, infrastructure investment and rational health and educational policies.
3) The world became a small place and is getting smaller every year. You cannot say "so what" to our allies and pretend to be the moral and political world leader
1
Who moved all those companies overseas?
Germany does quite well with unions and its economy. Apparently, this tariff is meant to help a certain type of worker: white, male, Midwestern, union. But other unions are evil and communistic, according to conservatives.
I bet he’s against raising the minimum wage however.
So, basically, Trump is ramping us up for WW III. That’s sounds about right.
As I was saying before my computer decided to post my comments prematurely
we need to look at how things will be in the future and take that into account
when we try to solve the problem of the status of our middle class. It isn't
very helpful to wish for things to return to the way they used to be because
nothing ever returns to the way it used to be. Conservatives would do much
better if they would get rid of the habit of worshiping the past and thought
about the future.
Now that I think more about it, this opinion piece is really bad. Where are the statistics to back up these basic GOP talking points? Oh, that's right, there are none.
A compelling argument indeed, 150 years ago.
But I like the four pairs of scissors that I own all manufactured in China that don't cut a single piece of paper.
"The U.S. needs an alternative to a free-trade system that has hollowed out the factory towns that once made America great."
maybe, but the starting point must be recognition that the main drivers of this "hollowing out" have been Wall Street and corporate America. Think Mitt Romney's Bain Capital that has an unsavory reputation for buying up American manufacturing companies and then bleeding them dry to keep up dividend payments, or think of Jack Welch of GEC, nicknamed Neutron Jack, because after he had been in a building, there were no people left behind.
Check back in a year. Let's see how it goes. Badly, is my bet.
Words matter, reason for which the expression 'economic nationalism' in what has become prevalent, a globalized economy, and where 'trade' is essential (debatable as it may be the added "free" trade). may not be wise. And political freedom (to capture best choices by finding time and resources that are most efficient, and effective, for the task at hand) requires economic freedom...provided it is regulated at home and abroad (W.H.O.). Trump's adventurism, making irresponsible and thoughtless moves irrespective of the facts (his usual, really) insofar 'tariffs' are concerned, is dangerous and uncalled for. Please, find another term, as economic 'nationalism' doesn't make any sense in today's world. Our security depends on a strong economic front; and without international prodding, it shall whither and die, especially in a capitalistic system like in these United States. For that, trade wars are stupid, given that trade requires diplomacy, and a finely tuned attitude of mutual respect. And without the strength of a healthy economy, it's security becomes puny at best. And we haven't even touched upon the shortsighted tax cuts for the 'rich' (corporate and otherwise), capital lost for urgently needed infrastructure, for better support of education and health; and, why not, some 'R & D' to maintain technological advances in the forefront. One more thing: does economic nationalism implies closing borders as well? Protectionism? Ughhh!
Pretty much every smart economist and thinker in the free world thinks that you are wrong and dangerously wrong.
So - either you're super smart - like Nobel-worthy - or you're not - like destroy the world's economy ignoble-worthy.
I think the world has pretty much voted over the past two weeks.
Plus - you agree with Trump - which by definition...
The case against it...HISTORY!
When you Trade with countries you don't go to war with them - so much for the preparedness point. Doing one thing makes the other moot. (You Conservatives are always 'fear' driven aren't you?)
Good luck with that "Healthy Middle Class' without Universities or Hospitals.
It all started with Reagan and Reaganomics.
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How does one decouple the issues raised here from Donald Trump. For me the problem is that anything Trump touches is corrupt and has a hidden agenda to benefit him and his family. There is nothing he can't damage or make worse and he will do this the same ignorant way as he does pretty much everything else. As a result we won't get necessary changes to trade policies while his apologists continue to tie trade to the republican tax scam as both being a good thing. What's the con here, that's the question.
It’s refreshing to read masculine writers that aren’t afraid to flex.
Please stop having these people write editorials for the New York Times. We really don't need to hear these ridiculous arguments from the extreme right to prop up trump. Please NY Times, get back to telling the truth and innovating and writing new ideas that will make the world a better place. We are in a dark hole right now and giving the far right a platform does not help.
There is an irony to all this, one I wonder if people get. Karl Marx's analysis of 19th century crony capitalism was spot on (his solution though sucked raw eggs, it made Plato's republic seem like a pragmatic solution to things), he said that unless the workers had a share of 'the good life', that if the rewards of industry and business were bestowed only on a small group of owners, it would lead to a revolt, or worse. Trump is playing on the sentiments of workers fed up with declining incomes and job prospects for all but a relatively small elite, but his response and that of most politicians misses the point that Marx made. Tariffs may bring back some jobs , but it won't be a lot, steel and aluminum production is not the old Bethlehem steel/US steel massive industry, it is highly automated.
The real question is the owners of companies, executives and major stockholders, are benefitting from the shifting landscape while ignoring the pain they leave behind as they maximize profits and their politician allies blame the workers for not 'keeping up', and that is how do we keep the working class in the middle class, and keep the middle class itself in there? How do we allow them both decent incomes and meaningful work? Wall Street and the U of Chicago economics department and Harvard Business school are not the answer, they are the major cause of the problem, not the solution. And if we don't, expect more of populist puffery like this, and even more anger.
The idea of another world wide war lasting for years is absurd. The next world war, if it happens, will be nuclear and will last a couple days. The next war after that will be fought with sticks and stones.
The whole idea of world trade is to make massive war a non-starter because it ruins everyone.
Major manufacturers in the US have world-wide supply chains. ALL trade tariff has to be closely negotiated, Tariffs cannot just imposed at the whim of an ignorant and stupid president. Why do we have to suffer because Trump & Cronies are stupid? the idea he can do this on his personal whim is ridiculous.
The US has a huge debt because Dubya and the Repubs refused to fund the two unnecessary wars in the middle east and instead borrowed the money. If we cannot afford those wars, and the right wingers refuse to pay for wars they start, what make McCarthy think ANYONE is willing to spend money on a world wide war? Not happening.
Now what did ACTUALLY emptied industry communities from the 60's and up until now?
Automatization! Mostly.
Wanna have people work like they did 50 years ago? Make a time machine and go back in time! Because the REALITY keeps moving forward, regardless what backward conservatives THINKS about it.
It is time for some people to wake up and see the reality for what it is, not for what they want it to be.
Or as I was told as small boy; Stupid is what stupid does.
This is likely the dumbest piece of writing I have ever read in the NYT's in four decades.
How is it possible the writer, even in a relatively short piece, not acknowledge that as a country, we are far richer than we have ever been, that manufacturing jobs have decline primarily due to automation not trade (we actually manufacture more now than ever, even as jobs have declined) - with free trade?
And the silly dogma has no place in this great newspaper. No, free traders are not ideologues, but believe in theories that have very broad consensus across the political spectrum and are based on decades of research. For the same reason, free traders are not "elites" (as though being very good at something is somehow a negative.)
I applaud the NYT's when it publishes opinions that I don't agree with, that maybe open my eyes to a different way of looking at things. But please, always keep it fact-based, cogent and well thought out.
Free trade is best for overall growth and peace. The question for this country is how the proceeds from growth are shared. The model for a free economy suggests that there is an equilibrium between supply and demand. That is not the reality in this country. There is no countervailing equality between labor and capital, which distorts the model. Labor is has been gutted by the demise of unions and laws which have given big corporations all the leverage. Free trade is good, but the sharing of the wealth from that is ultimately a political decision.
2
While I agree with your article on the advantages of, if not imperative of a healthy middle class I don't agree that tariffs are the first answer. Having lived through the 70's, 80's etc. my observation is that the enemy is within not without. It is not only tariffs that control the economy, it is our lack of any coherent domestic policy. Our internal lack of regulations have allowed companies to become too big and gobble up local smaller successful businesses and create monopolies that not only monopolize capital but also wage growth and value (not to mention choice). The most important one may be value/quality of community life and may be the genesis of some of the nationalist movement.
Things like the loosening of financial services regulations so the shareholder becomes more important than the employee to a company's bottom line, the weakening of 401K's, the killing of the 'Fair and balanced broadcast rules', the lack of regulation regarding monopolies of regions by cable companies and other sectors etc. etc.
For a good example of what can be done look at the way Germany managed it's work force during the economic downturn. It is a high wage earning country that put it's workers first. Germany is not the US but we can do it our way and probably better if we try. Unfortunately rulings by our Supreme Court have put money above people and our congress has no will to fix it.
"The fact that technology reduces well-paid industrial employment is no reason to reduce it further through open trade policies."
This badly needed to be said. Most analyses trade policy merely point out that automation has been the bigger factor in eliminating manufacturing jobs, then simply write off the workers who have been displaced by trade. Thank you Mr. McCarthy for stating this so clearly.
On the trade issue, why not environmental and labor policies agreed upon by the countries which care about these things? These happen to include countries with enough clout to get real results. (Of course there would have to be some major changes in the US, at least.) Environmental policies would include especially a carbon tax on everything -- including international shipping. That would, for instance, raise the price of metals produced overseas, while fighting global warming. The labor policies would include especially requiring ability to organize a union and/or similar body carrying real worker influence. Not requiring unions, rather just the ability to organize if workers wanted to. Granted this would be tricky, since governments and owners can undercut worker bodies in various ways. But it wouldn't have to be perfect to make a big difference.
With these policies, long-distance international trade would decrease in the short term, but on a more level playing field as well as more moral.
I don't agree with the perspective entirely, but I do wish that the Times and other publications would acknowledge that "most economists" leave distribution out of the equation when they talk about policies like trade -- in other words they talk about "national wealth" or "growth" either (a) as though these were somehow automatically socialized, or (b) as though distribution were someone else's problem. By talking about trade only in terms of "growth" or "efficiency," they side-step the central problem of our time -- who gets the benefits? These things aren't automatic. If Warren Buffett moves to a small city, the headline might be "city wealth quintuples" -- but the effect for the average person might be nothing or very small. But standard economist dialogue slips over this point, over and over again. There are other effects that should be considered.
2
Let me get this straight - the "invisible hand" (unregulated economic activity) is the bringer of all things GOOD in free MARKET philosophy but, when applied to free TRADE philosophy, forces changes in labor markets, which is, of course, BAD.
All things considered, I prefer my national security to be strengthened by international cooperation rather than by the manufacture of weapons of war.
1
I believe free trade did more good than bad. Some industries lost jobs because of automation, technology or simply by lact of productivity and costs. Are we willing, as consumers, to pay the real cost of products made in North America? Are we willing as investors to have a lower return on investment? Innovation is key and perhaps buying locally made products would be a good way to support local economies as well.
I can't argue with Mr. McCarthy's goals. Sadly, he is unable to muster any evidence that the tariffs actually advance those goals. It all sounds good, but US steel output is near an all-time high. It just takes a lot fewer people to produce all that steel. In the meantime, the imports hurt every steel using industry. To the extent that they lose out to imports, the US will need less steel making capacity rather than more. Even the stated goals of preserving capacity are endangered by the tariffs.
1
In the discussion of the "hollowing of american industries", why is there no mention that US businesses in nearly every industry consciously switched to off-shore suppliers to find lower prices to satisfy the short term profitability expectations of shareholders?
Germany has successfully adopted a high-added-value, high-labor-cost economy.
The United States did this successfully after WW2 then lost momentum and competitiveness to Asia in manufacturing.
We should strive to re-invent and SUSTAIN our manufacturing excellence to complement the other highly productive components of our national economy.
This is a 50 year old recurrent problem that needs our best thinking and action to secure the stability of the middle class.
The adoption of the "service" economy model has benefited some and was a good idea but we couldn't anticipate how new technologies and Asian manufacturing ascendancy would render it less than hoped.
Our diminishing middle class needs a new high productivity based economic option. The future of the USA as we know it depends on it.
Tariffs are not the answer but perhaps Trump's clumsy way of signaling his desire to address it. I hope his forcefulness and Brinkmanship may lead to a better tomorrow.
The basic problem is that the free-trade vs. economic nationalism dichotomy is the wrong debate. It is re-employment, not reindustrialization that will re-invigorate a middle class. Automated factories do not re-employ.
Thus, neither protectionism nor free trade intrinsically creates a stable middle class. A stable middle class is created when society decides that employing workers takes precedence over efficiency and profit.
2
Would you be surprised to learn that since 1980 manufacturing (as a % of GDP) has doubled while employing 1/3 less workers? Or that steel mini-mills produce as much steel as the old style ones that required substantial human participation? Do you recognize that before the WTO and other institutions that regulate trade, the recourse of countries who felt economically cheated was war? First, the diagnosis - we have lost most jobs (85%) to automation or technological advances. Second, the jobs that are being created pay less well than the ones being eliminated. Wage growth has not kept up with inflation, let alone the rising costs of higher education and medical care, and so more people are finding it difficult to prosper. Blaming others, not like ourselves (minorities, hispanics, muslims) or those in other countries is a misdirection from those who are benefiting most from these trends, the owners of capital, who are prospering and now control the levers of government. This can not go on, and it won't. How it pans out is yet to be determined.
As to why Main St. has suffered, it's not just about steel and aluminum. Per Mr. McCarthy's last line in his column, China has been for many years the destination of choice for American-founded and based manufacturing companies. These American CEOs (with the help of many pliant Congress's) found it much less expensive to outsource their production (look at nearly any item sold in Walmart) to lowest-wage workers in China (a country without civic freedoms plus labor and environmental protections that US workers have). This point - unfortunately - is almost always omitted in pieces like Mr. McCarthy's and in so many other opinion columns about US global trade policy.
A couple of thoughts.
1. The ideology actually goes back longer than that, at least to 1962 Kennedy administration GATT agreement and through the 1970s and 80s, well before NAFTA. Also, the biggest agreement that had the most impact on manufacturing in the U.S. was not NAFTA, but China's admission to the WTO in 1999 with special, favored conditions. The result was a drastic reduction of manufacturing investment and employment within the U.S.
2. Trump's tariffs are highly unlikely to reverse this investment and employment trend. The donor class of both the Republican and Democrat Parties share a mutual horror of Trump's protectionism so it will only last as long as he is President and can veto bills overriding his decision. The U.S. exporters and major consumers of foreign manufacturers, whose oxen are being gored by this policy will be ferociously lobbying and donating their Congress critters to get this reverse. Not a good climate to make a long term investment in a steel mill if the profit will depend on sustaining this 20% tariff.
3. Further, the rise the dollar, and the fact that since the Reagan administration, except for a brief moment early in the Clinton administration, it has been overvalued rules. If the FED raises interest rates, and if U.S. bond interest rates rise in order to sell the extra 200 Billion a year of debt created by the recent tax cut, this will raise the international value of the dollar, making imports cheaper despite the tariff.
The 5000 jobs that these tariffs will create can, if concentrated in a single town, bring it back to life. Sadly there are two elephants in the room. First, steel and aluminum production use vastly less labor than they did in the past. Second, the jobs that remain are skilled jobs - technicians to tend the robots - and not really open to aging unemployed steel workers. Finally, WE DO have steel and aluminum production both in the US and in the hands of our allies. Frankly, a Chinese invasion without nuclear weapons seems an far fetched reason to use to justify these tariffs. When exactly was the last time a foreign power invaded the continental US - 1812, I believe.
This is a cogent and persuasive argument. I'm by no means a conservative & I'm certainly not a Republican, but I've never liked or have been convinced by the "economic efficiency above all" argument of free trade. The United States desperately needs to protect its middle class and offer decent paying jobs to workers (McCarthy's national security argument is powerful too). If the only way to do this is via a carefully thought-out system of tariffs and "managed" rather than "free" trade, then so be it. It's time to have this debate.
1
The author is convinced that the only viable middle class jobs in the for-profit world involve manual labor in factories. This isn’t true, and acting like it is does a disservice to the hollowed-out factory towns referenced in the article by keeping their residents trapped with no way forward. Yes, we could maybe temporarily bring back some factory jobs, but as the author points out, robotic automation will cause those jobs to disappear soon anyway. Why not focus all this energy and effort into educating people for the middle class jobs that already exist today and that will exist in the future? Demand for workers in STEM fields has never been higher - there are so many middle class jobs in areas like software, biotech, computer security, engineering (electrical, mechanical, chemical...), for-profit biomedical research, statistics, the list goes on. Middle class jobs also exist in the corporate operations world - accounting, sales, corporate strategy, public relations, day-to-day project management.
I’m a recent public university graduate with a degree in computer science and I couldn’t believe how easy it was to find a job. Tech recruiters were on campus nearly every day, and even summer internships for college sophomores could pay $5000 a month. The jobs are here, but for many people the access to the necessary education isn’t. If you want a healthy middle class, focus on affordable higher public education, not trapping another generation in soon-to-vanish factory jobs.
2
Tariffs will not restore manufacturing jobs. That ship has sailed and it's self-piloting. Automation is increasing at an exponential rate and it is not going away.
The solution to the loss of jobs, the middle class and income inequality is not to be found in economics, or the free market- it needs to come from a radical restructuring of what it is to be a human in the 21st century.
Mr. McCarthy’s perspective is based on the “darker assumptions about human nature” that he alludes to. There is need, of course, to be realistic about the motives and objectives of individuals and nations, but I, for one, believe that the confident optimism of global cooperation, as long as it is tempered with intelligent pragmatism, is a far better strategy for progress and security than is fear-based retreat into defensive protectionism.
national security has a strategic logic all its own that springs from different and darker assumptions about human nature than the hopeful logic of economic efficiency.
I was surprised someone could write so long and not say anything meaningful and devoid of economic analyses.
1
The right needs a new lie. Why not announce a “New Economic Policy.” NEP is now being used to justify the continuing decline of the middle class. Another war being passed on to the middle class. The biggest lie is the conservative cares about anyone but themselves.
Neither "free trade" nor bigoted isolationism—to say nothing of the pro-corporate, entirely trade-irrelevant vile TPP—will solve the Stingy Employer Problem. That can only be stopped by voting out pro-corporate parties like the "covfefe" GOP who insist on keeping taxes (and thus vital services) low and keeping offshore islands "legal" to stow cash hoards and pay even less tax, and bringing back even minimal regulations (like $15 or higher MINIMUM wages) to ensure locals get pay that entices them to work.
This might make stingy megacorps like Walmart and Amazon leave town. Good. More small businesses and more workers for their own communities to employ.
It might also end an excuse of racists to bash e.g. Puerto Ricans as lazy while not even taking the jobs that are open for them at home.[1] Even better.
[1] https://www.washingtonpost.com/business/economy/why-a-white-town-paid-fo...
1
But we ALREADY have the largest and most lethal military on earth ...
Flirting with economic nationalism is not the problem; stupidity is.
Steel and aluminum for defense? The next world war will be over before it begins when the loser's military systems are hacked.
1
A beautifully reasoned analysis that goes right to the heart of the political problem in the United States.
One party wants to make the rich richer. The other wants Utopia. When Republicans are in power, the interests of the middle class are sacrificed for the first goal. When the Democrats are in power, for the second. The middle class is enraged, inclined to support neither party. They elect Trump. He follows through with a program of economic nationalism and the pundit class wonders what is happening.
Anyone with any brains knows what is happening. And yet we continue to entertain ourselves with the Kabuki in Washington, as the pirates and Utopians dual to the death.
Bannon will prove to be right. No surprise. Goldman Sachs hires no idiots. As a strategy of economic nationalism takes hold, the position of the American middle class will begin to improve. Trump's strength will grow. Portrayals of Trump as a bumbling idiot will prove delusional. Trump seems to be the only guy in Washington who can do arithmetic and see the problematic side of an enormous trade deficit.
Nice to read an op ed in the Times that actually is based in reality rather than ideology a la Friedman, Krugman.
Free trade has destroyed the prosperity of a large swath of the northeast and Midwest. Cheaper consumer goods is a foolish trade in exchange
4
How rich that a conservative spouts the importance of a strong middle class fas essential for national security,
It is the same conservatism influences that have progressively worked for 40 years to tear down the American Middle class.
No Mr. McCarthy it isn't China or others who have poked a big hole in our national security. It is the policies and blind eye of folks like you who can't think of enough ways to kill the middle class.
Corporations on a whole have been doing quite well for a long time. No one forced corporations to move their business and manufacturing bases abroad. No one forced them to displace thousands of blue collar workers here for cheap labor elsewhere. Certainly no one forced them to out source white collar work abroad either. Finally no one forced them to hoard al the profits rather than reinvest at home and in their workers.
The greed and policies you folks love that suppress living wages, starve our public schools, allow our important infrastructure to deteriorate, bust worker protections, hijack the work, health and wealth of wage earning families are to blame.
You sound like an old man of the 1950's living in a movie.
Wake up and accept the responsibilty the conservative movement has for this mess. Look inward.
1
Until Cadet BoneSpurs brings his manufacturing here to "Merica, I'll believe exactly ZERO of what this grifter says. When is his wife, sorry daughter, going to bring her clothing and jewelry sweat shops to the US? Yeah, didn't think so.
Maybe the Mango Menace can speak about the thousands of H-2B visas workers he has hired for years at his hotels and winery's. Including this year.
Shall we also mention the 200 illegal Polish laborers that helped build Trump Towers for $4.00 hr? Ya know, the ones he refused to pay and threatened deportation upon? The ones that put a lien upon, then sued for wages. They fought for almost 20yrs and won $1.375 million in damages.
https://www.nytimes.com/2017/11/27/nyregion/trump-tower-illegal-immigran...
Donnie Doll Hands is a business tycoon like Faux Views is fair 'n balanced.
Buy American-Hire American. Just another con to the uneducated, blissfully ignorant and disingenuous red rubes..
2
I cannot recall at what moment in history America was great. Was it when it had slavery? Was it when it had segregated schools? Was it when it was killing four million Vietnamese people?
1
It was when we saved England’s...existence in WWII. While you were still kneeling to this foreign sovereign.
A middle class large enough to be noted is not a natural feature of a true free market. In that labor cannot be given any equality with capital in a capitalist economy lest it become communism, there is no natural order to anything resembling the socialist nirvana desired by the left. While Trump has lied about his motivations and agenda, so too do Dems lie when they entice their base. Obama's declaration that "No one working full time should live in poverty" is just one such falsehood. The cost of living and the value of one's labor are separate and unrelated issues. Yet he lied to feed his entitled base.
1
Daniel....that was refreshing.
1
If order and continuity are established conservative principle, it would seem that a plannedeconomy - using tools such as tarriff is the best way to implement a conservative society. -
"... Republicans were as surprised as anyone. ..."
Yes, the very definition of chaos in the WH.
"... Gary Cohn, resigned in protest. ..."
Gary got what he came for, the cut, and needed to high tail it out of there before Mueller lowers the boom.
"... free-market theorists ..."
Where's the free market? We don't need armchair theorists spouting their ideological nonsense. We need pragmatic experienced realists who understand who markets actually work. Trump certainly is NOT someone who knows anything about any of this, fake Wharton degree not withstanding.
The entire paragraph describing WW2 on two fronts etc is irrelevant today. We are never again going to see huge tank battles, the Eastern Front, D-day invasions, Battle of the Bulge, huge ship battles etc ever again. Trump's national security argument is literally a joke, a lie like the man himself.
Bar far the largest ACTUAL national security risk, the one that trump ignores and is being investigated for, is Russian interference.
I wonder why America Firsters don't apply this same logic to universal healthcare and education, both vital to our national defense militarily and economically.
1
As Mr. McCarthy says, his arguments against free trade and for economic nationalism are political, not economic. First that free trade harms our security, because it hurts our manufacturing base. He cites our "arsenal of democracy" in World War II. But the wars of the future will not be like World War II, with huge armies and heavy equipment like cannons, tanks, and planes. They will either be guerrilla wars, such as we fought in Iraq or short nuclear exchanges, such as might occur on the Korean peninsula.
Second, that free trade harms the growth and maintenance of a middle-class, which is essential to democracy. Free trade is not hurting the middle class so much as new technologies, which supplant labor in the production process. The relatively small number of jobs lost on account of trade can be addressed by re-training and by subsidies.
Third that economic nationalism fosters prosperity. But Mr. McCarthy doesn't support this claim. He just says "... so what if it doesn't", and falls back on the first two arguments.
Economic nationalism was tried in 1930, when the Congress passed the Smoot-Hawley tariff that measurably worsened the great depression.
It is also a policy adopted by autocrats like Adolf Hitler. He tried to make Nazi Germany self-sufficient by seizing the land and oil fields of Romania, the Soviet Union, and other countries. Free trade on the other hand fosters international peace and comity.
What a joke. The writer edits a device with an oxymoron for a name and pitches a line straight out of 1950. And tops it with some malarkey about capitolist looking out for the working man. I guess he’s never heard of labor unions.
1
I am wary of America firsters, and free traders - at the same time. Despite what they espouse, the former are imperialists, the latter are milquetoast. I believe in free trade because it makes everyone rich.
McCarthy is an America firster, so I don't buy his notion of "if we are not tariff slapping, we will lose WWIII which will be the same as WWII with tanks, ships, and heavy bombers.
But the free traders need to wake up and smell the substance.
There is truth in the notion that every country wants a trade surplus with the US, that most close their markets to us, that most are afraid of competing in an open field. I don't worry about third world countries; it is Europe, Japan, China that are not playing fair. Expecting equal and fair access to each others' markets is not unreasonable.
Now to the tariffs. They are a tool, a means to an end. It is the first salvo. If China, Japan, Europe, S. Korea - act with equal petulance; we will all suffer. They are best advised to come to the table and say: "okay, we got the message, now let's talk about open markets."
Will this happen? I don't know.
They will start retaliatory tariffs to their peril. All those dollars sitting in vaults in other countries should be used - and not stockpiled - to improve the living conditions of their own people. Otherwise, there is no purpose to trade.
Kalidan
Dear Mr. McCarthy:
Greetings from the 21st Century!
Let me catch you up on what has happened over the past hundred years:
Many factory jobs have disappeared due to this thing called “technology.” In fact, America’s aluminum and steel industries have shrunk their workforce by about 75% over the past decades—while increasing output! Magic? Nope. Cheaper jobs elsewhere? Nuh-uh. Automation, sir. It’s the wave of the future!
I am sorry to report that the middle class has suffered, though, and continues to do so thanks to policies that favor the ultra-wealthy. Our financial and taxation systems work best if you make several million a year. Healthcare costs routinely wipe out middle class families. And college educations, which used to be the key to financial security, is prohibitively expensive.
Ironically, this guy Trump who you mention fought for policies and legislation that exacerbated these issues. I kind of don’t think he was really such a champion of the working class.
Wishing you all the best with the new steam-engine locomotive. (Watch out for that coal, and if you ever get TV, please don’t watch Fox News.)
I'm not totally opposed to every aspect of this reasoning, but as others have said a true nationalism looks for the real protection of all the population. Moreover, what guarantee have we that in hands of the Trump government a protectionist regime isn't the plaything of utter fools?
I agree in principle with the basis of your argument for economic nationalism; it being a multi-faceted and logical objective for economic stability. Unfortunately, logical and multi-faceted are characteristics not possessed by our current leader. If by chance there should be any positive outcomes from his current position on trade tariffs, it will be by shear luck. One other point that particularly irks me in general about the subject of free trade ideas. The decline of decent paying manufacturing jobs has less to do with free-trade than by technological displacement. For the last half century the country has been moving, if but slowly initially, toward mechanization of otherwise manual labor. Our leaders have proven once again their utter lack of preparedness. They have focused on their own daily meal rather than how the family will survive the winter. In this case, the family has to take some responsibility too for not stepping to the plate when the adults has proven to be unreliable.
I suppose the author of this piece really believes what he is saying. But that does not make it true.
What is particularly egregious is how the article soft pedals the role of power and elite self interest in the fall of the US middle class. Corporations supported by their political flacks and amoral bankers have spent the last thirty years crushing working people and sucking the capital out of once-productive enterprises.
Let's face it. While there's a host of ideologies poured into the ears of those who work that tell them otherwise, good jobs, wages and job security aren't given to anyone. They are taken and maintained, if people have the power to do so.
But unions have largely been destroyed in the US. Nothing has replaced them. No cooperative management models have arisen as have been so successful in Germany. Company management seeks a good balance sheet this year with no care for the long term success of the enterprise or those whose work make it happen. Job security is a joke and the lack of it undermines bargaining power. Accumulated capital that could go into making firms more competitive is instead extracted to use to buy other companies or to buy back stock.
'Free' trade is of course one of many things used to coerce workers and keep down labor costs. But it is hardly alone.
1
If I understand your argument boils down to:
1) prepare for war
2) see 1)
3) Make sure the USA has it better than anyone else
Let's assume for 1 second that all other countries would have a similar briljant view on the economy...... Let's not. Most countries have already figured out that other forces will be more important.
Imagine instead how future wars will work. You can bet that wars will be fought with technology. So you can go ahead and protect your steel industry. But when the Russians , Chinese, or Koreans attack you in cyber space, steel isn't going to defend you in any way. And boots on the ground won't do that either.
If you don't believe that, you are missing the fact that this is already reality (Russia anyone?)
I suggest taking innovation, clean energy, quantum computing, Elon Musk wanting to go to Mars, and artificial intelligence seriously and try to become an innovatie force in technology, instead of longing for old times that will not return.
What about the ghost towns from the old gold mining days? Come up with some catchy slogan and get those gold miners back to work and revitalize those old towns. Although the talking point 'if you don't have .......you don't have a country has been used regarding borders and steel, it just might work again.
Less than 2% of US steel imports come from China. It's ridiculous to suggest that this will do anything to reverse America's industrial decline vis-a-vis China's manufacturing power. I'm super confused as to why the nyt would publish such an illogical "think" piece. Paid book promotion, maybe?
Also, I'd love some evidence to back-up Mr McCarthy's incredible claim that we need to be stockpiling our strength (whatever that means) for some looming war. Sounds like Neocon 101 to me.
2
Absolutely ...
I welcome conservative views in The NY Times - even if “Modern” Age refuses to do likewise. But I have begged The NY Times to describe the bias and accuracy when providing the byline. The name of the publication is innocuous enough, but if you look up it’s media bias it’s obviously extremely right, which is fine, but factually, often inaccurate.
Somehow you must create descriptions or use other reliable sources who describe the accuracy of the author’s publications or background. These are dangerous times and we require, no demand, this type of information from The NY Times.
Please follow this up with your thoughts on Paul Krugman article of the same date
Thanks
Patrick Harford
Interesting article. However, Mr. McCarthy will probably be replaced by a "robot' to write op=ed's in the Times in the not too distant future. Because that is the "future" for most of us.
The US-dilemma is that in the evolution of civil society free trade and redistribution of opportunities go hand in hand. This solution is blocked in the minds of Trump c.s..
"Nationalist economies have some of the world’s most impressive records of growth and technical advancement." Ok, I'm assuming you mean China...which isn't plural.
The hypocrisy of America is amazing. We will vote for a man who promises to save American jobs, then go to Walmart and BestBuy and buy foreign made products just because of little things like quality and price.
Globalization works because the overpaid pigs on corporate boards don't want to pay union-scale wages to American workers. These swinish people on their golf links and in their clubs will conspire to defeat any threat to their personal continuous cash flow. And they could care less where the money originates. Since amoral multinational corporations really rule the United States through their almighty lobbies, it's most unlikely that a move back toward the archaic world of autarky will ever succeed. I work directly with the administration of these Free Trade Agreements for the federal agency that oversees them and know firsthand what a huge boondoggle they really are. For any part of the GOP to pretend that it's concerned with American jobs and industries first is quite disingenuous. The force of all that profit made possible by globalization and leveraging cheap Asian labor is insuperable.
1
Who knew that ‘Modern Age’ was a socialist organ. Even they didn’t, until Trump.
1
the worst smack in the face by Trump is to pin the tariffs on military security. The future of war is cyber not tanks. He doesn't seem to mind not protecting the US from that.
1
Mr. McCarthy,
Well written and Amen.
Thank you.
This is an especially dangerous view, based on jingoism and false premises of social Darwinism and not on any rigorous analysis of fact
Will this "Buy American" eventually apply to Ivanka's Chinese sweat-shop made apparel and accessories ?
Bye bye market economy! Back to the USSR and the wonderful Gosplan !
McCarthy has it backward on all points. Globalization does not have to hollow out the middle class if the Oligarchs would pay a fair wage and stop sucking the blood out of their fellow stakeholders. The old shibboleth about nationalism being necessary for national defense is is absurd in the modern interconnected world. Ever hear about comparative advantage and it's operating among committed allies? Nationalism leads to war by definition. Lets bury the war mongers. Etc.
Alternate Header: The Case For A Time Machine
I know that going back to the past where anybody who wanted to could get a job at a steel mill or auto factory and work their way into a middle class life are gone as is the past where that person would be happy with one car and one TV. The former steelworker working at a big box store now may not have the life he had at the mill, but he isn't living the way we all lived in the 50s, 60s and into the 70s either. You seemed to dismiss the availability of cheaper flat-screen TVs, but having more stuff is a big part of life today in a way that it wasn't even 40 years ago. That "stuff" would not be affordable to most of us if it were made in the USA.
The authors states: “Economic nationalism differs from free-trade ideology in having three distinct goals rather than one.”
The espoused goals are: security, prosperity, and “a multilayered free-market political and economic order that is anchored by a healthy middle class.” In fact: “As far back as Aristotle, a secure middle class has been thought essential to the well-being of a constitutional republic.”
So far so good, but the author’s attempt to connect these goals to tariffs is simplistic. The sole notion provided is that tariffs allow certain activities deemed necessary to the goals to be economically viable because economic competition is reduced. No attention is given to evaluating collateral damage to other activities, nor alternatives to tariffs, nor examples where tariffs work well, nor to the abuse of tariffs to pocket profits instead of developing better methods.
So far as the objective of a healthy middle class is concerned, tariffs are far down the list of remedies. Close to the top is redirecting the profits made from outsourcing and automation away from off-shore tax havens and toward restructuring the economy to employ people in solving the problems plaguing the country and ignored by a corporate controlled Congress. Such things as affordable health care, working infrastructure, fixing opioid addiction, providing a living wage for useful work, environmental protection, child & elder care, real education, etc, etc.
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This article is so flawed it is hard to understand how the Editorial Board could have agreed to publish it. You devalue your intellects by allowing this illogical and ill-conceived nonsense onto your pages. Who is this author? What qualifications does he have to write articles on international trade and economics? He is totally uneducated in these subjects. His career has been in political writing, working for Rand Paul and he was a student of classics at Washington University in St. Louis. time to replace sloganeering and superficial but invalid associations of one thing to another with intellectually serious argument. I'm not pretending that free trade alone is an unmixed blessing, but even not the brightest graduate students in Economics and Political Science could write more respectable essays than this on the issues and the potential solutions.
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Amen.
I visited China. The plane was full of Americans going to check on production there.
I was told that factories in the big cities of Shanghai and Beijing paid $10 / day.
So over the years, factories had been moving to the outer provinces where they paid $6 / day.
Those jobs are not coming back.
On the other hand, Germany doesn't seem to have a problem and they have faced the same years of globalization we have.
A recent NY Times article said there was a shortage of brick layers in the US with and average salary of $50,000 / year.
Germany trains their workers for the trades.
Germany trains their workers for high-tech manufacturing.
With 35 years of trickle-down Reaganomics, we got an opioid crisis.
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Is he really wishing the south had won the Civil War? I stopped reading at that point.
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Wake up America!
What you just read was a perfect justification of what Eisenhower warned about and McNamara created - a military industrial system that never ends.
Your problem is education.
Start with free copies of Orwell's "1984" and explain to your children the real meaning of the phrases;
“War is peace. Freedom is slavery. Ignorance is strength.”
That is what you have NOW!
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I think someone at the Times needs to check this posting — the version I read appeared to be missing the section with facts and analysis to support what otherwise just reads as empty rhetoric.
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National security, pish-posh.
Where are at the top steel plants in the U.S? In the states that catapulted the president to the White House.
It's a politically brilliant move by President Trump.
But play up the national security angle, that's the only way to not get sued by the liberal states outside the rust belt.
Steel plants, (000) tons
------------------------------
AK Steel Corp. – Ashland Ashland, KY 2546
AK Steel Corp. – Butler Butler, PA 1543
AK Steel Corp. – Mansfield Mansfield, OH 882
AK Steel Corp. – Middletown Middletown, OH 2899
ArcelorMittal – Burns Harbor East Chicago, IN 6173
ArcelorMittal – Cleveland East Cleveland, OH 2535
ArcelorMittal – Cleveland West Cleveland, OH 2094
ArcelorMittal – Indiana Harbor #2 East Chicago, IN 2205
ArcelorMittal – Indiana Harbor #3 East Chicago, IN 2976
ArcelorMittal – Indiana Harbor #4 East Chicago, IN 3638
Gerdau Long Steel North America – Midlothian Midlothian, TX 1786
Gerdau Long Steel North America – Petersburg Petersburg, VA 1190
Republic Steel - Canton Bloom Cast Facility Canton, OH 1394
Republic Steel - Lorain Hot Rolled Bar Plant Lorain, OH 1200
The inexplicable timing of these poorly considered tariffs suggests nothing more than a bone to save Saccone's house seat. Republicans are, rightly so, in deep doo-doo.
tarriffs on steel will do absolutely nothing for the middle class or working Americans. The outcome will be more expensive steel, with increased profits for mill operators. US annual steel output is about 100 000 000 metric tons, down from 140 million peak output in the 70's, employing about 80 000 workers. There are 9 integrated steel mills and 112 mini mills operating currently in the US. There is no lack of steel in case of war. It's a moot point. By adding tarriffs on imports and raising corporate profits, the US will export less, construction costs will go up, cars will be even more expensive, than they are already. All in all another stupid idea by truly incompetent and corrupt idiots, lacking a vision for a sustainable future. Only thing "conservatives" conserve are bad ideas.
This is nonsense. Nothing more, nothing less. Sorry this does not require profound comments.
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This is different from fascism?
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Good article.
I wonder if Krugman can read as well as write?
Probably not.
To a great extent, the flight of capital in search of greater returns ( cost of capital) either through innovation, a move to right to work jurisdictions, or off-shoring of production that led to the hollowing out of the midddle class. A trade war will only exacerbate the problem.
suffice it to say that the level of economic ignorance in this opinion piece is staggering. it would be a waste of my time to detail a rebuttal.
Is this guy an economist? Nope, the editor of a quarterly conservative journal. (You know it's conservative because the word "conservative" is in the title.)
80% of German war casualties were suffered on the eastern front against Russia. Thats where Nazi Germany was defeated, not on the beaches of Normandy.
Why no discussion of producing higher-value products? American industry was producing too many low/mid-range commodity products. Commodities prices always fall when there is more supply, and when you're producing something that can be produced cheaper somewhere else by whoever, you will inevitably lose. We should have focused on producing better quality products that require unique skill to produce, as successful affluent and still industrial Northern Europe has. Why don't we talk about this instead of stupid tariffs?
So. Many. Contradictions... Take this: “To reduce public policy to a single dimension, as free-trade ideologues do, is foolish and dangerous” By that logic, reducing policy to economic nationalism is even worse. History has shown it is foolish and genocidal!
I find it odd that the Times would run this opinion piece, given the wealth of factual analysis it has produced in recent days entirely undercutting the author's arguments.
I don’t know how anyone can claim with a straight face that trump cares about the middle class. This op-ed is laughable.
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Why is the NYT permitting a blatantly unqualified journalist to pontificate on such complex and complicated economic issues about which he clearly knows next to nothing, beyond conservative platitudes? Your space is much too valuable for such a waste.
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We're headed for another big war and we will need industry and raw materials to win this war. I can't believe I'm saying this, but on this issue Trump's instincts are correct. The congressional republicans are like the British conservatives who wanted to appease Hitler rather than to prepare to fight him.
Gosh, the argument they we need manufacturing jobs is as valid as 150 years ago saying we need to preserve cotton pickers’ jobs.
In a fully developed economy like the US free trade spurns innovation and is the foundation of prosperity.
Sad to see that the NYT gives nostalgic pipe dreams a forum.
It's been Americans that started buying in China and in other "cheap" foreign countries that have ruined America's industrial complex. CHEAP was the war cry for decades. They made a "lot of money" which is the "silly" dream of Americans. That their activities ruined the jobs of their compatriots didn't matter.
Why are Americans lying to themselves??? Does Trump, an economical clown, hope he can change something of this situation? Why doesn't the NYTimes have the guts to tell the truth to the American folks?
Can you at least imagine what European counter-measures to Trump's tariffs will have on American farmers when the EU stops buying American cereals and other foodstuff?
I'm convinced that this angry comment won't be published but, dear people of the NYT, please realize the bitter truth (besides, I never bought an American car in my life).
What a woefully inadequate and poorly thought out defense of the indefensible.
1) If you need something for national defense you put it in the defense budget.
2) If you want a strong middle class you support unions for classes of workers currently denied union status.
3) You don't adopt trading policies that hurt your allies.
You cant fix STUPID
In the late 70s, Lee Iacocca moved Chrysler manufacturing across the river to Canada and started sourcing parts from Japan and Germany, all the while shouting, "Be American, Buy American!" from the roof tops. In the early 80s US Steel broke a union strike by shuttering 3 plants and throwing over 5000 union workers out and moved offshore.
It wasn't trade agreements, it wasn't "unfair foreign practices", it was corporate leaders not wanting to support their workers any more. Now that corporations have impoverished most of America and have an Executive Branch which has blessed the further raping of the country and poisoning of its people, they can bring "the jobs" back. Except they won't be "the jobs" which built our old middle class: the pay will suck, the conditions will be dangerous (and deadly in some cases), and people will take them because they have no choice.
Let's bring back the company store while we're at it.
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We need to think 21st century and beyond, not a 20th century balancing act. China is showing us the way right now with their "one road, one belt" plan.
The US need to stay at the forefront of technological revolution because this is where the fertile ground is now. Space and medicine are the next frontiers. Space is so as was proven at the end of the 20th century and the biological revolution is in full swing, abetted by the discoveries engendered by space.
With regards to the middle class and its well-being, first a big mistake was made when the human capital and the infrastructure was let go in the name of lower taxes. There are such things as "lost generations". Education is more important than ever.
Governments should practice statistical analyses and continually study trends so as to properly adapt to dynamic times.
We faltered in the last 40 years taking our eyes off the right road. Now, we need to get back in the game, before we are completely buried and embrace the 21st century manufacturing i.e. computers, AI, miniaturization, space transportation systems, renewables, power storage, factories in space etc. We need a "GI Bill" to bring people back into the middle class and basic research is of the utmost.
Many people are not going to do well in the near future because of Republican tactics over the last 40 years. We are not going to salvage the 30-50 years-old cohort. The Republican party failed them big time and wants now to screw the next cohort.
Maybe I am wrong.Israel has no steel mills or factories to make cars.According to Trump Israel is not a country.Israelis would not agree with this.
Hitler and Mussolini were economic nationalists. So was Japan, France and Britain and they all made arguments similar to the ones in this article. Of course, if this again leads to war it won’t be the children of Wall Street Titans, steel barons or politicians dying in the conflagration. It will be the children of the middle class and others.
Such economic ignorance and pure sophistry! I would bet the essay would get an F from some Economics professor.
History shows that such tariffs are not good for anyone.
Take your head out of the sand. This is 2018, not 1950.
The raw materials?
The paradigm that we were to move from an industrial to service economy? Labor?
You really think a christian academy in some backwater will produce the necessary scholarship? Jesus science?
Submit this dreck (op-ed) to a university level course for actual credit?
Somewhere the realisation that the "hollowed out factory town" industry was simply out competed in the world market. Cash registers, typewriters, guns in my home district disappeared overnight. Educational institutions? Thriving. Serving students from all over the world. District? Thriving.
Donald used undocumented immigrants and foreign steel in his buildings. He uses Romanians on H-1B visas at Mar-a-Lago.
I'll believe Donald when he does as he says.
No, Daniel McCarthy, we do not wish to share your Kool-Aid, nor follow your delusional megalomaniac into mass economic suicide.
I find myself wondering, these days, whether he’s truly crazy or merely stupid. It looks more and more like I don’t have to choose.
Mr. McCarthy - Meet Dr. Krugman. You may want to read his thoughts on trump’s tariffs (https://www.nytimes.com/2018/03/08/opinion/trump-trade-tariffs-steel.html) before penning “Part Two” of your column on the same subject. Happy learning.
Buy American - Hire American
So, how come the Trump schmattes are made overseas?
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Here, here!! Paul Krugman should read this and learn something.
Thank you for putting into words, what most Americans of the working class and middle class feel in their bones.
They know that "increasing the GDP" by free trade generally means better jobs for foreign workers, greater profits for Goldman Sachs, and worse jobs for previously well compensated Americans. And Americans have had enough of enriching Goldman Sachs at the expense of the rest of us. Good riddance, Gary Cohn!
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Protectionism is the progressivism of fools. Gandhi was a great statesman but a horrible economist. Just as the ignorant in the USA argue that American workers who earn $15 per hour should not have to compete with Chinese workers who make $2 per hour, Gandhi thought that Indian workers should not have to compete with American and European workers who have the benefit of modern machines. As a result India adopted protectionism. In 1947 the per capita income of India was similar to countries such a South Korea. By 1977 the per capita income and standard of living in South Korea was many times that of India. India has since largely abandoned protectionism and has benefited immensely from free trade. Just as David Ricardo proved would be the case when he developed comparative advantage.
There are stupid tariffs and very stupid tariffs. A very stupid tariff is a tariff on steel and aluminum that increases the costs of every product made in the USA that uses those metals. This increases consumer prices and makes products produced in the USA less competitive relative to those made outside the USA using steel and aluminum priced at the world market rather than the artificially propped-up protected US steel market prices.
A less stupid tariff is the retaliatory tariff that will be put on US motorcycles (Harley Davidson) that will not raise any costs on any EU producers, or raise prices for anyone in the EU, except for buyers of motorcycles.."
https://seekingalpha.com/article/4148256
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So, have President Trump and his daughter Ivanka brought their manufacturing back to the US? Is Trump hiring American workers for Mar-a-Lago or is he applying for more H1B visas? Or is he just another rich hypocrite?
Jeez. What terrible columns today. This one and that other one calling liberals "Smug" - enough finger-pointing and blame-gaming!! Can't anyone offer a solution to our horrible mess of a government? And our mixed up, uneducated populace?
Why does the NYT continue to give a platform to people like this? Almost everything he says regarding trade is factually incorrect. Steel tariffs are not going to bring back steel jobs.
Daniel McCarthy? Where did you come up with this guy!? Does he know it's 2018 AD , not BC?
This is nothing more than a right-wing "commentator" trying to normalize Trump's erratic and thought-free policy brain fart of the week. Next week, the bucket and shovel brigade will be scrambling to rationalize Trump's next whim.
How could an article not worshiping at the altar of free trade actually make it through the gauntlet of orthodoxy which is now the New York Times. Heads will roll!!!
First of all trump is simply a con artist. What he says means very little. Even a mafia don makes more sense. Even Kim Jung-un is more of a statesman. This writer, McCarthy, talks big: WWII, orthodoxy, consensus, Aristotle, all big words but totally inapplicable for an idiot like trump. And that stupid sign above his head: "Buy American - Hire American"? What a fraud. trump hires 70 more foreigners for Mar-a-Lago. There are no Americans needing jobs who can work there?
It’s really about education. Technological innovation has lead to new ways of doing things (PC vs paper, CNC vs mechanical, self-serve checkouts) and extraordinary gains in production, making unskilled workers less needed. The 1950s that the author and Mr Trump idolize was an anamoly - at what other point in time anywhere in the world were unskilled workers able to command a middle class salary and benefits?
A tiny elite reaping disproportionate economic gains is the outcome of capitalism (unfortunately). The way to combat inequality is through improved education, universal healthcare, and redistributive policies on the gains. Tariffs on the inputs is a thumb in the dyke.
Time to stop thinking small and looking in the rear view mirror. Globalism is the new normal. We can rise to the challenge.
Economic nationalism, on the other hand, requires constant balancing and adjustment if it to be pursued correctly.
At yet Trump, that stable genius, has shown zero aptitude for constant balancing and adjustment regardless of how much repeated bankruptcy, just barely keeping ahead of the demands of unhappy porn stars, ex wives, and Russian plutocrats intent upon receiving their piece of the American pie may impress some conservative deep thinkers like Mr McCarthy, with stars (and who knows what else) in their eyes.
It's likely that NYT chose to publish this nonsense in order to embarrass the author by exposing his folly to a wide audience.
The author misses the point. U.S. prosperity will not be enabled by tariff tricks and presidential decrees but by a fundamental and radical alteration of the nation's priorities: Make Infrastructure, Not War.
The military-industrial complex has sucked the economy dry with $ 8 trillion literally wasted (not to mention the resulting human carnage) on wars this century alone, while China is spending $ 8 trillion on a single industrial project.
Slogans will not save the U.S.. Its future prosperity will depend entirely on its willingness to sacrifice its goals of a New World Order for a New Domestic Order. The latter can facilitate and drive the former, not vice versa.
I wait with baited breath to see whether the U.S.'s much vaunted ability to reinvent itself spurs the nation to hew heights or whether it will continue fighting the Civil War.
Look at my country.
We are the world champion of export surplus.
We are the definition of 'Mittelstand'.
We are everything what you are claiming to fight for.
And we are doing the opposite of what you are proposing.
We are making as many international deals as possible.
We buy steel and aluminium whereever we can get it.
Our recipe for success ? Try it with a well trained and and motivated workforce. Because we take all these steel and aluminium and turn it into tools, cars, fridges and stuff only an highly trained workforce can do.
All you do is taking some freakin stalin-alike phrases and dress them in stars and stripes and make command economy look like you care for common people. Maybe you and your bigwigs get rich, but everyone else will go down.
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generalizations and pablum. it this what the times op-ed section has become?
I am always amazed that conservative "thinkers" want to bring the US back to 1955. What do they see then that we cannot with a little hard work achieve now. I suspect they want to go back to the robber baron days of yore, without of course the labor unions, the safety protections or the environmental laws.
The article talks about the middle class which has been just hammered by Republican conservatives of late, squeezing the last bit of humanity out of the way they treat that group. How about passing laws and the money to make all people better suited for today's world. I can see where Republicans have given so much help to the people of Oklahoma, or Kansas or Lousiana where schools perform so much worse then is possible if they just gave a damn.
Since Nixon said "I am now a Keynesian" in 1971 Republican presidents have taken every opportunity to run a deficit. Democratic presidents worked hard to run a surplus, or at least minimize the deficit. (Obama had a hard time first because it's good economic policy to run that deficit in times of recession, and then, when the economy improved, Congress prevented him from adjusting taxes to avoid a deficit.)
When the government has a deficit it must borrow money -- sell T bonds. This sucks money from the economy that would otherwise go to things like new factories. But, more damaging, it attracts foreign "investment" in the bonds. So boatloads of foreign money flow into the US to finance this debt, upsetting the balance of payments and driving up the "value" of the dollar.
Increasing the value of the dollar is NOT good. What it means is that foreign goods are cheaper and US goods more expensive. So government deficits "export" manufacturing to foreign countries.
Net: Since 1945 the productivity of US industry has risen at a remarkably steady rate of about 2.5% a year -- American workers have been very productive. And, from 1945 to 1973, the inflation-adjusted wages of "goods-producing" workers rose steadily at a virtually identical rate. But suddenly, around 1973, the rate of rise of wages flattened to near zero. This corresponds almost exactly with the change in Republican policy that, from that point on, caused the "national debt" to begin steadily growing.
To call what we currently have "free trade" is a misnomer. The problem isn't in open trade - the problem is that it is not reciprocal. I am convinced that America could compete and win in a truly open system. Under the current system, with our doors wide open, while other nations are blocked - is a giveaway of American jobs and American prosperity that should not be continued.
Trump has at least recognized and is trying to correct the problem which is more than can be said for any president in the last thirty years.
On the world stage, America must be competitive and have vigorous trade. This requires smart, focused trade policies not blunt instruments like isolated tariffs.
Competitiveness will require a healthy, highly educated, mobile workforce, modern world-class infrastructure, world leading science and technology and this requires investment. That’s why the bi-line of this article gives me pause. Would his “conservative” organization support this investment? I would have the same kind of reservations if he had been representing a “progressive” group. To survive in a competitive world we need truly flexible thinking.
There is nothing wrong with aggressively confronting unfair trade practices but we have to really understand the complex effects of proposed actions. The administration economic “experts” who initiated the tariffs are the same ones who advised “declaring China a currency manipulator” years after it had reversed course on this issue and was pursuing other transgressions. We need “smart” policy that not only understands the complex world of international commerce but supports the growth and personal health of our workforce and development of our other national assets.
This article if this was the 1950's would have a good point, but is irrelevant in the 21st century. The idea that there will be another WWII level war that will require massive output is an anachronism, Nuclear weapons made that obsolete, most war today is technological (which is why the Qualcomm call is supported across the board). The idea that if we put on huge tariffs jobs would come back to the US is false, because even in China and other places they are automating much production as well. That doesn't mean economic self interest isn't important, and in the US it did fall by the wayside in the name of increasing profits and shareholder management that benefitted the very top and some select upper middle income people, and with the University of Chicago Lord of the Flies/Ayn Rand idea that the economy should benefit the very few who are 'special'.
The answer isn't in tariffs or bringing manufacturing back, because manufacturing is becoming less and less labor intensive, even in China, as automation takes over. What we are in is what Vonnegut predicted in "Player Piano", how do we maintain meaningful work for most people without it being a handout? And how do we convince wall Street analysts and HBS trained managers that unless you have workers with meaningful work at decent pay, that they won't have anyone to buy their goods and services?
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Mr. McCarthy, you and your conservative cohorts have been silent about erstwhile depredations of the middle class in postindustrial America.
You have been supportive when Wall Street raiders engaged in mergers & acquisitions, and then eliminated and off-shored union jobs to pay debt service in the name of laissez faire trade (like when Mitt Romney's Bain & Co. shut down a steel mill in Missouri - one example of a legion.)
In addition, there was plenty of antagonism from the right of Democratic Presidents Carter and Obama for extending loans to auto manufacturers in troubled times. There was a very strong national security argument in that case, because the value-added workers of GM and Chrysler can make tanks and jet engines in times of war. Nonetheless conservatives would brook no governmental interjection into the private sector.
Hence, your conservative support of Trump's tariffs in the name of security are seen through a lens of hypocrisy and tendentious inconsistency. Needless to say, fanning the flames of a trade war are not a conservative position.
5
I think people are struggling with a huge economic change. Technology is the true cause of all the disruption. Climate change is also part of the puzzle. Trump and supporters are pointing fingers in the wrong direction. Major change always has victims, and clutching to traditional causes is probably a typical human foible.
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until government actually does something targeted and meaningful in the way of job retraining, strengthening the social safety net and increased attention to public education? it will not matter if we promote economic nationalism or free trade.. the average guy is not part of the equation for liberals or conservatives. the workers in this country have willingly been sacrificed for the benefit of the wealthy. now we worry about the symptoms of this tragedy such as opioid addiction but we do not deal the with disease..... out of control capitalism.
The author's claim about the US being able to fight a two front war in WWII ignores the likely possibility that there would not have been a two front war in the absence of the Smoot-Hawley tariff act of 1930. Smoot-Hawley had very bad economic consequences in Europe, particularly in Germany. In 1932, Germany's unemployment rate stood at about 25% and, in the end, even its very democratic Weimar constitution failed to protect its Jewish minority.
No one really knows the future consequences of the Trump tariff, but as the old saying goes, those who do not remember the past are condemned to relive it. I doubt that the Trump tariff will once again make Lackawana, NY or Baltimore, MD major steel production centers. The world has moved on and industry is more automated. Creating a few jobs in the 18th Congressional District of Pennsylvania will not offset the costs currently being imposed on all American industries by our costly and dysfunctional medical care system. Moreover, how many jobs will be lost in US industries that use steel or aluminum as a raw material?
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We sold all our rare earth mining equipment to China! ALL. And so, although we have plenty of rare earth minerals in our abandoned mines and earth, when China some years ago stopped making them available, we were in a hurt.
It takes a good bit of time to retool to make the mining equipment and the refining. And it takes time to train the workers and regain the expertise. It is insane to ever stop mining silver or rare earths or . . . Even if it can be obtained more cheaply.
The Strategic Materials Act (7 year supply of 66 strategic materials for defense and economic security, three for years of boycott of supplies, 4 for a major war) was written by then Representative Thomas E Martin of Iowa as WW II was already in Europe. It took 18 months to convert our factories to war footing. At Pearl Harbor we still only had enough rifle ammo in our homes and stores and bases to defend for 24 hr an invasion. Most essential ammo was in much less supply, within two months we were mostly at speed.
Senator Stuart Symmington and President Nixon in a phony balanced budget sold off almost all of our strategic reserves.
Let us not ever be so short sided again. Silver less expensive in Peru. Yes. But close the mines in Idaho and they flood and then we are at the mercy of far distant countries. And the same with rare earths and many other minerals and supplies. Even down for Arctic clothing was essential!
And let us demand a living wage from every country whose products we buy!
3
Again, this is a one-way thinking: only the US can impose tariffs. What does happen if Europe, Russia, China and Canada start imposing tariffs on US products? How would it impact the middle-class?
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If we keep relying on wars and domestic industrial production for national prosperity, we are not going to win in the process of addressing the climate challenge. Mother Nature is not going to watch this passively much longer.
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Nations should trade freely with nations that are like themselves in terms of how they regulate the economy, and should put up tariffs with nations that are very different in terms of how they regulate the economy. The United States, Canada, the European Union, Japan, all have certain things in common that make free trade between them logical, without threatening to hollow out industrial towns: robust workplace safety standards, environmental protection, the right to unionize. We can squabble over minute differences here and there, but these developed nations are more alike than they are different. They are alike in that their regulation of the economy is costly, but deemed politically worthy. When you open free trade between a country like the United States, which has effective, yet costly workplace safety protection, and a country like Mexico, which does not, you essentially send the American worker out into the global marketplace with a ball and chain around his or her legs. How are they supposed to compete in selling their labour when their competitors work in vastly inferior conditions, for vastly less pay, in a completely different economic environment? By all means, let American, Canadian, European workers compete against each other, because they all come into the global marketplace with roughly the same social welfare costs attached to them. Set a tariff on Mexican, Chinese, Bangladeshi, etc., goods at a rate equivalent to the domestic social welfare premium.
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The Export Import Bank subsidies loans to foreign entities and so that they, in turn, can buy American products. How about an Industrial /Manufacturing Bank that could provide subsidies to American entities so that they can hire American workers?
And as far as the need to preserve certain industries for national security purposes, there are other ways of ensuring their survival. Nationalize them or subsidies them directly, as other countries do.
Tariffs on imports such as steel hurt everyone as they raise the price of everything downstream.
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It wasn’t the mill towns that made America prosperous, it was the unions. This writer barely gestures toward them faintly with his reference to amazon’s (indeed horribly treated) warehouse contractors, but how many economic nationalists want to bring back powerful, organized labor? Also, I don’t know if this writer imagines there will be another war involving huge armies and navies, mountains of ordnance, and so on, but it seems he hasn’t noticed that we’ve been at war for over 16 years without ceasing already.
Finally, what a sad commentary on the nature of an “economic nationalist” that this one, anyway, is not “comforted” by the presence of strong hospitals and universities, with their middle-class employees, or indeed, by the remarkable story of Pittsburgh’s recovery from its steel days and its thriving.
This article is so outdated. New technologies have no boundaries and are instantaneous available on a click of a button. We invest in steel mills and coal mines while the rest of the world invest in higher education, health care, new technologies, etc.
We can close our eyes and pretend to live in 60’s, but that will not change the truth or make any difference: the time will fly and the world will move on.
I consider myself a global citizen and I am a professor with my research interests in new technologies. If we want to put our country’s future in coal and steel then we have already lost the game.
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Lots of good points here. But it forces some questions
As I understand it the US produces 70% of all the steel it consumes. One percentage would be required for us to meet the author’s goals. If you use the WW II analogy it must be greater than 100%. But is that realistic?
Obviously aluminum is a different overall story. But again how much is enough? Do we need to have 70% self sufficiency like steel today, or 100%. What is enough? And can we even get close to self sufficiency on aluminum?
Finally do we need to treat Mexico and Canada likely adversaries in future wars? Can their production count as helping meet our goals? Or do we need total self sufficiency?
Or is this all just blowing smoke?
2
I (otherwise a flaming liberal) have long echoed one of McCarthy's points, which is that our productive capacity is a national security issue, as World War II demonstrates. However, I am beginning to wonder if that theory still holds in the context of 21st century warfare, or is this a really bad case of generals preparing to fight the last war. While we could turn our factories over to building a massive invasion force to crush and occupy Syria or Afghanistan or even North Korea, just about no one is suggesting doing those things would be a good idea.
I have also always thought that if we could somehow start with a blank sheet of paper, we could design, from scratch, a US economy that would be just about entirely self-contained and would provide full employment. It might even be more egalitarian (but maybe at a lower per capita GDP), and it would definitely be less economically and politically exploitative in the world, which could also benefit national security -- IN THEORY.
The problem is that we do not have a blank sheet of paper and a benevolent despot to arrange all the chess pieces as she/he thinks best. We have the businesses that we have with the assets they have. I can't think of an instance where a command economy and reasonably democratic politics have successfully coexisted. At best you end up with the opposite in both spheres (somewhat like China).
1
Every time you see "Economic Nationalism" read "White Isolationism" because the Author is living in the Ward and June Cleaver world of long ago. By the time a politician stands in front of an angry crowd of workers who have lost their jobs (or invites them to the White House) it is too late and they know it. What a responsible government would do is invest in the basic infrastructure of a modern economy to help those workers move on to new and better things, i.e. roads, bridges and renewable energy to move people and goods, research and development to develop new and better ideas, education to give the workers the skills they need and healthcare, a healthy workforce is a productive workforce.
We should offer assistance to help people relocate to areas where there is better work if they choose. We should encourage immigration of skilled and unskilled people to this great Land of Immigrants because more workers mean a bigger and better economy (and more tax revenue). Stop calling people "illegal" because they could comply with a broken system that has not been updated in more than 30 years, fix the system to meet the needs of an economy that clearly demands their labor,
And finally, stop telling lies. The U.S. produces more industrial output with fewer workers than ever before, automation and innovation. Domestic production of steel meets 70% of our needs while National Defense usage is about 2.5% of demand.
The third point is valid: free trade has devastated the heartland and industrial center of the US.
This assertion runs counter to the main demonstrations of international trade analysis. That is, one learns as an undergraduate and even more as a graduate student that free trade between two countries benefits both. Among many countries, it benefits all.
And it's largely true. But, there's a shell game going on here. If we export Silicon Valley wonders, China pays for those items with industrial products: the consumer and intermediate manufactured goods once produced, especially, in the Midwest.
Here's the shell game. The benefit to Silicon Valley firms is greater than the loss to those displaced by the related Chinese imports. Sleight of hand: "the benefit to the US is positive!". Sure, San Jose's gain beats Chicago's loss.
For Chicago, who cares? Who cares that your agony has made for offsetting joy two thousand miles away?
The truth, not the shell game, is that trade is authentically beneficial to both sides, only if it helps the entire population of each country. That is: free trade is unambiguously beneficial only if it injures nobody.
All that is necessary to make free trade work for everybody is to tax some of the benefit to San Jose people to compensate Chicago people for their injuries.
Over the forty years of hollowing the heartland, neither liberals nor conservatives, the elites, cared.
San Jose kept the benefits.
And got Trump.
3
The temptation for the superficial to focus on supply is very strong. On the surface it seems to be a panacea, a way to increase production and lower prices. But aggregate demand is the fundamental driver deciding the benefits that accrue to a country due to trade. One of the fundamental discoveries of trade theory is that the most benefits of trade accrue to the nation with the most aggregate demand. Perhaps we should stop selling out the masses in favor of a few corporations so the American people have more money in their pocket to spend. Nationalism v Globalism seems like a sucker's distraction.
I think the gentleman has a point: why can China have all of these protectionist laws about ownership yet be allowed to Waltz in and own outright beyond their borders with impunity?
On the other hand, why does the predatory economic actions of the Chinese absolve the US from having to crack down on the whole-sale wealth theft of the workers of the country who have become 400% more efficient while the ownership class has seen their wealth grow by ... well, approximately 400% since Reagan?
He’s right, there aren’t convenient answers, and free trade has presided over the loss of middle class wealth in large swaths of America. Has it been some combination of a domestic system that doesn’t have the political will to censure and straighten out the predatory wealthy and an international system that too easily enables their pathological avarice? Probably.
1
Free trade can work if everyone is playing by the same set of rules. If one country can gain a comparative advantage by having lax environmental and workplace safety rules, or by murdering labor organizers, or by use of what amounts to slave labor, there needs to be swift and brutal economic retaliation by all other nations. The same goes for governments subsidizing industries or manipulating currency.
I think a lot of the frustration among Americans who have seen their jobs shipped overseas is the perception that the government is slow to respond to cheating, and takes half measures when it does react. And there is suspicion that the government is willing to sacrifice U.S. jobs to avoid antagonizing countries whose cooperation is desired in other areas. A classic example is the 3 airlines in Quatar and the UAE who have received massive government subsidies for years, but only recently had their hands partially slapped.
Instead of the certainty of an American win, the protectionism that Trump touts is more like a Pandora's Box. The hopes of those that touted the Smoot- Hawley protectionist bill to curb the effects of the Depression were in for some nasty surprises.
1
Economic nationalism is widespread except in the US under the influence of press and wall street propaganda. China builds huge e-commerce companies such as Tencent, Alibaba, Baidu etc using protectionistic censorship. Both Japan and South Korea use import tariff to develop and boost huge industrial conglomerates such as Samsung and Mitsubishi.
The decline of US manufacture industries are a reflection of decay of the American spirit together her people and it is always easier to blame someone else such as the wall street, poor education systems, indolence toward working, drug and gun cultures, political corruption, automation and etc., for our own failing.
Yes, our economy does need an alternative. The problem is that the shift toward "neoliberal globalism" led by multinationals and financiers should never have been our policy first programmatically proposed by Reagan and then fully implemented by Clinton. Very hard at this point to reverse course without massive disruptions and short-term setbacks.
1
The only way to create a beneficial economy for the majority of Americans is for American business to share some of their record breaking, enormous profits with the American worker. Instead of trying to hide billions of dollars in a shell game throughout the world to avoid taxation, they need to be willing to share their prosperity. But, alas... we have a scam artist as president who will never make business pay a more equitable share. In fact, he with the help of congress, has the business community paying considerably less.
Being 76 years old I remember when the decline of American manufacturing began. It was in the mid 60’s and the early signs lay in the quality of American automobiles. We had to wait years for disk brakes, radial tires and fuel injection systems—all standard today — to be brought to us via European and Japanese automobiles. I enjoyed tinkering back then and I remember well the feeling that this or that metal or plastic part was a piece of junk, something that I literally touched with disgust, obviously using lower quality to save a penny or two on the sale of 5 million or so cars. The cost of those pennies saved on innumerable parts came to a peak with the 1970 Plymouth we owned, truly a piece of junk, top to bottom. It was replaced with a used Volvo and we never went back. By the end of the 70’s, living on a tight budget, we learned to avoid “American made” because we could not afford endless repairs.
But we never blamed American workers. It was owners and investors who were happy to sell third rate products if they could find a way to disguise and ignore the consequences. Things have changed somewhat, but I still instinctively avoid American made products rather than take my chances on paying for shiny objects of dubious quality. This is certainly true of 90% of the shiny plastic-wrapped products found in our grocery stores today, with the health concerns we all hear about.
It is not sustainable to compete and sell these appearance-without-substance products abroad.
1
Both parties have let the US worker blow in the breeze of economic competition for quite a while. While the Republicans never seemed to have much interest in protecting the worker the Democrats worked to protect the interests of the worker through backing unions and a certain amount of protectionism. President Clinton brought the Democrats into the free trade fold. Though the Democratic Party did not fully abandon the worker this "treason" pushed enough workers to the Republican side - which aligned with many workers social views - that the slow but almost complete disenpowering
of the workers economic interests is almost complete. While I am not in favor of Trump style protectionism the Democrats must make clear pro-worker policies. They must work to protect Unions, provide money for retraining, make college education affordable, provide money for research that will keep us competitive in technology, affordable healthcare, progressive taxation, etc.. Only by doing this will the Democrats provide a clear and winnable alternative to the Republicans
1
Those who, like Mr. McCarthy, think centralized power in a society is the best way to order lives, should come clean with their wishes: If you want to sustain an economically unsustainable industry, tax away more wealth from the population and give it to the US steel producers to keep them afloat. Why are the consumers of steel the ones that must pay for propping up US companies for the purported value to "national security" or supporting a middle class? Take the money from people with taxation powers and send a check to the US steel companies; that is how crony capitalism normally works. Why disguise it with tariff and phony rhetoric?
1
Me thinks that the author needs some schooling in Economics.
Economics is 100% a Man Made construct; it as such, has within its providence, the ability to exact outcomes with which we as a society wish to enable.
There are no natural or predetermined forces that we as a society have to abide by. We construct the rules.
Too many people have a false understanding that there is a unalloyed or natural outcome and that any attempts at an "interference" is itself a lessening of what that outcome should be.
He is correct in his observation about a Middle Class, but wrong in his observation about it being pressured by Tariffs/Free Trade or Technology in and of itself; it's in fact, about Economics: the very rules that we as a society wish to create and follow.
And indeed if one traces out the "hollowing out " of both the Middle Class and the jobs that enabled the Middle Class, it really come down to the stratification of wealth. For it requires a sufficiently large Middle Class to bring about the prosperity that should be the FUEL that powers the engine that we call an Economy.
In the absence of a prosperous Middle Class, that Fuel will continue to diminish and eventually starve the engine: our Economy.
23
As a progressive, I am encouraged to see that there are others "across the aisle" that have similar skepticism of free trade. I abhor Trump, and see his current steel and aluminum tariff as very poorly targeted, but also believe free trade works only in the presence of a roughly playing level field in terms of labor and environmental regulation, domestic taxation, etc.... Otherwise, it is a race to the bottom. Over the past half century the increasingly dogmatic free-trade orthodoxy (along with relaxed financial, labor, and social regulation domestically) has flooded our society with cheap, low quality goods; exacerbated the rising importance of a financial sector that is much less fundamentally productive than manufacturing; and contributed to the hollowing out of our middle class, resulting in a sense of existential crisis and anomie among the (previously middle class) working poor that has resulted in mental health issues, addiction, and crime.
26
No one forces us to buy cheap, low quality goods. But yes, the growth of the financial sector has greatly contributed to income inequality.
1
Thank you WS. Your first three sentences are spot-on, namely...
1) Not all progressives are in total lock-step with free trade;
2) The recent tariffs, like so much else in the Trump admin., seem ad hoc and poorly thought-out;
3) We ARE in a race to the bottom.
I live in the Pittsburgh area where the hollowing-out of many of our mill-towns is visible and tragic. As one writer here has pointed out, the devastation of the Rust Belt remains mostly invisible to those in the major urban areas of the East and West Coasts, but it's real and painful to the thousands of families who live in them.
I wish Paul Krugman would address the issues you raise...without resorting to the bromides of "retraining" and "safety nets." Yes, they're important, but they aren't the answer to a systemic problem. Thanks again, WS for your thoughtful comments.
1
Indeed, this should be an issue that people on the right and left can actually agree on. It's a shame that many progressives are just trying to do the opposite of their opponents for no other reason, just like conservatives decided to oppose climate change mitigation purely to be contrarian once it became a left wing cause.
1
This is the first informed and articulate article about "free" trade that you have published in the last twenty years. Advocates of free trade (Krugman, et al) are ignorant of the theory's origins -- Adam Smith and David Ricardo, among others. The economic environment upon which they based their theories favoring free trade had absolutely no similarity to the unlevel playing fields of today.
We need to establish, for every industry, tarriffs that level the playing field, one country at a time. We can pretty much ignore Canada, Europe and Japan, since, with a few exceptions, the fields of play are relatively level between them and us. We need to concentrate on Mexico (withdraw from NAFTA), Latin America, China and most of Asia and Africa except for Japan. We need to ignore the interests of "globalist" companies. Let them take advantage of the American market (which is more than sufficiently large and diverse) instead of parading around the world.
Above all, we must withdraw from the WTO. We do NOT need world trade. We need American trade, wherein American citizens produce and benefit from each others' purchases. If Mexico or China or whoever can (like Germany) produce goods that American citizens wish to buy while the foreign manufacturers operate from a level playing field (produced by tarriffs), then so be it. If not, Americans will buy American products.
"Trust us! Free trade is better in the long run." That's the only argument presented by the free trade elitists.
20
Interesting approach to begin your argument by attacking Krugman, et al as ignorant of Adam Smith’s and David Ricardo’s place in economic history. Me thinks this approach degrades your argument right off the bat.
1
I guess you are talking about Adam Smith, who claimed there was a god like power in form of a invisible hand that would take care of spreading the monetarian resources in a good way among the people, something it have not and will not do (because there simply is no invisible hand). And mentioning him in the same sentence you mentions "ignorance" seems rather strange.
But I guess ignorance is a blizz, mostly among the right
1
Level the playing field to what level? To match Mexican auto workers that get paid $6/hour with no planned hikes/no benefits to their US counterparts who start at $18, move quickly to $23 with $26 on the three year horizon? Protectionism is never the answer.
The trade "war" with other nations is unnecessary and creates downside secondary effects. Another way to preserve the industries which support national defense and the hollowed out middle class is to target subject corporations with rates of taxation which persuade them to relocate factories and jobs back to the USA .
Tariffs subsidize cost inefficiency, so the same 'middle class' you are protecting will see costs rise for things they buy. On the other hand, suppressing labor costs to maintain cost competitiveness is part of our issue with income inequality. At this point in history, labor costs for manufacturing are cheaper in many other places - and telecommunications /transportation globalization has made those lower costs feasible for the manufacturing supply chain. This is the price of free enterprise/capitalism. Do we want to make our manufactured goods more expensive (impacting consumers - and diminishing global competitiveness), or drive down labor costs to levels of countries that do NOT enjoy our American standard of living? Neither a good outcome.
So, as Germany and other developed countries have learned, adapting to other opportunities by a focused investment in re-tooling our workforce (and infrastructure) is a win-win. We (currently) have the infrastructure to uplift our skills to provide better paying jobs that support a strong middle class that keeps the consumer engine running. INVEST in Americans with better training and education options, and we will continue to thrive. It is a false choice to choose lower wages or tariffs vs jobs. As for security - our massive industrial military complex has vast (and protected) capacity, and we still have functioning industries as well. Nukes make a WWII scenario obsolete anyway.
1
The "national defense" argument is obsolete. The conflict between superpowers will not be decided on the basis of which country can self-reliantly produce the most battleships and tanks. It will be won in a matter of hours--in cyberspace, if we're lucky, with nuclear weapons if we're not.
Besides, there are much better ways to support a robust middle class than by propping up a few select industries with tariffs that hinder the rest of the economy. We could start with a tax code that, rather than penalizing middle income earners as the plan recently passed by Republicans does, returns the progressive income tax on wealthier individuals and corporations to what it was during the Reagan era. We could build on that by establishing universal healthcare and supporting inexpensive access to higher education, measures that would increase the financial security of families and better equip young people to work in the tech industries that are thriving and expanding.
It also needs be said that it has been automation that has cost the majority of manufacturing jobs in the U.S., not foreign competition. McCarthy proposes a 19th century solution to a 21st century problem.
1
Dan,
I take your piece to be in favor of pragmatic free-trade policy, taking national security and the benefits of free trade into account. However, the U.S. has never acted purely on free-trade ideology at the cost of its own national interests. The U.S. has always supported pragmatic free-trade policy. The U.S. has protected certain industries, selectively imposed tariffs, and blocked private deals that might harm the national interest, while also being the driving force of international trade norms and institutions that lower trade barriers and benefit everyone. In doing so, the U.S. has underwritten the most peaceful and productive period of human existence by supporting and furthering global trade with as few barriers as practical.
The President's unfiltered attack on trade threatens confidence in the Post-War U.S.-lead institutions and world order. Loss of confidence means the U.S. will lose is status as a global hegemon, resulting in a global power vacuum that will create more conflict, less national security for the U.S., less trade, less wealth, and an overall backslide for human productivity and development.
Can we all at least acknowledge that the President's unfiltered anti-trade rhetoric threatens to undermine U.S. power and global security for generations to come? Our national interest is not best served by tearing down the U.S.-lead Post-War world order. Continued pragmatic free-trade policy is in our nation best interest.
2
What nonsense. Steel to prepare for war? Civil war? World War II? Now some 70 years later, it is cyber war and we are woefully inadequately addressing that very war on our democracy, here and now. As for a stronger middle class that is deceived by so-called tax reform that will increase income inequality while simultaneously increasing deficits in what should be stronger national programs for health care, education, social security, infrastructure, and the safety net for those in need, while diminishing bargaining power for unions, the political voice of many in the middle, these tariffs and a so-called selective trade war are a smoke screen to these realities. The truth is that the ultra-wealthy are getting wealthier by getting tax cuts and benefits as are corporations that should be progressively taxed. As economic efficiencies occur, real government supported training and job connected opportunities could take place in areas of infrastructure, including internet speed for all, mass transportation, bridges and roadways, alternative energy sources, reframing the health care delivery system, and regionalized approaches to education, from kindergarten through college and vocational education. If there is to be a nationalist approach to economic growth, the areas above are fertile ground.
57
So we cannot trust the markets, after all? Thought that trusting the markets, leaving it up to markets, was a conservative belief.
As for free trading having hollowed out American factories -- how so? Ah yes, because foreigners could produce the same high quality article at cheaper labor. We benefit when buying goods at cheaper prices.
"Technology" requires adaptation as it continues to advance. See how e-mail has (to some extent) hollowed out the Post Office. Or examples from paper newspapers vs the internet.
Walls around America (& lately tariff walls) to build up faded American industries. It's like turning away from solar power to restore coal mines. Who believes that?
I am old enough to have seen steel-producing Pittsburgh in the 1950's & recently today. No longer grimy everywhere but wonderfully clean & renewed -- a beautiful city.
Stay with free trade & make the necessary adaptations: as, special helps for families of ex-coal miners left without resource. Imagination & courage -- we have the resources.
1
This piece suffers from a certain degree of economic illiteracy. First of all, the author has no grasp of the theory of comparative advantage, for which an abundance of economic research has confirmed. Our comparative advantage is in high tech, engineering, and other services. That means washing machines should be imported and our sophisticated medical technology exported. It is not true that trade has been the primary variable in hollowing out the working class. The culprit, if there is one, is the replacement of blue collar labor by machines, robots etc. Thirty years ago it took about 26 workers to produce one hundred million of manufactured products. Today it takes 6, and with the robotization of cars and trucks soon 75000 trucker drivers will be obsolete, their jobs taken by robots who don't join unions and never require a rest stop. The social issue is not to protect jobs whose productivity is low, rather it is to educate and support a work force with the intellectual flexibility to respond to these changes.
50
Actually, no: the theory of comparative advantage states that nations need not only gain wealth through the industries with which they have the highest absolute advantage. So, Albania could easily gain wealth from car exports and Britain from exporting frozen meals. There is still a demand for American goods not produced by robots. And if either of those industries represent an important component of the economic supply-chain of those countries (like steel in the U.S.), then some domestic protection is warranted.
1
You're the one who's illiterate. At no point did the author suggest that free trade doesn't have the advantage in terms of raising net GDP, he simply raised the idea that there might be other things that are more important, like wealth distribution and self sufficiency during times of crisis.
Excellent op-ed. I mostly agree. A few points: ‘free trade ideology’ has mostly been employed as a thinly veiled rationale for cashing out by offshoring manufacturing to cheaper locations, without any regard to the harm done to workers and the country. Also, “economic nationalism, on the other hand, requires constant balancing and adjustment if it is to be pursued correctly”, and this administration is not up to this task.
1
Free trade has been promoted along with free markets as natural phenomena which produce better outcomes by far than any reasoned efforts to achieve the same results. These two notions are not confirmed by realty, they exist in the realm of the imagination.
Trade however has created a lot of wealth, enough to produce the modern world with all of it’s wonders. Countries like ours grew into great and prosperous ones because of trade. Trade can cause losses as well as gains. If a country is not alert, it may suffer unacceptable losses which it simply cannot offset by any gains in others kinds of exchanges. This is where trade agreements that prioritize free trade over any poor outcomes become legal nightmares where harmful results cannot be remedied without breaking the agreements.
1
I tried to submit a much longer comment but it became too lengthy to be accepted. So I will ask Mr. McCarthy a series of questions.
1. Will modern war be fought by massed armies created by immense industrial output of armor, ships and arms? In the case of war, will the US need to move into mass production when it already has a military build up far beyond any other on earth? It would seem that modern war will be a high tech and tightly directed.
2. Isn't a better form of security gained by global trade and countries' prosperity dependent on the peaceful exchange of goods? Wasn't a secondary cause of our civil war economic policies that pitted the industrial North against the agricultural South? Trade and prosperity can be the first steps toward cooperation or toward conflict.
3. Can anyone imagine a rejuvenation of our heavy industry that would include a return of workers' wages to the levels they were at prior to the loss of blue collar employment over the last few decades?
4. It's difficult to accept the assertion that the government has always sought to create a middle class. Largely it seems that the government has grudgingly responded to progressive demands of the people to provide conditions for the creation of a middle class. Given the undeniably widening gap in the distribution of wealth, it is certainly not the current policy of this government and this particular administration to do anything in regard to a middle class.
4
I grew up in a steel town, Williamsport ,Pa. My father was a steel worker for Bethlehem Steel. Due to the Union, the integrity of the company to honor pension plans, fairness of the Arbitration Committee working with management The company prospered. OTHER STEEL COMPANIES IN TOWN RAIDED THE PENSION PLAN OF THEIR WORKERS, AND DID NOT have the ethics of Bethlehem Steel. Over time, steel corporations wanted cheap labor, no unions and less regulation, so they sold out and moved to foreign markets where their profits were not shared with the workers and did not have to deal with regulation. The almighty dollar was supreme. My town in many ways became frozen in time wanting things to return to the way it used to be... It suffered as a result for not recognizing that we need to move forward with progress to educate for the future, to train for new jobs, and become more creative and innovative to support the middle class.
So, it is not just the lack of support from the federal government , but unwillingness to face reality of the facts in towns like Williamsport and plan accordingly for the future. 72 % of the voting population in town voted for Trump because they wanted to return to the 50's. They wanted to believe that he would rescue them, forgetting that he is just like the the robber barons in Williamsport that cut down the trees for lumber and left the town without a future until the steel industry moved in.
3
Arguments similar to "economic nationalism" can be used to argue for an expanded role of the State in the country's affairs. Europe is a case in point. Europe has also managed to preserve both its middle class as well as many of its export industries (esp. Germany) by making sure its population is well trained (for free) and probably by some subtle "protectionist" policies as well. I will believe this writer on "economic nationalism" once he acknowledges that same logic also extends to the role of the State.
4
There may be a case for tariffs in specific cases. The details matter, so any such measures should only come after gathering data and careful analysis. What will be the impact on industries that consume aluminum and steel? What are other countries' likely responses? What will be our responses to those? How large should tariffs be to maximize the benefits and minimize the drawbacks? What actions should we take to mitigate the drawbacks?
An impulsive decision is wrong, regardless of the merits of free trade vs. protectionism.
1
Automation and other forms of robotics made it "better, cheaper and faster". The trade agreements created larger markets for goods but are not the reason for the job losses. What is needed is an effective re-employment strategy for those of us displaced by this changing world. Out west, we saw lumber mill towns decline when the captains of industry cut down all the trees, with no on-going reforestation plan. So much is said about American ingenuity. Let's bring that ingenuity to bear on the 'hollowed out factory towns'.
3
I have no economic training but just cannot see how current policies will reduce the gap in wealth between the rich and the poor. Protectionism will probably benefit one (small) segment of population but will be at the cost to a much larger segment of population. I agree that a prosperous and secure middle class is essential to a republic. But I don't know for how much longer can this class be maintained in our country with the current political leanings. Widely affordable education and healthcare would do a lot more to secure that middle class and across much wider geographical area and socioeconomical strata, than import tariffs.
7
The US had high tariffs at the beginning of nationhood to protect "infant Industries;" and to provide revenues for the federal government. These tariffs were successful, to some degree, in enabling the growth of industries especially in the Northeast. However, I doubt that the federal government was using national defense arguments to build up Northern industries as a bulwark against aggressive Southern aristocrats. Similarly, Mr. McCarthy hearkens back to WWII when our industrial strength and resolve were necessary to arm the Soviets and and other allies to defeat the Axis powers. However, modern warfare would probably be different involving much more cyber warfare and less steel,aluminum and blood and guts. This is not to say that steel, aluminum and blood and guts would not be necessary to wage modern war but to a lesser extent than in previous wars.
Further, Mr. McCarthy asserts that these tariffs are necessary to preserve his ideas of what constitutes the "middle class." Pitting workers in the steel and aluminum industries against workers in industries that use these products does not make for good industrial policy in my opinion.
8
Free trade my foot. We don't clamor for free basketball... We clamor for fair basketball. Presently America faces an adversely tilted field with nearly all of our trading partners. Aside from mercantile issues like theft, dumping and currency manipulation, none of them pay anything like their share of global policing costs. The simple truth is that we've been packing that freight since Reagan or prior. We can no longer afford it in light of our ever growing social welfare commitments at home. America is eating her young in this regard and Trump knows it... but the liberal left simply doesn't get it... nor do they want to get it.
22
BSCook111,
Walk through Wal-Mart and look for anything manufactured in the U.S.
"We can no longer afford it..." How much are you will to pay for a flat screen T.V.?
Amercia is eating her young but not in the way you believe. Income inequality; inadequate funding for public schools; crushing student debt. That is how America is eating its young.
TLGK
3
Global policing costs? Hey America if you start a war you can pay for it!
I'm sorry but.... what? Ever GROWING social welfare?
As far as I know Trump and Bush did and have done exactly the opposite. Mostly also going the other way under Clinton but no wonders, republicans are well renowned for their attempts at rewrite history and using FALSE NEWS to get their will done.
In Marxist analysis it's workers vs. capitalists. But the reality in America is that it was investors, American stockholders who didn't care if jobs were sent overseas as long as their rate of return went up. Grandparents, retirees, hedge funds sold the America economy out to the Chinese.
The same way that Fox News, the NRA and the Republican Party are now selling the American political system out to the Russians. Open societies rely on citizen education and involvement to defend themselves against tyrannical regimes. America has lost that advantage on both the economic and political fronts.
8
The trade "war" was lost when the first American company moved to China and found they could make their goods there much cheaper than in the US. Prices here didn't drop and companies began to rake in money paying Chinese workers in a day less than American workers in an hour. This of course was made possible by Nixon "opening" China and American companies drooling over that huge market for their products. Boy did that backfire. Form there they have moved to other countries as Chinese workers began to demand more.
It was also lost when the stock market became a giant casino, pensions were replaced with 401ks, and CEOs salaries and bonuses were tied to stock performance. Now it was important to keep wages low so stocks stayed up aped the American worker began to lose ground again.
If it's good for business it's bad for people.
12
GOP love for our Middle Class: repeal affordable health insurance, no infrastructure jobs, no opioid treatment funding, no raise to minimum wage, erase farm products markets, undermine US home values, explode national debt and gift billions to the already rich.
10
You have surely noted that the GOP controls the White house, and both houses of congress. The policies you espouse apparently have little support among the electorate.
Still highly unpersuasive. Even if the basic logic for economic nationalism appears persuasive (which it does not to me), then why rely on tariffs specifically? Why not subsidize American steel producers, but still let foreign companies try to compete. Or, set up arrangements so that US defense industries must by US steel, whereas firms in other private industries could by from anyone. That would protect US national security with much less protectionism.
2
I have no problem with free trade in theory. The problem with many people who support free trade is, they don't also demand fair trade. As Elon Musk recently noted, a car shipped from the US to China is hit with a 25% tariff, a car shipped from China to the US is hit with a 2.5% tariff. Also, how is it fair when a US company moves jobs to a developing country where environmental regulations are lax, electricity is generated with dirty coal plants, worker rights are nonexistent, building codes are weak, and so on? Of course, big multinational corporations love unfair trade. Moving jobs to developing countries means lower manufacturing costs which means higher profits. I think the discussion needs to go further than just free trade versus tariffs, it also needs to address the issue of fairness.
8
Interesting thoughts here, Mr. McCarthy. Now what do you think about collective bargaining, labor unions, universal health care etc? Let us hear the rest of the story or is this just a tease?
7
Not only do I commend Daniel McCarthy for a thought-provoking point of view, but I commend the New York Times' editorial board for FINALLY publishing an opinion that is not either typical establishment left, or token establishment right.
As for Mr. McCarthy's substance, I agree that it is not - and it should not be - all about dollars and cents. Which is exactly why in my book Stop Calling Them "immigrants" I make that same point about PHIs (Persons Here Illegally). It's not JUST about dollars and cents.
2
There are too many questionable assumptions and assertions (eg. national security, strong nationalist economies(?)), to answer here in this post.
What is not mentioned and never will be by any conservative economist or pundit is that if capitalism is to progress unrestrained —and as a result a generation or two of workers is left with no hope of advancing their lives due to displacement and robotics, the most common sense and actually conservative solution is for government to create a safety-net that insures society from falling apart.
The least intrusive and non-bureaucratic solution is a guaranteed income for all citizens. No welfare, Medicaid, Obamacare, food-stamps and scolding of hedge-fund managers and CEO billionaire stock manipulators.
Just create the guaranteed income for all through a combination of taxes that we already pay plus confiscatory taxes on the super wealthy individual and corporation, period. Let every citizen receive $20,000 per year from the day of birth. Let him or her keep whatever else is earned by individual effort and gumption and entrepreneuriality.
Cap individual wealth at $10 billion. Jeff Bezos and Bill Gates won’t miss the extra $180 billon, nor will the Walton family. They’ve already achieved wealth beyond their wildest dreams and it’s dubious that was their motivation in the first place.
4
Tariffs raise the cost of products that Americans want to buy, which only makes their lives more expensive and thus more difficult. As always, the poor will be affected the most by rising prices.
The best way to increase prosperity in this country is to unshackle businesses, by removing all regulations on their operations, except those that defend individual rights: The right to life, liberty, property, and pursuit of happiness. Tariffs destroy these rights.
1
Interesting point, Mr. McCarthy.
So one of your concerns is with the stability of the middle class.
I imagine you and your organization have long supported institutions and policies that strengthen the middle class.
But, I cannot find such support - in fact I easily see counter-examples.
Am I missing something? Help me out here.
7
"America first" is an empty slogan and a transparent attempt to hold on to the support of blue-collar workers even as Trump and republicans dismantle protections and benefits for labor and destroy unions.
6
So, if economic nationalism makes sense, why doesn't economic regionalism, or economic localism? How about Pennsylvania charging tariffs on imports of steel made in other states? Or a tariff on textbooks not written by Pennsylvanians? Shouldn't we be freeing states and cities from the oppressive Federal control of interstate commerce?
I have no problems taking genuine security concerns into account. Anybody who thinks that is what is happening with these tariffs is a liar or a morn (or both).
Anybody who tries to do economic policy analysis without giving numbers should be fired. Running the numbers tells you that these tariffs harm the middle class as a whole.
4
This is absolute balderdash. The decline in manufacturing/blue collar jobs began well before the advent of globalization and increased trade. Certainly, there has been job destruction in industries competing with imports, but also job creation in industries reliant on exports. We have also enjoyed lower prices as consumers because of trade, increasing real purchasing power. Protectionism will not buoy the middle class. A stronger social safety net to help those who lose their jobs—due to trade or any other reason—is a first requirement. Making the transition to new jobs, possibly in new locations, easier and smoother is also necessary. Clearly, keeping a watchful eye on truly damaging unfair trade practices is necessary. Dealing with them through negotiation and/or the WTO, however, is preferable to protectionist prescriptions like quotas and/or tariffs.
3
EU countries continue to pursue open trade, recently adding Canada and Japan. Their middle class is not suffering. The main reason of America’s middle class decline is the continuous attack on unions started by Reagan with now even a politicised SCOTUS joining the battle.
7
Tomorrow, my company is officially introducing a new, patented, 100% made in USA bbq grill accessory. We will not face any initial competition and this means we can consider the effects of the proposed tariffs in terms of the most basic economic theory: supply and demand.
Specifically these tariffs mean that we will raise the price for our new grill accessory. In turn this means we will sell fewer, will buy less US steel and make fewer parts in US factories that employ US workers. My company will have less money to spend on developing and launching more made-in-USA products. My metal stamper has less work to employ USA workers. And US steel companies will less made in USA steel. Lose + +lose + lose = 3X losers. We're tiny, but you can multiply the effect across the entire economy.
5
And by off-shoring production, the sourcing of the materials, and the producers themselves, wouldn't it become inherently more challenging to discern the next step for progress in any of those areas? Does anyone think the United States is going to solve the problem of water and air clean-up, locally or globally, when so many of the dirtiest factories that make its things are out of sight and out of mind? I heard on NPR yesterday: "well with immigrants....what if I had a computer company and I wanted to hire them from India? It's not fair." Import the steel, import the people!
And guess who fought for decent wages for this middle-class: Unions! (The same ones Trump is appointing judges to decimate.)
6
This article is a thought provoking analysis that will be unpopular with the readers of the Times. But those same readers should understand that most Chinese steel and aluminum is dumped into the US markets in the form of manufactured products such as auto parts and all those poorly made Chinese consumer goods. With this decision and his willingness to engage North Korea diplomatically, one wonders if President Trump has turned the corner. Or maybe all the scandals, failures and his previous bad decisions have forced him into that same corner.
1
If it's not bought, it won't sell.
A simple way without imposing tariff is for each individual to decide where to buy. Walmart-like companies killed the middle-class mom and pop operations across your country...and consumers still flock to buy from them...you get what you pay for!
Trade exports to China last year were around 200 billion dollars while trade IMPORTS were a whopping 250 billion dollars. This is a major problem. Go back and read a recent NY TIMES story: "US-China Trade Deficit Hits Record, Fueling Trade Fight" (feb. 2018). The Chinese have no desire to change, so something has to give. If Tariffs can change this - then .....let's have more.
1
When the industrialized countries had a big hedge over the non industrialized countries, they cry was "Free Trade" and of course, they flooded the world markets with their products in weak, undeveloped countries. Then "Free Trade" was "good" and the only "rational way" of thinking.
Now that the rest of the world have grown and developed in many ways, the industrialized countries have been losing, obviously- their technological advantage, now it is the biblical "Weeping and gnashing of teeth" because it is not them the ones that always win in free trade.
Now, the U. S. has become the "Luddites of the World", destroying the machines .... of development of the world. It is plain blindness.
3
Education, services and technology have also make America great, and certainly with the recent $Trillion tax cut, that greatness is further enhanced for the wealthiest. And does the "hire American" sign that is hanging behind Mr. Trump in the accompanying photo constitute a violation of the EEOC labor practices? Legal immigrants (green card holders) are authorized to reside and work in the US and the sign appears to indicate that preferential treatment in hiring should be given to American citizens. Are all the workers at Mar-a-Lago or Trump hotels American citizens ?
3
Steel production in the late 1970's was over over 110 million tons annually. It collapsed to less than 60 million tons by 1981. In that same time period, employment in the industry declined from over 500,000 jobs to less than 325,000. By the late 1990's steel production was back to over 110 million tons. Despite the recovery in production, employment in the steel industry continued to declined to just under 200,000 jobs. (http://fingfx.thomsonreuters.com/gfx/rngs/USA-TRUMP/010030XR20T/USA-TRUM...
Tariffs on steel will not bring back jobs. American industry sheds jobs all the time. It may be "unfair", but workers have to adjust. It may be unpopular, but workers need help in making adjustments.
2
Trump should have thought of the importance of a strong middle class before he passed a tax bill that exacerbates inequality. Tariffs to protect young domestic industries against foreign competition that will put them out of business make sense (if those industries are strategically important) in developing countries, but not in the strongest economy in the world. The steel and aluminum industries in the US, while strategically important, are not under pressure of collapse by foreign competition. Trump is starting a trade war to please his base, not executing a well thought out trade policy.
2
Must tariffs or attempts to tax the overseas profits of global corporations be the only answers considered to the dilemmas rightly portrayed in this article? Global corporations can move their head offices elsewhere and thus escape most US government taxation of profits earned elsewhere. Tariffs attempt to target certain commodities and certain trading partners and cause tariff wars. Can we not consider instead simply fostering balanced trade without targeting specific industries or trading partners? Why not simply grant our exporters $ trade credits that importers must buy on a regulated exchange before releasing equivalent $ to pay for imports. If other nations follow suit--GOOD!
The author of this piece is editor for an oxymoron - Modern / Conservative. This opinion piece pines for the gold old days of manufacturing in America, but ignores fundamental changes within manufacturing that have contributed to its decline. Trump's ideology is "zero-sum" which will not work to better the long term for the middle class.
Capitalists and politicians have always tried to figure out how to pay workers less and pocket more. It's partly a product of an American culture that once owned slaves and took that practice into the industrial revolution. Cheaper and cheaper wages has always been the goal of Robber Barons and their political allies. American workers fought back and developed unions who helped stabilize wages for middle class families. As free trade expanded, America lost more and more unions who once protected workers wages. Free trade has become the American union buster. The free trade that bolstered the Chinese economy certainly hurt the American worker and helped the new age Robber Barons profit at the expense of American workers who could once find jobs without going to college. Investing in education to train new workers and retrain current workers is sorely needed. But that also means an educated work force who could challenge the low wage status quo. All countries will need jobs for low skilled workers; including America. These are people who work hard jobs and are easily discarded. We will always have capitalists who will figure out how to pocket more at the expense of the American worker instead of thinking of ways to put money in the hands of the American workers. Trump's vision is hard to believe. After all, he's a Robber Baron too. More than ever, we need more unions.
2
The fallacy implicit in this article is that the US can ever return to the salad days of the 50’s and early 60’s. Those days were a direct product of having been the “arsenal of democracy” and having our industrial base intact while the rest of the industrialized world was pulverized. The second fallacy is that China was ever going to be held back once the decision was made in the post-Mao era to engage strongly in the world economy. And the author omits any discussion of the beleaguered labor movement, which is as responsible as industry for creating a vibrant middle class in the West. Instead, the industrialist class the author so admires has worked overtime to destroy the labor movement in America, a move that has led inexorably to the hollowing out of the American middle class and to the legions of non-unionized warehouse workers he seems to deplore.
2
I fail to see how helping 120,000-140,000 US steel and aluminum workers trumps the jobs and job security of over 9,600,000 - 11,200,000 workers which rely on imported steel and aluminum. I fail to see how increasing the costs of imported steel and aluminum helps the wallets of over 115,000,000 households who buy those products, from cars to beer/soup cans, and will suffer from any retaliatory tariffs on consumer goods.
Can we revive US Steel without first addressing the opioid epidemic?
Dear Mr. McCarthy,
You are deceptive in your writing, making your case to the public which is powerless except through the vote to do anything here. It is the 1% moneyed class who make the decisions about our economic future. They will take their industries wherever they can make money. You make it sound like if they lose money, oh well, at least we’re safe. They don’t care about national security any more than you really care about the middle class, let alone know what the middle class is all about.
NAFTA was negotiated and signed by President George H.W. Bush, not President Clinton. The treaty was later ratified when Clinton was president.
1
From what I can read here, conservative nationalism is nothing more than preparing the nation for war: boosting artificially strategic industries, cutting ties with the rest of the world, promoting strong anti-intellectualism (steal factories instead of universities), and lies.
This last part is essential. You need to strike preemptively by accusing the opposition of being ideologues, to confuse the masses. You need to appear the protector of the people if you want to wage war. So you denigrate liberals, and all reasonable people out there, by stating that they have a "single-dimension free trade ideology". Meanwhile you are ready to infuse more insecurity in the system (cutting welfare) so more people will fall for the national savior.
This administration is dangerous. It is ready to break all the legal construct that created a relatively peaceful world since WWII. All this, to satisfy the dreams of glories of insecure, incoherent, old men.
Time to vote them all out, before it is too late.
One cannot just call out free trade agreements. Business decisions made by American businesses hollowed out the factory towns. Some business decisions were based on survival, but some were based on greed. Unregulated capitalism will eat its young.
So why is all the blame put on politicians for not protecting these workers when it was the corporations who let their mills become obsolete and non-competitive? For years I lived across the river from Fairless Hills PA and the largest US Steel plant. Now it is totally gone. It is not needed. Steel for today's needs is made elsewhere in the US by many fewer workers. Mostly, changes in technologies and globalization made jobs go away.
If you really believe in “Economic Nationalism” stop drinking coffee. We don’t grow any (recall that nationalists don’t consider Hawaii part of the US). Stop using pepper or cinnamon. Stop driving cars – there is not a car on the road that is 100% made in America. Above all, stop using cell phones – we don’t have nearly enough rare-earth metals to support 300 million cell phones in the US.
Change is as old as time. With change come shifts from one industry to another. The people who made buggy-whips became auto-workers and there is no reason to believe that steel-workers or coal-miners cannot build wind-mills or install solar cells. If our so-called leaders spent less time longing for yesterday and more time preparing for tomorrow perhaps they’d be able to help workers make the transition.
The only thing stopping them is the lack of imagination exemplified by this editorial.
1
It is amazing how the conservatives actually have so few convictions. They will follow whatever policy or individual that happens to be in vogue today. For the last 25 years it was GOP orthodoxy. Currently that is whatever Trump says.
Tariffs do little when nations like China pay pennies on the dollar for manufacturing salaries. Unless people stop buying Wal-Mart, which they will not do, this will have zero effect. It is PR red meat for a base that has been swindled
The US has never engaged in 'free trade'. What is called 'free trade' is in reality international managed trade. These so called 'free trade' agreements require 1000's of pages of rules and regulations with a myriad of tariffs, subsidies and other permitted forms of protectionism. The agreements are tilted towards economic interests with the most political influence - usually favoring financial interests over US jobs and workers. US jobs were too often sacrificed for political interests. The US is the world's most open (and lucrative) market while most other nations engage in various forms of protectionism. Of course China is the poster nation for this. With China the US practices one way 'free trade'. China practices blatant and rampant protectionism that costs the US 100's of Billions in trade loss. The Republican Party is financed primarily by economic interests (like the Koch Bros) that greatly benefit from the current distorted system. While no fan of Trump, his trade moves no matter how crude and awkward are a step in the right direction.
While there are definitely examples of the US being taken advantage of in global trade steel is definitely not one of them.
The US produces the same quantity of steel that it did in 1990 so I don’t see any national security risks.
China definitely plays unfair in areas like intellectual property theft and industrial espionage. But China imports of steel are less than 2% of total US steel consumption.
How did we get to steel as the trade boogeyman?
There is nothing vague or unintuitive about tariffs: they are a tax on everyone which directly benefit a concentrated minority. Would America have supported legislation raising payroll taxes a small amount with the revenue earmarked for steel and aluminum workers? I doubt it. And yet that is exactly what these taxes will do.
The solution to hollowed out towns and economic inequality from trade, globalization, and technology is not lashing out with taxes that arbitrarily pick a few industry-specific winners and create many losers, which essentially transfers wealth between lower quintiles of the income distribution; instead the transfer should be from owners of capital (i.e. the owners of the firms and the robots) who continue to accumulate nearly all of the real wealth gains to the owners of labor.
These tariffs will unambiguously hurt the middle class on the whole while ensuring the owners of steel and aluminum companies continue to enjoy all of the gains from economic growth and policy. Helping the middle class, indeed.
Read Elon Musk's endorsement of fair trade, not free trade. Tariffs on cars imported into China are 25 percent. U.S. tariffs on Chinese cars are 2.5 percent. Those who dismiss Trump's attempts to move towards a rational policy, however flawed it may be, are either the capital holding one percenters who benefit from an unbridled push to pure economic efficiency without consideration of the cost to the rest of us, or the commenters who have never held anything other than a service industry job. If, like Musk or the rust belt worker with dirty hands, you actually make something,you might have a different view.
1
Mr. McCarthy fails to cast the blame for the disappearance of the middle class where it belongs - on the Republican party that has destroyed a health care system that was designed to help protect the lower and middle income families from an economic disaster that a prolonged illness or a preexisting condition could cause ,that passed a tax bill that overwhelmingly benefits the richest 1% of our population at the expense of the middle class, that has cannibalized our democracy by allowing the wealthiest 1% to fund, to their heart's content, the election of members of Congress and the President. And to put at risk the country's safety net for those most in need- the sick, the indigent,the elderly, the disabled- all of which undermines the middle class.
I wonder how strongly Mr.McCarthy will embrace European and Asian markets placing tariffs on goods from the United States. He doesn't mention that in his opinion piece.
Is it that the price of steel and aluminum from stateside producers is much higher than from other countries? That's called competition.
“Steep” tariffs is an exaggeration, and “globalization” only benefits those at the top. It’s time the regular guy fights back. Canada and Mexico are exempt, and these American companies just got the biggest corporate tax cut in history.
The swamp and the media go nuts. I don’t get it. Tariffs are never permanent. Obama got a lot of grief when he put a tariff on Chinese tires, but it wasn’t anything like this. Suddenly, everyone is an expert of trade.
Absurd. The days of getting a $30/hr job with full benefits and a defined benefit pension straight out of high school are long gone. The National Association of Manufacturers told Trump that they have more than 350k jobs unfilled due to lack of skills of the applicants. Countries like Germany and the Netherlands have a much more cooperative system between business, labor and the education system, where the needs of industry are defined and met much better than here. Workers looking to be retrained here take a huge gamble often, shelling out for expensive training programs that may be of no use offered by companies only motivated by profit.
Mr. McCarthy is possessed with insecurity, an irrational fear cultivated by boyhood games played with plastic replicas of guns. To him, the world is a dangerous place, with aggressive neighbors and terrorists around us, and hordes of Asians, Europeans, and Africans poised to storm our shores and occupy our country.
The notion that trade restrictions can promote middle-class prosperity is ludicrous. The American economy is failing to maintain a prosperous middle class because the value of goods and services (GDP) is not fairly shared among those who invest in enterprise, produce goods, and provide services. Our tax laws make no attempt to balance capital accumulation with consumer demand. Our economy is awash in excess capital that cannot be profitably invested; instead it is hoarded in financial instruments like hedge funds and derivatives, which are wagers on the economy rather than investments in the economy.
Capitalism needs churn, with continual gains and losses of capital, and sufficient economic activity to provide livelihood for those Americans who seek to support themselves by honest labor, not speculation and luck.
Our economy is aggressive capitalism trending toward monopoly. Our openness to world markets has made it possible for us to drive Toyotas, rather than Ford Pintos, and to snap pictures with iPhones, rather than Kodak Brownies.
Let’s not retreat to isolationism again!
1
In 1975 I waited in line for a huge sale on SONY TV's. I paid $275.00 for a 12inch set. The only time we are going to appreciate free trade is when the price of products we buy doubles and triples, more than eating up our Trump scam tax break for the poor and middle class.
Ok, sure, free trade is a simplistic approach that does not account for the harm done by global free trade, nor for the various anti-competitive laws that we have in place to empower the winners, from patents and copyrights to licensing laws.
Nor can we ignore the value of an industrial capacity, especially in war time.
But the writer seems to not understand that our industrial capacity was disassembled quite some time ago. The machine shops that dotted the Great Lakes and created opportunities for young men (at the time limited to men) to learn to form an edge and gradually learn to become expert machinists simply don’t exist in meaningful numbers. Nor do we have the steel mills able to make the tons of steel plate that we welded into liberty ships in WW2.
So sure, blame the elites. And have your fun. But the writer is part of the elite. And the conservative elite must accept blame for the ideology that makes intervention in the economy anathema, except perhaps with last resort tariffs that will do nothing at all to bring back the millions of workers carrying lunch pails into factories.
Industrial policy means picking winners and losers, and requires tariffs, import quotas and even educational assistance to train the skilled workers who are no longer being produced in large numbers.
By the way, I worked in a machine shop in 1981-82, but that shop has been closed for decades.
I guess I’d be more convinced if Trump didn’t import workers for Mar-a-Lago and make his branded products in China.
You might give the "economic nationalists" some credibility in their claim to protect "middle class prosperity" if they were not always the same guys who rail against organized labor, continuously expand the power imbalance of US "job creators" over the employees who create wealth and use the tax code to ever increase the concentration of earnings and wealth.
2
How exciting - a rightwing populist intellectual (has a degree in classics and now lives off the largess of wealthy donors to the conservative foundation that employs him, not all of them avowed racists I’m sure) shares a fact-free take on what ails the industrial Midwest! And somehow he manages to gloss over automation and ignore the crushing of unions! Go figure.
Oh, dear. Where to even begin? Contrary to what he ignorantly writes, the American steel industry was already in freefall by the early 1980s. This is pretty common knowledge. He might want to ask around. Or read a book on the topic.
Good jobs in steel are long, long gone. And, truth be told, 21st Cebrury mills now require a tiny fraction of the workers they once did so even if they all magically returned it would make little, if any, difference. What would help decimated old mill towns and small cities like Duquesne, Warren, East Liverpool, McKeesport, etc.would be higher wages for retail, medical and hospital workers. Way higher. Union jobs would be great.
But, of course, what would really save these municipalities would be if they could just somehow attract lots of young industrious immigrant families to work and live in what are now dying, boarded-up towns inhabited largely by the old.
2
The author doesn't seem to want to understand that we are in a Global Economy. he can put his fingers in his ears and scream economic nationalism all he wants the world, is the world's consumer. It was established long ago by most economists that the only was to move forward was to compete not protectionism. Those mill jobs aren't coming back no matter how many tariffs we create because the real manufacturing job killer is automation, not free trade agreements and so-called "economic nationalists" are living in a past that is long gone and not coming back. The author exemplifies this in his examples, civil war, WWII, no modern examples of how "economic nationalism" was successful. The world economy is starting to move on without the US, will we allow it to do so? I wonder.
The 800 pound guerilla in the room is capitalism. Yes, free trade increases our overall wealth but it's mostly accruing to the wealthy at the expense of middle class jobs.
3
Trump's whole appeal to restore America's economic power by escaping to the past of it's once profitable steel, coal and over-all manufacturing sectors is a simplistic solution and appeals to a very simplistic and gullible mind but it worked to get him elected and he's still using it.
McCarthy cites the Second World War. I remember a more recent time, the 1970s, when Japanese carmakers were first allowed to sell cars here. Americans discovered the the Big Four, as they were then known, not only make cars that were clumsy and inefficient, but also of poor quality. That was the legacy of protectionism.
Only by competing with the Japanese did Detroit learn to make world-class cars.
If we adopt McCarthy's protectionist model, we invite inefficient, second-class production of expensive, inferior goods. It's just another brick in the road to third-world status, just another bogus promise of prosperity as a way to enrich the plutocracy.
"...if the phenomenon known as "the flight of capital" could be ruled out. The divorce between ownership and the real responsibility of management is serious within a country, when, as a result of joint stock enterprise, ownership is broken up among innumerable individuals who buy their interest to-day and sell it to-morrow and lack altogether both knowledge and responsibility towards what they momentarily own. But when the same principle is applied internationally, it is, in times of stress, intolerable--I am irresponsible towards what I own and those who operate what I own are irresponsible towards me..... The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous--and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed." JM Keynes 1933 essay on "National Self Sufficiency.'
I congratulate the NY Times for publishing an op-ed that has a viewpoint that differs from that of Paul Krugman who can be depended upon only to oppose, regardless of the merits, anything that Trump proposes. For example, I doubt (and will check) that Krugman was opposed to Obama's tariff on auto tires, which did not even have the virtues of economic nationalism, as described in McCarthy's column, but only the virtue of paying back his union supporters.
3
The author clearly has no grasp of the demands of the American consumer, global supply chains or capitalism. It is capitalism that moved out businesses offshore so the brand or manufacture could lower costs to meet demand. End of story. I bet the author enjoys shopping Costco...and globalization is the reason why. This move by the Administration is just more Kabuki Theater for their base...and it had to be done by Executive Fiat. It won't last. And neither will this Administration, past 2020.
“The outstanding faults of the economic society in which we live, are its failure to provide for full employment, and its arbitrary and inequitable distribution of wealth and incomes.” John Maynard Keynes. John Maynard Keynes 1883-1946. JMK was a British economist. His ideas fundamentally affected the theory and practice of modern macroeconomics. He is considered the 20TH century’s most influential economist.
“Where there can be shown to be no difference in labor cost, I am for free trade.” Robert M. La Follette January 1906 – June 1925, Republican, Senator From Wisconsin, US House of Representatives, Governor of Wisconsin.
“Oxfam reported the worlds 85 richest people have the same wealth as the poorest 50%, that is to say, 3.5 billion people. It also reported the 80 richest people have the same wealth as the poorest 50%.” Oxfam is an international confederation of charitable organizations focused on the alleviation of global poverty.
The author paints an optimistic picture of the results of Trump's policies. l doubt we shall se this come to pass.
1
Had to reach pretty far and low, stretch reason and truth, to accommodate an opposing opinion. I especially liked the civil war analysis.
1
Roll back the tax breaks given to corporate America and the wealthy. Invest that money in the numerous infrastructure projects that need the funding. Complete the transition from using fossil fuels to clean energy. Build a new power grid to distribute energy where and when needed. Build the high speed rail with the same zeal we built the interstate highway system.
There are thousands if not millions of jobs available if we transition to the 21st century rather than living in the coal fired past.
1
The real villains are the .01% masters of the Republican Party; They are the ones who rolled up the various industries, and moved production in search of lower wages.
For example Walmart (Ten miles from Corporate HQ here); They encouraged their suppliers to ship their customers JOBS to China in the name of low cost. Now they have an er, problem (unacknowledged) and are desperately trying to shift their corporate "focus"; Rural Arkansas (and America) and it's closed factories? Soon to be abandoned.
2
China didn’t steal etch-a-sketch production: company leaders moved production to make an extra buck. If Trump wants to restore Midwest msnufacturing towns, he needs to convince corporate (mostly white male) elites to accept lower corporate earnings and to convince American consumers to pay more.
65
Or, we need to find a way to impose surgically focused taxes on the increased profits from offshoring (and from replacing workers with robots). And then use that revenue wisely.
Both trade and automation generate increased profits because capital is more mobile than labor. Workers can't move internationally to follow the jobs (if they could and did, wages would tend to equalize worldwide). Even if every country adopted open borders tomorrow, language barriers, relocation costs and noneconomic factors would hinder worker mobility.
Similarly, workers displaced by automation face costs and delays to move and retrain domestically. On the other hand, money moves around the globe at the speed of light with a few taps on a keyboard.
The remedy is to use taxation and regulation to reduce and redistribute the excess profits flowing to the holders of capital due to this mobility imbalance.
I'm curious why you felt it important to specify, "mostly white male"?
"That the United States could wage war on Germany and imperial Japan simultaneously was a function of the rapidity with which civilian industry could be adapted for military needs."....A terrible argument. WW II was over 70 year ago. Given the modern weapons of war there will not be another prolonged world stage conflict where the outcome will be determined by an ability to provide volumes of military equipment over a several year period. There will be no time to convert civilian industry to military needs. Further, the world is a very different place today. Globalization is a reality. To pretend otherwise is a guarantee of failure. Job displacement is inevitable; the solution is to be found in jobs that can't be done abroad. We need to concentrate on building a better infrastructure at home.
The national security argument is bogus. The kind of wars, Civil, WWI and WWII are history, as are the logistics and tactics of those conflicts. A war in the future is more likely fought with bits and bites, with non-state actors like ISIS than with nation states firing guns and dropping bombs. Reviving an inefficient industry so that a few thousand jobs can be revived is not grounds for doing this. Better those people be trained in skills for which there is a market. Remember, the steel workers of the midwest came off the farms, traded a good hand with a plow for a good hand with a blast furnace.
Let's impose stiff tariffs on digital streaming services, to bring back the golden age of big-band jazz and downtown movie palaces. Let's slap tariffs on cars to revive the long-suffering horse sector.
The promoters of 'free trade' and its continued expansion argue manufacturing just isn't that important to the U.S. - that we excel in Services and have a surplus in that area. This ignores several important points:
- Manufacturing generates middle class wages that helps Main Street. Those financial services generating trade surpluses generate wealth for Wall Street, and a portion of those profits are managing trade.
- The Manufacturing sector is an infrastructure and the more supply chains that are active in a economy the more it facilitates the expansion of new manufacturing. That's why Germany and China have a robust trade surplus in products, and the former's success proves its not all about low wages.
- Higher steel costs due to a shift in domestic production might raise indeed raise consumer costs - this isn't a problem if wages rise faster.
It is too bad Trump is the torch holder on this issue. What I'd really like to see is a synthesis of the Left (Sanders) and the Right on this issue. Cut corporate taxes (done) and eliminate some onerous regulations (more than done) while at the same time sharply raise the minimum wage and in general work to get wage growth back on track.
1
I would prefer to see statistics on how hollow are our weapons producing industries rather than a simple statements. I would prefer to see someone push back against the whining voices of former industrial and resource extraction workers and say to them, "look your grandfather moved to find better work, you should, too. Stop complaining." and finally, I would like to see more Americans choose to pay more for made in America goods before tariffs or other trade barriers are erected. If we truly want an economy that is nationalist, then let us vote with our pocketbooks, not policy.
I can't believe what I am reading here. Quote: "... Economic nationalism differs from free-trade ideology in having three distinct goals rather than one. The first isn’t discussed very often in a time of relative global peace: maintaining the industries necessary for prevailing in a large-scale war. ..." To avoid exactly that, a repetition of WW1 and WW2, the European Coal and Steel Community was formed (see:
https://en.wikipedia.org/wiki/European_Coal_and_Steel_Community)
Does the U.S. government fall back to early 20th century thinking?
As a Canadian living close to the US boarder, I see the desolation in what was the most powerful industrial region the world has known. Both empty factories and destroyed communities.
It is a pity that this vista is not visible from Manhattan, San Francisco, Martha's vineyard, or Washington. That a free trade deal with Indonesia and Vietnam and keeping tariffs on a Benz, Porsche, Audi is more important than these communities.
This negligence is what got you Trump. It is why the democrats, a so called party of the left, can't win the working class vote.
54
https://www.bloomberg.com/news/articles/2017-06-21/how-just-14-people-ma... is the real reason. If you bring steel production back, it's going to produced 30 or so direct long term jobs for every t million tons produced. Maybe another couple of hundred indirect - miners (maybe), truck drivers, etc. That's about it.
Republicans have been dismantling the middle class for a while, since Reagan, by raiding Social Security, weakening pension protections, sabotaging healthcare solutions, failing to create meaningful childcare and parental leave policies, and lately, trying to de-fund public schools. It's not just about factories. And believe it or not, the policy makers are from all 50 states. It's not just about the coastal elites. Mitch McConnell is very damaging to the middle class and he's from Kentucky.
21
I grew up in Cleveland, Ohio. When I was is the 7th grade in 1969 I took public busses to school. There was a bus stop at 140th & St. Clair, the location of the old Coit Road Fisher Body plant. Coming home from school, we caught the afternoon shift change (yes, they have a few employees who rode the bus). That plant closed in 1983 (I looked it up to write this) long before NAFTA and China joining the WTO. The desolation of the heartland isn't solely because of free trade.
2
Nice try, but no cigar.
The decline in manufacturing jobs in the northeast and midwestern states in the 1970s and 1980s had more to do with industry consolidation and lower costs of labor in southern "right to work" states than it did with tariffs.
And like it or not, the U.S. has been steadily moving away from a manufacturing economy to a service economy for several decades. The current Bureau of Labor Statistics numbers for February show about 12.5 million jobs in manufacturing. That's it! And a good deal of manufacturing today is performed by machines and robotics, not by people. That's pure capitalism at work.
Yes, we can impose tariffs, thereby making many goods more expensive for Americans, directly and indirectly. But there has never been a time in history when protective tariffs and restrictions on trade benefited this country. (See Smoot-Hawley, 1930).
And yes, someone always gets hurt no matter whether a country embraces free trade or adopts a protectionist stance. The real question is which of these actions incurs greater job losses and what (if anything) governments do in return to minimize the resulting human costs, beyond lip service. Arbitrarily imposing tariffs isn't the answer.
4
The United States is the richest country in the world. How can anyone say free trade hasn't worked? The real issues have to do with how that wealth is distributed, most of it goes to the top 1%. Normal people don't reap many of the benefits of free trade, but they will be majority of the casualties of a trade war.
2
But global employment in manufacturing is declining and will increase with advancements in AI and big data. Invest in R&D and tech and that's the future. Not reviving old mill towns.
But, the government has never really had effective plans to help the people dislocated by trade. And since Republicans hate government, this will never be solved.
2
"For 25 years, free-trade orthodoxy has been a bipartisan consensus among America’s policy elite."
There was already a bipartisan consensus among America's policy elite in the 1970s, when Japanese car imports took off.
McCarthy offers 3 legs of highfalutin nonsense.
Taking the last first, he admits prosperity is a hollow goal. To the extent trade barriers make us poorer, if they do, he says, well, that's the price of national security and a strong middle class. Perhaps, but that's not an argument that tariffs bolster prosperity.
Second, he claims industry underpins the middle class. Maybe. But which industry? If steel is more expensive, so are cars. The steel worker might benefit, but the auto worker pays (as do the rest of us). Furthermore, McCarthy admits automation is destroying those same industrial jobs, a problem to which he offers no solution. And there's no guarantee that protected industries will pay well; we saw promises of pay raises convert in the main to stock buybacks and dividends.
If the middle class were truly McCarthy's concern, he'd offer policies that protect it. Support for unionization and education, a more progressive tax code, better support for economic dislocation, and universal healthcare. Actual remedies, though, are conspicuous in their absence.
Finally, national security. If that a concern, it is not the president's alone. Some rational basis needs to be established, and a department charged with measuring our national war-waging power that would make, say, annual recommendations to congress. Congress could then enact laws informed by — but not controlled by — those concerns.
3
Moderate tariff might make sense as part of an industrial policy that seeks to gain a strong foothold in the industries and technologies of the future. It does not make sense for protecting highly automated old line factories.
Tariffs also don't make sense when at the same time the government is gutting R&D funding to develop said future industries.
But the main problem is this: Who is going to convince the American consumer that paying more for goods is good for them? And what happens if tariffs plus labor shortages plus tax cuts leads to inflation?
6
The factories that used to make central NY prosperous went south before they moved overseas. To some extent that kind of migration is inevitable. Factories age and upgrades will cost less somewhere else. And there is the cost of labor, although that will become less important as technology makes human workers less numerous. The hollowing out of factory towns that made America great preceded the current globalization of manufacturing.
The economic changes in the last century caused real hardship here. Some people thought the answer was for people to move to where there were jobs. Maybe that's short-sighted. Maybe the answer is to put high quality public services into the declining towns and cities. Maybe the answer is some kind of guaranteed income that will provide a foundation for people to make changes in their lives.
There are a lot of reasons to think that tariffs and other protectionist policies are not the answer to the problem. It's true that the "hopeful logic of economic efficiency" will not fix things, but, fortunately, that's not the only option.
1
Interesting that an opinion piece from a left side think tank and then this one from the right are saying somewhat the same thing: it is time to rethink our trade and by extension the whole set of economic policies that are part of the reason for the destruction of the broadly based middle class. The most important point here is the final call for a pragmatic dynamic. If we applied that process to taxes (visa vie excess CEO pay etc)., financial regulations, health care, environment, transportation, and on and on, we might reemerge as a united debating dynamic nation and retain our dying democracy.
8
I expect similar arguments were made in Damascus before steel making moved to Toledo, Sheffield and Pittsburgh, in Venice before glass making moved to New York, and in London before Francis Lowell copied loom technology to be used in Lowell Mass. Ideas and capital will inevitably find each other and comparative advantage will most likely always prevail. King Canute was not successful at keeping the ocean away and the tariff walls will also fail to defeat comparative advantage even if built on disparate environmental and worker protection standards. It is not merely a question of whether steel and the middle class steelworkers "should" be protected but rather whether they can be protected against the rest of the world and the rest of the American middle class who will be asked to pay for this new defensive wall.
6
Big steel enjoyed protection from rapacious foreigners for decades, hiding behind walls of tariffs and continuing to use the spectacular but inefficient Bessemer process for manufacturing steel, even as smaller domestic producers ate their lunch with so-called mini-mills. Now, big steel is a shadow of its former self and ready to, once again, hide behind tariffs and increase prices and profits without moving to more efficient means of steel production. How are steel tariffs going to help most Americans when steel prices skyrocket, as they already have.
Aluminum is a different case. Aluminum production depends on massive inputs of cheap electricity, which is barely available any more in the US. Hence, the reason aluminum production has shifted to other parts of the world. How is restricting aluminum imports going to help the average guy who'd like to buy a new car, which increasingly depends on the use of aluminum, when the price of aluminum similarly skyrockets?
8
Another angle to consider is the sacrifice of our cultural moral code that occurs when we engage in blindly free market policies. Many of the cost savings that firms acquire by moving their production overseas comes from differences in the cost of labor. Cost of labor is an aggregate of supply, demand and culturally established standards. Concepts like the 40 hour work week, age requirements, working conditions are all built into the cost of society. Those costs extend beyond the immediate cost of the particular production the firm engages in. As a consumer market while reaping the reward of lower costs we are sacrificing our moral standards for those we consider ‘other.’
4
There is no doubt that our own greed has helped send jobs overseas for the last 50 years. Collectively, companies have decided that cheaper overseas raw materials, finished goods, and services were more important for making money than exporting the same. This value judgement was made possible by the combination of wide open US markets, and protectionist tariffs and other trade barriers to US goods overseas. This was good for companies, but not as good for workers, who, despite having access to cheap overseas goods, had their wages suppressed due to lack of affordability of (and thus demand for) our goods to overseas buyers.
Another less noticed effect of these policies is that we now have diminished capacity to build for ourselves war materials that may become scarce in the event of war. This is a national security issue. For all these reasons we need to finally bring trade back into balance; it is worth the risk.
2
I believe in markets and most of all free markets. But free markets make an assumption and that is companies and people in two countries that trade with each other are on a level playing field.
With respect to China and the steel market the playing field is anything but level. The Chines government has heavily subsidized its steel industry, creating more capacity than is needed and a global glut.
These tariffs are a common sense response to the "China First" economic policies of the Chinese government.
The next front in this fight should be over intellectual property. The Chinese are openly stealing our IP and copying our designs. This is economic warfare and we need to respond and win.
6
That a sort of postindustrial middle class might be sustained by universities and hospitals, as it is in places like Pittsburgh, is not a comforting thought to the conservative kind of economic nationalist. Productive industries with a measure of trade protection are still private, profit-seeking firms; in short, they are capitalist institutions, which hospitals, in effect, and universities, in most cases, are not.
I'm confused by this passage. It seems like the author is suggesting that hospitals and schools are bad for the middle class?
3
The free trade side wins much of my head, my heart goes to the hollowed out towns. The head says, free trade...if untitled by unfair trading practices such as dumping excess product via third countries as China does routinely. The head says look for ways to retrain workers, subsidize their moves to areas with better jobs, etc. My head also says, when the home grown business sells to the multi national we lost a fan of the local and gained money for some to invest while workers suffer the real loss, their jobs.
So yes, free trade, but realize that that must be with those who don't rig the game to favor just their small towns. And it must find more and better ways to be sure the middle class, the workers aren't left in the lurch with no support and no where to go.
4
"...while hollowing out the factory towns that once made America great."
Factory towns didn't make America great, leading the world in innovation and adaptation did. A true 'America First' policy would focus on preparing our working citizens to lead in a technology and information-driven global economy, rather than on desperately clinging to a past that will no come again.
16
Lots of comments here on innovation--the problem has been that American research has come up with many innovations, too many of which have been transferred overseas for production. The real money (and real jobs) is not in innovating per se, it is in manufacturing the resulting product. Consider all the many american inventions that are not manufactured in America--e.g., televisions, smart phones, computers, etc.
12
I agree. but if Americans are not willing to pay more for stuff, then that stuff will be produced overseas. A standard of living built on inexpensive things will hurt some and benefit others.
2
Or the opposite. Manufacturing of electronic goods hasn't been particularly profitable for decades. Certainly they're not known as high wage industries. But developing those technologies and writing software for them is lucrative.
National security and free trade go hand in hand. China's growing military is becoming the Pentagon's single greatest threat. To counter that, the US should have joined the Trans Pacific Partnership trade agreement that 11 nations just signed this week.
If the US had joined the 500 million people in those countries, it would have given us a substantial counterweight to China. Now the US is left at distinct disadvantage from both a trade and a broader strategic perspective. Over time, China will be able to pick those 11 countries off one by one to join their orbit.
Economic and security ties go hand in hand Mr. McCarthy. You can't have one working well without the other.
4
"With more wealth available...". But there isn't - globalization has not visibly produced more wealth for the US. GDP growth has not accelerated and productivity growth has declined. Economists would not be talking about "secular stagnation" if globalization had resulted in the promised benefits.
Globalization has probably been beneficial for the world overall, but the benefits have gone to the countries which have pursued aggressive trade policies (for example China's massive purchases of foreign currencies are not "free trade" in anybody's book) and the economic elite in the US. China's progress has been mainly from its internal economic policies anyway. There is no reason why globalization can't benefit American workers, but this is prevented by the interests which are profiting, and by the refusal of economists to admit that they didn't understand what would happen with globalization.
5
McCarthy's first point on economic nationalism on maintaining the industries necessary for prevailing in a large-scale war uses misleading examples to justify his point. Except for Gettysburg, almost all battles in the Civil War were fought in the South leaving the industrial base of the Union untouched. The same thing is true during the second world war, the U.S. industrial base is untouched by conflict while the industrial base in most of Europe and Asia was destroyed.
3
What everyone seems to forget here is the greed factor which has prompted American manufacturing jobs to re-locate elsewhere.
A fact that is made all the more poignant by the slow and steady dissolution of trade unions, whose sole purpose was to provide workers with a safe environment and living wages.
If Mr. Trump were truly about buying and hiring American, he would not only recognize this, but he wouldn't use foreign-made merchandise for all his brand name products.
His hypocrisy is simply mind-boggling.
11
Company executives and hedge funds have benefitted from tax policies, leverage and outsourcing to the Far East. Long term view of R&D spending has been lost due to the same factors. Short term earnings have been prioritized to salvage overleveraged companies or to create tax advantaged option gains. Get Rich Quick has been the credo in the U.S.
Tariffs will hurt, not help.
The problems are primarily domestic. At the same time, a crack down on specific incidents of IP theft makes sense, but that is a totally different issue than uncompetitive smokestack industries...
5
I still don't understand how raising the price of raw materials will help bring manufacturing to the USA.
5
All this is why I am a socialist. We are a family, and the economic free traders want to simply throw away millions and millions of poor Americans because they cannot work for peanuts.
The rich should't get to live on multi-billion dollar incomes as long as there are millions of homeless.
Sure, I am not a factor in America, I have no money and no vote but mine alone, but I don't care. America is a falling empire and it has solved its problems by tossing the poor to the curb, and seems only to care about what the Cohns of the world think. Both the Goldman Democrats and the Trump Republicans are allies in the economic war to disenfranchise the poor.
We aren't in it together, that is an illusion. The investor class is running things and making themselves Gods, living high above in gilded palaces.
Hugh Massengill, Eugene Oregon
14
The fact that Trump is president is confirmation that there are economic problems among the working class and many middle class workers. Not everyone has the intellectual abilities of the "innovative class".
Unless something is done to provide a pathway to economic stability for working people, they will someday rise up and "eat the rich".
7
I have often wondered how much of our industrial base loss is the result of our industry not being agile? How fast can an American factory deliver a speciality steel needed for a construction project when compared to a steel factory located in Germany or some other equally industrialized country? Many pundits will blame unions and government subsidies on why foreign competition is cheaper. That maybe a partial answer but it is definitely not the complete answer.
4
The real solution is higher taxes on those who benefit most from the “wealth available in aggregate” created from free trade, and then using this national wealth efficiently to redistribute to those most affected by free trade in the form of education, labor force retraining programs, and government services. Everyone benefits and society and the economy continue to make progress beyond a manufacturing age and further into the information age and beyond. Regressive tariffs like these only take us further away from this goal and only benefit a small number of people and only in the very short term (maybe, at best).
Sadly, this seems politically impossible these days, considering the fact that congress just passed a tax bill that squanders national wealth and exacerbates our nation’s ticking time bomb of an income inequality problem.
7
Protectionism only helps capitalists increase profits. It does nothing to improve the quality of life for workers. In fact, it makes life worse because of the increased prices we will be paying for everything made from steel and aluminum.
And, what will the capitalists do with those increased profits? They will invest those profits in replacing labor with technology and automation as they have done since the beginning of time.
The factory jobs being lost overseas are not inherently better jobs with better pay than any other jobs. It was Unionization that made factory jobs middle class jobs, not the jobs themselves. Factory jobs are dirty, unsafe, unhealthy and they pollute our air and water. We should be glad to see them go.
America needs to make sure the jobs of the future are all jobs with good pay and safe and healthy workplaces. Wishing for the good ole days of unionized factory work to return is not going to feed the bulldog.
3
Capitalists are not nationalists.
The 10% shareholder class of Americans’ primary allegiance is to the returns on their investments. Their allegiance to their country (or community, workers, environment, customers, etc.) is secondary, by a long shot. In fact, these other constituencies are only important in the context of making money.
And this is all fine, but we need our elected government to be an advocate for the other constituencies.
(I say this as a lifelong, committed, educated and experienced capitalist.)
7
The problem is not free trade: it is the systematic pillaging of the middle and lower classes by the .1%. They have managed to subvert democracy and create a virtual plutocracy where their money directs political power. This has lead to decimation of unions and loss of the middle class reaping the benefits of their labor. The elevation of greed to God-like status has replaced the era where corporations felt a moral obligation to its workers and society, replaced by absurd levels of personal accumulation of wealth and objectification of the poor.
Roosevelt saved capitalism by introducing the social safety net and giving power to workers. Any efforts at saving the middle class must focus on these areas first, whether it is free trade or economic nationalism
5
I tend to be a moderate on these issues, and I take McCarthy's point about the post war obsession with free trade. In the heyday of globalization fever in the late 1990's, I was in its thrall as well.
But, to try to defend a sudden, untargeted, largely low economic impact (on main street) imposition of tariffs like this, primarily against allies with whom our economies are most integrated is pure foolishness and makes a mockery of what a more protectionist, smarter, and industrial-policy led trade policy could be.
Trump's actions may not be as unfounded in principle as the howling liberal press likes to suggest, but the execution is infantile and clumsy and risks a punishing trade-war that hurts relations with allies over very little.
How about coming to the table and saying; 'folks... we need to move away from this free trade position. We may go unilaterally, but you are our friends and partners. Let's find a way to do this that doesn't harm any of us unduly but also find a a new balance with our domestic interests'. We are the United States. They will listen. And if not.. then fire a tariff salvo. A smart one.
Moreover, it just isn't 1938 anymore. The types of protectionism we will need will not look the same. Conservatives like McCarthy seem to overly apply past models to the present day as though they will work. (and did they work? World Wars?)
One can take some of his points on the plausibility of tariffs without supporting the impulsive policy.
Republicans have no interest in a strong middle class. They are the party of the Confederacy,dedicated to the well being of a tiny economic elite. They crushed the unions, and union-crushing remains one of the most important objectives of Republicans. Protectionism without unionism is just another regressive system of taxation.
2
It is myopic to believe that the only way to develop a healthy middle class is a return to heavy industry. Being in the lead in the new, next, industries is key; new energy technology, new materials, new bio, genetic and other engineering and new things middle aged brains cannot yet imagine. To do this we had better invest in public education K-16 and beyond, in health care, and in nutrition-- in short invest in human capital-- to make use of all of the talent in this country. There is plenty of money in this country for this investment, but as we all know, it accrues only to a few. In the meantime, decent wages can create a middle class. Again, there is plenty of money in this country for middle class wages for everyone who works full time.
A return to heavy industry along with the erosion of environmental protections in this country is nothing short of disastrous.
Talking about "free trade" versus "protectionism" is misleading. All trade is negotiated.
4
"Free-traders tend to believe that . . . the harm to those whose manufacturing jobs are lost [is] outweighed by the good that comes from, say, cheaper flat-screen televisions."
There is insufficient attention on either side of this debate to the great shift from production to consumption, including consumption's necessary evil, planned obsolescence. A consumption economy has engendered its own moral rot, requiring us to normalize the constant purchasing of disposable junk. In the 1970s on Saturday mornings I could listen to ABBA and Queen on the same big console radio over which Dad had listened to Orphan Annie and FDR's fireside chats, and we could replace the tubes as needed. My parents' heavy steel and chrome toaster literally lasted their entire lives, and it worked better than any of the multiple toasters I've owned. How is my life better--really--now that I need to spend upwards of $1,000 every few years for the latest telephone? We simply surrender to the depressing conclusion that nothing can be repaired at home, everything needs to be junked after a few years of use, and a giant garbage island in the Pacific is just the price of a modern plastic economy. It's not Ludditical to see something wrong in all of this.
2
This opinion is well-reasoned and valuable. It points out why the Democrats lost the 2016 election: They were insensitive to the economically disjointing impacts of free trade on the US middle class and on those who aspire to the middle class.
It is one thing to say free and fair trade is essential to modernizing the economy but they ignored or downplayed the difficulty of having Americans "find a new way to earn a living". Lives,families and whole communities were destroyed and the dignity of work was assaulted all in the name of "low cost suppliers" and "creative destruction."
What is worse the Democrats paid insufficient attention to what is meant by FAIR trade. It implies that the market should belong to the most efficient not the most subsidized or the most blatant dumper of goods. Fair is fair.
Fair also implies reciprocity. In order for all parties to trade to prosper there needs to be rough balance in payments over the long haul. This means that one party to the trade should not be selling its future to finance its current purchases. There are national security implications of that as well when the US sovereign debt is so large and so widely held.
As with so many issues the truth is somewhere between free and unfettered trade and economic nationalism. Hopefully we have begun to move away from the former to a more centrist position.
2
Excellent article. I am a Democrat and liberal and conservative depending upon my listener's point of view. Of this I am certain. We are not China's friend. We are their customer. The price of the cheap goods sold at WalMart will have a big price in blood and treasure if we ignore the stark reality of how they trade. They lie, cheat and steal ( mostly IP). Free trade is a myth. The label is centuries old, but unfortunately the world actors have changed dramatically. Your essay should serve as a reminder to those who wish to be theoretical, that the real world is where you reside.
3
The world has globalized and will continue to do so whether we want it to or not.
China has now taken the lead in that while we are opting out.
The damage is already done.
But maybe we'll be lucky, turn things around in our government and end up with a tireless Secretary of State who can repair all the bridges this latest Republican "leadership" has burned down. You know -- like Hillary did.
The Republican party has _never_ been the party of the working-class. They have always adamantly opposed the one reliable path by which working men and women get good wages and the possibility of economic and social advancement--unions. This was the sick genius of Reagan. He realised that Republican economic policy was hopelessly flawed (trickle-down economics simply don't work, hence the term "voodoo economics), and turned the party towards social issues/value instead.
1.) "Economic nationalism" is an oxymoron. Economic thinking is based on statistics, modelling, and rational calculations. Nationalism is an inherently irrational belief system. You can either have nationalism or sound economic policy, but not both at the same time.
2.) America's military expenditure is already more than that of the next five countries' military expenditures _combined_. Canada and other close allies can provide us with all the steel we need.
3.) Steel and aluminum production are increasingly automated. So unless you are trying to Make America Great Again for Robots, this isn't going to help, and it hurts all the ancillary industries (a much larger sector) that rely on affordable imports.
4.) If you really want to help working men and women, it's straightforward, but politically difficult: raise the minimum wage, pass laws increasing fully-time benefits, increase access to education, and pay for it by taxing the wealthy and businesses.
If you're a Republican, good luck with that!
1
''. This was the sick genius of Reagan. He realised that Republican economic policy was hopelessly flawed (trickle-down economics simply don't work, hence the term "voodoo economics)" - Not sure where you got this gem from but it was George HW Bush who coined (or popularized) the term "voodoo economics" during the 1979 primary campaign when he was competing with "The Great Communicator". Reagan didn't realized much of anything ... he couldn't recall.
1
Checking on the rapacious billing practices and the multimillion compensations of Hospital CEOs one wonders if these institutions are really non-profit.
Economic nationalism in no way promises a bigger, stronger middle class. Today companies and the public sector seek to reduce medical care and retirement benefits for workers. As workers pay more for these benefits it reduces their net pay and accordingly their middle class status. Unions are less prevalent and weaker. We have a Supreme Court Justice (Alito) arguing in a current case that public sector union demands are the cause of higher taxes. So people making less than a third of his income are not entitled to the same medical and pension benefits he and his cohorts receive.
While there may be some short term merit to the arguments made, current attitudes toward labor costs will not do much to rebuild the middle class. Maybe with nationalized health care and pensions we could again build a bigger and stronger middle class, but I doubt the author would favor either of those suggestions.
1
US based industry (mfg and service) are competing against foreign companies who do not have to worry about paying for their workers' medical care. That is taken care of by national health services paid for by taxes and generally with better health outcomes. Why in the world would US companies not be leading the charge for single payer healthcare that puts them at such a disadvantage --- not counting their shifting more of the health care financial burden back to their employees.
So it's all about preparing for war and national security ?
I would be happy to believe this opinion if the tariffs would target potential enemies in stead of primarily US allies.
According to this logic, the cause of the Allies in WWII would have been greatly helped if FDR had imposed tariffs on say the Brits at the start of the conflict.
The only thing Trump is trying to do is to secure his voter base, by making them believe that tariffs will create jobs. In a couple of years, people will find out that this is not the case, but by then, there will be someone else to blame.
Every industry is being challenged by automation, even white collar jobs. Capitalism is ruthless, and the root of problems, but a reactive tariff on steel is not going to help us.
A comprehensive industrial policy, including targetted investment by the government in key industries, would be a good first step.
There is much to dispute in Mr. McCarthy's representation of the facts and conclusions. The national defense arguments are laughable as he is fighting not just the last war, but a war that ended over 150 years ago and ignores that the US ramped-up defense production from virtually nothing once war became inevitable. However, the most questionable assertion is that it will benefit the working, aka middle class. It is meant, like the recent tax change, to benefit the protected industries. Indeed, the Republican party and Trump who have proposed and passed policies that benefit the rich over workers and increased the vulnerability of workers to exploitation is evidences the hypocrisy of this argument.
The only way to bring back manufacturing jobs in a meaningful way is to pay workers 3rd world wages in order to be competitive.
That would also bring back the company town, the company store, and all the other evils that UNIONS fought and got rid of for the first 75 years of the last century. US workers have had higher productivity than most foreign (especially Asian) workers primarily due to automation, better organization of production, and EDUCATION. Education is rapidly declining as a factor due to improved education in Asia. But putting cops in all the schools should fix that.
Cops are not educators. I don't see how they would improve education.
Nice words demonstrating the emptiness of the proposition. Reduce national wealth by tariffs and the middle class will be richer. Hunh? Ridiculous. Try this instead: free trade, retraining that works, and higher taxes on the 1% and businesses to improve our general social security including health and education. This will also cut against income inequality. Time to drive the economic royalists from the temple of our democracy.
You know you’re in trouble when you start invoking the Civil War and the World Wars to justify Trump’s peevish policy today. Similarly the manufacturing boom of the ‘50’s is hardly relevant in today’s automated economy. I’m half surprised he didn’t advocate a global war as a means to strengthen the middle class. This sort of misty eyed romantic view of the past is exactly what enables Trump First politics.
1
The free trade ideologues view markets and trade as if they were some kind of natural system, like weather. They balance themselves so it's best not to tamper with them. But they are no such thing. They are simply a list of rules through which participants act - buying, selling and working. The question is who makes the rules. Who benefits and who doesn't.
I really hate it when Trump has a good idea and these tariffs probably won't work. He's not smart enough to figure out how to figure out a way that does. But at least he's moving some people beyond free trade dogma.
So, why does free trade work so well in every other country in the world?
Is America so large and developed that America can operate with rules that are different than the rest of the world?
No other developed country governs by small government, low regulations, but that is the goal of the USA? No other country does loads of protective tariffs, but that is now our goal?
I would expect that this "America First" policy to work as well as American healthcare.
There is no magic correlation between factory jobs and middle-class lives. Factory jobs translated into middle-class lives because of a history of labor action.
Working on an assembly line and making a bed in a hotel room are not metaphysically distinct tasks. If you get comparable pay and benefits, they carry the same compensation. Factory jobs before unionization were dangerous, mind-numbing, and exploitative.
We are at nearly full employment, so we are told. So why are working people just barely making it? Because the jobs they have don't pay them enough to sustain a middle-class life.
1
"If the price of national security and a durable, free middle class is a modest reduction in gross domestic product, the economic nationalist is willing to pay it." Sounds like an argument for higher income taxes to pay for education, infrastructure and healthcare, No? Wouldn't those create more national security and a bigger middle class?
Sprinkle some AMERICAN protectionist sugar on your "middle class" argument and some will find it easier to swallow. We prop up our sugar producing plantations with tariffs (subsidies)and send candy making factories out of the country - sound familiar? All things being equal it boils down to balancing productivity/technology juxtaposed against labor costs. Who will work for less in capital based societies and where do the profits flow surely not to the middle class.
The promotion of “free trade” policies became an extension of diplomatic measures to foster cooperation between competing nations. While there is some truth that government subsidies to industries and theft of intellectual property has taken place, to the advantage of China,
the demise of our industrial heartland shouldn’t be blamed on that country’s policies or machinations per se. Technology, profit making, consumer preferences, government policy play a role here. We can’t and shouldn’t turn back the clock. Our government must promulgate policies that make US products competitive on the world stage and tariffs and the potential for trade wars will only set us back.
The folks who support Trump the most have the most to lose.
These arguments would have merit if there was any evidence that tariffs deliver the outcomes that are claimed. Of course it would be wonderful if America's industrial base could be rejuvenated. That isn't an argument for doing anything anyone says will do that. It goes further than unintended consequences. If tariffs further damage the industrial base, as seems likely if America's trade partners respond tactically, then that's an avoidable consequence. America doesn't experience trade deficits because it's a loser, but because it's the wealthiest nation.
"Free trade" doesn't really exist. Governments worldwide assist their industries to be 'competitive'. Including the United States, which massively subsidizes business through either tax law, tariffs, price supports, and many other ways.
Not mentioned here is the 800 lb gorilla: artificial intelligence. There will come a time in the not-too-distant future we will have to deal with this question.
1
At long last an article that argues that we are not bound to theoretical Free Trade when there is no such "animal" on the planet.
My recollection is that the Founding Fathers supported "Mercantilism" which helped native industries, such as making nails which had to be imported from Britain. The extreme version of free trade that we espouse is, at best, 30 years old.
On basic industries, agricultural expertise, natural resources, and technological expertise, we should be loathe to give away our patrimony so easily. I believe that China imposes substantial, if not severe, restrictions on American companies doing business in China. Why are we afraid to reciprocate?
As a Democrat, who finds Trump vile, I admit that he has "willy nilly" identified a "middle class" issue that the Democrats should refine and campaign on. The Republican and Democrat elites, who have profited on so-called "free trade" and watched vast swatches of the country economically decimated, have nothing to offer the country except re-training for the new economy.
We mention capitalism right along with Christianity and rugged individualism as part and parcel of the American ethos.
Capitalism may well be the best system for delivering goods and services but it is based on greed and must be countered by government regulation and societal pressures. Unregulated capitalism is not unlike a game of Monopoly, someone ends up with all of the money. It seems in true American fashion, we want it both ways. We all want to get rich then we want the government to protect our wealth. We are unwilling to pay the taxes required to have universal healthcare, world class education, and a modern and reliable infrastructure.
Too much rugged individualism and too little collective good.
We can't turn the clock back to 1955 through restrictive tariffs. We can only bring our society up to world class levels by thinking of the common good, not capitalism style survival of the fittest.
"Steel towns throughout the Northeast and Midwest have been losing a trade war for decades because they cannot count on their leaders in Washington to fight for them."
Fight whom? The CEO's and boards of directors of US Steel, Bethlehem Steel, ALCOA et al who have bought and sold most of the "leaders in Washington"?
The only political power middle class industrial workers ever had was through trade unions and they have become more or less irrelevant. The author never mentions them.
When, with advances in technology and transportation, a designer in one part of the world can instantly transmit detailed manufacturing instructions to an automated CNC machine in any other part of the world, that creates a part in five minutes that used to take a half dozen machinists a week to make, and that part can be transported to an assembly plant anywhere in the world and creates a product that will be on a retail shelf or showroom in anywhere else in the world, and all of this takes place in a month or less, the whole notion of nation states becomes almost meaningless.
1
Economic nationalism might indeed be a reasonable and productive policy if carried out fully and effectively, but the Trump administration and Republicans in Congress aren't doing that. This piece should be directed at them rather than to the readers of the NY Times. There's no use in trying to convince those of us on the left of your viewpoints if you can't first convince those on the right who are actually running things. But I think you'll find that's a much harder job.
What utter nonsense. Free trade, once begun, cannot be made "unfree" without disastrous consequences for all concerned. Unskilled American factory workers lost their jobs to globalization for one simple reason: they earned more than their counterparts abroad and thus could not compete in the global economy. The only way to regain those jobs is to pay them less, which will never happen, or retrain them in skills needed for the jobs of the future. Look at China. Just as in China, where some Chinese workers are beginning to earn more than their counterparts in Vietnam and Bangladesh, those jobs are beginning to move too. But China is investing and educating its workers for the jobs of the future --hi-tech aviation and alternative energy -- so it will have an easier time adapting to the new economy. Trump, on the other hand, is trying to revive the jobs of the past, like coal mining and steel foundries, which will Make America Last Again. Tariffs and trade wars will only hasten MALA.
1
It's fascinating to me that you can write an entire article lamenting the loss of the middle class and not mention either livable wages or unions. Of course, you are a conservative, so those are as much an anathema to you as people earning their living through universities and hospitals, but they made the middle class in this country during the time you're lauding. The loss of worker's rights to better themselves brought with it the loss of the middle class.
In the end, this is a moot argument. Technology is not going anywhere and more and more jobs will be lost to it. We're going to have to consider other ways to create a healthy and thriving populace or we're doomed. And you might have to seek outside of your conservative box, because the solutions will not be found there.
The political economy best solution is Free trade with a strong safety net and education system.
Economists argue for free trade because it is Pareto optimal, meaning that the winners could compensate the winners and still be ahead. But if no compensation, and with profits going to capital due to wage competition and no unions, wealth and income become more concentrated, as we see.
But Republicans can't accept a working safety net. So we've ended up with Trump.
1
The political economy best solution is Free trade with a strong safety net and education system.
Economists argue for free trade because it is Pareto optimal, meaning that the winners could compensate the losers and still be ahead. But if no compensation, and with profits going to capital due to wage competition and no unions, wealth and income become more concentrated, as we see.
But Republicans can't accept a working safety net. So we've ended up with Trump.
The author advocates for a solid middle-class with the help of economic nationalism, but does not even mention how the current Republican government favored the top 1% over the middle class with the "tax reforms." Production per se is not, and should not be a goal but as a means to improving the lives of the people involved in it. Almost every argument in this argument clashes with the current Republican orthodoxy which favors the elite at the expense of the working middle-class. From healthcare to banking, the elite are always more protected than the working people.
The author, if he wanted to make a cogent argument, could have incorporated the income inequality, healthcare, taxes, education as a collective Republican strategy. Alas, nationalism under the guise of "economic" priority is presented with less than convincing evidence. Need I mention that the US steel imports from China is about 2-4% and the tariffs on mainly aimed at China will make the US steel manufacturers raise its prices, benefiting mainly the wealthy corporations.
No, the road to a better middle class does not go through nationalism, economic or otherwise. It requires a strong social contract to which the rich must adhere to as well.
2
There is always one stipulation that people make for open trade: "we" benefit. Who is "we"? This question is not addressed nor has it been answered. Some people, especially big corporations, benefit, but many people lose out big time.
We should also consider what would happen if a world war were to break out and all trade across oceans would stop. Would Americans be looking in their basements for old computers because their current one was non-functional and could not be replaced? We have made ourselves dependent on nations around the world for almost everything, including food. These interdependent relationships can be a source of cooperation and peaceful existence, but what happens when that breaks down? We could reach a point where almost nothing could be made here without components for overseas.
Low prices can be a trap. How many flat screen televisions does one household need? If we forced to bring these and other technologies back here, how long would it take and at what cost?
As a wild guess, I would say we have exported five to ten million well paying American jobs. We have helped a large portion of the world toward prosperity but the cost to our country has been very high. At some point, China and other nations are likely to be in a superior bargaining position: you want these things? Then you have to pay our price.
1
This is a very valid point of view but the steel industry's a poor example. 95% of the layoffs in the steel industry happened because of automation, not imports. We have to be careful to distinguish between economic calamity caused by unfair trade and the inevitable creative destruction of capitalism. The steel and mining jobs of the 19th and early 20th century are not coming back any more than cotton picking or wheat threshing jobs that were eliminated in previous centuries
1
I am assuming that the steel and aluminum subject to tariffs are roll and or bar stock. I suspect that the numbers of jobs required to produce these refined metals are less by far than the numbers of jobs involved in converting refined metal to consumer goods. This suggests that another approach to redress unfair trade practices would be better. Value added taxes? Flexible corporate tax rates that reward good behavior and penalize bad?
1
The Chinese didn't use tariffs to build up their industry. They didn't pay their workers the kind of wages that create a middle class and those who owned our steel industry and other manufacturing companies closed their factories and moved them to countries where they could get people to work for much less. This is more about continuing to restructure America in a way that is even more advantageous to the very wealthy. If the steel industry, or any other manufacturing returns, the workers will find conditions much different from when they once had unions and secure employment. Maybe this will work, but I, and a large number of more knowledgeable people, doubt it.
5
This will only help workers who are unionized. Workers without unions are still at the mercy of their mega-billionaire business owners.
3
Some 50 years ago in my university Econ 101 class, the professor began with this comment: "Anyone who mentions tariffs will fail immediately." In those days we had no power points, etc., but, the professor loved copied spreadsheets, that over the semester repeatedly showed mountains of data affirming why anyone who mentions tariffs in his class should fail.
2
I'm so tired of hearing factory towns made America great. factory towns made a few people/families /corporations very rich and powerful and kept many Americans in back breaking jobs with little opportunity to advance. what made America great were unions that pushed for better wages and benefits, environmental regulations that demanded corporations deal with the impact of their production processes, and educational opportunities that meant factory workers' children could go to college and beyond. That we have so degraded opportunities to access the American dream that a return to factory towns is seen as progress, is just sad.
4
Although you want to deny it, manufacturing once provided employment and at least a lower middle class life to millions of Americans. I know liberals want deflect from that truth by pretending the the 50's and early 60's were a time of misery for all, there are still Americans alive who know that's not true. When Americans make enough money to pay for more than one box of cereal and a can of cat food a week, then they can spend money, boost the economy, and pay their property taxes, which fund schools. Shipping entire industries out of the US in order to improve the lives of those poor Asians undermines the entire US, economically and socially.
All well and good America First with restricting imports, however if we increase our production:
a. the jobs that come back won't be well paid Union jobs because
the GOP has spent the last few decades dismantling the unions. So the manufacturing of today isn't the manufacturing job of the past.
b. automation will increase the capacity, so once again, the owner and shareholder benefit over the worker
America First really seems to represent American Corporations First, not the American Worker First.
No surprise to me, but might be news to the GOP voter.
4
Exactly. And if the Trump voters haven’t retooled their skill set to automated manufacturing there will be few options available in the future no matter what is being pronounced.
Every tax hurts somebody somewhere and is offset by benefits to somebody else, even if only the tax-collector. I'm convinced that the critics of these tariffs simply don't like, personally, the steel-worker demographic that will benefit from these new measures. It's as simple as that.
When someone says, "It's as simple as that," I'm convinced that they don't know what they're talking about.
Nothing is "as simple as that," especially pretending to reduce what are cogent and thoughtful arguments to simplistic prejudices.
Unfortunately China can subsidize their steel industry to save jobs because those jobs pay $3/hour, while ours pay $60/hour when you add in the benefits etc. 25% tariffs won’t balance that equation.
2
Does this man know that US industrial output is actually greater than it was 50 years ago but just employs fewer people? His particular brand of intellectually dishonest double talk (is he in favor of labor unions?) is characterized by this observation:
" Economic nationalists do not accept the claims made by extreme free-traders that any degree of industrial protection must inevitably lead to less national wealth. But so what if it does?"
5
Countries like Japan, China, and Korea practice economic nationalism. They want the factories, the jobs, the technology, and they go after it aggressively.
While these countries may have some problems, they have had impressive growth and generally good economic results.
So there may be some advantages to economic nationalism.
6
To the author's first point about being prepared for the exigencies of war in a time of relative peace: how about a mandatory year of public or military national service? Potential benefits are easy to list: development of human capital and national civic identity, basic training in leadership and collaboration as well as physical fitness, labor for some infrastructure projects, general education as well. Throw in some weapons training to address the "well-regulated militia" clause of the 2nd amendment. Why not?
The list of reasons against is just as long. For conservatives, the top two may be the expense and the expansion of the role of government, as other commenters have noted about tariffs.
Before we have the arguments, let articulate the goals that we're pursuing as a country. That's not happening here. This article is justificatory backfill to prop up a decision informed by little or no expertise or research and made for assumed political gain. I'm pretty confident in saying that even further back than Aristotle, that's been thought a bad way to govern.
2
The author proffers the assumption that Free Traders are less concern about economic nationalism. In fact, free trade arguments have often been used as a mean to open up foreign markets that have been essentailly closed to US firms because of high tariffs, and other "protect infant industry " argument. In fact , countries have wage wars to take territories and open foreign markets (Opium War).
The question we face now is whether tariffs and other protective measures are the best option to promote a shrinking US Steel and Aluminium producers. And if the US truly want to encourage domestic production of steel used in military hardware, wouldn't it better if the government offer other tax and nontax incentives for firms to us American steel in military materiel. Specifically, some kind of domestic content requirement imposed on military hardware purchased or under contract by DOD would more than enough to ensure that US has sufficient steel and aluminum for security concerns.
3
To me, this all misses the point: we need to protect workers not just industries. And that translates into "fair" as opposed to "free trade." Tariffs are a very blunt instrument to help workers. What would help is legislation that would strengthen unions and their right to bargain collectively, especially in those industries that are essential to our national security. Instead, we have "right-to-work" laws that aim to eliminate unions and a current case before the Supreme Court that would impair public unions from collecting dues. We also need union representation during the drafting of trade deals that hasn't been the case under both Democrats and Republicans. We are in an era of incredible societal imbalance between the forces of Big Government, Big Business, and sadly Little Labor. The results are there for all to see. Decades of stagnant wages, a shrinking middle class, social unrest and divisiveness, political polarization, and recently teacher strikes. Tariffs will not correct the social imbalance nor will "economic nationalism" that still favors Big Business and Big Government as we currently have in Washington.
4
Misses the point entirely.
The fact of the matter is China and other countries have outplayed us at our own game of capitalism. Complaining about it won't help, and taxing through tariff's won't help.
The solution no one will want to hear is to address the owners profit making need and the employee's higher wages/benefits need so that the cost of making steel her is competitive with the cost elsewhere. Carnegie did it when he consolidated control in the steel industry through harshly reducing production costs (read wage reductions) to drive down the price of steel. We don't need to follow the Carnegie example because we have plenty of billionaires with more money than they could ever spend, together with plenty of laid off steel workers who would gladly take the jobs. That's the deal that needs to be made - readily available investment money and workers need.
4
I'd be interested in hearing where this author stands on the relative importance of robust union representation in the workforce and a livable minimum wage. If he supports "right to work" laws and keeping the minimum wage where it is, I suspect he's more interested in factory owners' profits than a thriving middle class.
7
The factory towns that once made America great, are never going to be that. Its self-defeating to beat the dead horse of the idea that heavy industry, as so many others do it better and cheaper. However, even with the decline of employment in the US in those industries, production of steel in America is up from its heydays. However employment there isn't because they are automated. That's how steel is made now. Its dangerous and mis-guided to lead people on that its possible stimulate those industries via price protection, without ultimately creating a trade war. This is generally the path to world wide recession and depression. Instead, resources need to used to support and bring in the "new" industries. Manufacturing of environmental sound tech and products is the coming thing. Why don't we try to get in front of that instead of chasing the chimera of re-newing our factory towns. This sort of economic thought it going to end up being a huge disaster.
2
The problem with your thinking is that the resources needed "to bring in the new industries" which requires retraining the existing workforce and educating the future workforce (like China is doing) is being greedily concentrated in the 1% and not only doesn't it trickle down but they just bought themselves a gigantic tax cut which further starves those resources needed to "bring in the new industries".
Many countries have the same problem and if they all became protectionists trade would pretty much cease and prices would rise (no more cheap products from China etc.). We do need to make sure no one cheats but free trade is the only feasible option in the current environment, which has changed irreversibly since the last century. Like it or not, free trade has to continue and things will eventually level out, but not for a while. Anything else would be a disaster.
Our two front war in Iraq and Afghanistan fell apart. Sustained industrial strength is no longer the way to win wars.
The hitch is that many of the problems of the “hollowed-out economy” should have been worked on YEARS ago. For example, the time to have “fixed” the steel industry was several decades ago, before so many plants closed. That particular problem was discussed in the 1970s, as I recall, and little or nothing was done about it, then or later. Now the mills have closed, and it’s really too late to get the steel industry back, on that scale.
U.S. industries that use steel have made other arrangements to get the metal they need. These steel-using industries will now have to compete with similar imported products that are made with cheaper foreign steel; and there are no tariffs on these competing products, when they are imported. With such a headwind, these domestic industries cannot survive, and many more jobs will be lost.
It’s easy to get sentimental about the poor little factory towns. But sentimentality is the enemy of clear thought. You can’t solve yesterday’s problems; you can only solve today’s. It won’t ever be 1953 again, no matter what we do. It’s time to work for what is attainable in 2018.
6
China once was the tool of capitalists interests and the Chinese fought a civil war to get rid of them. Now their centralized government is putting China first and using massive subsidies to make sure China wins the trade wars. We on the other hand, under the banner of "free trade", lay our country open to the exploitation of corporate interests to the detriment of the American people. Must we too fight a civil war to free ourselves of foreign interests?
American manufacturing willingly sent their production plants out of the country over the past 30+ years. They were greedy and sought to avoid the price of the pollution they left behind. They could careless about the American workers they hurt.
Their names are still listed on all the products made by other countries. It's a huge shell game and Trump is playing it too. He's weakening environmental rules and gave them huge tax breaks, so they can bring jobs back with little of their own money. Just like the government did when it helped them pack up and move.
Of course they are afraid of trade wars, they are the ones who've benefitted by selling cheap goods to the U.S., they just couldn't bring the money home. Now Trump is going to help them do that too.
2
Madness. To believe that modern warfare is based on heavy industrial capacity as it was in the 1940s or that protectionism will halt automation and bring back manufacturing jobs is utterly absurd.
4
This column could have been written by Bernie Sanders! But neither Bernie nor Mr. McCarthy can answer the ultimate imponderable question: are we willing to pay more for flat screen TVs, appliances, and cars to ensure that someone in another part of our country is gainfully employed, paid well, and has decent benefits? The cult of selfishness that the GOP has embraced and the blind faith in free-trade of neo-liberals has brought us to the point where conservatives and progressives are finding common ground.... and that common ground is that we much begin making some trade-offs if we want to restore the middle class. Mr. Sanders see the trade-off being higher taxes on the big wage earners... Mr. McCarthy sees the trade off as being higher prices for consumer goods for everyone...
4
I see nothing in the column that remotely resembles policies put forth by Bernie Sanders, a supporter first and foremost of workers' rights and the unions that insure them.
So, if the economy is diminished, that is a fair price to pay for security. Don't put it past Trump to start a war to prove that he was right.
"The middle class, by this reckoning, must take care of itself, finding new ways to make a living if the factories close. With more wealth available in the aggregate, thanks to the efficiencies of trade and specialization, some happy outcome is sure to materialize. If we cannot say what it is, that only means that spontaneous order has a pleasant surprise in store for us."
"some 'happy outcome' is sure to materialize."
"If we cannot say what it is, that only means that spontaneous order has a pleasant surprise in store for us."
Surely, you cannot believe this magical thinking drivel. At best, it's foolish and silly. At worst, it allows rich people to make bad policy decisions (from which they always protect themselves with their endless supply of money), bad policy decisions that destroy many ordinary people's lives. Unfortunately, I believe this type of thinking permeates the minds of our elites as it has its origins in secularized Apocalyptic Christian ideology, the grand ideology behind American exceptionlism itself. How are we to counter such thinking when (apparently) none of us have found anything better to replace it, or when we bandy back and forth between on type of secularized Apocalyptic Judeo-Christian ideology and another--capitalism, communism, capitalism, communism?
2
"How are we to counter such thinking when (apparently) none of us have found anything better to replace it"
Well Spoken!
1
Thanks. I really do believe this "stuckness" is at the crux of our (or our elites') inability to find genuine solutions to our economic problems.
Q - The questions I have:
Isn't america practically at full employment? There is no recession. So in theory the middle class is there.
Q - Isn't it about the QUALITY of the middle class life in America?
Answer
- Undo automation? - no joy there, it will be there on the other side of tariffs.
- Wage depression.
America has experienced depressed wages for decades. This is NOT the case in most industrialised nations. It is US specific. Why? This has impacted America's middle class the most. By far.
- Create programs to help average Americans feel MORE PROVIDED FOR. Embrace nationalised medicine and watch costs go down and have the middle class feel provided for.
2
When the reason at the top of the list is: "maintaining the industries necessary for prevailing in a large-scale war" the argument is nonsensical.
In terms of physical warfare the U.S. is so overpowering this point is ridiculous. And if this is the true reason, then don't place tariffs on steel and aluminum, instead place tariffs on computer chips and possibly some types of software since the next large/scale war will be cyber. Our deficit is not in producing steel, but is rather in manufacturing chips.
1
This article surprisingly makes all the wrong points about why tariffs are good. It does not mention that they protect a few, wealthy corporations while add cost to many in the “middle” class.
Furthermore, all those employees working for protected industries will likely not see a penny of the added revenues as wage gains, because that will go to the top management and investors.
Bringing the excuse of a full out war like in WWII is comical at best. Joint chiefs have said a nimble military able to carry out guerrilla style combat against an amorphous enemy is now the norm. Drones and other high tech weapons are ever more potent and thus lethal. The vast inventories of heavy machinery of the past are no longer relevant. Defense contractors are even considering advanced manufacturing on the battle field.
I agree that countries have fallen short on their promises to compete fairly with the US (and the US is no saint either, just look at mega farming or aerospace as examples of protected industries). I also agree that free trade agreements are disruptive. However, solving a problem by creating others via ill-conceived tariffs is stupid and self defeating.
1
Union support is required and Democratic support of unions must be a priority. Trade is #3. Living wages is #2.
2
What we need is the return of the Luddite. we should all take our hammers and smash the machines and computers that are and will do our jobs for us. when we have rendered the conveniences of modern life broken, then we can return to a good day of hard labor for all of America.
Hmm, and here I thought unions had something to do with a strong middle class based in part on blue collar workers who could achieve a middle class lifestyle based on industrial production.
1
"The first isn’t discussed very often in a time of relative global peace: maintaining the industries necessary for prevailing in a large-scale war."
Our military arsenal today is by far the most powerful in the world. No one is a close second. By large scale war I assume you inferring one where nuclear weapons are used in which case there would be no victor. Are you auditioning for a spot in Trump's cabinet?
1
International trade is a worthy goal to be promoted just as an America first economic nationalism is necessary to maintain the infrastructure needed for national defense and to provide economic opportunity for the middle class. I'm loathe to say this, but Trump gets it right when he calls for a trade policy that balances international trade and economic nationalism.
The "free trade" regime that has become American trade policy serves the interests of wealthy donors at the expense of ordinary Americans. It is designed to encourage off shore production of goods designed by American companies rather than to permit goods designed and produced by foreign companies to be imported into the US. So called "free trade" policy does nothing more than permit free arbitrage of labor.
Unfortunately Trump's boneheaded steel and aluminum tariffs do not address the problem of a trade policy that promotes offshore production by American companies. A better tariff would be a tariff on goods produced off shore by American companies.
4
The author wants to be very sure that America can refight World War II (which concluded over 70 years ago), at "some time in the future." And that's his justification for the Trump Tariffs.
Frankly, it seems as if both gentlemen are trapped in 1950. I'm not willing to be trapped with them.
Where were all you guys when unbridled capitalism and monopolies eliminated competition within the US and still does so today regardless of trade. Where are all the small shops and businesses? Why so few airlines, small banks, small farmers, and just a few companies controlling the internet and media. The whole point of American capitalism is driven by a credo of eliminating the competition and then providing worse service and products. Free trade has little to do with it but I am sure the author cares not a wit for this problem. In the US it is made much worse by a health care system (except for Medicare) that is based on this same free market capitalism when it should be a right just like public education. The joke of it all is that this Nationalist Trump is controlled by the most desperate, dangerous, and evil man in the world Vladimir Putin as Russia is becoming an economic and social wasteland with its embrace of the worst aspects of this same unbridled capitalism. Oligarchs rule Russia (under Putin's direction) and seem to own many of Trump's former aides, his family and Trump himself.
2
It seems to me that the industry we should be pouring gigantic amounts of money into is education. You see, besides employing an enormous number of people, thereby supporting a robust middle-class, it produces something worth having--- educated people who can do the jobs of the future rather than the jobs of the past. Which supports a robust middle-class. And on and on. Of course, guess who doesn't vote for Republicans?
1
Somehow I don't think that union labor is part of the Trump vision for a revitalized American Steel Industry.
1
Sure. Free trade ideology is a partial truth. Economists critical of Neo’s-liberalism have long made similar valid points against the “Washington Consensus”. But why call it “nationalism?” Or “America First?” And why emphasize military readiness or even the “middle class,” instead of recognizing that social welfare as a whole depends, to a certain degree, on government managing the economy. That point of view would reflect common sense. Instead what Trump is doing is worse than arbitrary. He is systematically dismantling the institutions that are necessary to take a reasoned, data-driven approach to public policy, while using the government to promote his political supporters and punish his political opponents.
1
I have to question the elevation of manufacturing jobs as the backbone of the American middle class. It didn't just happen yesterday that this country has been shifting from a manufacturing based economy to a service based economy. Unfortunately, the de-industrialization of the country that began 40 years ago has now accelerated to warp speed due to technology and it is the speed of change that has made people's heads snap.
But focusing just on the mythical manufacturing jobs misses all the other industries that are getting hollowed out due to technology. The first that comes to mind are retail workers. The thinning out of jobs in this sector has been staggering but no one is calling for Amazon to pay some type of tariff (on line sales tax?) in order to preserve these jobs.
So my take away from the economic nationalist argument is that domestic creative destruction in the economy is okay (Amazon replacing shopping malls) but off shore creative destruction is bad (far flung manufacturing supported by advancements in logistics) and we need to protect against it.
Let’s bring back the typewriter. After all, it’s made with steel. Coal and oil too, because after all, global warming is a hoax, look at all of the snow we’ve had.
One of the benefits of free trade that the author has omitted is that it has helped to maintain and even encourage peace. You tend not to shoot at your customers, not good for business. And why we pick the winners, in a choice reminiscent of central planning is a whole other mystery. National security, really? If we never import another ounce of steel we have enough for decades. If the author was so concerned about the hollowed out middle class perhap he should help to bring back unions and fund training for workers displaced by technology. It’sbeen A very successful formula for Germany.
Naomi Kein's, 2014 book, "This Changes Everything," makes clear that free trade agreements are antithetical to efforts at controlling climate changing emissions. World wide free trade means a larger carbon fuel use for world wide transportation, and means production in places of cheaper labor with lesser environmental regulations.
But besides these obvious conflicts between curbing greenhouse gases and promoting world wide free trade, Klein also notes that when free trade and the curbing climate change come into conflict, free trade wins. There are all kinds of binding treaties and the World Trade Organization to make sure that participating countries buy their products from the cheapest suppliers, regardless of the negative climate or social impact.
If Trump, with anti-free trade policies, manages to keep big multinational corporations from pillaging the earth for their needs measured by only one metric -- price -- while those corporations ignore all the social and environmental consequences, then Trump will be doing the world some good.
I doubt Republicans and "centrist," big corporation Democrats will be happy with such a Trump.
The writer claims that the tariffs are supposed to help the middle class. That is not true. The tariffs are meant to isolate the United States and throw down a glove to the rest of the world. It is Republicans who stifled the unions and promote the service economy by cutting services like health insurance, and other social protections that allow Europeans for example, to be middle class no matter what their job. Republicans cut all supports for the middle class and now we are divided into rich and poor. I wish Trump voters would see through these people.
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With respect to the authors item (1) and trumps supposed national security concerns; in global/wwii type scenario in the 21 st century steel and aluminum don’t really matter. Can anyone contemplate a conflict where the us nneds to build more super carriers ( over five years) or restart th3 F22 fighters production line to fight a current war. In the world of nuclear weapons the idea of a ww1 or2 war of attrition over years is extremely poor justification in my view
A tariff world is one where the government picks the winners and losers.
Protect steel, and the domestic steel industry and its workers get a benefit. But that’s because steel prices rise. With rising domestic steel prices, products incorporating domestic steel get more expensive, making those products either less profitable if their prices stay constant, or less competitive if they don’t. Either path leads to reduced profits for the industries that have to buy the more expensive steel. Those losses will also affect those industries’ workers. If any consumer prices rise, the general public sees a reduction in their purchasing power. So steel wins at the expense of other Americans, not just foreign producers.
These effects are magnified and further distributed outside of the steel supply chain by any retaliatory trade actions.
Even worse, this doesn’t even have to be a zero-sum game. The country as a whole can lose more than the steel industry gains.
Tariffs are a potentially more egregious targeted redistribution of wealth than the recent tax reform, where the national debt increase (held collectively by all Americans) was used to fund highly regressive tax reductions, by which a small fraction got the majority of the benefit and only a tiny fraction of the long term costs.
I'm sure the author is also shedding tears over the small farmers in Mexico who were wiped out by the US government subsidized corn and wheat shipped there by our farmers. Until, of course, a trade war breaks out and our agriculture exports are crippled by retaliation tariffs. Etc...
In reality, the tariffs are designed to buy votes in a tight PA congressional race, and also allowed Trump to ignore any gun control talk (except for video game talk). Nothing to do with national security.
Even as incomes have stagnated, middle income Americans have come to live more luxurious lives in terms of stuff and activities than in the past. Low cost products and travel mean that dollars go further. When consumers are given a chance to vote with their wallets, lower prices and higher quality always beat the reverse.
Why do American-built cars offer good value in terms of style, performance, safety and quality? Why do they last 3X longer than 40 years ago? Because of competition from cars made in Japan and Korea.
The national security argument is bogus. In the pre-nuclear era serious wars lasted roughly half a decade. That was enough time to engage industry to produce stuff for fighting. Modern wars rely almost solely upon existing military equipment and stockpiles and end in a matter of weeks or months.
Comparing the US economy to that of China is also bogus. It borders on tautology to say that it's easier to achieve rapid growth in a poor country than a rich one. Duh. Chinese theft of intellectual property and export of knockoffs is a real problem that targeted trade policies can help to resolve.
Trade wars impoverish everyone. Saying that there's another side to the story is like saying that gravity is just a theory before jumping out of a plane without a parachute.
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Economic nationalism, America first, .... all convince me that America is waning. We've become like all of the other less "significant" countries, demanding more from others rather than leading, inspiring, and yes, sacrificing for principles unique to us. Historians will point to this time, this presidency as the moment when we relinquished our leadership - no doubt to China.
It's a sad time, made all the more tragic as so many people in this country believe that they're time has come. They're about to be disabused of that fiction.
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Loads of words from a bubble like perspective but not much of a content in this article.
Reading this piece, I wonder how we in Singapore make ends meet?
Yes, we do have a thriving middle class and a thriving production despite the fact that we are one of the most open and globalized nations.
Reading this article we should not exist and yet here we are.
So, as with other economy and social analysts, there is more to the big picture than Mr. McCarthy can see.
The US has killed off large parts of its middle class because it does not have a social contract and goes by the idea of "Every man by himself".
Other countries have a base in looking after their own but also try to learn from others and include what the others seem to get right.
While the US is still isolated, the EU has kept its social contract and opened at the same time.
Singapore never had much resources with one exception and that is our man power and our middle class.
So we tend to educate them, feed them and pamper them to enable them to live up to their full potential and the results show that we are right.
The same goes for the EU and to a lesser but still important amount to China.
All the while the US has outsourced its production, not because it was cheaper but because US products cannot compete any more.
And because the middle classes that power any economy have been on the decline in the US for decades.
You cannot progress if you have lost the brains.
It's not the other way around as suggested here.
Citing the industrial power with helped win two long-ago wars is irrelevant in today's world, where foreign internet lies and influence undermine our democracy. Bush's steel tariffs resulted in job losses in America. There is no reason to think Trump's ill-advised impositions will not also result in lost jobs here.
Republican pro-business policies have hollowed out middle-American factory towns by rewarding investors over workers. When corporations look to cut expenses, labor is the first item on the menu. Big bonuses await the CEOs who can cut the most jobs and save the most money for his investors. The recent wealth transfer to the already wealthy, passed enthusiastically by Republicans (they called it tax reform), will further undermine American workers, and leave them holding the bag on the massive debt it will incur.
Given these facts and so many others, only an fool would listen to a conservative Republican advocating economic policies to benefit American workers. I am not that fool. I wish The Times would be a little more critical in their choice of conservative viewpoints. Or maybe I am being too critical of them; maybe conservative ideology really has nothing more to offer than this already-disproven drivel.
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Whatever Aristotle may have meant by "the middle class" (literally the "mean" class because he was pursuing his general theme of the Golden Mean), it wasn't what any of us mean today.
As for the comparison with China, oy vey, that's a bit of a reach. Might as well base your economic strategy on post-war Guatemala. The Chinese have enjoyed explosive progress because they have an enormous base of expendable labor and have been willing to sacrifice the lives, health, wealth and freedom of millions for generations. Good luck with that in the US!
Re: Bush 43’s tariffs
Bush wanted to protect 1200 steel workers about to be laid off. Instead thousands were laid off in other industries. One estimate was that when you added up the unemployment insurance, Medicaid, WIC, etc. costs that would have been less expensive for the US government, that be you, to have given each steel worker a check for $250,000.
And what has happened to US steel production since then? Gone up. Steel production employment has gone down due to automation. Thus, everything stated in this column is bogus. Mr. McCarthy is a fraud.
Tariffs are not a novel “third way” policy. “Economic Nationalism” is an empty term, without any substance.
For example: School boards have gone back and forth between roughly two theories: rigid teachers with homework and rows of desks, and open classrooms with no homework and free play. Those are two broad views on education. Introducing more detentions and time outs isn’t a competing education policy, and giving it a name like “Disciplined Education” would be disingenuous.
Tariffs lower investment as investors cannot be sure that they won't be repealed. Lack of investment will lower competitiveness and reduce jobs and wages. That ain't great.
Mr. McCarthy - the world has changed since 1942, and the change is accelerating every year. Looking to the past is the worst way to address this situation. Your talking points are sorely deficient in understanding this fact.
America can look inward, but the remainder of the world will not follow suit. We can have a significant role in the future, or accept a leading part of the past. The choice is simply that clear.
Mr. McCarthy seeks to recreate a manufacturing sector that will never return. It's not trade agreements but automation that has set us on this path. It may be that trade agreements in the 90's cost the US manufacturing jobs, moving them to Asia and Mexico. But now those nations are also watching as these jobs are taken over by robots. Last decade this process was a trickle, now it's a river, next decade it will be a flood. This is a global problem that needs a 21st-century solution, not an economic policy that is stuck in the past. Tariffs are a futile and self-defeating gesture, possibly with political benefits for Mr. Trump but with serious negative consequences for our economy.
Mr. Trump attempting to fulfill campaign promises. How utterly unexpected and surprising.
Mr. McCarthy makes sense to me, and of course Prof. Krugman is against it, as per today Op-ed who claims that these tariffs are violating US law. Prof. Krugman claims that Mr. Trump is throwing the world economic system under the bus. Mr. McCarthy claims that Mr. Trump cares first about the US. Also a surprising idea.
As in the case of North Korea, if something good comes of the tariffs, there will be many reasons to avoid crediting Mr. Trump. If the idea does not work, then blame galore.
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"But they are a first attempt at finding an alternative to a free-trade system that has built up the People’s Republic of China while hollowing out the factory towns that once made America great."
Although their form of government is hardly acceptable, China is rapidly moving forward in cutting edge biosciences, clean energy, artificial intelligence, and many other 21st Century endeavors, Trump is promoting a return to coal and expansion of fossil fuel usage and seems to focus on old industries that are either no longer viable or can, are, and will be highly automated. These are not the industries that will bring back a middle class living for those many who have lost it over the past 30-40 years. To think that it will, will only prolong the misery of those in the dying industrial towns of the past. Education and innovation are key; tariffs, particularly these poorly thought out ones by President Trump offer no long term solutions and likely will do more harm than good.
If I believed anything Donald Trump did was thoughtfully planned, I might accept that his new tariffs could ameliorate the plight of working class folk who’ve been left behind by the shift to a global economy. But I don’t believe Trump is thoughtful, nor do I think he genuinely cares about anything but his own ego and enrichment.
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We have done a real bad job of protecting our industrial workers, there was absolutely no plan to deal with the consequences of free trade. Any modest steps which were taken were blocked by conservatives which is one of the reasons we have Trumpism. You can have free trade but there has to be some kind of industrial plan like most European countries have.
Mr. McCarthy's piece is not very thoughtful. It fails to discuss the fact that the U.S created the world that Mr. Trump is now recklessly tearing down. Yes we need these industries to fight wars but it can be argued that WWI and WWII were caused by tariffs. Post war peace was built in large part by free trade. Surely there is a better solution in the 21st century than returning to 19th and 20th century counter productive trade policies?
There are many many middle class jobs that aren't factory jobs. Teachers, bus drivers, engineers, accountants, farmers, contractors, police officers, nurses, and so many more. I'm not sure why the author is so sure that a factory is the only place a middle class person can work.
The problem is not foreign trade, and the imbalances. The Republicans and conservatives, the writer is one, broke the backs of the unions, the salary protections that protected millions of workers, both white and blue collar. Also the infrastructure became old and outmoded at time when foreign competition starting ramping up throughout the world. We are in a time of change, There are tremendous developments in research and development on the horizon, we should be capitalizing on them. Look at the history of times of technology change, there are vast dislocations, Unions that protect the salaries of workers, teachers, civil servants and cops would help the middle class. Incentives for research and industries would help more than punitive tariffs. Tariffs will hurt Americans more.
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The GOP is fighting to defend “Free Trade” that doesn’t exist.
Every aspect of our economy is saddled with costs imposed by thousands of pages of regulations as well as minimum wages, health care etc. The Peoples Republic of China (PRC) pollutes freely, steals Intellectual Property and any health care is provided to the workers by the government.
When we allow overseas sources to avoid these costs to gain a competitive advantage, our Balance of Payments (BoP) deficit grows exponentially. The present value of the BoP matches our National Debt a year or so later. In addition to draining the life blood of our economy, the PRC is investing in a major defense build-up which will cost US more to keep up with now and in the future.
There may be more nuanced ways to ensure that products that enter our country pay the same costs that our domestic suppliers do without harming our friends, but the GOP needs to help to find them. Just because “The Donald” is clumsy doesn’t mean that he is wrong.
Let's be honest here. The tariffs Trump is putting into place are a political ploy. It's a reality-television photo op, so he can sit in front of a bunch of guys in hard hats. He's only rushing it through now because he's worried about being portrayed as the "loser" in the Pennsylvania special election on Tuesday.
China may be dumping steel in the market, but we get most of our steel from Canada. So, the tariffs won't have the intended effect.
I do agree with the author that maintaining our industry, the middle class, and prosperity are important. These Trump tariffs won't do it. And, they might spur retaliatory moves by our trading partners that will hurt critical industries, harm middle class jobs, and hurt our economy.
Republicans who care about trade should stop a reality-television ploy that could do real damage to working people.
There are far too many people for the 19th century economic arrangement we are still living with. It's simply a post-scarcity new world where capitalism is failing to provide for the needs of society.
We can either adjust the rules or the population size. This is the dawn of neo-feudalism.
Mr. McCarthy ignores how industrial production shifted from America to China and other low cost countries: the choice made by America's largest and most successful companies, including Apple. Nobody put a gun to the heads of the CEOs of these companies, they chose to shift production to low cost countries of their own free will in order to maximize profits. McCarthy frames the issue as one of competition between American companies and foreign companies, when in fact the American companies elected to shift production to foreign companies. And that choice has proven to be extremely profitable, as American companies including Apple have been generating enormous profits, profits that have escaped taxation here by schemes designed to shift income to tax havens, schemes that the Trump administration and Republican Congress have rewarded by allowing these companies to bring those profits to America at a tax cost far lower than the tax cost if they had not engaged in those schemes. Sure, it's China's fault.
The middle class sprung up on a bed of tax money and spending. The wealthy paid, in some cases, more than half their income to the Federal government. We built roads, innovated, educated our children cheaply. Back then, children were rightly afraid of Russians and hid under desks from fear of nuclear war, not American-right NRA-trained Russian-funded terrorists. We as a country must pay for our own health and innovation, we must support our own, we must remember that WE are the Federal government. Ripping off other countries with whom we have to share a planet is bad strategy. Our rich need to put back in to the country that made them wealthy.
Basically, what you are describing, Mr. McCarthy, is capitalism in action, not exactly a reaction (pardon...) I would expect.
From my Econ 101 class (1963) four ideas taught still resonate:
1. Within my lifetime there would be 3-5 participants in every type of business: airline, auto, TV, movie, agriculture, etc. Government oversight and regulation would decline. Wages would decline. Quality and choice would decline. Consumer cost would rise. The über rich would not be effected and would be catered to
2. Businesses hate competition. Businesses want to avoid competition. Competition is expensive and fraught with danger: One could lose.
3. Businesses like laissez faire, free market capitalism. It can lead to monopoly. Businesses, when left to their own devices, will aggregate to their own best advantage, create cartels at best and monopolies at worst. Monopoly is the ultimate goal of any business. A small cartel is not a bad second prize.
4. Businesses like oligarchies and/or plutocracies. Businesses can live with, if they have to, theocracies. Businesses do not like democracies.
In "The Graduate" it was plastics. Now, think what 3D-Printing could do...
I can see the logic in some of the ideas advanced in this editorial, but the fact is, they're moot in actual reality. As proof, I point to the tax cut. The tax cut shows absolutely no desire on the part of the 'tiny capital-controlling elite' to foster a sustainable middle class in America. Changing the way our nation does business with foreign entities won't change the problems we have at home.
Ultimately, the way to keep the middle class afloat is in domestic policy. Unfortunately, domestic solutions to the dying middle class are even more anathema to the party in power than economic nationalism. Taming the rampant health/insurance industry? Domestic. Raise taxes back to pre-Reagan levels? Domestic.
Trump's version of "America First" does not actually consider what's best for the country and its citizens, nor does it address the "losers" from a global economy. Instead, Trump intentionally lies about the causes of manufacturing employment decline, which the evidence shows is much more the result of technological advances than from trade. His tariffs are about picking different winners and losers and earning cheap political points. They have virtually nothing to do with making America great and will likely end up hurting us all.
“Economic nationalists are intent upon protecting not only certain industries but also a multilayered free-market political and economic order that is anchored by a healthy middle class.”
The key world here is “certain”, which is where the cronyism comes in. When the government does this, someone has to suffer. Nationalism is a relic of the past and needs to be re-examined. Our modern industries depend on HUMAN capital, not industrial. The funny thing is, many so called Republicans were instrumental in hollowing out the middle class when they moved overseas in the pursuit of maximizing shareholder value. Unions were busted. it would do better to look to the future rather than placate the present and those people who do not adapt.
I witnessed first-hand how government can create jobs and prosperity. I grew up in one of the "Asian Tigers". Trump is right. Coastal elites are wrong. In essence, the "new economy" - a.k.a. hospital and university jobs, is subsidized and inefficient. While preaching globalization, elites are insulated in their highly protected world from global competitions. Trump's presidency was inevitable and it was totally created by the elites.
In fact, we should look at trade from two angles. (1) job security of middle class: From this perspective, limiting the imports of steel and aluminum makes sense. (2) The overall trade imbalance especially with China. The chronic trade imbalance with China should be dealt with. Chinese should open their market and we should all forget about WTO. This issue is between these two countries. There is no reason to get others involved.
The next war will probably have more to do with software capability than how much raw steel you can process into planes and tanks. Keeping our borders open, our industries internationally competitive and ideas and people flowing into the country is the best way to make sure we're able to fight tomorrow's battles-- not those of nearly a century ago. Your next argument will be for hoarding gold.
I'm from a shrinking former post-industrial town. The "alternative" we are looking for IS free trade theory. Free trade raises the standard of living for the countries engaged in it - either thanks to comparative advantage an/or lower prices and greater variety for consumers. Economists know there are going to be winners and losers, but that the winner's gains are more than enough to offset the loser's losses.
Equitable free trade therefore requires domestic policies where the winners share some of their gains with the losers. That is what hasn't happened, thanks to the Paul Ryan's of the world. The inequity of trade is a systematic failure of domestic policy, not trade policy.
"The first isn’t discussed very often in a time of relative global peace: maintaining the industries necessary for prevailing in a large-scale war."
Aah...."a time of relative global peace"--it's a good thing because we only have to spend (globally) 1.7 trillion dollars annually....with the US leading the way. That doesn't include stuff like wars (Afghanistan, Iraq, and dozens of hot spots throughout Africa). Wars are extra. Then there's outsourcing.
(And of course we know our own military "is crumbling. SAD." What do you expect when we account for only half of global defense spending? Russia maintains 9 foreign military bases, the furthest flung is Vietnam. We only have 800! Unacceptable.
"maintaining the industries necessary for prevailing in a large-scale war."
How large-scale are we talking here? If I'm not mistaken, D-Day type operations are a thing of the past, although the History Channel can be very inspiring. It's no longer about our supply of rubber and bauxite. Today's large-scale is when you press a button here, a button there and everybody loses. Another industrial/large-scale war--another WWII-- may stir the imagination but that ship has sailed.
We’ve already had our trade war. We lost. In the rust belt there are downtowns that resemble Berlin, 1945. There are opioid users who resemble the dispirited, displaced refugees of those days.
It’s time to take lessons learned, and rebuild. The US needs a thoughtful, long-term industrial policy. Which it won't get from a Trump administration.
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Maybe an even bigger reason than the military to keep manufacturing here - value added. Which you're not going to get from a service economy.