[ed. No.]
By the end of last year, after a fundamental reordering of the world economy, manufacturing employed about 8 percent of the nation’s workers.
Now, the country is wealthier than ever. Yet the economy looks, and feels, quite different — dominated by service work of all types, both lucrative and low-wage. Industrial hubs in the American interior have often withered, leaving many strongholds of Mr. Trump’s base on the economic fringes. (...)
But the economic story of the American 21st century has also been shaped by the deliberate pursuit of freer trade in the hope of lower prices, with the knowledge that doing so would put U.S. manufacturing employment at risk.
About 20 million people made their living from manufacturing in the heyday of U.S. manufacturing, which peaked in the 1970s. By the end of last year, manufacturing made up only about 8 percent of total employment.
“The funny thing about finance and economics is that we don’t really advance or learn anything over time, we just cycle through the same things, over and over, in different ways,” Brent Donnelly, the president of Spectra Markets, a market research firm, argues. “We vilify mercantilism and lionize free trade but are forced to rethink these religions when income inequality shatters social cohesion and decades of unreciprocated tariff cuts create an unlevel playing field.”
The Biden White House tried to remedy these socioeconomic dilemmas with a carrot-style approach to industrial policy. It sought to promote labor union empowerment across all sectors, but especially manufacturing, by backing groups like the United Automobile Workers in old industries and subsidizing new industries like green energy, with made-in-America qualifying provisions.
That approach — which will at least partly live on through the investments it spurred in the early 2020s and subsidies passed by Congress — was cut short in November. Now Mr. Trump’s style of industrial policy, based on the import tax “stick” of tariffs, is on the clock. (...)
But Mr. Setser says he still views tariffs as more of a targeted, defensive tool than one meant to address a chronic job loss.
“In most cases,” he argued, “the end result of tariffs is that it doesn’t solve a trade deficit, it just means you trade less, you import less, you export less, the overall deficit doesn’t typically change.” (...)
That’s partly because despite a boom in manufacturing construction, modern factories simply do not need as many workers as they used to.
by Talmon Joseph Smith, NY Times | Read more:
Image: Maddie McGarvey for The New York Times
Now, the country is wealthier than ever. Yet the economy looks, and feels, quite different — dominated by service work of all types, both lucrative and low-wage. Industrial hubs in the American interior have often withered, leaving many strongholds of Mr. Trump’s base on the economic fringes. (...)
An expansive cohort of economists and business leaders remain deeply skeptical of the tariff campaign, however, and of its ability to reverse the decades-long drop in manufacturing employment — a decline with various global causes and unclear domestic remedies in an age of factories dominated by robotics.
While disagreement about Mr. Trump’s prescription for America’s manufacturing decline is widespread, few experts dispute his general diagnosis — echoed by a new breed of conservatives, including Vice President JD Vance — that deindustrialization caused a sort of pain that went unnoticed for too long.
A paper published this year by M.I.T. details the impact that the surge in imported Chinese goods at the dawn of this century had in the following years. It finds that while heartland regions hit hardest by this “China Shock” have rebounded somewhat, the individual workers whose jobs were affected have not.
Since the late 1970s, a powerful stew of forces has led to the offshoring of many factory jobs. As U.S.-based multinational corporations matured, executives and activist shareholders realized that they could often increase production at lower wages overseas, enabling higher profits and reduced prices for domestic consumers.
State and federal policymakers, frustrated by testy battles with labor unions in that era of inflation, often supported such adaptations by globalizing firms.
Over the years, the relatively high value of the U.S. dollar has made goods produced by exporters generally more expensive. And the nation’s trade deficits — in which American consumers buy more things from abroad than the value of things American producers sell abroad — are also a function of affluence.
While disagreement about Mr. Trump’s prescription for America’s manufacturing decline is widespread, few experts dispute his general diagnosis — echoed by a new breed of conservatives, including Vice President JD Vance — that deindustrialization caused a sort of pain that went unnoticed for too long.
A paper published this year by M.I.T. details the impact that the surge in imported Chinese goods at the dawn of this century had in the following years. It finds that while heartland regions hit hardest by this “China Shock” have rebounded somewhat, the individual workers whose jobs were affected have not.
Since the late 1970s, a powerful stew of forces has led to the offshoring of many factory jobs. As U.S.-based multinational corporations matured, executives and activist shareholders realized that they could often increase production at lower wages overseas, enabling higher profits and reduced prices for domestic consumers.
State and federal policymakers, frustrated by testy battles with labor unions in that era of inflation, often supported such adaptations by globalizing firms.
Over the years, the relatively high value of the U.S. dollar has made goods produced by exporters generally more expensive. And the nation’s trade deficits — in which American consumers buy more things from abroad than the value of things American producers sell abroad — are also a function of affluence.
But the economic story of the American 21st century has also been shaped by the deliberate pursuit of freer trade in the hope of lower prices, with the knowledge that doing so would put U.S. manufacturing employment at risk.
About 20 million people made their living from manufacturing in the heyday of U.S. manufacturing, which peaked in the 1970s. By the end of last year, manufacturing made up only about 8 percent of total employment.
“The funny thing about finance and economics is that we don’t really advance or learn anything over time, we just cycle through the same things, over and over, in different ways,” Brent Donnelly, the president of Spectra Markets, a market research firm, argues. “We vilify mercantilism and lionize free trade but are forced to rethink these religions when income inequality shatters social cohesion and decades of unreciprocated tariff cuts create an unlevel playing field.”
The Biden White House tried to remedy these socioeconomic dilemmas with a carrot-style approach to industrial policy. It sought to promote labor union empowerment across all sectors, but especially manufacturing, by backing groups like the United Automobile Workers in old industries and subsidizing new industries like green energy, with made-in-America qualifying provisions.
That approach — which will at least partly live on through the investments it spurred in the early 2020s and subsidies passed by Congress — was cut short in November. Now Mr. Trump’s style of industrial policy, based on the import tax “stick” of tariffs, is on the clock. (...)
But Mr. Setser says he still views tariffs as more of a targeted, defensive tool than one meant to address a chronic job loss.
“In most cases,” he argued, “the end result of tariffs is that it doesn’t solve a trade deficit, it just means you trade less, you import less, you export less, the overall deficit doesn’t typically change.” (...)
That’s partly because despite a boom in manufacturing construction, modern factories simply do not need as many workers as they used to.
by Talmon Joseph Smith, NY Times | Read more:
Image: Maddie McGarvey for The New York Times
[ed. I'd also add: killing green new energy funding/technologies (our most promising new manufacturing industries); more robotics and AI disruption just around the corner; time and logistics of replacing factories and workforces given the length and depth of retaliatory tariffs and associated economic and investment uncertainties. Oh, and undermining worker's unions, and defunding academic and industry R&D. We're not going back to the future. See also: 'Batsh*t Crazy' Trump Tariffs Should Be Seen as $7,000 Tax Hike on Workers, Says Economist (CD).]
