Tuesday, March 2, 2010

Protectionist Campaigning for Dummies, ctd. (and a Quick Note re: My Comments Policy)

Before I get to the substance of today's entry, please indulge a quick introductory remark about my "comments policy" for this blog. (I promise that this entry is worth reading in full, so just bear with me.)  I manually publish or reject all comments and have a general rule that I'll publish any comment that is (a) complimentary/supportive of the blog in general or the entry in particular; (b) contradictory yet honest and worth my response; and/or (c) otherwise harmless.  On the other hand, I won't publish a comment that is (a) spam/profane/incendiary; (b) laden with factual errors that I don't have to the time to refute (especially when I've already refuted them elsewhere on the blog); and/or (c) appears to be sent by someone who has an obvious personal or professional bias against what I'm saying.  On that last point, it's typically pretty easy for me to determine "bias" when I look at my blog's visitor log and check out a commenter's IP address, location and/or place of business (behold, technology!).  For example, if I write about sugar subsidies and then see that someone from the sugar industry logged on and tried to paste some counterfactual propaganda in a comment, I'll reject the comment.  Pretty simple.

This longwinded-but-necessary introduction leads me to my blog post from Friday, in which I opined on the possible political motivations behind new protectionist legislation from Congressman Gene Taylor (D-MS) that would force the United States to withdraw from NAFTA.  One of my main conclusions was that Taylor's legislation, which (i) was based on a classic protectionist myth about free trade and US manufacturing job losses and (ii) would never, ever become law, was probably little more than a cynical way for the Congressman to grub some free campaign advertising, even though the protectionist myths propagated by the legislation could, if followed, actually end up harming many of his trade-dependent constituents (Taylor represents a district in Mississippi with three international ports).

On Sunday, I received a rather detailed and disgruntled comment from the anonymously-named "Researcher" that appeared to meet both "reject criteria" (b) and (c) mentioned above.  On the former criterion, the comment itself was a longwinded defense of Congressman Taylor's protectionism that relied on several of the myths that I've repeatedly debunked on this site.  (And yes, I was just heartbroken that Researcher wasn't familiar with my work!) On the latter criterion, a quick glance at my visitor log indicated that "Researcher" lived in Washington, DC and was Googling "'gene-taylor' NAFTA" on a Sunday afternoon - thus setting off my spidey-senses that perhaps "Researcher" had a personal stake in this debate (or was just really, really bored).  For these reasons, I chose not to publish Researcher's comment, and figured that was the end of the story.

I was incorrect.

Yesterday, the same "Dummies" blog post received another, more confrontational comment from Researcher that said, in what I imagined to be his/her best Jack Nicholson voice, "Why did you delete my comment? Can't handle the truth?"  The gauntlet, as they say, had been thrown.  Normally, I'd still ignore such puerile taunting, but because there are a few things in Researcher's original comment that I really haven't covered before, and because the comment itself provides some very valuable and relevant insights, I think that a response would actually provide everyone with a great "teachable moment," as the kids like to say.  So I've decided to take Researcher's bait and to respond in full to his/her original comment... in (what I hope to be) excruciatingly embarrassing detail.

I've now posted each of the comments at issue in the comments section of the original blog post, but for ease of reference, here's the first comment in full:
Taylor is senior Member of the House Armed Services Committee and has seen all the evidence that you deny of the economic inefficiency and the threat to national security from the rapid decline of our manufacturing workforce and industrial base. It took years to build MRAPs to save the lives of soldiers and Marines from roadside bombs in Iraq because we no longer have the industrial capacity to respond quickly to a surge in demand. The cost to taxpayers was very high because we did not have the domestic capacity for the parts and supplies for efficient manufacture of thousands of new vehicles. The United States is losing the ability to be self sufficient when necessary and that is a significant loss.

The jobs data is very clear. Since we went all-in for free trade, whenever we have a recession (2000-01, 2008-09) we lose millions of jobs in the U.S. and most of the manufacturing jobs do not come back after the economy improves. Companies do not invest in new plants or substantial expansion of existing plants except in industries where buy-American policies require it, such as defense production, or where we have informal protectionist agreements, such as the voluntary deal with Japan automakers that encourages them to make their cheaper cars in the U.S.
So there you go.  Readers of this blog will immediately recognize that Researcher's comments rely on several classic "protectionist myths."  I'll dismantle each of these one-by-one (not in order), and then I'll hit on a few specific points that are unique to the comment above.  Finally, I'll discuss some very interesting and ironic things I've discovered about Researcher and his/her comment.

Myth #1: The US manufacturing sector ("our industrial base") is "rapidly declining."  As I've noted many, many times, tall tales about the demise of US manufacturing are probably the most prevalent, and misguided protectionist myth out there.  First, until the onset of the latest recession, the US manufacturing sector was setting all kinds of performance records.  As noted in my Cato Institute paper last year: "According to nearly every financial statistic that is relevant to evaluating the health of the manufacturing sector, it was unequivocally thriving until the onset of the recent US financial crisis and recession.  In 2006, US manufacturing achieved record highs for output, revenues, profits, investment returns, exports, and imports.... [I]n 2007 new records were set for output, revenues, value added, and exports in the manufacturing sector." (See paper for footnotes, but don't bother: it's all government data.)  During this same period ('06-'07), do you know what else was setting records?  Yep: imports.  Of course, the strong, positive relationship between imports and US manufacturing success makes total sense when you consider that almost 60% of all imports into the United States are capital goods and equipment - things that American manufacturers rely on to produce their globally competitive products (in record amounts).

Oh, and just so we're totally clear, the US manufacturing sector was, and remains, the world's largest: according to the United Nations Industrial Development Organization, US factories are the world’s most productive, accounting for 25 percent of global manufacturing value-added.  By comparison, Chinese factories account for only 10.6 percent. (But don't just take my, or the UN's, word for it: the White House's 2009 "Manufacturing Framework" also made America's manufacturing dominance crystal clear.)

Second, while the current recession certainly put a damper on the US manufacturing sector (and every other sector), our "rapidly declining industrial base" is actually leading the economy into recovery: just yesterday the Institute for Supply Management released its monthly "factory index," a widely accepted metric of manufacturing health, which showed that US manufacturers had increased production and employment in February - the seventh straight month of expansion - thus "signaling [that] factories are leading the nation out of recession as the new year begins."  So not only are Researcher's claims about the demise of the US manufacturing sector without merit, but so are his/her additional claims that recessions somehow accelerate American deindustrialization and discourage manufacturing investment.

And one final point here, I find it hilarious that someone would cite "Buy American" provisions as the gold standard of manufacturing efficiency and productivity.  As I've already noted, the Stimulus* Bill's Buy American provisions have been an abject disaster - harming many US companies and literally causing the destruction of perfectly good raw materials out of fears that they didn't comply with a unnavigable labyrinth of bureaucratic regulations.  And the GAO recently found that these same Buy American rules were creating massive inefficiencies in construction and manufacturing projects across the country.  Awful.

Myth #2: Imports destroy US manufacturing jobs.  Researcher is undoubtedly correct about one thing: the number of manufacturing jobs is decreasing in the United States.  However, this has absolutely nothing to do with imports or free trade (or, as shown above, the state of the US manufacturing sector).  Indeed, as noted in the aforementioned Cato Institute paper, total US manufacturing jobs peaked in 1979 "and started to decline well before trade accounted for even a fraction of GDP."  And NAFTA certainly had nothing to do with it: "Between 1979 and 2007 the number of US manufacturing jobs declined from 19.4 million to 13.9 million, or by 196,429 per year.  In the 14 years between 1979 and the launch of NAFTA, the U.S. manufacturing sector shed 2.7 million jobs. In the 14 years between the launch of NAFTA and 2007, the sector shed an almost identical 2.8 million jobs."  So much for that nefarious job-destroyer that is NAFTA, huh?

The truth is that developed countries around the world have been steadily losing manufacturing jobs since the 1950s, and this trend is due to rapidly increasing productivity, technology gains and changing consumer tastes, not free trade. According to the CIA's World Factbook, Germany, the United States, Japan, Italy, France, the Netherlands and the UK are all among the world's top ten merchandise exporters; according to the OECD, some are net importers, and others are net exporters.  Yet the long-term industrial employment trend for each country is decidedly downward (but for a few random upticks).  So neither a country's total exports output nor its trade balance is a magical recipe for retaining manufacturing jobs.

Heck, even those awful, currency-manipulating Chinese (/sarcasm) are losing manufacturing jobs: According to a recent op-ed by GMU's Walter Williams, China has lost over 4.5 million manufacturing jobs since 2000 - a lot more, by the way, than the United States (about 3.3 million, according to the BLS).  Williams helpfully adds, "In fact, nine of the top 10 manufacturing countries, which produce 75 percent of the world's manufacturing output (the U.S., Japan, Germany, China, Britain, France, Italy, Korea, Canada, and Mexico), have lost manufacturing jobs but their manufacturing output has risen."

So, Researcher, if you just have to blame something for American manufacturing job losses, blame the robots, not NAFTA or free trade.  (Cafe Hayek's Don Boudreaux has even more on NAFTA, trade and job losses here, if you're interested.)

One final note for anyone still not convinced: recent government statistics show that 2009 witnessed a very significant contraction in US imports, total US trade (exports and imports), and the US trade deficit.  And do you know what else characterized 2009?  Cripplingly high unemployment!  Enough said.

Myth #3: Imports and "free trade" threaten national security.  Protectionists love to scare the bejeebus out of people by claiming that without widespread protectionism, America's manufacturing sector - and thus its national security - is gravely at risk.  I've already detailed above how manufacturing fearmongering is routinely, ahem, manufactured, but national security fearmongering, while despicable, is also par for the protectionists' course.  Here's Cato's Dan Ikenson refuting (unsurprisingly) the United Steelworkers union back in 2001:
U.S. military accounted for less than 0.1 percent of industry deliveries in 2000. During the Vietnam War, steel deliveries to the military accounted for 1.9 percent of the total market. This confirms that U.S. steel capacity and production so exceed military demand that even massive production cutbacks have no security implications. There are no legitimate shortage concerns--only hypocrisy.  The industry warns of shortages while seeking to curtail supply.
Sounds familiar, does it not?  And, let's keep in mind that the stats above are from 2000 - back when the now-vibrant US Steel Industry was a complete mess.

Clearly, the broader protectionist claims about free trade undermining national security by accelerating American deindustrialization are completely false, but what about the discrete claims - about procurement problems during the US military's production of MRAPs (Mine Resistant Ambush Protected vehicles) - that Researcher brings up?  Well, they also appear to be flimsy.  According to 2009 Testimony by the GAO on Rapid Acquisition of MRAP Vehicles, "DOD use of a tailored acquisition approach to rapidly acquire and field MRAP vehicles was successful" (emphasis mine).  GAO also found that one of the reasons that the MRAP "rapid acquisition" program was so successful was because of expanded trade: "The Secretary of the Army waived a restriction on armor plate steel, which expanded the countries from which DOD could procure steel." In other words, eliminating restrictive procurement rules allowed the government to produce MRAPs even more quickly. Shocking, I know.

But let's ignore all of these facts and assume arguendo (lawyer word!) that the MRAP program demonstrates a weakness in the US industrial base which requires some form of discrete protectionism (admittedly, there is some vague reference to this issue on page 4 of the GAO Report).  Although my earlier points make clear that "free trade" didn't possibly cause US manufacturing weakness, such "national security protectionism" is perfectly in line with current free trade theory and practice.  Indeed, even Milton Friedman himself once wrote that "it cannot be denied that on occasion [national security] might justify the maintenance of otherwise uneconomical productive facilities."  Moreover, all US free trade agreements contain express exceptions for military procurement (e.g., NAFTA Article 1018) and for trade restrictions based on national security concerns (e.g., GATT Article XXI and NAFTA Article 2102).  So to claim that NAFTA or "free trade" theoretically or legally undermines US national security is just plain wrong.

More importantly, Researcher's (and Rep. Taylor's) grand solution - completely dissolving NAFTA to justify some form of extremely limited national security protectionism - is a classic case of "throwing the baby out with the bath water."  While the United States government might possibly have a direct and identifiable national security interest in protecting certain domestic MRAP suppliers, it has no such interests in also protecting domestic producers of tomatoes or t-shirts or footwear or lumber or televisions or automobiles (and so on).  Yet Taylor's anti-NAFTA legislation (and other broad protectionist strokes like it) would do just that - and thus destroy all of the awesome benefits (totally unrelated to MRAPs or any other discrete military procurement) that free trade provides American businesses and families (especially those with lower incomes), while also unnecessarily and unfairly restricting every American citizen's right to engage in voluntary, mutually beneficial transactions with whomever he or she so chooses.  As such, Researcher's and Taylor's protectionist dreams, if enacted, would impose an immoral, unnecessary and regressive tax on basic necessities, industrial inputs, consumer products and luxury items. 

In short: such proposals are as immoral as they are absurd.

With that, I think I've totally overdone itadequately disposed of Researcher's original comment about NAFTA, US manufacturing, national security and even MRAPs.  Of course, if Researcher had just spent 20 minutes poking around my blog, he/she would have known this already and could have saved us all some time.  I guess that makes Researcher's pseudonym rather ironic, huh? (Zing!)

And speaking of irony...

You might recall that I said at the beginning of this novella that it wasn't just the factual misrepresentations in Researcher's original comment (or his/her subsequent taunt) that warranted this blog entry, but also that the comment itself was actually quite noteworthy.  Well, that's because it turns out that "Researcher" appears to work in the U.S. House of Representatives and has a history of commenting on blog entries about Congressman Taylor or Mississippi politics more generally.  According to my visitor log (and yes, I have PDFs of all of these log entries), Researcher filed his/her Monday "taunt" from a computer with the IP Address ("U.S. House of Representatives," Washington, D.C.) around 2:00p after (again) using Google to search the blogs for "'Gene Taylor NAFTA."  I think this makes it pretty clear where Researcher works and what Researcher was doing last Sunday, and therein lies the very thick irony.  As I mentioned above, the main point of my original post was that elected officials often use anti-trade legislation to do little more than get free press during an election cycle and further reinforce the widespread myths that justify their protectionist politics.  And here, in the case of "Researcher," we very likely have a congressional employee checking the internet for news and blog reports on a Congressman's new anti-trade legislation, and then taking to the web to further propagate the protectionist myths that justify the aforementioned Congressman's protectionist positions.  In other words, by trying to debunk my original blog post, Researcher pretty much proved it all to be true.

You cannot make this stuff up.

One final closing note: I must admit that I'm dismayed, although probably not surprised, to learn that federal employees appear to be surfing the web and anonymously commenting on blog entries in which they have a personal or professional interest - sometimes on the taxpayer's dime.  While I seriously doubt that such behavior is illegal or anything, I find it rather troubling that someone employed by the United States Congress is using anonymity and the internet to mask obvious and important biases and thus unduly influence public policy debates.  Such actions hardly seem to be a model for good government, and they certainly make me wonder just how prevalent anonymous government commenting practices are.

Indeed, just how many "Researchers" are out there?


Researcher said...

I actually tried to post under my own name, Brian Martin, Policy Director for Congressman Taylor, but the system would not take my name without registering so I used an old Google blog handle. I was not hiding my interest or connection to Congressman Taylor. I get no financial benefit from the legislation I advocate so I don't see any conflict of interest in engaging in a policy debate. Do you have any financial interest in trade? If you are going to blog as a trade professional and make dismissive statements rather than engage in legitimate discussion then I see no reason I should not be able to respond.

I was offended by the smug elitism in your blog post. I know all your arguments. I heard them all long ago in Econ 101, but Econ 101 is useful fiction for capital investors, not for workers or nations. The assumptions are wrong and there is overwhelming evidence that our current trade policies have depressed wages and eliminated jobs in the U.S. It is everywhere in lost jobs and wages, but also shows up in higher taxpayer costs for American-made defense purchases because of the scarcity of suppliers, skilled workers and the consolidation of defense manufacturers. The places in Mississippi and elsewhere where factories have closed are depressed areas that people like you know nothing about and obviously care nothing about. Not everyone can or should become software engineers, investment bankers, or investment lawyers. We are wasting too much money on those services that steal value rather than create it.
All you guys ever do is create bubbles that eventually crash around the rest of us.
Sure, increases in productivity reduce the number of workers needed to make the same amount of goods, but this is not supposed to be a zero sum game. Productivity increases are supposed to increase wealth, not just for the capital investors but for workers as well. And that wealth should increase demand for more goods and meeting that demand should create more jobs. Increased productivity means that our standard of living should be rising and it is not in many places where there are manufacturing workforces but not much manufacturing.
GAO may consider the MRAP procurement a success but it took four years at very high expense to get those vehicles built. DoD figured out how to do it, building different versions with different engines, different suspension, and various other components, because there was not enough capacity to build them all the same. Defense contract costs are exploding because every part is now a special production because no one is doing comparable private work. We cannot fulfill a sudden demand for certain skills and trades because the private market is not increasing the number of machinists, welders, etc.
In the South and Midwest, and perhaps elsewhere we also are seeing branch rail lines being abandoned or rapidly degrading after the closure of manufacturing plants. Those towns will be cut off from the economy except for the Wal-Mart trucks driving in. Mississippi has lost 40% of its manufacturing jobs since 1994 even with Nissan opening a plant in the state. Many of the plants still in use are not seeing any significant investment in expansion or improvement so it is just a matter of time before they also will be abandoned. It doesn't do those towns much good to know that a bunch of investment bankers and lawyers made millions of dollars from their suffering.
If we repeal NAFTA and take back concessions to China and other countries with which we have high trade deficits, then we just go back to bilateral agreements with the United States negotiating in the interests of the nation as a whole and not just the investment elite. A system that is based primarily on increasing the supply of cheap labor is not going to work for workers and their interests should be matter.

RickRussellTX said...

Sir, your command of the facts (both technical and trade) remains brutal as ever.

At business school, which was colocated at a military base, my finance group did some simulated investment in MRAP providers -- the US has a vibrant market; many companies have competed for MRAPs in the last few years, and several major contracts have been awarded to different companies in order to keep competition vibrant and healthy.

Thousands of MRAPs have been delivered and are on active duty in war zones.

If I may be academically weak and quote Wikipedia,

"Gates decided to ramp up MRAP orders after the Marines reported in 2004 that no troops had died in more than 300 IED attacks on [Force Protection] Cougars. As of May 6, 2008 eight soldiers had been reported killed in the thousands of MRAPs in Iraq, according to news service Knight Ridder....

In June 2008, USA Today reported that roadside bomb attacks and fatalities were down almost 99% partially due to MRAPs. "They've taken hits, many, many hits that would have killed soldiers and Marines in uparmored Humvees," according to Adm. Michael Mullen, chairman of the Joint Chiefs of Staff. Maj. General Rick Lynch, who commanded a division in Baghdad, told USA Today the 14-ton MRAPs have forced insurgents to build bigger, more sophisticated bombs to knock out the vehicles."

The supply problems have been noted, but the problem is compounded by issues that have nothing to do with steel supply, such as the extreme weight of MRAPs, difficulty transporting them by air, and the fact that he MRAPs can't operate in some theaters due to their requirement for strong bridges and firm road bed.

Rick R.

(not operating out of a Congressional office, and probably not getting paid as much either)

Scott said...

Dear Brian,

Thanks much for your (identified) comment. I don't have time to rebut its substance here, but I will do so tonight (except for the ad hominem attacks - those I'll let slide). Of course, most of what you said can be easily rebutted using the quick links at the right side of the page, but that's obviously not going to suffice. So I'll take care of it tonight.

Before I go, however, I do have two quick notes:

(1) If you really wanted to identify yourself and tip your clear bias, why didn't you simply introduce yourself at the beginning of your original comment, just as you did here? It's obviously not difficult. (And as I noted in my blog entry, you've apparently used that same "Researcher" handle at other, non-blogger websites.) And clearly, there's an BIG advantage to anonymity, as I discuss above.

(2) As a trade lawyer, I actually have more of a financial interest in protectionism than the unfettered free trade that I advocate here, because more trade cases and more protectionist problems are good for business. This what we call in the biz the "free trade lawyer paradox" (i.e., free trade would put me out of work). And obviously, I don't get paid for spending my free time blogging (please note the lack of ads), and almost all op-eds are unpaid. The fact is that I do this - and got into trade law in the first place - because I really want affect change in the current trade system. At work, this is by using the law to keep the US market as open as possible (through domestic laws or the WTO), and here it's by shedding light on some of the more complex - and dirty! - aspects of US trade policy. So if you choose to ever post here again, please, PLEASE spare me the insinuation that I do this blog in order to gain some sort of financial benefit.

(I wish.)

Ok, time to go to work. More later. Thanks again for your contributions.

Daniel said...

Rick -
You think Congressional staff gets paid well? I'm in the private sector in D.C., so I've never drawn a Congressional paycheck, but it's a running joke in this town how badly staffers are paid.

I agree with you on Taylor, NAFTA, and manufacturing, Scott - but I disagree with you on "Researcher". The fact that he has a differing opinion from you and that he works for Taylor doesn't mean he has a personal or professional bias against what you're saying. The obsession with "Researcher" is a little overwrought.

Also - it would have been nice to talk about jobs under Myth #1. Some people make the mistake of thinking that manufacturing itself is in decline, but I think when most people talk about this they're talking about manufacturing jobs and manufacturing communities in the rust belt. Those are in decline, and that's what most people are refering to - which I think you're aware of. Omitting a discussion of those issues from your "myth #1" discussion really slants your argument.

Colin said...


If NAFTA was so bad for Mississippi, why did the state's unemployment rate decline after it was implemented? In January 1994, when NAFTA was implemented, MS unemployment was 7.6%. Five years later it was 5.2%. Ten years later it was 6.2%.

And this isn't because the good people of Mississippi are all working at McDonald's either. GDP per capita has been on a steady upward progression as trade has liberalized:


Lastly, if you really want to improve employment in Mississippi, why not focus on the state's economic freedom? According to the Mercatus Center, your neighbors in Alabama are ranked 20 places higher in economic freedom among the states (#10 vs #30) and they have traditionally had lower unemployment (compare the 10 year histories of each state) and higher GDP per capita ($27,695 vs $24,518).

Economic freedom and trade liberalization is your friend, not your enemy.

Scott said...


Thanks for your comments. However, I must beg to differ about the importance "Researcher" and the anonymity issue. As I'm sure you know, one of the biggest problems in the current trade policy/politics debate is the manipulation of the well-intentioned-yet-ill-informed by the ill-intentioned-yet-well-informed. Typically, this manipulation is achieved through the distortion of basic facts (like manufacturing job losses) and the constant propagation of a few standard protectionist myths (like overall manufacturing decline), and it's often done by our elected officials and their staff who have the bully pulpit (and a lot of free media). See my 2009 Cato paper for oodles of evidence about this and the deleterious effects that it has on American support for trade liberalization and economic freedom.

So, given this unfortunate dynamic, I think it's absolutely essential that, when someone is debating these issues, we all have a decent understanding of his/her interests. Mine are made abundantly clear in the hundreds of blog entries here (and my bio, etc.). Yet the intentions of "Researcher" and his anonymous ilk, as well as their interests, are hidden, thus leaving the ill-informed incapable of judging the veracity of the "facts" anonymously presented. Maybe this is just the libertarian in me, but when I'm told something by a politician (or his staff), I'm far less likely to believe it than I would be if the exact same stat/anecdote came from an ordinary citizen. And therein lies the problem for me and I’m sure many others. Because none of us has the time to factcheck everything that we read, the wide, grassroots dissemination of protectionist myths (or any other political propaganda) by anonymous sources that actually have a stake in the outcome of the debate can severely distort what should be an honest and open debate about free trade and the American economy. And the opinions of non-experts can thus be unfairly manipulated.

Sunlight, as they say, is the best disinfectant.

As for your second point, I think I make clear in my discussion of "myth #2" that the manufacturing jobs issue is an equally misleading myth. And while you certainly have a point about public perceptions of rust-belt decline, I think my broader points about trade, manufacturing and jobs make clear that free trade has very little, if anything, to do with this phenomenon, and that something else (hint: high taxes, rampant unionization, and overregulation) is causing the destruction of the rustbelt states and those communities. The robust growth of manufacturing in the southern states is ample evidence of this fact. Indeed, this is why the myths about trade, manufacturing decline and jobs need to be dispelled - so that politicians and crony capitalists can stop blaming foreign competition for their fiscal and corporate mismanagement.

Thanks again for commenting.

Carl Oberg said...

Scott, an excellent and thorough dismantling of protectionism. Well done!

I know others have used it as well, but I always like to use the iPod sourcing study as an example of what free trade is capable of and how much of imported goods actually come from overseas. In grad school, I did a video on that and some of the issues you discuss here. Check it out: http://blip.tv/file/2174164/

Carl Oberg

Scott said...

Thanks, Carl. I also enjoy the iPod example and used it in my 2009 Cato paper. I also blogged on the new iPad a while ago, noting the same important global sourcing issues:


I look fwd to checking out your video.

RickRussellTX said...

This may come off a little... intense.

Brian Martin, Policy Director for Congressman Taylor, said: "Not everyone can or should become software engineers, investment bankers, or investment lawyers. We are wasting too much money on those services that steal value rather than create it."

Why shouldn't American citizens enjoy the enhanced wealth that comes with the blessings of education, creative work and freedom from physical toil?

Which Americans "can or should" become engineers, lawyers and bankers, Mr Martin?

Does Congressman Taylor tell his constituents that not everyone can or should become engineers, lawyers or bankers? Perhaps he could say that in an address at a public school. It would certainly make his position clear.

And you're accusing Scott L of "smug elitism"? Physician, heal thyself.

Some may argue that bankers and lawyers don't add value, but I would counter that the value they add is directly measured by their economic price, not by some external subjective view that some professions are "have value" while others do not.

If lawyers, bankers and engineers added less value, then they would command lower prices. If they added no value, they would be unemployed.

Daniel said...

"And while you certainly have a point about public perceptions of rust-belt decline, I think my broader points about trade, manufacturing and jobs make clear that free trade has very little, if anything, to do with this phenomenon, and that something else (hint: high taxes, rampant unionization, and overregulation) is causing the destruction of the rustbelt states and those communities."

That's an unusual position - I've never heard that put forward before. Nationally, manufacturing employment has been declining at the same time that tax rates and unionization rates have declined. I'm not exactly sure how I would characterize regulation of the manufacturing industry during that period - simply because I'm not aware of what the trends in regulation of the manufacturing sector have been (please nobody post a big long list from the U.S. code - it's an absolutely meaningless exercise).

I thought the standard explanation for manufacturing employment decline has been productivity growth. The old "technological unemployment" phenomenon.

Not the trade myth popular in Rep. Taylor's office (as I said above, I agree with you on NAFTA).

And not the tax/unions/regulation myth that's popular at Cato.

Scott said...

Sorry, Daniel, maybe I wasn't being clear in my comment to you. I meant the "phenomenon" that is the destruction of once-prosperous rust-belt states and communities, not the "phenomenon" that is manufacturing job losses. Obviously, industrial job losses are mainly due, as I say in my original post, to productivity, technology, and changing consumer tastes. Yet the implosion of of places like Detroit is not because of manufacturing job losses - new businesses and new jobs emerge in a dynamic and free ecnonomy, even in manufacturing. It's because of the crippling effects of high taxes, rampant unionization, overregulation and other forms of wrongheaded economic interventionism, as well as the (often-corrupt) political systems that support such policies.

Dave said...

Scott, excellent! I myself have a blog (shameless plug irresistible) and have dealt with this same issue several times (as well as in arguments with friends about the issue). The number of people who believe that somehow restricting the marketplace would help consumers is truly amazing. Even more amazing is that the same arguments against free trade that are made today were debunked by Adam Smith over 200 years ago.

I do have one slight editorial comment about your 4:47 PM posting: I would argue that the problem isn't "rampant unionization" per se, but rather rampant *coerced* unionization couple with special government monopolistic benefits accorded to those unions.

Keep up the good work, I'll definitely add your blog to my regular rotation.

Scott said...

That's a great correction, Dave. Thanks.

Anonymous said...

In the spirit of disclosure, my blog handle is SweetLiberty, but you may call me by my first name, Sweet.

Now really, isn't Brian Martin correct in asserting, "Not everyone can or should become software engineers, investment bankers, or investment lawyers. We are wasting too much money on those services that steal value rather than create it?" Just because manufacturing productivity is higher without those employees, shouldn't the factories be forced to hire back employees it doesn't need in order to keep them working? If these displaced workers cannot become software engineers, investment bankers, or investment lawyers, then clearly we must create jobs for these people doing what they are presently skilled at, even if taxpayers must subsidize their salaries. For it is the responsibility of manufactures not to be more productive, but to supply jobs to workers. Yes, the costs of those manufactured goods will go up, but who cares? Everyone then will have a job!

A friend of mine is a displaced welder and he should be hired to weld something. Furthermore, we all should be forced to pay for whatever it is he welds together so that he can receive a paycheck and consider himself gainfully employed. The important thing for America is to maintain jobs at all costs. If that means falling behind on innovations and actual productivity, so be it! Brian and his boss should be the ones directing what jobs are valuable to the economy - not consumer preference. Who could argue with that?

Scott said...

Well done, Sweet. Well done.

JB said...

I doubt this will mean anything of importance to the author of this article, but he changed my mind on free trade. Originally I was into free trade when I was young lad, then got into college and drank the kool-aid from my professors and radio personalities like Thom Hartmann. After college my feeble brain began to question many (often lefty) things it picked up from college, but still held on to that anti-trade ideal. They say things start to erode then all of a sudden one thing cracks through or breaks the perverbial camel's back. This blog piece did it for me. I spent hours looking up what you cited, my brain required it. It's all true. So as previously mentioned, it may not matter much to most, but you sir changed my mind on free trader, consider me in your camp.