WND column
Immigration and Unemployment
Long before there was a Republican Party, the idea that free trade and immigration foster economic growth was a staple among many Americans. Even today, there are few on the right side of the political spectrum who have bothered to review this centuries-old logic or examine the considerable amount of empirical evidence that has been gathered from decades of quasi-free trade or 47 years of mass foreign immigration.
Last month’s unemployment report was not good. While the U3 unemployment rate was only 8.1 percent, which is bad but not disastrous, the number of Americans not working was actually much higher than it would appear due to the statistical games being played by the Bureau of Labor Statistics. Since the unemployment rate is calculated by dividing the number of unemployed people by the total number of people in the labor force, the BLS keeps the rate down by reducing the size of the labor force. For example, in the April unemployment report, it was reported that the size of the civilian labor force shrank from 154.7 million to 154.5 million.
Long before there was a Republican Party, the idea that free trade and immigration foster economic growth was a staple among many Americans. Even today, there are few on the right side of the political spectrum who have bothered to review this centuries-old logic or examine the considerable amount of empirical evidence that has been gathered from decades of quasi-free trade or 47 years of mass foreign immigration.
Last month’s unemployment report was not good. While the U3 unemployment rate was only 8.1 percent, which is bad but not disastrous, the number of Americans not working was actually much higher than it would appear due to the statistical games being played by the Bureau of Labor Statistics. Since the unemployment rate is calculated by dividing the number of unemployed people by the total number of people in the labor force, the BLS keeps the rate down by reducing the size of the labor force. For example, in the April unemployment report, it was reported that the size of the civilian labor force shrank from 154.7 million to 154.5 million.
Labels: economics, immigration, WND
105 Comments:
You've refuted comparative advantage of international trade in previous columns. Where does that leave absolute advantage and economies of scale in your reckoning?
According to this article in Reason (I did not examine the underlying data), we did not have a massive increase in illegal immigration, we just made it harder for them to go back and forth so they stayed. The same number of people were crossing the border (roughly), they just weren't going back home.
I finally stifled my subconscious objections by putting it this way:
Singapore's trade policy is smart. Lee Kuan Yew practiced heavy protectionism early on. This was smart.
The problems accepting come when I think of how protectionism works in a corrupt "democratic" system.
I used to support free immigration and trade when I was younger. Then I realized population A is not the same as population B. Comparative advantage must take into account the population of people you are talking about.
Studies in linguistics show that the human brain is hardwired for grammar from birth. But is each human population wired in the same way? Why did western languages evolve towards alphabets, when eastern languages evolved towards pictographs?
And if you took that idea about languages, could you not apply it to things like economic capability? The European Union is a prime example. You can't expect Greeks to produce like Germans. Maybe German neuroticism is what is responsible for their productivity?
Perhaps we need a new field, Neuroeconomics. They are applying the same concepts in Neuroarthistory. We have have all the genetic tools available now.
People first, THEN economics. Money, goods, and services are meaningless without people.
People first, THEN government. Politics is meaningless without people.
To accept the concept of free trade and its necessary consequences, such as free labor, unlimited immigration and universal citizenship...
I don't see why these have to be necessary consequences of free trade. Where does this necessity come from?
How can you have free trade while banning a free trade in services? A free trade in services requires the free movement of labor, which therefore dictates no limits on immigration.
Liberty only flourishes when there is Rule of Law - and rights are strictly enforced. A very small, well defined, strong government.
What is referred to by "free trade" are special subsidies, violating rights and contracts, breaking laws, etc. Trade outside life, liberty, and property.
Kansas and Nebraska, Michigan and Ohio can have free trede - but even then , OH (WI, IN) has no soft drink deposit, MI is 10 cents and tries in vain to pervent "returns".
Mexico is a different culture, there cannot be free trade, and that horror endous managed trade NAFTA has been shown. Then there's currency - devalue the Peso and instant tarrif to the US and subsidy to Mexico.
Canada is closer, english common law. New Zealand might be closer still (or to our ideal instead of our slouching toward socialism).
Even in context, free trade means the least common denominator - the worst of the rules and regs - between partners, Mexico, China, The USA.
It's very easy to have free trade in goods while banning free movement of labor across national borders. What's the problem?
Furthermore, it's possible to have free movement of labor without universal citizenship. Citizenship is not necessary for one to be able to work.
I would just add one thing...
Applications for Social Security disability are SKYROCKETING
So I guess the average libertarian wouldn't be on your side if you wanted to create a libertarian society somewhere and attempt to keep non-libertarians out (if that's even possible).
> the BLS keeps the rate down by reducing the size of the labor force.
I suspect you have no objective suggestion that shows the BLS is actively "playing" with the labor force numbers.
The methodology for calculating who is in the labor force, as opposed to who is not, appears to have not changed.
> Studies in linguistics show that the human brain is hardwired for grammar
> from birth. But is each human population wired in the same way?
Using Noam Chomsky's work on VD's blog? Interesting approach.
It's very easy to have free trade in goods while banning free movement of labor across national borders. What's the problem?
Free trade in goods only is not free trade. So, what is your justification for banning free trade in services? What "free trade" argument supports only free trade in goods but not free trade in services?
Mexico is a different culture, there cannot be free trade
TZ, I dare say Mexico has more free trade than the United States, at least when it comes to domestic free trade.
There are lots and lots of businesses that operate under the radar here or at least with very little regulatory oversight. I can get the worlds best tacos from a very unregulated food cart and I've never once gotten sick from anything I've eaten down here EXCEPT in Mazatlan one time I was sick for weeks from seafood I got from one of the most popular restaurants. I have eaten at the taco carts on average of once a week for the last 2.5 years.
Labor moves freely about Mexico though they're very strict about labor coming from south of their border.
The United States is overrun with regulation and litigation threats over the smallest slight and is therefore not nearly as free. People want all the rewards of a marketplace with none of the risks.
Free labor and free trade are doctrines no less utopian, and no less ultimately destructive to society, than scientific socialism and feminist equalitarianism.
Excellent point at the end of the article. I have viewed people who promote libertarianism from this viewpoint as people who fail to properly apply human nature to the mix. John Stossel and the folks at Reason stand out as prime examples in the media.
From my own personal experiences, Hispanics tend to have little regard for other people's property and their own. My church, which broke from the Episcopal Church and had to rent a building owned by a Spanish-speaking Seventh Day Adventist church, often has to deal with the messes that they leave behind after their worship services. I can't count the number of Sundays I've come into the building to be overwhelmed by the smell of food that was left out in the kitchen.
Meanwhile we're told that there is nothing wrong with immigrants and that they provide cheap labor. I say we eliminate labor regulations, the war on drugs, the welfare state, and the Federal Reserve and you won't have a need for "cheap labor" legal or otherwise.
TZ, I dare say Mexico has more free trade than the United States, at least when it comes to domestic free trade.
Impossible, steve sailer assures us mexico is one giant hellhole.
> Impossible, steve sailer assures us mexico is one giant hellhole.
Mexico has some very not terrible parts. (Even aside from tourism centers that essentially plant you within a resort that you cna't escape [for your own security]).
I say we eliminate labor regulations, the war on drugs, the welfare state, and the Federal Reserve and you won't have a need for "cheap labor" legal or otherwise.
Exactly. Also, if you eliminate the welfare state, the "jobs americans just won't do can be done by people coming off the welfare rolls
Free trade in goods only is not free trade. So, what is your justification for banning free trade in services? What "free trade" argument supports only free trade in goods but not free trade in services?
Do people not have the right to form contracts to purchase whatever they want, from whomever?
The issue is one of individual rights vs the state. If the state says you can buy good a but not good b, what else can the state troll you to buy or not buy?
Vox, what are the yearly ratios since 2006 using your preferred metric of employed/total population? I'm curious regarding how this ratio compares to other employment/unemployment metrics pre and post the most recent crisis.
What "free trade" argument supports only free trade in goods but not free trade in services?
I assume that you mean a purely economic argument, and I see your point. If a nation can specialize in coal mining, why not in hair cutting or investment banking?
Still... citizenship?
I'm tending to agree with Vox on the free trade issue. The problem is, how do you enforce reasonable trade restrictions without being downright punitive and/or setting up a messy bureaucracy that mucks everything up?
You can't, so the question really becomes, is totally free trade more or less harmful than the bureaucracy that results in trade restrictions? A case could be made that totally free trade (unrestricted labor movement, etc) would result in a more restrictive government because evidence seems to point to immigrants trying to make their new country like the old country.
I don't have the answers and it's not like it can be modeled out and tested.
A case could be made that totally free trade (unrestricted labor movement, etc) would result in a more restrictive government because evidence seems to point to immigrants trying to make their new country like the old country.
your logic rests on the assumption that you would have to give citizenship to immigrants
So I guess the average libertarian wouldn't be on your side if you wanted to create a libertarian society somewhere and attempt to keep non-libertarians out (if that's even possible).
That sums up the failure of the libertarian imagination. BORDERS!?, they screech. CITIZENSHIP PAPERS!? This is why liberal societies are ultimately doomed. They don't discriminate, so they are eventually overrun by illiberal peoples.
Only somewhat off topic, given the article of the day, today's XKCD has a good take on a common descriptive term for economics. :)
A case could be made that totally free trade (unrestricted labor movement, etc) would result in a more restrictive government because evidence seems to point to immigrants trying to make their new country like the old country.
your logic rests on the assumption that you would have to give citizenship to immigrants
No it doesn't. It doesn't take citizenship to remake the politics of a particular place. Look at what illegal immigrants have done politically to Los Angeles.
I don't think the issue of "unrestricted immigration" can be properly considered until we remind ourselves that what we currently have is not merely "unrestricted" immigration, but heavily subsidized immigration. I suspect if the only immigrants coming in were those who had the ability and willingness to earn their keep we'd have far fewer immigrants and far fewer problems in terms of percentage with the ones that do come. As it is our federal government seems to want to import as many parasitic types as possible.
your logic rests on the assumption that you would have to give citizenship to immigrants
How's that working out for you? And, as Vox has pointed out repeatedly, you assume that cultural influences and changes that accompany immigration do not matter. In the end, your vision of anarcho-capitalist free trade is as much of a utopian pipe-dream as is the socialist dream of an efficient command and control economy.
"Free Trade" with China has been a great boon to the U.S. in one respect: we've been exchanging massive amounts of fiat currency for real goods. Meanwhile, they use that fiat while it still has value to build productive infrastructure, obtain long-term access to natural resources, and accumulate gold for their gov't and CB. All while we slowly lose productive industry to them (and others). If it were just cheap junk they were producing, the Ricardian comparative advantage might work for us, but the cheap junk was just a starting point for them. Much like Japan after WWII. They are moving on and developing an industrial base that does/will include autos and other durable goods as well as using U.S. companies to develop/steal a tech industry.
Bottom line: in a "free trade" environment, he who cheats best, wins. the benefits of free trade are not synonymous with the benefits of trade.
We don't have "free trade" as defined by VD, so we can hardly argue over the "results", as there hasn't been any true free trade. It's sorta like people whining over "free market capitalism" causing the crisis - we haven't had any free market capitalism!
Anyway, I like the supply side view that less taxes (tariffs) equals less friction between producers which equals more economic growth which is a good thing. So, in practice, keeps tariffs low and more goods will be produced here and abroad, and destructive trade wars will be avoided.
So, whose predictions can we trust? VD and the other anti-free trade doom-and-gloomers have said in the past that U.S. manufacturing is all going overseas. However, and relating this back to unemployment, US manufacturers are actually finding a shortage of skilled labor and many many jobs going unfilled.
However, and relating this back to unemployment, US manufacturers are actually finding a shortage of skilled labor and many many jobs going unfilled.
The tool and die industry anticipates a shortage of a hundred thousand machinists in the next five years
In the end, your vision of anarcho-capitalist free trade is as much of a utopian pipe-dream as is the socialist dream of an efficient command and control economy.
I'm not so sure. A tough society that is highly intolerant of any deviations from its culture might be able to withstand free movement of people across its borders. This would not be considered very utopian nowadays though.
To accept the concept of free trade and its necessary consequences, such as free labor, unlimited immigration and universal citizenship, it is necessary to reject the U.S. Constitution and the idea of limited government as well as everything that history has taught us about cultural, ethnic, national and religious differences.
But is this not exactly what libertarianism is? A deprecation or even outright rejection of government and such differences in favor of a strictly monetary mechanism of interpersonal relations?
I used to support free immigration and trade when I was younger. Then I realized population A is not the same as population B.
This is fascinating. I have just read part of the book "Proslavery" recommended by Nate. This exact view was advanced by the pro-slavery advocates.
Bottom line: in a "free trade" environment, he who cheats best, wins.
Yes, if by "cheats" you mean "works his ass off".
The main problem I see with free trade (and illegal immigration) is that you can pass domestic laws and regulations that stifle production without feeling their ill effects in full (or at all, at least temporarily).
Difster: According to this article in Reason...
"What the Data Actually Say About Illegal Immigration"
Mark Bernstein...
Stopped reading right there.
Yes, if by "cheats" you mean "works his ass off".
Do you think that the Chinese are benefiting relatively more from their current trade with the U.S. because they work harder?
I'm not so sure. A tough society that is highly intolerant of any deviations from its culture might be able to withstand free movement of people across its borders. This would not be considered very utopian nowadays though.
True enough up to a certain point where the immigrants can influence that "tough society" away from its adherence to its culture. At that point a society has a stark choice: limit immigration or accept the changes it brings.
The main problem I see with free trade (and illegal immigration) is that you can pass domestic laws and regulations that stifle production without feeling their ill effects in full (or at all, at least temporarily).
I think this is a big part of why American industry has fallen off so. We're the victims of our own regulation. Interestingly, even though it's only been a few years since China instituted a lot of "worker's rights" legislation (minimum wage, limit on hours worked, etc) the impact is already real and being felt. The trend is increasingly away from China and to other Asian nations, Mexico, or South America for commodity stuff and back to the US for the more sophisticated and/or high end stuff.
Do you think that the Chinese are benefiting relatively more from their current trade with the U.S. because they work harder?
They do more work per dollar or RMB of cost to their employer you betcha. Given that in the US a worker's salary is probably only ~ 1/2 of his marginal cost to his employer that's not too hard to do.
But I take issue with your term "benefiting relatively more". How do you know this? Why do you think it's true? And WHO precisely is benefiting relatively more than WHO? It's sloppy aggregate thinking of the sort that always seems to muddy up discussions on this topic.
And if you took that idea about languages, could you not apply it to things like economic capability? The European Union is a prime example. You can't expect Greeks to produce like Germans. Maybe German neuroticism is what is responsible for their productivity?
Someone pointed out a while back that two thousand years ago, the people who lived in what we call Italy were considered productive, hard working types while the barbarians inhabiting the forests of Germany were impetuous and irresponsible, more inclined to riot than to hold down a steady job.
Jake:
...what we currently have is not merely "unrestricted" immigration, but heavily subsidized immigration. I suspect if the only immigrants coming in were those who had the ability and willingness to earn their keep we'd have far fewer immigrants and far fewer problems in terms of percentage with the ones that do come...
Yes, I entirely agree. The original "immigrants" that created the US were all people willing to take chances and work hard in exchange for an opportunity to be prosperous and escape from stiffling rules imposed by others. Regardless of what cultural or genetic soup they came out of, they were the individuals from that soup most inclined to value liberty.
Regardless of what cultural or genetic soup they came out of, they were the individuals from that soup most inclined to value liberty.
Everyone values their own liberty.
Do people not have the right to form contracts to purchase whatever they want, from whomever?
Do people not have the right to form a community where these things are are regulated?
Do people not have the right to form a community where these things are are regulated?
Are not communities governments?
Josh:However, and relating this back to unemployment, US manufacturers are actually finding a shortage of skilled labor and many many jobs going unfilled.
The tool and die industry anticipates a shortage of a hundred thousand machinists in the next five years
Oh, bull crap. I've been hearing this BS since Bush I.
A) It never materializes outside of Forbes and Bloomberg articles and B) At some price the market will clear but training apparently isn't a price the employers are willing to pay so back to point (A).
True enough up to a certain point where the immigrants can influence that "tough society" away from its adherence to its culture.
I wonder about the direction of causality here. Perhaps the society losing its adherence to its culture is the primary cause, and increased immigration is an effect, a symptom of the underlying disease along with feminism, political correctness, and so on.
Are not communities governments?
They usually contain one. That was my point. The one right so many libertarians aren't willing to grant is the right to form a collective will.
Let me simplify it for you, Jake: our trade with China has resulted in increasing trade deficits where, in return for products that they produce cheaper than us, they get dollars, technology, and jobs. Extrapolate that trend. Is the relative savings in produced goods now worth the cost of lost productive industry and jobs now and the potential cost of rebuilding same in the future?
Moreover, there are relatively few restrictions on what the Chinese can export to us, while they carefully limit our exports to protect and build their own industries. Hardly free trade, but that's how it is practiced.
Nations don't have friends, they have interests. Even if a nation does not protect its interests, it can rest assured that other nations will protect their own. Usually to the first nation's detriment.
Are not communities governments?
They usually contain one. That was my point. The one right so many libertarians aren't willing to grant is the right to form a collective will.
Ah.
But they do. So long as the "collective will" either means their will or provides a means for them to opt-out without consequence.
Perhaps the society losing its adherence to its culture is the primary cause, and increased immigration is an effect, a symptom of the underlying disease along with feminism, political correctness, and so on.
Ah. The opening for which I was looking.
Feminism contributes to gun explosion.
http://reason.com/archives/2012/04/19/the-gun-explosion
Cherub: "Oh, bull crap. I've been hearing this BS since Bush I. A) It never materializes outside of Forbes and Bloomberg articles and B) At some price the market will clear but training apparently isn't a price the employers are willing to pay so back to point (A)."
Don't let the facts get in the way of your dogma. As I have repeatedly explained to VD, US industrial OUTPUT is higher than ever; however, total US industrial EMPLOYMENT is lower. This is due to AUTOMATION, not "free trade" (like that exists or something).
Automation means fewer low skilled jobs but more high skilled jobs - such as building, operating, maintaining, and repairing the automated machinery. This is called a skills shortage and has nothing to do with supposedly free trade or immigration. It occurs due to people going to college to major in women's studies rather than engineering. I mean, whatever happened to vocational schools?
If you don't believe me or Forbes or Bloomberg, how about you google "shortage of us industrial jobs" and follow a few links and educate yourself.
Using Noam Chomsky's work on VD's blog? Interesting approach.
Noam may be talking out of his ass when it comes to politics, but he revolutionized the field of linguistics in the 1950s.
pdimov May 07, 2012 9:45 AM
What "free trade" argument supports only free trade in goods but not free trade in services?
I assume that you mean a purely economic argument, and I see your point. If a nation can specialize in coal mining, why not in hair cutting or investment banking?
What you may be missing is the gross economic distortions caused by free trade in goods but no free trade in labor. The result is the ever increasing US debt to China and the thirty year hemorrhage of US industry to China.
China primarily has a manufacturing advantage because of dirt cheap/slave labor and limited labor and environmental protection laws. If Chinese labor (and all other nation's labor) were free to pursue their best interests by moving to where the best wages were available, this imbalance would correct over time.
Anyone who advocates free trade in goods but is anti-immigration and against free trade in labor is actually advocating for this gross imbalance. It has given the (false) appearance of prosperity in this nation, but at the expense of our long-term viability.
As I have repeatedly explained to VD, US industrial OUTPUT is higher than ever...
Uh-huh. Why don't you give it to me in tons of steel, feet of copper wire, pounds of cotton milled, internal shipping tonnage, etc. slap it on 1966 and adjust for population. Don't give me some jiggered government figure in dollars of output which are as cooked as the BLS unemployment numbers.
This is due to AUTOMATION, not "free trade"...
Yet, there's a hundred fold increase in the products out there in the market today that need machines built to make them, but those machines aren't built here and aren't operated here.
Automation means fewer low skilled jobs but more high skilled jobs - such as building, operating, maintaining, and repairing the automated machinery.
But they are ever eager to train Chinese rice diggers how to do it while laying off American men who did do it, and did it well.
Millions of manufacturing jobs have been created in Asia while millions left the US. Something that shouldn't be happening according to your automation theory.
I'll even bet more have been created in Asia than have left the West. Something that really, really shouldn't be happening according to your automation theory.
It occurs due to people going to college to major in women's studies rather than engineering. I mean, whatever happened to vocational schools?
Yes, I remember it well. All those White blue collar boys from the East Side of Chicago and Northwest Indiana going off to women's study programs at Harvard. A veritable exodus it was.
If you don't believe me or Forbes or Bloomberg, how about you google "shortage of us industrial jobs" and follow a few links and educate yourself.
You mean "shortage of industrial workers"? Or "shortage of (insert sector here) jobs" - the rallying cry of the open borders shill media and academia?
"Fruit be rotting in the fields"! No thanks, heard it a million times.
Desert Cat: "thirty year hemorrhage of US industry to China."
See, perfect example of my point. People like to assume this is true because it fits their dogma. However, the pesky data shows that US industrial production has actually more than doubled over the last thirty years.
Boetain May 07, 2012 3:43 PM
However, the pesky data shows that US industrial production has actually more than doubled over the last thirty years.
What did US industrial production as a percentage of GDP do during that same time period?
If Chinese labor (and all other nation's labor) were free to pursue their best interests by moving to where the best wages were available, this imbalance would correct over time.
By moving to the US, you mean? Highly unlikely. Goods manufactured in the US by Chinese labor will be much more expensive than the same goods manufactured by this same labor in China, and nobody will buy them. You can blame free trade all you want, but the simple fact is that US consumers cannot afford the tax on manufacturing imposed by US regulations. Yes, eliminating free trade would certainly be one way to hammer this point home.
Cherub: "Yet, there's a hundred fold increase in the products out there in the market today that need machines built to make them, but those machines aren't built here and aren't operated here."
Another totally absurd blanket statement just pulled out of thin air with no supporting data. Never mind all of the huge manufacturing plants and industrial parks scattered all over the country.
What did US industrial production as a percentage of GDP do during that same time period?
That's not a very good metric. Imagine an economy whose GDP is made up of 100 chairs at $10 each and 100 haircuts at $1 each. Next year, raise the price of a haircut to $100. Instant manufacturing collapse!
Desert Cat: "What did US industrial production as a percentage of GDP do during that same time period?"
I am not going to play chase-the-goalposts with you. I was merely using your statement as an example of how people like VD, Trump, and Buchanan, etc. get everybody hyped up that China has taken all of the manufacturing. It is just not true. As for jobs, automation is the main culprit. This stuff is not that hard.
pdimov May 07, 2012 4:03 PM
Goods manufactured in the US by Chinese labor will be much more expensive than the same goods manufactured by this same labor in China, and nobody will buy them.
That assumes that labor will remain as cheap in China as it is now, with millions of Chinese taking their labor out of the country. It also assumes that labor will remain expensive in the US in response.
You can blame free trade all you want, but the simple fact is that US consumers cannot afford the tax on manufacturing imposed by US regulations.
Regulation is another factor contributing to the imbalances, which is why extending free trade to free labor trade is still not a complete and viable solution.
Another totally absurd blanket statement just pulled out of thin air with no supporting data.
Hey genius, think "Sam Walton's store shelves circa 1963 vs Wal-Mart circa 2012".
Never mind all of the huge manufacturing plants and industrial parks scattered all over the country.
Would that be the pie-in-the-sky 200 acres every podunk town has set aside empty with the faded "Will Build to Suit" sign by the road or the shuttered one in the next town over with the "For Sale or Lease" sign barely visible through the underbrush growth?
"Would that be the pie-in-the-sky 200 acres every podunk town has set aside empty with the faded "Will Build to Suit" sign by the road or the shuttered one in the next town over with the "For Sale or Lease" sign barely visible through the underbrush growth?"
No... He means like the world's largest steel plant that was recently completed and is up and running in southern alabama.
Boetain May 07, 2012 4:18 PM
I am not going to play chase-the-goalposts with you. I was merely using your statement as an example of how people like VD, Trump, and Buchanan, etc. get everybody hyped up that China has taken all of the manufacturing. It is just not true. As for jobs, automation is the main culprit. This stuff is not that hard.
I did not establish a goal post that I subsequently moved. Stating that output doubled over X time frame is meaningless without context.
Let me quote the numbers for you:
"US manufacturing as a percentage of GDP declined from 27 percent in 1950 to 23 percent in 1970 to 14 percent in 2000 to 11 percent in 2009." -- The Manufacturing of Decline.
So industrial output by share of GDP declined by almost 1/4 in nine years, and over the last forty years fell by more than half.
The pie is getting bigger, but the share of the pie due to industrial production is shrinking. A rather different picture than the one you are painting.
Cherub:"Would that be the pie-in-the-sky 200 acres every podunk town has set aside empty with the faded "Will Build to Suit" sign by the road or the shuttered one in the next town over with the "For Sale or Lease" sign barely visible through the underbrush growth?"
Your view of America is so distorted that it is not even worth engaging with you, except, oddly, many others have bought into your way of thinking which is totally divorced from the facts. What is it? Do people just want to be pessimistic and xenophobic?
My head is not in the sand. I look at the data and it says US manufacturing is ok. I have actually been to many large factories producing 24/7 and I have been to small machine shops that produce the parts for the automated machinery makers that produce machines for the factories, all of these things happening right here in the USA. I have driven around many areas of the country and seen industrial parks with full parking lots.
Maybe you pro-trade war types live in Italy or NYC or something and just have not gotten out much lately?
No... He means like the world's largest steel plant that was recently completed and is up and running in southern alabama.
You talking about TK's electric mill? That tinker toy?That's no where near the largest mill in the world. It's not even an integrated mill. It gets its slab from Brazil.
I can think of two integrated mills that closed here in Chicago in the 90s that had single blast oxygen furnaces with with as much capacity as that entire mill.
That assumes that labor will remain as cheap in China as it is now, with millions of Chinese taking their labor out of the country. It also assumes that labor will remain expensive in the US in response.
US labor is highly taxed and has a cost floor. It's not allowed to not remain expensive. Unless... the Chinese were allowed to be "undocumented" immigrants and workers, and the employers could get away with that practice... but you didn't have this in mind, did you. :-)
To put it in perspective US Steel's South Works in Chicago which closed in 1992 had an annual capacity of 7 million tons. That was from iron ore by great lakes freighter from a mine in Minnesota or the UP and coke coming in one side and leaving as coil out the other.
There were others in Chicago. Detroit, Cleveland, Youngstown, Pittsburgh, Gary - no electric mills with imported slab are going to come any where near that.
But I bet in the government numbers they do as considered output.
Desert Cat: "A rather different picture than the one you are painting."
Incorrect...your link paints the exact same picture (and much different than the gloom-and-doom painted by the VD pro-trade-war types):
"As befits a large, modern country, America's manufacturing sector remains very large and has been growing in absolute terms. In 2009, US manufacturing accounted for more than 18 percent of global manufacturing3 and its value was higher (when compared in nominal, exchange-rated terms) than the total GDP of all but seven of the world's economies (behind Brazil at $2 trillion and ahead of Canada at $1.6 trillion). The per capita value of manufacturing in 2009 was higher in the United States ($5,800) than in France ($3,900), Canada ($4,200), Italy ($5,100), and China ($1,500). When measured in constant monies, US manufacturing expanded by about 60 percent between 1990 and 2009, nearly matching the growth of overall GDP; it grew by 10 percent between 2000 and 2009, compared to a 15 percent increase in GDP."
pdimov May 07, 2012 4:48 PM
US labor is highly taxed and has a cost floor. It's not allowed to not remain expensive. Unless... the Chinese were allowed to be "undocumented" immigrants and workers, and the employers could get away with that practice... but you didn't have this in mind, did you. :-)
There are a lot of things, including labor laws, that would have to change for free trade to really work the way advocates of "free trade" believe it does/should.
Which is why it is not practical to fix the mess along that path, unless one were to establish a Dictatorship of the Libertariat to implement it.
Boetain May 07, 2012 4:53 PM
Incorrect...your link paints the exact same picture (and much different than the gloom-and-doom painted by the VD pro-trade-war types):
Do you really want to do that Boetain? Really? Quoting a single paragraph out of context while conveniently hoping no one will catch you in your deception?
That paragraph was a set up for what follows. Here are the next three paragraphs:
But these numbers can be deceptive. America's manufacturing sector has retreated faster and further in relative terms than that of any other large, affluent nation. US manufacturing as a percentage of GDP declined from 27 percent in 1950 to 23 percent in 1970 to 14 percent in 2000 to 11 percent in 2009. While manufacturing as a share of GDP has also declined in Germany and Japan, both countries have retained relatively larger manufacturing sectors at 17 and 21 percent, respectively. The contribution of manufacturing to per capita GDP is also higher in Germany ($6,900) and Japan ($8,300) than in the United States. The most shocking, but underemphasized, fact about global manufacturing is that Germany's share of global merchandise exports is actually higher than America's (9 percent vs. 8.5 percent in 2009), despite having an economy just one-quarter of the size.
As a consequence, the United States is lagging as a global economic competitor. In 2009, Germany and Japan had large manufacturing trade surpluses ($290 and $220 billion, respectively) while the United States had a massive manufacturing trade deficit ($322 billion).5 The other key measure -- little known in popular discussions of manufacturing -- is export intensity, the ratio of a nation's exports to its total manufacturing sales. The global average export intensity is twice as high as that of the United States, which ranked 13th out of the 15 largest manufacturing countries in 2009, higher only than Russia and Brazil.6 Meanwhile, the leading EU countries had export intensities 2.5 times to 4 times higher than America's. Comparisons of the value of manufactured exports on a per capita basis are even more dramatic: they are higher in Spain ($3,700), Japan ($4,000), Canada ($4,600), and Germany ($11,200) than in the United States ($2,400).
The US manufacturing sector is also badly trailing China's, though in order to fully appreciate this, one must calculate the real value of China's artificially undervalued currency (the yuan renminbi, or RMB). The 2009 data from the United Nations lists US manufacturing output at $1.79 trillion versus RMB 14 trillion or $2.1 trillion for China when converted at the official exchange rate for 2009 (about RMB 6.8/US dollar).7 But according to the purchasing power parity (PPP) conversion preferred by the International Monetary Fund, one RMB should be worth 29 cents, or RMB 3.4/US dollar. Even if the real RMB value were only 50 percent higher than the official rate, the total added by China's manufacturing in 2009 would be in excess of $3 trillion, or about 67 percent above the US total.
Knock it off.
There are a lot of things, including labor laws, that would have to change for free trade to really work the way advocates of "free trade" believe it does/should.
Free trade in goods already works. It's not perfect, it's just better than the alternatives.
Desert Cat: "Do you really want to do that Boetain? Really? Quoting a single paragraph out of context while conveniently hoping no one will catch you in your deception?
That paragraph was a set up for what follows."
Hey, it's your link, and it confirms the data I have been citing. You doom-and-gloomers are the ones deceiving everyone into thinking China has taken all of our manufacturing due to "free trade" (defined as low tariffs on imports, while we get shafted on exports). IT...IS...NOT...TRUE.
Only as long as the dollar remains the world's reserve currency...
"I can think of two integrated mills that closed here in Chicago in the 90s that had single blast oxygen furnaces with with as much capacity as that entire mill."
Cute... and delusional.
I have actually been to many large factories producing 24/7 and I have been to small machine shops that produce the parts for the automated machinery makers that produce machines for the factories, all of these things happening right here in the USA.
Burn that strawman. Torch him good. I see you never addressed my points on automation and the increase in number of products compared to before.
I'm not surprised. I've had this argument with free traitors multiple times before and it's always whistling past the graveyard on that.
Look, Cherub. I know the rust belt has had some tough times, but I bet even there if you got out of the house and drove around you might see some factories humming along. That might make you feel better.
Hey, it's your link, and it confirms the data I have been citing.
I'll let that stand on its own for others to decide.
Cute... and delusional.
Nope. Number 7 blast furnace at Inland (now Mittal) in East Chicago, IN built in 1980 can do 12,000 tons a day. Do the math. US Steel South Works had a 10,000er.
It's big, but not even the biggest as far as integrated mill oxy furnaces.
Look, Cherub. I know the rust belt has had some tough times, but I bet even there if you got out of the house and drove around you might see some factories humming along.
Still whistling and hand waving. And then the convo you've had with Desert Cat - jeezus. His link supports your conclusion? Wow.
Anyway, what's indisputable is China has added millions of manufacturing jobs making thousands of new products created in the last 20 years. Many, even most probably, created by American companies.
Why aren't those jobs in the US? Free trade.
Cherub: "Why aren't those jobs in the US? Free trade."
Ok, so we are playing a guessing game now. My guess is with higher tariffs over that period, those jobs would not have existed in China or the US. Both country's growth rates would have been less and the standard of living for millions of people would be lower.
As for the linked article, etc. I am glad to see that you guys now accept that US manufacturing output is growing, even with this supposed fair trade regime. But you just doom and gloom on the fact that jobs are lost, other countries are growing faster, etc. I get your concerns, but I draw conclusions that automation has been the primary driver of job losses, and more tariffs would just make things worse.
Anyway, what's indisputable is China has added millions of manufacturing jobs making thousands of new products created in the last 20 years. Many, even most probably, created by American companies.
Why aren't those jobs in the US? Free trade.
EPA, EEOC, Federal Reserve, minimum wage, OSHA, labor unions, litigation, taxation, regulation, etc are all other causal factors. You're assuming that, because let's say...100 million jobs were created in China, simply ending "free trade" (which isn't really free trade at all, FWIW) would magically result in the creation of 100 million jobs in the US?
My guess is with higher tariffs over that period, those jobs would not have existed in China or the US.
None of them? Not even maybe half gained here while the losses of established industry was curtailed? BS.
You wouldn't be able to say it with a straight face in person. How were we able to increase the amount of goods before with increasing standard of living before under a tariff regime.
What if China didn't exist? What era would we be stuck in forever according to your theory?
Let's just ignore history and go with your "guess".
Both country's growth rates would have been less and the standard of living for millions of people would be lower.
Lower than what? What's you metric. Are you subtracting the extra debt piled on to achieve that standard?
I am glad to see that you guys now accept that US manufacturing output is growing...
Growing in jiggered monetary terms and even then it looks bad. Give me some tons, pounds, gallons, feet to support your conclusions. Something the BEA, BLS and Census Bureau can't hide in a model or by weighting sectors that are thriving heavier while discounting those dying.
Now the rebuttal from free traitors so often is those tons, pounds and feet production stats are irrelevant because we need to use so much less due to efficiency. But if that's the case why is the world setting new consumption records based on those metrics? The sheet metal cover on a lathe motor ain't no thicker in China than it is here.
Why has our share of producing those tons, feet and pounds gone down while China's has gone up?
...but I draw conclusions that automation has been the primary driver of job losses
Already rebutted which you've ignored for the umpteenth time. They were gained in Asia. You're a really bad conclusion drawer.
You're assuming that, because let's say...100 million jobs were created in China, simply ending "free trade" (which isn't really free trade at all, FWIW) would magically result in the creation of 100 million jobs in the US?
Let's say it was 6 million produced. Fuck let's say it was one produced here. One produced here is better than one lost to there.
I don't believe the free traitors believe that tariffs wouldn't increase manufacturing jobs and production here. They just don't care.
You have a government. Its policies are going to pick winners and losers, period. No way around it. They just don't want manufacturing here to be the winner.
I do. And other sectors will suffer (although not in any way near what manufacturing has as a result of the obverse). I'm fine with that. Unlike the free traitors, I'm honest enough to admit.
America is the flea market that everyone wants to be at. By God, time to start charging the vendors a booth fee.
When we make a trade deal it should be plus 50 to us and plus 1 to them.
That's right China, 25% tariff to you to sell stuff here, and 0% for us to sell stuff there. And if you put a tariff of 1% on we'll double it 50% for you. Eff you, you don't like it back to the fucking rice paddies with the lot of ya.
That's how you do trade deals when your the dog with the biggest balls. That's how you stay the biggest dog.
Everyone values their own liberty.
Huh. If that so, a lot of people do a damned good job of hiding it.
Or maybe I was talking about people who value "liberty" as a concept, and are smart enough to realize a your never guaranteed to keep hold of the long end of the double-standard stick.
That's right China, 25% tariff to you to sell stuff here, and 0% for us to sell stuff there. And if you put a tariff of 1% on we'll double it 50% for you.
This will be great fun to watch. Especially since China has a policy of retaliating immediately with the exact same tariff. You'll be up to 1.7e+38% in no time.
...but I draw conclusions that automation has been the primary driver of job losses
Already rebutted which you've ignored for the umpteenth time. They were gained in Asia. You're a really bad conclusion drawer.
I remember reading an interview with Terry Gou, founder of Hon Hai (owner of Foxconn), in which he stated that he could probably produce everything in the US at the same prices via automation. He cited litigation as the primary obstacle to that.
You don't seem to quite get that capital (automation) and labor are in cost competition with each other. The jobs in Asia exist at a price point which doesn't work in the US, but automation does.
"That's how you do trade deals when your the dog with the biggest balls. That's how you stay the biggest dog."
Dude, you sound like some neocon idiot "we just just nuke 'em all".
We're not the dog with the biggest balls, haven't been in quite a while and were never going to maintain that status (unless you wanna nuke everyone else). You think the US can just bully around the rest of the world economically for ever? I doubt we could even if our economy weren't royally screwed up, as is it's pure delusion to suggest we try it. We are or at least were the largest single national economy, that doesn't mean we can do whatever we want. Do you know what percentage of Chinese manufacturing is exported to the US? Do you think you might want to look up such information before you go making a fool of yourself?
What do you think China would do if we tried such a stunt? Maybe quit borrowing dollars from us and let us taste fully the bitter economic conditions our "leaders" have created for us? If you don't understand America's monetary "policy" then you're talking out of ignorance when you discuss the loss of manufacturing to China and the trade imbalance with them. How do you think such an imbalance occurs without government manipulation? Do you, your town, your family, your state, etc go extended periods of time spending much more than you earn or earning much more than you spend/invest? Why do you think such things happen with nations, and why do you think the solution to it is to impoverish 300 million people to create a few million manufacturing jobs?
Foxconn to replace workers with 1 million robots in 3 years
The "problems" attributed to free trade (such as it is) are the symptoms of the real issues, exposed to us by market process. To blame global trade for the decline of the US economy is like a corporation blaming a decade of financial losses on "doing business outside the company". Cutting off global trade will no more help our economy than that corporation would improve it's business by only buying and selling with it's own subsidiaries.
The real issue is that America is screwed up. We've been an increasingly corporatist/fascist state for over a century now and it should come as no surprise to anyone who realizes this that we've to a great extent lost the ability to compete on the global market. Because of the existence of global markets we are aware of this failing, if we erected high tariff walls we might could continue to pretend we were still the world's industrial superpower for a while longer, but we would be not one penny better off. In fact we'd be worse off since we'd be force to rely on unproductive cartelized industrial and agricultural interests to an even greater extent.
And agriculture is an interesting case in point to me. It makes sense to a large degree that China would be a world power in manufacturing, this is actually a return to a historical norm... at one time the Chinese industrial might far surpassed that of Europe in the middle ages, then their government when into isolation (ironic). But it seems to me that America, with huge tracts of good soil and a low population density, ought be a world leader in agricultural exports. In fact, on net we are an IMPORTER of food... INDIA can feed itself and have food to export, but the US has to import food. Are all the good farm jobs going overseas??? Is there anyone who wants to argue THAT? Or is it that a century of government intervention into agriculture has distorted the entire sector into something that can't even compete in it's own backyard with food shipped from halfway around the world? Is there any reason to think the situation is necessarily any different in manufacturing?
We're not the dog with the biggest balls...
Yes we are, by far. And your advocating policies that have made them smaller than they were and will continue to shrivel them. But you know that and probably like it that way.
You think the US can just bully around the rest of the world economically for ever?
Not for ever. Forever is a long, long time. By why not for as long as we can? Why stop? Why do you give a shit what Asian gets bullied economically? If an Asian has to eat cockroaches so Americans can eat steak I'm all for it. Why aren't you?
I doubt we could even if our economy weren't royally screwed up, as is it's pure delusion to suggest we try it.
Oh this is priceless. "We screwed up, better not try anything different". Genius.
What do you think China would do if we tried such a stunt?
Let's do this scientifically. Let's test the theory.
Maybe quit borrowing dollars from us and let us taste fully the bitter economic conditions our "leaders" have created for us?
You mean our leaders who are selling us down the river and are unanimous on the issue of free trade? Yeah, who would want to go against the favored policies of these wonderful leaders? Certainly not you.
Do you know what percentage of Chinese manufacturing is exported to the US?
400 billion and growing out of a 5.7 trillion GDP.
Gonna hurt them WAY more than it will hurt us. Bad for them short term and long term. Much less bad for us short term, good for us long term. Are you a childless, terminal cancer patient with a short time horizon or something?
Why do you think such things happen with nations, and why do you think the solution to it is to impoverish 300 million people to create a few million manufacturing jobs?
Oh, no we'll have to go back to living within our means and using what we produce. It will be horrible. Like 1985 all over again. I remember 1985, we were all digging roots in the woods just to survive. I wonder if American made Iphones will have an app for that.
Especially since China has a policy of retaliating immediately with the exact same tariff.
China is a man with a weak hand that knows he's bluffing against pussies and traitors.
I remember reading an interview with Terry Gou, founder of Hon Hai (owner of Foxconn), in which he stated that he could probably produce everything in the US at the same prices via automation. He cited litigation as the primary obstacle to that.
Certainly in his interest to say that and suspect seeing as he never tried.
Foxconn to replace workers with 1 million robots in 3 years
And who's building those robots?
A brief summary of the free trade crowd's argument:
1) "Millions of high-paying, cutting edge jobs are on the way! Haven't you ever heard of comparative advantage?"
2) When #1 doesn't pan out, "it's the red tape, taxes, and regulations, dammit!"
3) When it's pointed out that regulations and taxes are a key part of what makes the First World different than the Third World, and that the U.S. middle class has been gutted over the last 10 years or more, shrug and chalk it up to the market.
Free traitors indeed. Thank God that libertarianism will soon be consigned to the dustbin of history. A nice irony is that all the immigrants the libertarians demanded ended up voting for the party that most hates libertarians. Ha!
When it's pointed out that regulations and taxes are a key part of what makes the First World different than the Third World
You're arguing that it is taxes and regulations that make countries First World?
Why do you give a shit what Asian gets bullied economically? If an Asian has to eat cockroaches so Americans can eat steak I'm all for it. Why aren't you? - cherub's revenge
That's the spirit. I'll do you one better. We can import Chinese food in the form of Chinese people! Just drop a few nukes on them to get a good char-broil and toss the remains in those shipping containers. That would solve so many problems. Why, the Chinese would even be grateful. Higher wages for the survivors. There's no downside.
I think that mass immigration and feminism have been much more detrimental to wages and employment than so-called "free trade"
And who's building those robots?
Japan would be my guess. Japan has a trade surplus with China, by the way.
Oh, no we'll have to go back to living within our means and using what we produce.
That's not a bad idea and you don't need free trade to not exist in order to implement it.
1) "Millions of high-paying, cutting edge jobs are on the way! Haven't you ever heard of comparative advantage?"
On the way? They are already here, mostly in the government sector, but some, such as diversity consultant, in the private sector as well. Without free trade, all these people would lose their high-paying, cutting edge jobs and would have to actually, you know, produce something.
A nice irony is that all the immigrants the libertarians demanded ended up voting for the party that most hates libertarians.
What is the harm of libertarianism?
EPA, EEOC, Federal Reserve, minimum wage, OSHA, labor unions, litigation, taxation, regulation, etc are all other causal factors. You're assuming that, because let's say...100 million jobs were created in China, simply ending "free trade" (which isn't really free trade at all, FWIW) would magically result in the creation of 100 million jobs in the US?
Josh, you are correct. However, a horrible system in the U.S. that creates or increases a competitive advantage overseas does not mean that we should feed that competitive advantage. It means we should get our own house in order.
Or maybe I was talking about people who value "liberty" as a concept
There are few such people.
and are smart enough to realize a your never guaranteed to keep hold of the long end of the double-standard stick.
There are even fewer such people.
There are few such people.
Right. That's what made the original US so unique. It was a magnet that filtered those few such people out of the soup of their orignal culture and brought them together. Whereas our current immigration policy (coupled with our mis-regulated life) no longer filters those few out.
I await the next demonstration of your powers of not-getting-the-point. You've raised it to an art form.
Or maybe I was talking about people who value "liberty" as a concept
There are few such people.
Right. That's what made the original US so unique. It was a magnet that filtered those few such people out of the soup of their orignal culture and brought them together.
Were there enough to make any kind of difference? The American Revolution appears to have been driven primarily by collected personal self-interest and only incidentally by any notion of freedom as an abstract concept. The Declaration of Independence states that independence was sought not because the king was a king but because he had become odious. Constitutional separation of powers were instituted not because everyone wished everyone else to be free but out of collected self-defense by preventing any one person or group or even majority from accumulating excessive powers. Even the Civil War draped as it was with the fig-leaf of the elimination of slavery was at core only about economic and political power. When afterwards the South enacted Jim Crow no further response was taken.
In pushing for general education social welfare and expanded rights one may say the political left is far more concerned about freedom as an abstract concept than is the political right.
As I said. The vast majority care only for their own freedom. Very few care for any notion of freedom for others.
Including here.
"The logic is remorseless" except I didn't see any logic. Comparative advantage is as incontrovertible as supply and demand. The cited statistics don't say anything one way or the other, as they don't account for any of the other variables. At least you are honest enough to admit that you are making an argument against freedom. I'll give you that.
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