Posted on 01/06/2017 3:00:12 AM PST by expat_panama
INDUSTRIAL policy via Twitter is a new development in economics but we may all have to get used to it over the next four (or eight) years. Donald Trump's tweets on the car industry (and his planned cuts to corporate income tax) may or may not have persuaded Ford to keep a plant in Michigan, creating 700 jobs. But the problem with such headline-grabbing is that there are thousands of companies in America, and jobs are being created or destroyed every day; intervening in all these situations is impossible. Even in cars, for example, GM has recently announced 3,300 lay-offs, almost five times greater than the Ford additions.
History suggests that the aim of creating large numbers of manufacturing jobs will be a lost cause...
...declines have been seen across the developed world... ...between 1990 and 2014 compared with a 25% fall in Germany, 33% declines in France and Sweden, 34% in Japan and 49% in the UK.
The problem is not just China but technology. Industries like cars and steel tend to be plagued by overcapacity...
...focusing on manufacturing jobs which comprise just 10% of all employment in America (in percentage terms, there has been a virtually uninterrupted decline since 1970's 26%)... ...Worse still, the disruption to trade in services that might result, let alone the higher prices that consumers would have to pay, would far outweigh the positive impact of keeping a few jobs in America.
The markets seem remarkably sanguine about all this; far more so than they would have done if a President Bernie Sanders were threatening American businesses with retaliation. But we have seen individual stocks take a hit (Boeing, for example) when they came into the Twitter firing line of Mr Trump. Eventually, one thinks, the unpredictability of the attacks will wear out investors...
(Excerpt) Read more at economist.com ...
Ah yes, the economist...the leftie guideposts magazine.
Economists practice a “science” that only works in a bubble where nothing else matters. Their catchphrase is ceteris paribus. Sometimes, you have to put national security and the soul of the nation ahead of pure economics. The author pooh-poohs manufacturing jobs (only 10% of the jobs, only 26% in the 70s), but fails to mention that one manufacturing job is the equivalent of approximately 5 of the part-time jobs that the Economists would create for people who don’t have a 4 year degree.
An economist says that a job is a job. You lose a good manufacturing job and have to work in a convenience store and there is no net loss of jobs. In their ceteris paribus world, that is a healthy economy.
All Trump needs to do is get the ball rolling and the unfettered economy will pick up on its own. It will not take much but it will start with the men in his cabinate. He must keep the cold war wacko birds like McCain from upsetting things. Ted Cruz could help here.
“An economist says that a job is a job. You lose a good manufacturing job and have to work in a convenience store and there is no net loss of jobs. In their ceteris paribus world, that is a healthy economy.”
I was discussing this yesterday with a neighbor, the government counts someone who works twenty eight hours as a minimum wage worker fully employed, the same as one who works, as so many used to, forty OR MORE hours at double the minimum wage. You can be making one fourth the income you used to earn and still show up as fully employed.
I used to be one of Ted's biggest fans. He turned out to be a major disappointment. He destroyed his reputation, and I think it will be impossible for him to redeem himself. I for one will never trust him again.
re: higher prices that consumers would have to pay
We need some balance in fake news. How much of the price of a car is affected by
A. Taxes American companies have to pay and Foreign Companies don’t because the US taxes income while other countries tax sales?
B. Emission control standards. How much did that catalytic converter, etal add to the cost of a car?
C. CAFE standards. How much does being politically correct add to the cost of a car?
D. Safety Standards. How much did seat belts add to the cost of a car... seat belts which statistically save no lives. And Air Bags, which do save lives and were installed because nobody wanted to admit seat belts are a fraud?
E. ABS brakes and other technology breakthrus that occurred with no government involvement? ABS brakes have done more to reduce injury, death and auto insurance costs than everything else combined.
F. Styling changes? Every year factories have to re-tool to meet artistic changes.
G. Cost of wages in the US vs other countries.
H. Other?
Fake news is in selectively reporting some facts/factors and not reporting other facts/factors.
If you look at the enormous costs of government regulation on manufacturing, look no farther than the EPA. Some of the costs of dealing with their regulations are enormous. Wonder why a company closes a shop and abandons it instead of rebuilding? Thank the EPA for its unfunded “cleanup” mandates.
Wonder why we don’t see very many chrome-plated bumpers on cars any more? EPA.
Wonder why they use a less durable paint on things like electric transmission line towers and such? EPA
What’s the biggest driver of higher energy costs? EPA
Of course, I don’t want to diminish the costs of the other plethora of generally useless government agencies, but our regulations alone present a huge cost to potential manufacturers.
Manufacturing is a good example of a sector whose performance is becoming completely disconnected from its labor figures. Manufacturing employment in the U.S. has been steadily declining since it peaked in 1979, but our industrial output has grown considerably.
When manufacturing was first being lost they said get into computers and engineering. Then they started sending that off-shore as well. Now we have the huge rise in service related jobs and government work (welcome to mcdonalds may I take your order).
They keep telling us this is a good thing.
Loser liberal “economists” lying less lucidly lately...
With Trump there is Hope for Jobs. There is no Hope for this with the "Progressives".
>>That’s how you end up with burdensome mandates that deter businesses from operating efficiently at all. It’s also how you end up with massive numbers of people employed by government.
The “burdensome mandate” argument would have some actual weight if the stock market did not reach a new record level a couple times a year. The decision makers in the board room and in DC all know that they are creating profits without jobs, so the government creates fiat currency to prop up the economy that the little people live in through direct payments and an inflated bureaucracy that employs a huge number of people in the only good paying, secure jobs that are available to working Americans.
We had a functioning economy before personal computers and automation and we built things that lasted many years and were repairable. Everyone acts like a small decrease in economic efficiency will doom the economy. When your only metric is the value of the stock market, I guess that’s true. But if your metric is the economic health of the American people, then the picture begins to change.
Eventually there will have to be a 40k-60k paycheck supplied by the government for everyone. If you want to excel above that, go for it. There won’t be much inflation besides real estate and stuff like gold/jewels. TVs, computers, food, all the basics will be provided free. It’ll happen, sooner than later.
——INDUSTRIAL policy via Twitter——
Is the same as industrial policy by telephone. Jawboning was talking on the phone to encourage a CEO to get with the program
I think LBJ was a jawboner
While there will likely be some production increases, America will likely never manufacturer paint brushes again like it once did
We had a functioning economy before personal computers and automation and we built things that lasted many years and were repairable. Everyone acts like a small decrease in economic efficiency will doom the economy. When your only metric is the value of the stock market, I guess that’s true. But if your metric is the economic health of the American people, then the picture begins to change.
I agree with a lot of this, but keep in mind that our economy is driven by consumers, not employers. If one contractor offered to replace the roof on your house for $10,000 and the other offered to do the same job for $9,000, would you even think of hiring the more expensive guy to do the same project? Maybe a tiny fraction of Americans would, but most people would not -- even if the more expensive contractor had 10 people working on the job and the less expensive one had only 5.
>>If one contractor offered to replace the roof on your house for $10,000 and the other offered to do the sam
I’m not just talking about price. That’s ceteris paribus economics. In your analogy, let’s say that the $10k roof is a 25 year roof and the $9k roof is a 20 year roof. Or let’s say that the $10k roof is being done by a company from your town and the $9k roof is being done by a company from 1000 miles away that came into town after a storm and will be long gone.
I’m in that situation from hurricane Matthew. I chose the local, more expensive, roofer because the real world does not obey the economist’s ceteris paribus “laws”.
What is your source for the claim that safety belts statistically save no lives?
There are many articles written by economists that emphasize rising wage inequality caused by the “hollowing out” of middle-income jobs.
It’s true that the nature of the economy is changing. Change has been the one constant in the economy since the industrial revolution. There was a small town in Louisiana that, over a century ago, made most of the nation’s socks. As the industry automated the high union wage made the industry move away. This left an entire town unemployed. Then, oil jobs moved in and the workers transitioned from socks to oil or oil services.
The introduction of the sewing machine destroyed the piece work paradigm that had existed for centuries. The workers revolted and destroyed the sewing machines to preserve their industry. It’s hard to fight a technology change that makes things cheaper. Those people fighting a political and propaganda battle against fracking are doomed to lose.
Without a doubt, automation is eliminating manufacturing jobs. The last job I had was in a building with overhead cranes that would have looked at home in the aircraft world of 1940. Except, they had no stock room. Along one wall stood what looked like food vending machines on steroids. A worker would put his badge in the machine’s slot and punch buttons for rivets, a painter’s suit, a helmet, even small stock steel bars or welding rods. The company the worker worked for didn’t own any of the inventory until the worker stuck his badge in and “bought” it. This eliminated a huge number of jobs, or, rather moved them to a venue with lower overhead costs and fewer regulations, which made each item substantially cheaper.
And, there, we touch on a major driver for why technology is eliminating jobs. Your machines aren’t some protected class of people who will sue you for discrimination with government help. You aren’t mandated to give them health care and the machines reduce your insurance risks. All of these downside risks are created by government regulation to “make the worker’s lives better and give the workers better salaries.” What they do in practice, though, is cause companies to automate those jobs and eliminate the employees.
Yes, Virginia, the government, at all levels, and its regulators are the primary drivers in eliminating manufacturing and other jobs.
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