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hardnox
Advisor

Of course you are aware

that if the US goes full protectionist and thus forces wages substantially higher then the rush to automate virtually all the manufacturing jobs will explode. That assumes that the Free Market is left to function.

 

It is the same theory as the one that says that if you raise the minimum wage sharply you'll have many fewer of those jobs. The fallacy is to think that would only happen to Those People, burger flippers and the like, and not people who consider themselves as above that level (even if the last good job they had was 20 years ago, it is human nature to always think of yourself as that).

 

You can, I guess, go Luddite and forbid such things?

 

That's not intended as an argument for or against, just a question of, so what then?

 

The direct substitution of labor doesn't compare perfectly, but equally true of farming, where the technology has nearly reached the point where the most efficient arrangement would be 50-100K acre autonomously directed operations.

 

The only real obstacle to that is the need to have a few Family Farmers in overalls in order to keep the unique government safety net in place.

 

Of maybe the genetics and fertilizer oligopolies, the equipment manufacturers, the landowners are a sufficient lobby to sustain it.

5 Replies
hardnox
Advisor

Re: Of course you are aware

BTW, thinking about this logically, if you're a company that is forced to move production back to the US then you are going to rebuild with the highest level of technology that is available. From Day 1 there will never be the number of jobs that left or got left behind.

 

Initially the biggest limitation might be the capacity of the companies building the technologies. And there would be a huge and temporary boom in that sector but same 'ol- a few good jobs for very high skilled people, little for wrench turners.

Canuck_2
Senior Contributor

Re: Of course you are aware

And then there would be the return favour from other countries that would slam their borders to imports from the USA.

 

Isn't that one of the factors that led to the financial troubles in the 1930ies, protection politics?

BA Deere
Honored Advisor

Re: Of course you are aware

The US runs a $700 Billion trade DEFICIT with other countries...Pi$$ on `em  No matter how you guys spin it $700 Billion trade defict, Pi$$ on `em!   It`s gone to hell so bad that we ain`t got anything to lose.

hardnox
Advisor

Re: Of course you are aware

Just for the sake of accuracy, closer to $500B in recent years- $700B would be more back in the Bush years although a portion of that was due to oil prices/production.

 

Although El Donaldo aficionados are also certain that we have 50 million unemployed (apparently his economic team reads Zero Hedge), 80% of the murders of whites are committed by "the blacks" and there are 40 million illegals running around our country.

 

I'm not in the least bit opposed to revisiting some of our trade policies on a rational basis. But as you know, when somebody says "can't get any worse, do something" is when I click it off.

 

BTW and speaking of Zero Hedge, one of their continuous panic points is about how the $ is going to lose status as the reserve currency. Well, you can't have the reserve currency without a trade deficit because you won't have the float and a extreme protectioist move is likley to make the $ roarin' hot as the float gets cut and all foreign entities that have borrowed in dollars get short squeezed.

 

There's a lot of confidence that A Winner with The Smartest People around him can figure out all these troublesome matters. One of my problems is I'm not sure how much of a winner he is and I'm certain that Kudlow and Moore aren't brilliant.

hardnox
Advisor

Re: Of course you are aware

The convnetional economic view is that as far as the cause of the depression thing goes, that's more urban legend than not.

 

But there are some bilateral costs to protectionism and certain industries like agriculture (particularly the pork and poultry sectors) and grain as a second or third order effect, will feel it.

 

One of the driving factors toward greenlighting our indistrial livestock sector was that we had to be competitive in the global market. Other countries can do that too, with lower labor costs and even less regulation.