Did NAFTA help the U.S. auto industry?

by on March 30, 2016 at 11:56 am in Economics, History, Law | Permalink

There are still more than 800,000 jobs in the American auto sector. And there is a good case to be made that without Nafta, there might not be much left of Detroit at all.

“Without the ability to move lower wage jobs to Mexico we would have lost the whole industry,” said Gordon Hanson of the University of California, San Diego, who has been studying the impact of Nafta on industries and workers since its inception more than two decades ago.

Even in the narrowest sense — to protect jobs in car assembly plants — a wall of tariffs against America’s southern neighbor would probably do more harm than good.

And this:

The Honda CR-V assembled in El Salto, Jalisco, for example, uses an American-made motor and transmission. Roughly 70 percent of its content is either American or Canadian, according to government statistics.

This regional integration gave the United States-based auto industry a competitive edge that was critical to its survival. “There was a concern 20 years ago that an auto industry production chain would develop across Asia, including China and Taiwan and Southeast Asia,” Professor Hanson said. “Maybe Nafta saved us from that.”

That is from Eduardo Porter at the NYT.

1 Hazel Meade March 30, 2016 at 12:11 pm

“There was a concern 20 years ago that an auto industry production chain would develop across Asia, including China and Taiwan and Southeast Asia,”

This has actually happened in the semiconductor industry and electronics industry. Very little chip manufacturing capacity is left in the US. The entire supply chain is based in SE Asia and China. IIIRC, that is actually a major reason why Apple iPhones are assembled in China. There was some commentary about how they wanted to assemble it in N. America, but found that it didn’t make sense because the whole supply chain was in Asia.

2 Observer March 30, 2016 at 12:13 pm

“The entire supply chain is based in SE Asia and China.”

And all the value-added is in Cupertino.

3 John Hall March 30, 2016 at 12:18 pm

I heard Robert Gordon speak about the issue and he was going on and on about how much imports for electronics had increased since 2005 or so and I couldn’t help but wonder if he was failing to capture Apple’s value added.

4 anon March 30, 2016 at 12:22 pm

The objective difference between a Xiaomi and an Apple phone is low. But yes, perceived value is added somewhere.

5 The Original D March 30, 2016 at 2:09 pm

Apple headcount: ~80,000
Foxconn: 1.3 million

6 Cooper March 30, 2016 at 2:19 pm

And nearly half of those employees are retail sales clerks at the hundreds of Apple Store locations earning $14/hour or “Geniuses” earning $20/hour.

7 Chip March 30, 2016 at 2:32 pm

Foxconn CEO sees 30% of his workers being replaced by robots in next several years.

When robot-produced parts cost the same whether in Mexico or the US, companies are going to start reducing ship times and long supply chains to place production near consumers.

8 JWatts March 30, 2016 at 7:30 pm

I’m uncertain that the coming Robot surge will be as cataclysmic as is often projected, but I believe it’s likely that plants will keep their steady march towards higher levels of automation. The Foxconn plants are probably low hanging fruit. Repetitive high volume tasks are always the one’s that pay the least and are also the one’s that are easiest to automate.

9 mulp March 30, 2016 at 3:08 pm

“And all the value-added is in Cupertino.”

Rent seeking is value add?

In the economic models of the efficient economy, value add is always labor cost.

Labor cost embodied in built capital, knowledge capital, enterprise scale capital.
Labor cost in marginal cost to produce one more unit.
Labor cost that is used in worker income to buy the production.

But then, I’m a two handed economist.

Not the supply one handed side economist who assumes that if you build the product and charge a price twice what you pay labor, consumers will buy all you produce thanks to big government doing helicopter drops of cash somehow on customers.

10 Hazel Meade March 30, 2016 at 10:40 pm

Not the supply one handed side economist who assumes that if you build the product and charge a price twice what you pay labor, consumers will buy all you produce thanks to big government doing helicopter drops of cash somehow on customers.

I don’t think “supply side” means what you think it means.

11 Horhe March 30, 2016 at 3:44 pm

Glad to hear the one percent is doing okay. It was really touch and go there for a while, They shipped so much tech, know-how and the means to innovate that I was afraid the Chinese would steal their lunches too by competing with them. Thank God there’s some voodoo there that lets Apple products stay ridiculously overpriced compared to their competitors, who are not that far behind on capabilities.

This reminded me of a very good article of Eamonn Fingleton on Japan and Boeing.

http://www.fingleton.net/boeing-goes-to-pieces/

12 Skaevola March 30, 2016 at 12:36 pm

Plenty of chip manufacturing is still done in the U.S. (and other developed economies like South Korea and Taiwan) although most chip packaging and testing is done in Southeast Asia. You’re right that virtually all high volume electronics assembly (taking chips and putting them into finalized products) happens in the Pearl River Delta area.

13 Lord Action March 30, 2016 at 1:05 pm

Right, what Hazel said has some basis, but it’s very misleading. The Asian companies own the very bottom of the industry. 30 or 40 years ago, it looked like that was a beachhead, but it no longer looks that way.

14 Horhe March 30, 2016 at 3:47 pm

There were some good points here in favor of Hazel.

http://www.fingleton.net/the-japanese-electronics-industry-a-rebuttal/

“Katz points out that Japan’s share of the global chip fabrication business has fallen. This is true, but again it hardly signals the malaise he suggests. On the contrary the Japanese electronics sector has moved on to more sophisticated activities – activities that he seems unaware of.

Industries go through life cycles. When an industry is young, it typically requires leading-edge manufacturing techniques and thus production is dominated by just a few advanced nations. As it matures, other nations catch up. And this is what has happened in memory chips and other so-called “commodity” semiconductors. Whereas Japan was the world’s biggest producer in the 1980s, it long ago passed the torch (and much manufacturing technology) to Taiwan, a nation that trails well behind with a per-capita income at market exchange rates less than half of Japan’s.

This might be tragic if the Japanese had nothing else to do. In fact electronics manufacturing is a fast expanding universe and, while some Japanese corporations such as Sony are in trouble (by the way, how is Zenith doing?), the overall Japanese electronics industry has found ever more challenging new worlds to conquer. It is busy making a host of leading-edge producers’ goods that though invisible to the consumer are driving the electronics revolution. Examples include tantalum capacitors, charge coupled devices, laser diodes, ceramic packaging, and LCD drivers. Such components are essential in countless applications from cellphones and car navigation devices to optical fiber communications networks and avionic systems.

A typical area of Japanese leadership that is completely overlooked by the declinists is the battery industry. It happens to be one of the fastest growing sectors of the global electronics industry. Batteries may seem like an old technology, but the sort of batteries that used in cellphones and laptops, not to mention hybrid cars, are a world away from traditional alkaline or acid batteries. Today’s nickel-metal hydride batteries, for instance, require super-advanced manufacturing techniques. As Fareed Zakaria has pointed out, eight of the world’s top ten battery manufacturers are based in Japan (and only one, Johnson Controls, is based in the United States).

Then there are such fundamental areas of Japanese leadership as electronic materials. Not the least such material is semiconductor-grade silicon. Two Japanese companies, ShinEtsu and Sumco, enjoy a world duopoly. Monsanto of the United States and Wacker of Germany once successfully contested this geopolitically crucial market but they long ago dropped out: their problem was that every new generation of chip requires ever purer silicon and they just could not keep up with not-an-atom-out-of-place Japanese quality. The Japanese also are the dominant – and in many cases only – suppliers of a host of precision machinery vital in making electronics components and materials. They enjoy a monopoly in, for instance, LCD steppers, which are the key machines needed in the production of liquid crystal displays.
– See more at: http://www.fingleton.net/the-japanese-electronics-industry-a-rebuttal/#sthash.jTpp4h1m.dpuf

15 Lord Action March 30, 2016 at 5:36 pm

Did you read this? Are you familiar with the technologies discussed?

16 Sbard March 31, 2016 at 10:34 am

Another example is Japan Steel Works in Muroran, Hokkaido, which is currently the only facility in the world that can produce weld-free, single piece pressure vessels for nuclear reactor cores (other companies in this market make the forgings in two pieces and weld them together).

17 Nathan W March 31, 2016 at 1:55 am

Like the textiles industry of 1900, in a sense. Now Cambodia and Bangladesh fight over the scraps.

18 Hazel Meade March 30, 2016 at 10:49 pm

You’re right, I just mean East Asia in general, including Japan, Taiwan, S. Korea, China. The supply chain is based so much in that area that it is just more efficient to base other electronics assembly there. And there’s nothing wrong with that.

19 AIG March 30, 2016 at 6:20 pm

People, really, get a clue: http://s8.postimg.org/x91trdf3p/apple.jpg

China labor is 1.8% of iPhone’s value. Apple…60%

20 Hazel Meade March 30, 2016 at 10:22 pm

That has nothing to do with where the supply chain for electronic parts is located.

21 AIG March 30, 2016 at 11:52 pm

But why do we care, if it represents 1.8% of total value?

22 Hazel Meade March 31, 2016 at 10:43 am

We don’t. It was just an observation.

23 Observer March 30, 2016 at 12:11 pm

I’m sure that Trump voters who went from making $50,000 on the line to $25,000 at Wal-Mart will be happy to hear that others in the auto industry have kept their jobs.

24 firingline March 30, 2016 at 12:38 pm

Haven’t you heard? The consumer benefited. So even though they may have lost stable, well paying employment, they gained in terms of cheaper consumer junk from places like Walmart. They’re overjoyed, surely.

25 Cliff March 30, 2016 at 12:42 pm

I think the point is they would have lost their job anyway

26 Hazel Meade March 30, 2016 at 12:53 pm

Yes. The economy is dynamic. Nobody is guarenteed to keep making the same money in the same job, forever. Even if there was no change in trade patterns or technology, consumers might just stop wanting certain things and want other things. Some new competitor might spring up and put an old competitor and their employees out of business. Tough luck.
Everyone, top to bottom, in the economy ought to be prepared for their job to be eliminated through technological innovation, trade, or just changing consumer preferences. This is an essential fact of life.

27 firingline March 30, 2016 at 1:12 pm

The Japanese, the South Koreans, the Germans are all doing very well with manufacturing. It seems like it’s just the US that’s decided we’re too good for that kind of work, or that we’re not good enough and we’ll take the mcjobs and a cheap home refinancing instead.

28 Jan March 30, 2016 at 1:26 pm

In the case of Germany, it feels like their innovation focuses on how maximize productivity of humans, especially in design and manufacturing, while US innovation seeks to eliminate the worker.

29 Brian Donohue March 30, 2016 at 2:21 pm

@Jan, that must explain why Germany has lower unemployment and higher GDP per capita than the US, amirite?

Maybe Germany just didn’t get rid of shop class.

30 Chip March 30, 2016 at 2:34 pm

If I remember correctly Germany has lost half of its Pharma industry to places like Research Triangle in NC.

31 Cliff March 30, 2016 at 3:58 pm

The U.S. is doing very well in manufacturing as well. Do you care to explain what exactly you mean by that?

32 Bob from Ohio March 30, 2016 at 3:59 pm

The US is doing well with manufacturing too. Double that of Japan. We just no longer produce mass consumer goods in most types.

China is in first place (assuming its stats are reliable) but for how long. It benefited from currency manipulation and can’t do that anymore.

Look at the clothes in your closet. 10-15 years ago a lot of China, now next to nothing. Same thing is going to happen in consumer goods too.

33 Hazel Meade March 30, 2016 at 4:50 pm

Yes. So? Comparative advantage DOES entail that some countries specialize in one thing and others specialize in something else. Perhaps there is a reason why Japanese, South Koreans, and Germans are comparatively more efficient at manufacturing.

34 firingline March 31, 2016 at 12:28 am

“Perhaps there is a reason why Japanese, South Koreans, and Germans are comparatively more efficient at manufacturing.”

There is, it’s called protectionism. They protect their manufacturing industry, we don’t.

35 Hazel Meade March 31, 2016 at 10:44 am

Really, in what way are they protecting it, and how does it make that industry more efficient?

36 Daniel in VA March 31, 2016 at 10:02 pm

Hazel,

In Germany at least, they have a value added tax of just under 20%. Importers must pay the tax, and exporters are are refunded the VAT paid by their suppliers.

37 FUBAR007 March 31, 2016 at 12:10 pm

@Hazel Meade: “Tough luck. Everyone, top to bottom, in the economy ought to be prepared for their job to be eliminated through technological innovation, trade, or just changing consumer preferences.”

You say this way too callously and too flippantly. That tells me you’ve never had the experience of being “creatively destroyed”. Or of having to go through the struggle and dislocation of reinventing yourself mid-career. It’s not as simple as taking some IT classes at the local college and shotgunning one’s resume out on Monster, especially if one has long-term debt to service (e.g. student loans, mortgages, etc.) and family to provide for.

Beyond that, the problem with your statement is that, given the way our norms and institutions are set up, it’s an unrealistic expectation for most of the population. Education, housing, and really anything to do with long-term financing are constructed around the assumption of stable long-term, if not lifetime, employment. By extension, so, too, are a good number of our social institutions–marriage, family, local community, etc. Moreover, for the better part of a century now, we’ve conditioned multiple generations of people for the industrial model of employment. That isn’t something that can simply be switched off and replaced overnight.

The reality is we do a colossally shitty job of recycling people back into the economy after their previous careers have been rendered obsolete. (I’ll stipulate this now: IMO, the Efficient Markets Hypothesis is a crock of shit, especially when it comes to the labor market. It’s the Just World Fallacy in lipstick and heels.) The right-wing “solution” is, well, as you say, just to tell them “tough luck”. The left-wing “solution” has historically been to hand them welfare and say “good luck”. Neither approach is anywhere near enough. What’s required are active, aggressive measures to enable successful reentry into the market: e.g. relocation vouchers, debt forgiveness for outstanding student loans on obsolete credentials, mortgage buyouts for homeowners in depressed markets, nationwide standardized testing and skills assessment for adults, extensive and affordable retraining programs, etc. With today’s technology, we have the capability to do this stuff.

Incentivizing people to adapt to change means encouraging them to take risks. That necessitates making risk-taking more affordable. For risks that don’t pan out, it means not punishing them so severely that they can’t get back in the game.

38 asdf March 30, 2016 at 1:05 pm

Would they have?

Picking the Japanese car example is pretty absurd, consider the entire reason they built plants in America is because of the quotas that Ronald Reagan imposed on Japanese car imports (amongst lots of other anti-trade measures Reagan supported). Everyone who has a job at one of these Honda plants owes their job to protectionism.

39 Lord Action March 30, 2016 at 1:21 pm

Ugh, but +1.

These agreements are complicated negotiated treaties. They have good aspects and bad aspects. It is worth looking at the details, especially when the results look so lopsided.

40 Hazel Meade March 30, 2016 at 5:09 pm

Fair point.
Although they did make sure those plants got built in right-to-work states.

41 Lord Action March 30, 2016 at 1:07 pm

It’s fair to ask whether NAFTA was the best possible trade deal we could have gotten.

I’m a firm believer in free trade, but it looks like the benefits have been pretty lopsided. I’d really prefer some guy in Nebraska make $22/hr instead of $20 than buy one more Louis Vuitton bag for Shanghai.

42 Bob from Ohio March 30, 2016 at 4:05 pm

“It’s fair to ask whether NAFTA was the best possible trade deal we could have gotten.”

Probably not. We are and were in the dominant position but the gains have been less lopsided than the relative economic position would indicate. Our manufacturing is 4 times Canada and Mexico combined. We should have 2/3 to 3/4 of the benefits and it would still be a good deal for Canada and Mexico.

The one thing Trump (and I can’t believe I am saying this) might accomplish is to scare Mexico and Canada into some concessions.

43 Lord Action March 30, 2016 at 4:48 pm

“The one thing Trump (and I can’t believe I am saying this) might accomplish is to scare Mexico and Canada into some concessions.”

I am also repulsed and saying the same thing. The man’s got a point.

44 Hazel Meade March 30, 2016 at 5:10 pm

I’d really prefer some guy in Nebraska make $22/hr instead of $20 than buy one more Louis Vuitton bag for Shanghai.

And you’re perfectly free to give $2 to some guys in Nebraska instead of buying a handbag on Amazon.
Nobody is stopping you.

45 Lord Action March 30, 2016 at 5:24 pm

I’m saying the people negotiating our treaties are supposed to be working for the guy in Nebraska not the guy in Shanghai (or presumably his girlfriend).

If there are gains from the trade (and there surely are) the benefits should mostly accrue to us. Who needs the agreement more, the US or China? We have negotiating power.

Suppose there were $1T dollar in gains from a particular deal. Our friends at the State Department negotiate such that $1 accrues to the US and $999,999,999,999 accrues to China. Is this a good deal? We gained from it, didn’t we? Well, of course it’s not a good deal. We should have struck a better bargain. In fact, given our position, we should be accruing the lion’s share of the gains from these deals. And we aren’t.

46 Hazel Meade March 30, 2016 at 10:27 pm

Why should they be working for the guy in Nebraska and not the consumer in Iowa? Manufacturing workers are not the only stakeholders in trade deals.

We ARE getting a fair share of the gains. You aren’t counting the gains we are getting by being able to purchase products more inexpensively. If YOU want to buy more expensive products from some American worker, have at it. Nobody is stopping you. What you’re proposing is that OTHER AMERICANS be forced to purchase products from American workers because YOU think their interests are more important than those other Americans. You want the government to institutionally prioritize the interests of low-skilled domestic labor over those of other US citizens.

47 firingline March 31, 2016 at 12:34 am

“What you’re proposing is that OTHER AMERICANS be forced to purchase products from American workers because YOU think their interests are more important than those other Americans. You want the government to institutionally prioritize the interests of low-skilled domestic labor over those of other US citizens.”

Yes exactly, it’s much more important that as many citizens of this country as possible have well paying, productive jobs in which they can take some pride than that you can buy junk you don’t really need for 30% less from Walmart. Libertarians can go live on seasteads if they don’t like it.

48 Lord Action March 31, 2016 at 8:49 am

“Why should they be working for the guy in Nebraska and not the consumer in Iowa?”

It would be great if they were working for the consumer in Iowa, but as shown in the MR link I posted downthread, the evidence is that they are not helping him either. Or at least, that they are not helping him nearly as much as they should be.

49 Lord Action March 31, 2016 at 8:52 am

“You aren’t counting the gains we are getting by being able to purchase products more inexpensively.”

No, I’m counting that too. Obviously that’s a major part of the accounting. And the facts (at least insofar as this appears measurable) are that the benefit has been extremely lopsided, against the US.

50 Hazel Meade March 31, 2016 at 10:47 am

The consumer in Iowa is voluntarily choosing to purchase those products from China, and I think he is a better judge of what is good for him than you.

Yes exactly, it’s much more important that as many citizens of this country as possible have well paying, productive jobs in which they can take some pride than that you can buy junk you don’t really need for 30% less from Walmart.

A) It is not your decision to decide if what Walmart sells is junk, or whether I need it or not.
B) What about the jobs created by me having 30% more money to spend on OTHER THINGS? What about the increase in my standard of living (and the standard of living of every other consumer) that comes from having more money to spend on other things?

51 Lord Action March 31, 2016 at 11:00 am

“The consumer in Iowa is voluntarily choosing to purchase those products from China, and I think he is a better judge of what is good for him than you.”

I’m confused by this. I’m not trying to second guess the guy in Iowa and his purchasing decisions. I’m all for him buying cheap stuff from China. My argument is that he should be able to buy more stuff, even cheaper. And that they should be buying more whatever it is he is making. I am in favor of increased trade. There are gains to trade.

What I’m arguing about is the distribution of those gains. The evidence suggests most of the gains are not going to us, when even an elementary analysis of the negotiation suggests the US ought to be cleaning up in these treaties.

More free trade is, in principle, great. But if there’s a dollar in gain from the trade, 75% of it should go to the US, when it seems only about 25% is.

52 Hazel Meade March 31, 2016 at 11:31 am

More free trade is, in principle, great. But if there’s a dollar in gain from the trade, 75% of it should go to the US, when it seems only about 25% is.

You can’t control the dollar gains from trade. Trade deals are about setting the rules, not negotiating the sale of products. If the rules are fair, then it is practically inevitable that the poorer country will benefit more in terms of total dollars of GDP growth. If anything the rules are already biased in our favor, as the trade deals tend to focus on economic sectors that benefit the US companies most, such as manufacturing and consumer electronics and pharmaceuticals. Not to mention our insistence on intellectual property rights.

If we wanted to help poorer countries more, we would focus on agriculture.

53 AIG March 30, 2016 at 6:21 pm

Trump voters can move to Mexico. Everyone would be better off in fact, if they GTFO

54 firingline March 30, 2016 at 12:29 pm

The middle class is obsolete, in the future we’re all dentists or janitors.

55 prior_test2 March 30, 2016 at 12:41 pm

Nah, we’re all the rich or their grateful servants or living in American favelas. Someone wrote a book about this vision, to be honest.

56 Hazel Meade March 30, 2016 at 12:54 pm

Was it called ‘The Time Machine’?

57 Cliff March 30, 2016 at 4:00 pm

I love it, great insight

58 Observer March 30, 2016 at 1:42 pm

A celebrity economist should write a book about this topic.

59 spencer March 30, 2016 at 12:38 pm

70% US or Canadian content is higher than the US content of a lot of cars made in the US.

60 priior_test2 March 30, 2016 at 12:40 pm

‘There are still more than 800,000 jobs in the American auto sector.’

With many American auto workers (including those making trucks) working for BMW, Fiat, Diamler, Mercedes (cars and trucks), Honda, Toyota, Volvo (trucks), and VW.

‘And there is a good case to be made that without Nafta, there might not be much left of Detroit at all.’

See above.

‘“Without the ability to move lower wage jobs to Mexico we would have lost the whole industry,” said Gordon Hanson of the University of California, San Diego, who has been studying the impact of Nafta on industries and workers since its inception more than two decades ago.’

See above.

‘Even in the narrowest sense — to protect jobs in car assembly plants — a wall of tariffs against America’s southern neighbor would probably do more harm than good.’

Who is talking about a wall of tariffs?

‘This regional integration gave the United States-based auto industry a competitive edge that was critical to its survival.’

So, we went from the ‘American auto sector’ to ‘United States-based auto industry’ – and yet, the provided example is of a Japanese car company servicing a large regional market with a product unlikely to have any appeal in its home market (the same is true of the R class from Mercedes, for example) while sending the profits home.

61 Hazel Meade March 30, 2016 at 12:57 pm

I fail to understand your objection. Are you saying that you would prefer if car companies has nationalistic flavors, like an “American” car would have an “American” style resulting from being produced in America by Americans, and you’re disappointed that the cars are all bland and middle-brow and lacking in regional flair now?

62 (Not That) Bill O'Reilly March 30, 2016 at 1:29 pm

What difference does it make whether an American auto factory, employing American workers, is owned by “Americans” or foreigners other than to your apparent sense of jingoism?

63 firingline March 31, 2016 at 12:36 am

Have you ever heard of pride, community, patriotism, or were you born in a pod?

64 Hazel Meade March 31, 2016 at 11:32 am

Nobody is stopping you from buying American. We’re just stopping you from forcing other people to do the same.

65 FUBAR007 March 31, 2016 at 12:24 pm

O’Reilly, Hazel,

A few basic philosophical questions. In your opinion:

1) Is there such a thing as the collective U.S. national interest?

2) Should American policymakers privilege the interests of their constituents (i.e. Americans) over the interests of others when negotiating deals and making policy?

3) More broadly, are businesses part of the communities/societies in which they operate? If so, do they have obligations to those communities/societies: to contribute, to conduct themselves in such a way that benefits those communities/societies, or, at the very least, to not actively harm those communities/societies?

4) Do businesses have any obligations at all that should supercede their profit motive?

66 Review March 30, 2016 at 12:41 pm

” a wall of tariffs against America’s southern neighbor would probably do more harm than good.”

Yes, but who wants a wall of tarrif’s against only Mexico? The Trump model more closely resembles the Jeffersonian embargo on all international trade from 1807-1809. The stimulus of the embargo to domestic manufacturers was widely and favorably noted at the time and the cost to economic gains from trade was de minimis cost at about 5% of GDP initially and which would have evaporated if the embargo had been allowed to persist. That experience demonstrates that autarky in the US is indeed feasible and desirable given the size and resource base of the nation. http://www.dartmouth.edu/~dirwin/docs/Embargo.pdf

67 Cliff March 30, 2016 at 12:44 pm

You don’t think anything has changed in the last 200 years?

68 Review March 30, 2016 at 3:07 pm

Yes, things have changed. Had Jefferson not imposed the embargo, the United States might well have been destroyed during the War of 1812 and we would all be British subjects now. Instead of just England though, we now face existential threats from hostile Russia, China, leftist Latin Americans, and The Caliphate who are racing each other to decide who will control the former United States. Free trade only fuels that race.

69 Bob from Ohio March 30, 2016 at 3:50 pm

“we now face existential threats from hostile Russia, China, leftist Latin Americans, and The Caliphate”

existential?

Latin Americans? Ha, ha, ha. Look at Brazil and Venezuela lately?

The Caliphate? They control the less nice parts of two backwater countries.

Russia? Oil oligarchy with no upside.

China? Over ambition and a shaky economy.

70 Review March 31, 2016 at 10:33 am

In a world in which even North Korea has ICBMs with nuclear warheads every hostile entity is potentially an existential threat. Not to mention the reality of asymetric disruptive military technology advances that will wipe us out before we even know what they are. Paranoia is the only sane response to the world today.

71 mavery March 30, 2016 at 1:06 pm

If the US economy was the same size, relative to the global economy, now as it was in 1807, this might be a good plan.

72 Review March 31, 2016 at 10:36 am

Dani Rodrik is doing a pretty good business peddling essentially the same prescription: http://drodrik.scholar.harvard.edu/publications/globalization-paradox-democracy-and-future-world-economy

73 Jamie_NYC March 30, 2016 at 12:42 pm

This reads like a propaganda piece aimed at the “nativists”. Technically, is Japanese auto industry defunct, because they don’t rely on Mexico? If you say “no, but then they have China”, well, we could have used China too. So, the factories in Mexico were not strictly necessary.

The larger point is that the US got gamed out of high paying manufacturing jobs, still plentiful in countries like S. Korea and Japan, by mercantilist policies of our trading partners (Mexico to far lower extent than Japan, Korea and China), and our elite did nothing about it, blindly followigh the lessez-faire and free trade mantras. That benefited the elite much more than the ordinary folks. Ergo, Sanders and The Donald!

74 Hazel Meade March 30, 2016 at 1:00 pm

You’re acting like there is nothing at all to be gained via consumers having more money to spend on stuff other than cars.

I didn’t realize all the anti-traders were also anti-Keynesians.

75 Lord Action March 30, 2016 at 1:12 pm

It’s possible to believe there’s a lot of truth to Jamie_NYC’s story without being anti-trade in any respect. Being pro-trade is not synonymous with thinking whatever the government negotiates is just a-okay.

Look around here whenever trade and immigration come up. You’ll find a significant minority of people advocating for the advancement of foreigners at the expense of Americans. You ever worry that maybe, just maybe, some of those views prevail in parts of the State Department? It would shock me if they didn’t.

76 Hazel Meade March 30, 2016 at 4:58 pm

If you read your Ricardo correctly, comparative advantage doesn’t depend on the terms of trade deals. In fact, if we were to unilaterally drop all of our trade barriers overnight, that would still be a net benefit to the US economy. We would get to purchase everyone else’s cheap subsidized goods, and they would keep on punishing their own consumers by protecting their domestic industries. Nobody got “gamed” out of manufacturing jobs. If someone else decides to shoot themselves in the foot by selling stuff below cost it does not harm me to purchase that stuff. It harms them.

77 Lord Action March 30, 2016 at 5:11 pm

http://marginalrevolution.com/marginalrevolution/2016/02/the-latest-and-probably-best-estimate-for-tpp.html

Apparently we’ve been completely screwed at the negotiating table.

It’s a negotiated agreement. If the other guys get more benefit out of the arrangement than we do, and they need the deal a lot more than we do, we should be able to get offsetting concessions. I’m not asking for a trade barrier. I’d be completely fine with a cash transfer to offset the arrangement.

78 Lord Action March 30, 2016 at 5:13 pm

The link above provides (arguably dubious but endorsed by our host) estimates of the economic gains to various trade deals. The dollar values for our counterparties are a lot higher than the dollar values for us. That indicates something has gone very, very wrong.

79 Lord Action March 30, 2016 at 5:19 pm

My best guess is that trade agreements have become a clandestine multi-trillion-dollar foreign aid program, which provide enough benefits to pay off the few domestic voices at the table.

I’m pro free trade, but I’m not sure this is it.

80 Hazel Meade March 30, 2016 at 10:33 pm

It’s a negotiated agreement. If the other guys get more benefit out of the arrangement than we do

Who cares if the other guy gets more benefit? If it’s mutually beneficial, it’s mutually beneficial. You’re like the guy in the dictator game who would rather get zero dollars than $10, because he’s pissed off that the other guy is getting $90. And this is in the situation where the other guy is starting from 10% of your relative income. You’re a guy who would refuse a $10 windfall because a homeless blind man gets $90 and you think that’s unfair.

81 Lord Action March 31, 2016 at 8:59 am

I don’t care at all how much the other guy gets, except insofar as it’s an indication of how much gain there is to be gotten. That the other parties in these agreements have gotten a great deal more gain than we have seems bizarre. It should be the other way around, which strongly suggests our negotiators are leaving money on the table.

Possibly because of the reasons I suggest above, but I suppose it’s also possible that, like you, they don’t even realize they’re in a negotiation. Something can be mutually beneficial, and yet the distribution of benefits can be lopsided. Obviously, being on one side of the negotiation, I want it lopsided my way. It’s strongly lopsided the other way, and that makes no sense.

This doesn’t mean NAFTA, for example, is stealing benefits from our economy. It means NAFTA is adding much less benefit to our economy than it should. It’s like if I’m selling an old Honda Accord and there’s a guy willing to pay $15k for it and I’m willing to sell it for $9k. He walks up and offers $10k. Do I take it? Is it a good deal? Well, yeah, I’m gaining from it. But I could gain a lot more. The accounting of who is benefiting and how much they are benefiting tells you the trade treaty bargains have been poorly made for us.

82 Lord Action March 31, 2016 at 9:15 am

“You’re like the guy in the dictator game who would rather get zero dollars…”

This is the “Let’s make trade a clandestine foreign-aid program” argument. If you really think it’s best for US consumers to be writing hundred billion dollar annual checks to buy Louis Vuitton bags for Chinese consumers, at least be upfront about it.

83 Hazel Meade March 31, 2016 at 10:57 am

No you’re completely not getting it, poorer countries generally benefit more from mutually equitable trade agreements because they are starting from a lower level of development.

Trade deals are not about Boeing selling X number of 747s to us in exchange for us being allowed to buy Y number of labor hours. We’re not negotiating the exchange, we’re setting equitable rules under which anyone in either country can make exchanges.

If one country is growing faster because it is starting from a lower level of development, they are going to “gain more” in terms of GDP just because they have more growth potential than us. It’s not foreign aid and it’s completely fucking insane to think that your goal is to gain the most the most for you’re country in trade negotiations. Trade is not an adversarial relationship. You’re just opening the door to mutually beneficial exchanges by anyone who wants to make them.

84 Lord Action March 31, 2016 at 11:04 am

We’re not talking in percentage terms here. In dollar GDP terms the benefits are lopsided. That shouldn’t be the case, or more precisely it should be lopsided the other way. The base level of the economy at the start of the comparison has nothing to do with it – you’re misunderstanding the citations.

You’re also grossly underestimating the complexity of these agreements. And even if it was as simple as “both sides are just dropping all regulatory barriers to trade,” there’s no reason a cash offset couldn’t be used to counteract a lopsided result if that was somehow inevitable. It’s reasonable for the US to demand “Pay to Play” money.

85 Lord Action March 31, 2016 at 11:21 am

For example, in the citation above, the annual real income gains from TPP are supposed to be $131B for the US and $492B for the rest of the world, in 2030.

The obvious rider on that agreement, in keeping with how important the agreement is to the parties and their relative “walk away” power, is for ROTW to write a check to the US in the amount of $300B/yr at that point. They should pay for the access, given how beneficial the access is. I’m not suggesting these numbers are exactly right, but they are the order of magnitude we’re talking about. It’s a massive amount of money to just walk away from.

86 Hazel Meade March 31, 2016 at 11:35 am

the annual real income gains from TPP are supposed to be $131B for the US and $492B for the rest of the world, in 2030.

How much of the world’s population lives in the US?
Sheesh you are really horrible you know that? You’re like the guy in the dictator game who refuses to play unless he gets 80% of the winnings. Worse, your the guy who won’t let anyone else play either, unless you get a handicap.

87 Lord Action March 31, 2016 at 11:52 am

I guess when we’re talking about trillions of dollars and stagnation for a lot of people in my country, I’m going to insist on not being a sucker who gets taken advantage of.

88 Nathan W March 31, 2016 at 7:04 am

I wouldn’t be so concerned about those advocating for foreign interests at the expense of domestic ones, so much as those who advocate for the own interests and couldn’t care less what it means for the country as a whole. Consider that many companies would be quite happy with a deal that adds a $1 billion a year to their bottom line even if the deal were negative for the country as a whole.

89 MC March 30, 2016 at 4:42 pm

Mexico has the advantage of geographic proximity to the U.S. in the same way that China is close to Japan and S. Korea. Without greater trade integration with Mexico, even more American based auto jobs would likely have been “lost” to Asia than have been “lost” to Mexico.

90 AIG March 30, 2016 at 6:23 pm

“The larger point is that the US got gamed out of high paying manufacturing jobs, still plentiful in countries like S. Korea and Japan, by mercantilist policies of our trading partners (Mexico to far lower extent than Japan, Korea and China), and our elite did nothing about it, blindly followigh the lessez-faire and free trade mantras. That benefited the elite much more than the ordinary folks.”

There’s hardly a single word in here that makes any sense.

91 Nathan W March 31, 2016 at 7:00 am

I agree that it benefitted elites more, but you’re ignoring the export opportunities that come on the other side of reducing barriers to trade.

92 Dave Smith March 30, 2016 at 12:58 pm

I must say this: this article makes Krugman look really ridiculous. The whole notion that we should make policy based on some simplistic notion that something is made in one place completely and then sent to be purchased in another place is ridiculous. In other words, how can we tinker with protectionism without hurting domestic producers? We can’t.

93 Daniel in VA March 30, 2016 at 1:06 pm

Tyler,
My understanding is that trade flows are supposed to be in a free market self-balancing over time. If some country is running a persistent trade deficit (not necessarily a growing one) over a long, it’s currency will devalue until its exports become more competitive and its imports become less competitive. That is unless people/institutions/central banks outside the country are willing to stock up on that country’s currency or assets within that currency. We have seen the United States an extreme trade deficit in terms of the combination of time and intensity and therefore the total US assets accumulated overseas relative to the size of the economy (correct me if I’m wrong on this).
Now, many economists argue that those who lose jobs to trade can be compensated in exchange for a free trade policy. But also fiscal conservatives worry about the US trade deficit with growing US debt. The US national debt doesn’t seem to me to be an emergency now, but what if imports were so high that it wasn’t possible to compensate workers in losing sectors without compromising the fiscal stability, even though foreign demand for treasuries makes borrowing relatively more attractive?
Could the US consider taxing foreign-held treasury interest, including the interest going to foreign central banks? Does that sound like a crazy idea? It seems that it could be justified since the interest payments are paid for with taxes, and taxes are raised from within the country’s territory. So treasuries are territorial assets subject to tax.

94 Daniel in VA March 30, 2016 at 1:07 pm

I don’t understand why the commenting format takes away the paragraphs.

Tyler,

My understanding is that trade flows are supposed to be in a free market self-balancing over time. If some country is running a persistent trade deficit (not necessarily a growing one) over a long, it’s currency will devalue until its exports become more competitive and its imports become less competitive. That is unless people/institutions/central banks outside the country are willing to stock up on that country’s currency or assets within that currency. We have seen the United States an extreme trade deficit in terms of the combination of time and intensity and therefore the total US assets accumulated overseas relative to the size of the economy (correct me if I’m wrong on this).

Now, many economists argue that those who lose jobs to trade can be compensated in exchange for a free trade policy. But also fiscal conservatives worry about the US trade deficit with growing US debt. The US national debt doesn’t seem to me to be an emergency now, but what if imports were so high that it wasn’t possible to compensate workers in losing sectors without compromising the fiscal stability, even though foreign demand for treasuries makes borrowing relatively more attractive?

Could the US consider taxing foreign-held treasury interest, including the interest going to foreign central banks? Does that sound like a crazy idea? It seems that it could be justified since the interest payments are paid for with taxes, and taxes are raised from within the country’s territory. So treasuries are territorial assets subject to tax.

95 Nathan W March 31, 2016 at 7:15 am

The US is sort of a special case due to its reserve currency status and that money flows into UDS during stormy periods. On the one hand, this means that US investors have huge buying power in accessing foreign investment opportunities, and this is likely to benefit American capital holders in basically all relevant time horizons, but it I think it also has some roughly analogous concerns to being increasingly leveraged over time due to the trade imbalance. However, the US retains the ability to induce return of overseas capital held by American investors in addition to retaining the ability to inflate away that part of financial losses relating to imbalanced trade flows.

96 Effem March 30, 2016 at 1:54 pm

So if we start allowing (cheaper) doctors to immigrate to the US, existing doctors will be happy because eventually we’ll lose the entire industry otherwise (US doctors make considerably more money than global peers)?

97 The Original D March 30, 2016 at 2:16 pm

Aren’t we already doing that? Particularly for rural areas where a lot of native-born doctors don’t want to live?

98 Cliff March 30, 2016 at 4:07 pm

I mean yeah, if you totally blocked off the import of any foreign cars, we could still have an auto industry but there would be horrific consequences to that including trade wars, really expensive and shitty cars, etc. We absolutely have really high prices for doctors but due to status quo bias people don’t tend to pay that much attention to it.

99 mkt42 March 30, 2016 at 6:25 pm

Even if the existing MDs did become worse off, I suspect that the country as a whole would be better off, for the standard textbook economic reasons (not just the free trade aspects but also the cartel and artificially restricted supply aspects).

100 Gafiated March 30, 2016 at 2:03 pm

“The Honda CR-V assembled in El Salto, Jalisco, for example, uses an American-made motor and transmission. Roughly 70 percent of its content is either American or Canadian, according to government statistics.”

Now I know why CR-Vs only work 70 percent of the time.

101 Thiago Ribeiro March 30, 2016 at 4:48 pm

it is surprising it doesn’t work only 30% of the time. I had an American car. Never again.

102 Lord Action March 30, 2016 at 4:51 pm

You need to go German for a truly bad automotive reliability experience.

I mean, I love German cars. My last three vehicles came from that country. But reliability (and for that matter shaking the bugs out of new technology) is not something they do well.

103 Lord Action March 30, 2016 at 4:52 pm

Also, I should add that unreliable and _cheap_ are offsetting. German cars are unreliable and _expensive_, so it’s doubly bad.

104 The Original D March 30, 2016 at 2:29 pm

I’m curious about the second order effects of Mexico. The number of Mexican immigrants has more than quadrupled since NAFTA was passed.

They are separate issues, of course, but all those people who lost jobs because of NAFTA face additional competition in other sectors. Construction being the most obvious example.

105 jb March 30, 2016 at 5:39 pm

The uptick in Mexican immigration to the US started in the 1980s due to the effects of a very different industry from cars.

They are pretty much all fleeing either drug violence, or economic troubles due to drug violence.

If we eliminated the drug gangs, immigration would drastically fall as whole swaths of Mexico became functional again.

106 JWatts March 30, 2016 at 7:52 pm

Spikes in Mexican immigration were primarily due to Mexican economic troubles such as the Currency crashes (Tequila crisis) and a dearth of employment opportunities.

https://en.wikipedia.org/wiki/Mexican_peso_crisis

107 Dan Hanson March 30, 2016 at 4:21 pm

The U.S. exports roughly $175 b illion to $200 billion dollars in goods and services each year. Almost every one of those goods is made competitive on world markets because of efficiencies gained through trade. For example, the U.S. imports iPhones manufactured in China, then Apple adds a huge amount of value to the hardware and re-exports it to the world.

What do you think would happen if iPhones cost 45% more because of trade tariffs? That’s easy: They would start to lose sales to LG, Samsung, HTC, etc. Americans would lose their jobs, not gain them.

People who advocate tariffs also forget that the other side has a voice too – they can respond by creating their own set of tariffs designed to hit the U.S. the hardest. Trade wars are never a good thing.

Furthermore, it’s instructive to look at the auto industry in the 1970’s when Detroit started losing ground to Japan. The reason they lost ground is because they had become sloppy – they gave up too much to the unions, hurting competitiveness. They didn’t modernize and automate their factories. They used antiquated design practices while Japan was pioneering CAD design.

The auto industry’s response to this was to plead for ‘protection’, and the Reagan administration complied by making Japan a ‘voluntary’ offer they couldn’t refuse. Thus, Detroit got to stumble along for a few more years making crap products. Their global sales fell, and the jobs started going away anyhow.

It wasn’t until the quotas ended and free trade forced them to compete on an even playing field that the American auto industry started to turn around and revamp it’s production methods and practices. The result was a rapid increase in the quality of American cars, which allowed them to build more markets internationally.

Trade protectionism is almost always a bad thing. A big exception is national security, where certain strategic goods cannot be placed in the hands of your geopolitical rivals. But the default assumption should always be that more trade is better, freer trade is better, and that the case against it has to be extremely strong before you consider other options.

And anecdotes and hand-waving about non-specific jobs that will be lost do not clear that hurdle. It’s always easy to find jobs that were lost to trade, just as it’s easy to find jobs that were lost due to all sorts of economic changes. What’s harder to see is the jobs that are created when goods become cheaper and access to markets are expanded. What you don’t see is the job created because the single moms who shop at Wal-Mart now have a few extra bucks to spend on other things. You don’t see the jobs created because an American figured out how to import some cheap parts from China and turn them into a new product.

This is similar to the myth of government ‘job creation’. It’s easy to point to a factory built with government money and say that government created those jobs. It’s a lot harder to see the jobs lost across the economy because of the taxes required to build that factory.

108 Hazel Meade March 30, 2016 at 5:06 pm

You and your trickle-down Reaganomics! A pox upon thee!

Sent from my iPhone

109 firingline March 31, 2016 at 2:15 am

“What you don’t see is the job created because the single moms who shop at Wal-Mart now have a few extra bucks to spend on other things.”

Sure you do. The single mom is spending her extra money at the nail salon staffed by workers making minimum wage who otherwise might have been working on an assembly line that’s since been shipped to Mexico, and the guy sweeping the floor probably used to work at a steel plant. Those are the fabulous new jobs we get in exchange.

110 Nathan W March 31, 2016 at 7:19 am

I doubt that single moms who shop at Walmart are spending a lot of time in nail salons. More likely, they spend the savings on opportunities for their children.

111 Hazel Meade March 31, 2016 at 11:08 am

Exactly. Buying cheaper products from China is beneficial in two ways:

1) People have more money to spend on other things, that money stimulates the economy and offsets any loss of jobs from the shift of production to China. Dollar for dollar, the savings goes back into the economy.
2) People benefit directly from the actual stuff they buy. The consumer gets the benefit of the Chinese made product AND the other things they can now afford. Standards of living rise.

Yes, there are narrow classes of losers. The small percentage of workers who get laid off may have substantially lower incomes that aren’t entirely offset by cheaper products. But on average, it is pretty much mathematically provable that there is a net benefit for the economy as a whole.

112 Hazel Meade March 31, 2016 at 11:04 am

So, you don’t think that the benefit the woman gets from now being able to afford to go to the nail salon counts for anything, either?

113 firingline March 31, 2016 at 1:41 pm

“So, you don’t think that the benefit the woman gets from now being able to afford to go to the nail salon counts for anything, either?”

Compared to other people losing good jobs? No, I don’t care. If the trade off is between losing some purchasing power measured in cheap junk we could do without vs a significant part of the population losing good steady work and having to take up pathetic mcjobs meant for teenagers, I’d rather we lose the extra purchasing power.

114 AIG March 30, 2016 at 6:29 pm

The problem with arguing with Trumpeterians and Sandanistas, and in general the problem with arguing about “jobs” and lowering oneself to the level of discourse and language used by protectionists….is that you can’t win.

You CAN’T WIN an argument about trade, with someone who is so stupid that they don’t realize the fact that they drive a Toyota car, use an LG phone, and shop at Walmart for toiletries…but at the same time think that trade is bad and that…the elites shoved it down our throats without us wanting it.

YOU bought a Toyota car, dummy. Therefore, you explicitly chose this outcome.

Not that there’s anything wrong with that: Toyota North America employs about 400,000 people in the US (including all their dealerships and service stations)

This is not an argument that can be won, because you’re arguing with people with severe cognitive dissonance.

115 Daniel in VA March 30, 2016 at 6:36 pm

I’ve heard this charge of hypocrisy leveled in other cases, like libertarian opposition to social security, for example, and I don’t agree with it. You can think that different policy choices would be better for the country and still ethically make choices that maximize your utility but would be prohibited under your proposed policy regime.

116 AIG March 30, 2016 at 7:10 pm

I’m not claiming hypocrisy. I’m saying their premise is wrong. The premise of comparing what is “good for the country” vs “what is good for you” is also wrong in this case. That trade is “good for the country” isn’t disputed: they are specifically challenging the notion that it is good for them, and claiming that they didn’t chose this but it was forced upon them.

But they made the choices themselves. Imports don’t happen because some evil “elite” (the favorite word of brain-deads) forced it on them. It happens because they, the individual consumer, chose those goods.

117 Hazel Meade March 30, 2016 at 10:54 pm

STOP ME BEFORE I SHOP AT WALMART AGAIN.

118 FUBAR007 March 31, 2016 at 12:26 pm

AIG,

Let’s talk after you’ve had the joyful experience of being creatively destroyed and see how you feel then.

Or, in other words, stop being an asshole.

119 Mort Dubois March 30, 2016 at 7:36 pm

The article presumes that trade with China is a given. Not so – letting those imports in is a political decision that was done by elites, for the benefit of elites. Same with Mexico. It’s not obvious to me that the United States isn’t a big enough market to sustain its own manufacturing, or its own innovative economy in general. Open borders is a political decision driven by a particular ideology.

120 AIG March 30, 2016 at 7:45 pm

^^^ Sigh. There are obviously a lot of things that are not obvious to you.

But you’re missing your Lou Dobbs radio show bud. Stop posting on the internet, and go listen to the latest on the conspiracy of the elites to steal your precious bodily fluids.

121 AIG March 30, 2016 at 7:49 pm

PS: Dear Trumpeterian, do tell me, what kind of car do you drive? Where was the computer or phone you typed this message, assembled? Where was the shirt you’re wearing made? (I’m assuming you’re wearing a shirt, but maybe I shouldn’t assume that). Did the…elites…force you to buy these things?

The company you work for, (there’s me making assumptions again), generates how much of its profits from sales overseas, or from overseas operations? The inputs that they use to make the outputs they sell, come from where? What would happen if those inputs were now more expensive? Would you have a job then?

122 AIG March 30, 2016 at 8:03 pm

“big enough market to sustain its own manufacturing”

PPS: Dear Trumpeterian, US manufacturing output in real terms is pretty much at record levels.

The only difference being that US manufacturing firms no longer need the fat lazy dumb Trump voters to work in those factories, so they fire them.

But US manufacturing is doing just fine 🙂 Dumb lazy fat Trumpeterians, however, will never do fine.

123 firingline March 31, 2016 at 12:42 am

“The only difference being that US manufacturing firms no longer need the fat lazy dumb Trump voters to work in those factories, so they fire them.”

There it is, that haughty superiority and seething hatred for average people libertarians harbor deep down. Why don’t you just move to a seastead already?

124 AIG March 31, 2016 at 2:40 am

“There it is, that haughty superiority and seething hatred for average people libertarians harbor deep down”

1) I’m not a libertarian

2) Trumpkins are not average. They’re way way below average.

3) Superiority used to be a good word in America. Remember, when your mother told you to look up to people who were better then you, and try to be like them?

Remember, THIS used to be America before Trump: http://s14.postimg.org/6mnuh99yp/1617396679_1ecfd7ccf456ddf933117758379d296f.jpg

Now, we’re supposed to think that stupid people are just as good as the rest of us. That’s just un-American.

125 firingline March 31, 2016 at 2:45 am

Sounds like you’ve been watching too many movies. Hollywood does not reflect actual reality, and you’re not a hero, sorry.

126 AIG March 31, 2016 at 2:49 am

Non-sequitur response. I see what you did there. Good job impersonating a Trump supporter.

127 Hazel Meade March 30, 2016 at 10:57 pm

You talk about “trade with China” like it has nothing to do with people making voluntary choices to purchase products from China.
Nobody forces you to purchase Chinese goods. You can look on the label and reject anything that doesn’t say “Made in the USA” on it.

What you’re talking about is forcibly preventing OTHER PEOPLE from purchasing goods from China, because you think they should be forced to buy American too.

128 firingline March 31, 2016 at 2:00 am

“What you’re talking about is forcibly preventing OTHER PEOPLE from purchasing goods from China, because you think they should be forced to buy American too.”

Yeah? What’s wrong with that? Oh, I know, you thought you lived in fantasy land, where all that matters is maximizing individual freedom to the exclusion of as much else as possible, and you’re finding out that you actually live in America, a nation made up of citizens who mostly don’t subscribe to your hyper-rational, isolated, antiseptic and misanthropic outlook.

129 AIG March 31, 2016 at 2:11 am

Yeah, we live in America…which means if you don’t like it…you can go f**k off.

Precisely because we live in America, I don’t have to give two s**ts that fat, lazy stupid Trumpkins lose their jobs because they are too fat, stupid and lazy.

That’s why America is already great! 🙂

130 firingline March 31, 2016 at 2:19 am

What are you, 13 years old? You’ll grow out of it…

131 AIG March 31, 2016 at 2:27 am

I’m just trying to communicate to you in your native language.

132 Hazel Meade March 31, 2016 at 11:14 am

Fortunately, it also happens that trade is a net benefit to both countries.

What you’re talking about is prioritizing the interests of a small minority of low-skilled workers over the interests of the vast majority of other Americans.

133 firingline March 31, 2016 at 1:44 pm

Of course. Sometimes you have to make concessions for the good of society as a whole. That’s why we live in a nation, not Thunderdome.

134 Nathan W March 31, 2016 at 7:22 am

OK. And the world could also close markets to Hollywood, J&J et al., Proctor & Gamble, American financial institutions, bar Americans from investing in their domestic markets, etc. etc.

Do you think Americans would enjoy a higher standard of living as a result?

135 Hazel Meade March 31, 2016 at 11:19 am

We wouldn’t even enjoy a higher standard of living, even if ONLY WE raised our trade barriers.

Seriously, go reread your Ricardo. Raising our own tarriffs would benefit a minority of Americans at the expense of everyone else, and that’s even if other countries didn’t retaliate.

It is always in your interest to get your stuff in the most efficient manner possible. Tarriffs are like taxing yourself for being thrifty, and protectionism is essentially make-work.

136 JWatts March 30, 2016 at 8:14 pm

“US manufacturing output in real terms is pretty much at record levels.”

US manufacturing output (as a percentage of GDP) has been flat for decades.

http://goo.gl/SyV5Wl (page 4)

137 AIG March 30, 2016 at 10:04 pm

And this contradicts my statement…how?

% of GDP vs real output are the same thing?

No

138 Nathan W March 31, 2016 at 1:49 am

If the American auto industry had faced such dire straights, they simply would have introduced barriers to other imports. The American auto industry would not have collapsed without NAFTA, but cars would be more expensive.

139 AIG March 31, 2016 at 2:15 am

Nor would a few hundred thousand service and dealership jobs exist in the auto industry without NAFTA. GM would almost certainly have died without NAFTA. Ford would certainly not be as competitive as it is today without its lower cost suppliers in Mexico.

But forget about NAFTA. Both GM and Chrysler would be dead as a door knob, for sure, were it not for the Chinese market which represents the majority of their sales.

One thing is for sure, dumb fat lazy Trump voters would be living in their trailer park regardless of NAFTA or trade. They didn’t lose their job at the mill because Mesicans took deir jerbs. They lost their job at the mill because they are lazy fat dumb Trump voters.

140 Nathan W March 31, 2016 at 7:31 am

While we’re at it, maybe Trump can enforce the 100-mile diet. It will protect jobs in every locality, and we’ll all be better off for it.

We might also like to consider the 100-mile financial system, the 100-mile IT industry, and many others. Job wil be protected.

141 GoneWithTheWind March 31, 2016 at 9:51 am

This just shows you that there is nothing than cannot be rationalized away if you have no morals and a excellent ability to lie with a straight face. Presumably if all our jobs were moved offshore we would be an an economic nirvana.

142 Hazel Meade March 31, 2016 at 11:23 am

Presumably if all our jobs were moved offshore we would be an an economic nirvana.

If it was efficient to move all our jobs offshore, we would be living in an economic nirvana. Why do you hate leisure time?
Somehow people continue to be employed despite the fact that it’s cheaper to make some stuff in other countries.
Maybe you should go live on a self-sufficient commune and learn about the wonders of full employment.

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