With the way our politics is going, I worry about a whiplash of one administration getting us into trade deals and the next getting us out, ad infinitum, until the US is nothing but a laughingstock that no one in their right mind would do any deal at all with.
As you mentioned, economists were all for foreign trade, comparative advantage was everything. Then important parts of America were ravaged by the China shock, causing the rise of anti democratic forces. This last requires a political response. Until this response gets things back in order the economists must be in service to the political needs of defending American democracy. Economic insight without political insight is dangerous to the survival of our country.
The US has the advantage that it's huge and very wealthy and everybody will always want to do a deal with you however much you flip-flop on trade. Spare a thought for us in the UK though, who really cannot afford to be engaging in the sort of 'Mouse that Roared' crap that saw us leave the EU.
I remember Sir James Goldsmith had a very out of the box proposal that I thought sounded interesting. It was decades ago so this is very big picture, and possibly wrong. But the general idea was that all the developed countries should create a 100% free trade zone, and put up essentially impenetrable trade barriers against all manufacturing from the rest of the world. that means essentially no real competition on the basis of environment and wages, but still plenty of competition in the vast developed market. Emerging markets would be free to deal with the free trade zone as they prefer. they can erect 100% tariffs in the hope that they develop homegrown champions. Or they can keep markets open and benefit from the productivity and lifestyle improvements from more technologically advanced products. Then, and this is where it gets fuzzy, there needed to be huge transfers of wealth to developing countries, who should all be following their own development models. Not sure how the wealth transfers would work, and who doled it out. but the basic idea was to speed up their development and reduce the wage difference to the point where these countries could be admitted to the DM free trade zone.
The whole idea was to ease into free trade for all, recognize that initially we're on vastly different playing fields and give everyone more time to adjust. Anyway, it will never happen, would have had major foreign policy implications and lots of unanticipated economic side effects too. But I thought it was an interesting approach to at least ponder.
We have a conflation of events happening. US washing machine manufacturer closes factory in the US to make washing machines in China cheaper. American consumers may benefit from a lower cost machine but local factory workers are out of a job. The emotion of this issue, cheaper product for American consumers to buy vs workers losing jobs is the crux of the issue.
Americas problem is that it is not competitive in manufacturing in certain areas.. For example, the Detroit 3 automakers a few years ago told American that they would no longer sell sedans. Ceding that market to foreign makers. The reason? American car manufacturers cannot make a $25,000 car profitably.
They can make money selling trucks and SUV’s but not anything resembling a Corolla.
Biden with his push using the power of the State to force Americans to buy an EV has set the big 3 on a path to destruction. They will not be able to make an EV for $25,000 that is profitable and certainly not with the new contracts.
Legacy costs, Union benefits, environmental issues all conspire against making steel here. If you are building a skyscraper and you can buy steel cheaper somewhere else you do so. Steel is a commodity. It is nothing special. NUCOR does well cause it uses scrap metal and a particular production technique. USS is an anachronism.
Japan is our friend, someone we’ll need as a fulcrum against the hegemony of China....Japan buying USS would be no different than Canada buying USS. Would be feel the same way or is it pure bigotry?
I agree that the loss of IPEF trade components and opposition to Nippon Steel are both bad for the US and its partners, but disagree that this is all the fault of Trump. The only one to blame is Biden being too feeble and pandering to go against the unions and progressives who oppose any trade or globalization. Obama and Biden could have removed the bad IP provisions of the TPP but didn’t seem to really want to work too hard to get it approved when they had the chance. Trump is bad on trade, Biden is barely better.
An important thing about capitalism is that crappy companies must die. Government intervention to prop them up should only happen with strings attached to make them uncrappy or exempt from future subsidies or favors. See “GM”.
Maybe this is off topic, but is there anything that the governments of the US and other Free World countries could do to make it easier for their _consumers_ to find non-Chinese goods, either online or in bricks-and-mortar stores?
I suspect many Western consumers would happily pay more for alternatives to "made in China" goods, if only they knew where to find them!
Maybe the West needs to learn from India, given how often India shows up when I search for stuff about boycotting China? Or perhaps Western governments need to encourage their corporations to make India (whose population now exceeds China's IIRC) into a "Factory of Democracy"?
If I recall correctly, there was huge furor on reddit over the copyright extension provisions of the TPP, which were seen as an attempt to get ACTA in another form. I never hear about this when I read writeups on why TPP failed to be ratified, which is weird, because it seemed center of mind at the time. Am I overestimating the importance of the internet people?
I'm just here to object to the weird American neologism where factory workers are "middle class". Sorry, but apart from senior management you're not going to find many middle class jobs in a factory.
And that's fine, we have to stop pretending that everyone is, or needs to be, middle class.
“The global chips industry is poised to almost double in size by 2030 with revenues passing the $1 trillion mark, consultancy McKinsey forecasts. As a unique supplier to this industry, there’s no doubt that ASML will grow too.”
Going forward, I think ASML will build new facilities in other countries with business-friendly governments. With chip production doubling in the next 5-6 years, it makes more sense to geographically diversify manufacturing and corporate training campuses.
This was a great read as usual. A couple of questions/comments. I've been looking into several startups/existing industries that are wanting to decarbonize. Green steel is on the move. So it makes sense. Aside from the paradigm of the fighting the Chinese juggernaut (I know you don't buy into it). Diversification is just good for business and the global economy. I'm surprised the US isn't looking more closely at Canada, Mexico and South America as a block for untapped potential. I entirely agree with strengthening ties, collaboration, partnerships, statecraft. Particularly, Vietnam, Indonesia, new Zealand, & Australia. With labor shortages still occurring and a shift in industrial/healthcare/service jobs the fear seems unwarranted. Actually it seems like a growth opportunity. A peons two cents. ;-D
It's my understanding that the reason the horrible intellectual property provisions were removed from the TPP after the US withdrew was the US was the one that introduced them and insisted on them. I think arguing they could have been removed by us does not make a lot of sense to me
With the way our politics is going, I worry about a whiplash of one administration getting us into trade deals and the next getting us out, ad infinitum, until the US is nothing but a laughingstock that no one in their right mind would do any deal at all with.
Great Article
Get the damned agreements signed.
Or we are doomed
Im speaking as a Canadian.
As you mentioned, economists were all for foreign trade, comparative advantage was everything. Then important parts of America were ravaged by the China shock, causing the rise of anti democratic forces. This last requires a political response. Until this response gets things back in order the economists must be in service to the political needs of defending American democracy. Economic insight without political insight is dangerous to the survival of our country.
The US has the advantage that it's huge and very wealthy and everybody will always want to do a deal with you however much you flip-flop on trade. Spare a thought for us in the UK though, who really cannot afford to be engaging in the sort of 'Mouse that Roared' crap that saw us leave the EU.
I remember Sir James Goldsmith had a very out of the box proposal that I thought sounded interesting. It was decades ago so this is very big picture, and possibly wrong. But the general idea was that all the developed countries should create a 100% free trade zone, and put up essentially impenetrable trade barriers against all manufacturing from the rest of the world. that means essentially no real competition on the basis of environment and wages, but still plenty of competition in the vast developed market. Emerging markets would be free to deal with the free trade zone as they prefer. they can erect 100% tariffs in the hope that they develop homegrown champions. Or they can keep markets open and benefit from the productivity and lifestyle improvements from more technologically advanced products. Then, and this is where it gets fuzzy, there needed to be huge transfers of wealth to developing countries, who should all be following their own development models. Not sure how the wealth transfers would work, and who doled it out. but the basic idea was to speed up their development and reduce the wage difference to the point where these countries could be admitted to the DM free trade zone.
The whole idea was to ease into free trade for all, recognize that initially we're on vastly different playing fields and give everyone more time to adjust. Anyway, it will never happen, would have had major foreign policy implications and lots of unanticipated economic side effects too. But I thought it was an interesting approach to at least ponder.
We have a conflation of events happening. US washing machine manufacturer closes factory in the US to make washing machines in China cheaper. American consumers may benefit from a lower cost machine but local factory workers are out of a job. The emotion of this issue, cheaper product for American consumers to buy vs workers losing jobs is the crux of the issue.
Americas problem is that it is not competitive in manufacturing in certain areas.. For example, the Detroit 3 automakers a few years ago told American that they would no longer sell sedans. Ceding that market to foreign makers. The reason? American car manufacturers cannot make a $25,000 car profitably.
They can make money selling trucks and SUV’s but not anything resembling a Corolla.
Biden with his push using the power of the State to force Americans to buy an EV has set the big 3 on a path to destruction. They will not be able to make an EV for $25,000 that is profitable and certainly not with the new contracts.
Legacy costs, Union benefits, environmental issues all conspire against making steel here. If you are building a skyscraper and you can buy steel cheaper somewhere else you do so. Steel is a commodity. It is nothing special. NUCOR does well cause it uses scrap metal and a particular production technique. USS is an anachronism.
Japan is our friend, someone we’ll need as a fulcrum against the hegemony of China....Japan buying USS would be no different than Canada buying USS. Would be feel the same way or is it pure bigotry?
You decide.
I agree that the loss of IPEF trade components and opposition to Nippon Steel are both bad for the US and its partners, but disagree that this is all the fault of Trump. The only one to blame is Biden being too feeble and pandering to go against the unions and progressives who oppose any trade or globalization. Obama and Biden could have removed the bad IP provisions of the TPP but didn’t seem to really want to work too hard to get it approved when they had the chance. Trump is bad on trade, Biden is barely better.
The Autor, Dorn, and Hanson paper that is linked says:
"Developing effective tools for managing and mitigating the costs of trade adjustment
should be high on the agenda for policymakers and applied economists."
What does that mean?
An important thing about capitalism is that crappy companies must die. Government intervention to prop them up should only happen with strings attached to make them uncrappy or exempt from future subsidies or favors. See “GM”.
Maybe this is off topic, but is there anything that the governments of the US and other Free World countries could do to make it easier for their _consumers_ to find non-Chinese goods, either online or in bricks-and-mortar stores?
I suspect many Western consumers would happily pay more for alternatives to "made in China" goods, if only they knew where to find them!
Maybe the West needs to learn from India, given how often India shows up when I search for stuff about boycotting China? Or perhaps Western governments need to encourage their corporations to make India (whose population now exceeds China's IIRC) into a "Factory of Democracy"?
If I recall correctly, there was huge furor on reddit over the copyright extension provisions of the TPP, which were seen as an attempt to get ACTA in another form. I never hear about this when I read writeups on why TPP failed to be ratified, which is weird, because it seemed center of mind at the time. Am I overestimating the importance of the internet people?
I'm just here to object to the weird American neologism where factory workers are "middle class". Sorry, but apart from senior management you're not going to find many middle class jobs in a factory.
And that's fine, we have to stop pretending that everyone is, or needs to be, middle class.
Samsung Predicts 10-fold Increase in Profits
https://www.marketwatch.com/story/samsung-predicts-10-fold-increase-in-profits-as-ai-boom-sees-chip-prices-recover-6a214259
https://www.politico.eu/article/the-netherlands-business-asml-technology-election-geert-wilders/
“The global chips industry is poised to almost double in size by 2030 with revenues passing the $1 trillion mark, consultancy McKinsey forecasts. As a unique supplier to this industry, there’s no doubt that ASML will grow too.”
Going forward, I think ASML will build new facilities in other countries with business-friendly governments. With chip production doubling in the next 5-6 years, it makes more sense to geographically diversify manufacturing and corporate training campuses.
This was a great read as usual. A couple of questions/comments. I've been looking into several startups/existing industries that are wanting to decarbonize. Green steel is on the move. So it makes sense. Aside from the paradigm of the fighting the Chinese juggernaut (I know you don't buy into it). Diversification is just good for business and the global economy. I'm surprised the US isn't looking more closely at Canada, Mexico and South America as a block for untapped potential. I entirely agree with strengthening ties, collaboration, partnerships, statecraft. Particularly, Vietnam, Indonesia, new Zealand, & Australia. With labor shortages still occurring and a shift in industrial/healthcare/service jobs the fear seems unwarranted. Actually it seems like a growth opportunity. A peons two cents. ;-D
It's my understanding that the reason the horrible intellectual property provisions were removed from the TPP after the US withdrew was the US was the one that introduced them and insisted on them. I think arguing they could have been removed by us does not make a lot of sense to me