I actually followed that really clearly thanks to your cogent explanations. Wonksh perhaps, but the tie-ins to politics and affected communities brought it off the Econ textbook and into the real world.
Try again. I’m no economist but I live in the state that lost the furniture manufacturing and for that matter our weaving mills. The two things aren’t connected except for the effect they had.
My grandfather supported a wife and 5 kids and bought a house on his salary as a steel mill worker in a nearby state. It’s now a depressed area and has been for decades because the steel mill closed.
(Trump is gonna mess around and lose us the exports we have - except for our best lumber, which I wouldn’t mind keeping as trees - but I digress).
I learn by observing. Never finished college. As an art dealer I traveled across the country on the road for a month with the collection. As I drove through Ohio, Indiana I saw the devastation of closed factories. I stayed at an Airbnb in Richmond. It is a beautiful ornate house. I expected the owner to tell me the value of the house around half a million and this was late 1990s. It reminded me of the Mark Twain house in Hartford where I live. He told me about $125,000. So I understood industries being wiped out.I understood what NAFTA did to the rust belt. I understood how working class white communities could turn to the wrong party to support. I understood a lot on the 30 day trip. Btw, I camped usually at camp sites and used a mini stove to make me dinners. I bought my Stetson in Butte. I awoke at the local camp site to a cow staring at me. Enjoyed a rodeo with Montana folks on a Saturday night. A local friend once asked me where I wanted to move to and I listed Montana as one place. He then asked me how could I live around all those republicans and I told him that they would be my neighbors that’s how.
Let me dispel your Montana vision with reality. The $125,000 house is now worth $5 million, best to sell your art collection before you come for top dollar and bring cash, Stetsons still mark a dude, the conservative live and let live Republicans of the 90’s have been replaced with MAGA trans bathroom obsessed culture warriors, homelessness is a problem in everywhere, workforce housing is nonexistent, Yellowstone is still a river but Yellowstone Club the real estate development is a locked multi thousand acre community for elites and the economics of “Yellowstone” the series has inspired a Montana vision that never did exist. And it’s further stomping out of any remnants of the “hard scramble way of life” lived not because it was romantic nor made you a billionaire but rather it is what you grew up with taking care for yourself, your family, land and community.
Yes as a native Republican Montanan(Republicans left me politically decades ago) I like the present economics over the past but the purple state of the past is now the red state of the future brought on by the national divisions forced down politically to the local level. The Anaconda mining interests of 1890’s have been replaced by the Koch brothers of the 1990’s. The legislature has spend over $10 million in legal fees defending laws to overturn the most private rights and environmentally progressive 1972 Montana Constitution(thankfully without success), increased property taxes for home owners, decreased taxes on incomes over 400K and under funded the education system. It’s still a great place to live but most likely so is where you live as the grass in not any greener in this pasture.
“A local friend once asked me where I wanted to move to and I listed Montana as one place. He then asked me how could I live around all those republicans and I told him that they would be my neighbors that’s how.”
I addressed Montana and the reality that Republicans and the Republican party of the 80,90,2000 are not the MAGAs of today and Montana has become an expensive playground with all the problems of the nation with none of the governances in place to address the influx of people or their politics. Further MAGA is no help nor or Yellowstone tv visions.
Furniture and textiles was the Carolinas. The Rust Belt boomed after NAFTA because oil was cheap and we had an SUV boom. Just check out Ford Explorer sales figure in the 1990s and if you know anything about the auto industry the numbers are mind boggling because compared to cars made now the SUVs in the 1990s were crappy and needed to be replaced more frequently. I think NAFTA is blamed for several things unrelated to free trade—health insurance and several major technological innovations. So have you followed the US Steel saga?? The company that will potentially buy it is the company that developed mini mill technology that bankrupted Big Steel. So if you are interested in history check out, “Youngstown Black Monday” that happened in 1977 long before NAFTA and the China Shock and Volcker etc.
Edit—technological advancements did Youngstown in although it might not have been Nucor specifically which definitely was a factor in Bethlehem Steel…but the reason the Youngstown factory wasn’t updated was because of the “era of conglomerates” which I came across watch the TV show about how The Godfather was made and conglomerates are just the dumbest thing ever invented.
The main reason why the US steel industry has declined so much since 1970 wasn't foreign competition (the US even now produces about twice as much steel as it imports, and most imports are from Canada and Mexico), unions or bad management (both temporary issues largely solved by the 1990s): it was simply lack of demand.
The rise of mini-mills was part of that, they are much cheaper than traditional steel mills because they have the much simpler function of recycling scrap steel rather than producing new steel from ore.
Most steel production is now in China because most steel CONSUMPTION is now in China, as they embarked on a gargantuan construction spree building new cities, factories and high-speed rail lines.
If Americans want someone to blame for the decline of their steel industry, perhaps they need to be looking at the NIMBYs?
The Nucor CEO was really excited about Trump’s tariffs the first time around…so the company that bankrupted Big Steel now profits from tariffs people in Bethlehem, PA think we bring back their jobs. Btw, cheap steal makes construction cheaper and so there should be no tariffs and the federal government should just subsidize enough steel production capacity to be able to ramp up when necessary. Plus we could have a strategic reserve in Arizona like we have the Strategic Petroleum Reserve. Lastly, the dumbest thing Democrats ever did was prevent Trump from filling up the SPR in 2020 when oil was cheap…that was a factor in Kamala losing because gasoline prices were a factor in her loss.
Good explanation! It shows the complexity of trade. Trump and his enabler need simple solution as they so Not understand complexity.
One strange point I would Like to understand, why do MAGA's believe that other countries steal their wealth? 4% of worlds Population owns nearly 40% of global Assets!!!
Remember during the campaign Vance said at some rally (I paraphrase), "If immigration created wealth, the US would be the richest country in the world." He - a Yale law grad - said this unironically and with apparent zero realization that the US "is" the richest country in the world. They don't know what they don't know.
The MAGATs I know down here in the South have a zero sum mentality. Most really can’t believe anything is win-win, except maybe among people they see as their own community. In their worldview if “those people” are getting ahead it’s something is being taken from people like themselves.
I have known some of these people since we were young — in the 1960s — and most had that mindset back then. It makes them easy prey for fear mongering, something our Chicken Little media is addicted to.
On a thumbnail, what he is saying is that cheap Chinese goods accrue to our benefit. The way to respond is not with a tariff policy that is too high and un-targeted, alienating friend and for alike.
Internally in the US, cheap Chinese imports normally only hurt a very specific industry, often in a very specific geographic area. In the past, the furniture industry in North Carolina (also Grand Rapids, MI and Gardner, MA). That impact is devastating.
Alas, the US lets winners keep windfall profits and does not aide hard hit areas (Rust Belt). Trump did respond with huge subsidies when China targeted farmers, driving down their revenues.m, adding to the deficit along with billionaire tax breaks.
All roads lead back to income and wealth inequality in the US. If we taxed wealth and windfall profits (like we did from the 1940s through the 1970s) we could both benefit from low-cost imports and have the internal financial resources to take care of those financially and socially dislocated.
This is not a hard sell. It’s hard to implement because the wealthy own all three branches of government and the GOP keeps pretending social programs are responsible for the Nation’s Debt, expecting it can force cuts to government spending.
Bernie was right, but he looked crazy with the pointed-finger rants. We need Mr. Rogers making everyone comfortable with the truth and the solution.
“This is not a hard sell. It’s hard to implement because the wealthy own all three branches of government and the GOP keeps pretending social programs are responsible for the Nation’s Debt, expecting it can force cuts to government spending.”
I think that this *is* a hard sell. Most people admire wealth and despise poverty.
Most people, 90% +, would benefit from a more rational tax policy. I find it illustrative that our representatives and most media personalities live extremely well.
We should admire wealth creation, it’s the distribution system that is wholly out of balance.
If 10 coworkers order a pizza and 5 were told to share a sliver equal to about 4% of the pie, 1 took 90% of it, and the other 4 told they could share the rest what would the reaction be? Would they “admire” that distribution?
I don’t think so.
By the way, that distribution is more equitable than wealth distribution in the US.
So, is it’s a zero sum game? “Lose your own” . . . What does that mean? Is the tax code a law of nature or a human construct? Were effective maximum tax rates during a time that the GOP refers to America Being Great, being over twice they are now, good, bad or indifferent? If we are to Make America Great Again shouldn’t we return to those higher rates? Were changes to estate taxes and other shelters that tax wage income but not wealth somehow not dictating winners and losers?
Graph the percentage change in wealth and it is clear the country is becoming dramatically less equitable and extreme wealth concentration is spiking. That’s a fact. The “fairness” is an opinion and if 90% of the country wants to concede it’s fair, so be it. I just think they need to understand historical facts that seem to be obscured despite simple graphs capable of providing that epiphany.
Maybe China isn't a capitalist (capitalust) economy and communism with Chinese characteristics is the new world order that through this will come to be dominant?
The Chinese economy is run to deliberately encourage overproduction of industrial capacity (because it's far better to have more industrial capacity and not need it, than to need more industrial capacity and not have it), much like essentially all rich countries deliberately over-produce food (for the same reason) by subsidizing farmers.
And Chinese subsidies are distributed via local governments so as to encourage competition internally: it is a big enough country (as the US would be) that it doesn't need to concentrate (as South Korea does) on just a few "national champion" firms.
There's only one branch of government now; The "unitary executive," and he owns Congress (see Mike Turner's ouster by a compliant Mike Johnson), and SCOTUS, which is a wholly owned subsidiary of the Trumpian Party.
The government's goal should be to keep people busy while providing food, clothes, shelter, and healthcare. If the Chinese make too much stuff, they should recycle it and make something else. They could build more high-rise apartments or maybe a pyramid. The goal should be to create enough stress and fear so that people will cooperate, but not so much that they can't relax and enjoy their families and neighbors.
We have bar codes, computers, statistics, and AI. The world has enough resources for everybody if we would stop playing "who's got the bigger penis (money is a symbol)" games and grow up.
I listened to the UnitedHealth Group investor meeting this morning. It was total public relations BS with some numbers thrown in. Oh, and they honored Brian. By the time they were nearing the end of the meeting, I was watching a video of a monkey taking a shower on Facebook. He was really smart and funny.
Of course it is about inequality. But I get really sad. A bunch of working-class whites are being convinced to vote against themselves. Red states are growing populations because their economies are so bad. So no jobs. So the land and housing is cheap. They depend on the Feds and entitlements and then vote for oligarchy. These are NOT the actions of people acting from purely economic motives. On the left when we pretend this is strictly a need to rant about the rich, THAT is liberal socialist racism.
This is one of my adult children’s situation. Lives in a red state where military spouse is retired and has the bulk of income and benefits. Housing is cheap there. But they work for $12 an hour and their HS grad child can’t find a job. So basically government veteran benefits provide the bulk of their income.
I would argue North Carolina has been a top 5 economy since the 1990s and so globalization has been very good for North Carolina. Just think about it in terms of sports teams—it went from minor leagues/college sports to major leagues beginning in the 1990s!
Check out my comment—basically North Carolina has been the state most negatively impacted by globalization and yet it’s had a top 5 economy since the 1990s. And exporting cigarettes to China was supposed to lead to a boom in North Carolina and Big Tobacco’s last hurrah was 2000 and Bush and that didn’t work out.
Lots of Americans believe things that are arithmetically impossible, whether because they can't or won't do the arithmetic, or don't care about arithmetic consistency.
The reason tariffs work politically is not because they'll actually work, but they are a simple coherent story. USA good, China bad, China will pay our taxes for us.
I always appreciate the wonk, but this isn't budging any big tariff proponent.
I don't think the good professor thinks that his columns are going to change Republican minds. He's merely trying to keep the sane amongst us informed of what is going on.
To some people the “explain it to me as if I was in elementary school” argument, is the only way it works, and sometimes lying, misleading and misinforming about it is the best solution, even if it’s not true.
Everybody wants to believe they fully understand the intricacies of brain surgery in one simple argument, when it took them a lifetime to connect cigarette smoking with cancer
Social Security can and does work. It needs approximately the infusion of another Gulf war's worth of investment. The alternatives are bleak. GW Bush tried to privatize it (that was a lark), and if you think the homeless situation is bad now, just wait until we pull out SS. Nearly a third of Americans rely on SS to live in their dotage.
I'm not saying we don't need reform. Tax cuts don't imply that SS doesn't work.
It's a Ponzi scheme that only works with increasing demographics. We voted against Social Security when we collectively decided not to have a lot of kids.
Like in many ways but far from "is". Social Security is like a Ponzi scheme in that it relies on contributions from newer participants to fund payouts to earlier ones, creating potential sustainability challenges if the base of contributors shrinks, as you say. However, Social Security is a transparent, legal program designed as a social safety net rather than an investment, with benefits determined by established formulas rather than promises of profit. After having paid into the "scheme" for my life, granted, it's hard not to think of it as an investment (speaking for myself here - I get that idea when making the Ponzi comparison.)
Fundamentally, Ponzi schemes are fraudulent and unsustainable. Social Security, on the other hand, is backed by the government's authority and has mechanisms for reform, such as adjusting tax rates or benefits to address demographic changes. Its primary goal is to provide financial security for retirees, people with disabilities, and survivors, reflecting a social contract rather than an exploitative system. The alternatives to not performing this social contract are bleak.
I'm open to alternatives, but we need to make good on the commitment we signed on to when we created the system to get there. It's kind of like (not is) Healthcare reform. The most significant difference is that we don't have a private insurance market driving care for our elderly.
I appreciate metaphor but would like to stick to simile when it comes to a program like Social Security, where many people end up by design or misfortune in their dotage.
Thanks for getting back here - this is important stuff,
I have no doubts it imploding will be hellish but there just isn’t growth to keep it going. The idea that it will continue is completely delusional. We should be preparing for it to end not pretending we can patch it and crushing the rest of the economy.
As GGP said: politicians love telling their constitutions everything is going to be ok right up until guillotines come out because there’s no incentive to solve the problems.
If it were possible for it to work then whatever strategy they use could be used by private retirements. There’s no arbitrage here, just nice sounding lies.
It's the tax cuts that have made SS apparently unsustainable. Don't buy the bait and switch. We can take care of our elderly just fine if we fund appropriately - ie restore the tax cuts.
Are you willing to go through that hell? It is avoidable. Are the tax cuts that vital?
With America transitioning into an economic zone from an actual nation there’s also nothing to keep productive people here. If it got any more expensive to live here you’d see competent people fleeing (this is already starting.) You’re wishing the pyramid scheme worked out. Everyone knew it wouldn’t. Now the question is: do we take the remainder of the country with it or just let it die?
Are you predicting that if Trump goes ahead with his high tariffs they will work politically ? Are you sure you want to do that ? I get the point you are making. Some people reason from experience. Others from belief. And some can not be swayed by reason at all. I would agree that big tariff proponents should be placed in that category.
My belief ? Tariffs against our major trading partners on the order Trump is talking about will give America a heart attack. In his previous post about this, Prof. K inserted a quasi Laffer set of curves for tariffs that suggested the tipping point for marginal revenue gains in some general sense could be expected to be around 50%. Figures lie and liars figure. My senses tell me that is way too optimistic. In fact, I don’t see a 50% tariff on Chinese imports bringing in any net revenue at all. Nor a 35% one for that matter. I see them as bringing trade with China to a halt. And relying for the time being on the assumption that a rational man is presumed to intend the reasonably foreseeable consequences of his actions, I have concluded that this must be Trump’s intention. For Trump was an honorable man, and a wise one. And he knows what he is doing. On some level. In short, much of this discussion, like Krugman’s post, for sake of argument, presumes many facts not in evidence. These proposed tariffs are not intended as revenue measures. They are killers….deadly weapons for use in a trade war he is about to start. And since they will do at least as much harm to America as it will to its enemies…..whoever they are…..I am forced to conclude that djt aims to destroy America.
For the time being, there may be some who believe what he is saying, or for some reason do not feel free to dispute it. But in time we will come to find out how popular his trade policy becomes. Prof. K is only hinting at how bad this will be.
Excellent article and great explanations. It’s a shame that mostly lawyers run for political office. Wouldn’t it be nice if a good economist would threw his/her hat in the ring once in a while? Lawyers make lousy economists and it usually shows. Harris and Obama were terrible at disseminating economic reports. Biden was a complete “no-show!”
Our problem isn’t trade deficits, it’s macro economic policies, that view our economy as a national issue, not a local one (ie. National unemployment stats). We need better micro economic targeting when we lose manufacturing jobs, or any jobs, as automation will replace millions of manufacturing jobs in the next decade; like it or not!
And agreed, most industries adopt an area for growth. Silicon Valley draws tech firms. North Carolina was a furniture hub, as the Mid-West is an automotive manufacturing powerhouse.
However, we never really promote business initiatives from a local prospective. When we sign trade deals, we need to understand where the biggest job losses will occur, and plan accordingly, so we can attract other businesses to the area, which already has a highly skilled workforce.
And education is the key. To attract jobs, we need an educated and productive workforce. For far too long, our education system as a whole has been on the decline. We spend more, but get fewer positive outcomes. Musk and other billionaires would rather we outsource our jobs to foreigners. Don’t get me wrong; we have over 6 million jobs that Americans don’t have the skill set to fill. This creates slack in the economy, as we are not running g an efficient or productive economy, with so many highly skilled jobs available; which creates an additional 5-7 jobs for every skilled worker hired. My point, billionaires don’t want to invest in our education, which means we will always need outside help, and this is a detriment to our future generations.
That said, can debate the issue of education all day long, but if we are to adapt to the technology economy that will eventually cost millions of manufacturing jobs, regardless of skill set (automation), we need a workforce skilled enough to compete with the new generation of jobs, available in an automated American economy.
Workforces don't drive competitive advantage without infrastructure and intellectual property rights. The Chinese are currently positioned, by intent, policy, execution, and some covert actions, to outproduce all but the most adept. To out America's problem as a workforce problem is not productive.
We need a coherent state-backed infrastructure - like China has and is doing, guided by a protective IP policy to drive our AI advantages into the marketplace. Sure, we need education and workforce training, but that isn't the competitive advantage of America.
If I were pushed to name the American competitive advantage, it would be unfettered capitalism. Historically, it was freedom.
Tim, I’m not just equating it to only be a workforce problem. Many of the issues are mutually exclusive. And I agree, infrastructure is key, and needs to be addressed; although, much of it has been as a result of the infrastructure and CHIPs Act which passed a few years back. Granted, to your point, more still needs to be done!
That said, without a strong, educated workforce, it’s a moot point!
Fair enough; thanks for taking the time to respond.
STEM education is broken. Corporate America has sloughed that off; to be fair, we have sloughed healthcare off on corporate America. Unfortunately, higher education (including community colleges) and corporate America are sloughing. America is left holding the bag in oppressive student loans that aren't productive to the changing marketplace.
Contemporary worker (and investor at the same time, because an act of choosin jobs, activities, education, professions (callings, as for politicians), also needs some investment-like solutions) should know Law, ancient people treated Law as a science, Medieval ended with the finding of Justinian's Digests, Gaus created a system of elements, just like Mendeleev, Kant thought: "Law goes just from Reason", lawyers name states "law orders", Law is more systematic science than Economics (that still needs to become a system of elements, like chemistry and Law (civil).
Could you explain why imports and investments need to balance? Is that balance in accounting terms? I’m interested in understanding economically how that works. Thank you for these wonderful essays.
Thank you very much for this comment: "in practice, the winners don’t compensate the losers." In the 300 or so years of our diligent effort to become more efficient, we have thrown generations of workers out of work. Seldom has society reimbursed those workers for their losses. And a question: will we ever be able to have an economy that doesn't have a lot of people working much harder than others for a lot less income?
There’s actually a lot of job training available in the United States. Look at community colleges. The problem is that job training, while a worthy goal, is limited in actual practice as to its effectiveness. For one thing, the reality is many workers have aged out of the optimal age to start new careers. And even younger workers in many cases aren’t willing or able to undertake the relocation that is often necessary. Job training can be part of the solution, provided we recognize its significant limitations. It’s not a panacea.
Or they received job training, but the new job was in an industry that soon imploded because of advances in technology. So then they go through another round of training. The cycle continues ad nauseam and they never achieve stability.
Paul Krugman I see you live in Manhattan yes? Come on down to The People’s March on Centre Street on Saturday and say hello. I’ll have a guitar on my shoulders, lol. It ends in Washington Square Park with more of the same.
In the Netherlands the HQ of ABP (pensions of gov. personal) was moved from Den Haag to Heerlen to compensate for the loss of the mining industry. Maastricht, in same region, got an university. The former, state owned, mines (DSM) transformed into petro chemical industry. This might not have been enough. People did fall through the cracks, but it did help the local economy and prevented social breakdown.
Yes. he's stuck in the 18th century. Not, of course, in 1776, when Adam Smith pretty much invented economics as a serious study (quickly expanded and improved, of course, by others, as necessarily happens in the post-Gutenberg world) - no, the earlier time when Mercantilism ruled because it was so simple and intuitively obvious to the ruling class.
Great intro to international finance, however the policy recommendations seem kinda weak and steer right back to the bad place we are headed with the FFOTUS. Just how would tariffs fix anything? Wouldn’t it be more effective to deal with the localized disruptions/displacements with financial assistance, retraining, relocation (god forbid!)?
There's a lot here I don't quite understand. I'm not an economist, obviously.
According to Google AI, "According to the 2000 census, the Hickory-Lenoir-Morganton metropolitan area had a population of 341,851, and as of recent estimates, the population has grown to around 370,000, showing a positive population change since 2000; this represents a significant increase in population within the area."
I don't understand how this population has grown in the face of such an adverse effects from the loss of so much of its primary employment.
The author presents a graph showing a declining level of Chinese currency versus a weighted basket of Western currencies since 2022. but when I look at the Yuan-US dollar exchange rate since 1985 (https://www.macrotrends.net/2575/us-dollar-yuan-exchange-rate-historical-chart), what I see is the yuan basically pegged to the dollar since at least 2010. Perhaps I'm looking at the wrong comparison, but if not, I fail to understand how this shows a serious inflating of the Chinese currency in order to make its products more competitive abroad.
As I said, I have no real training in economics, so I defer to Prof Krugman with all due respect.
From personal experience I know that In 2014, one could buy a dollar with about six RMB. Now it requires more than seven. Also, it doesn’t seem so improbable that a metro that was buffeted by trade-related economic problems two decades ago is now on the mend, especially if it’s located in a *region* that has been growing pretty rapidly (in part due to affordability).
What I observed in my industry during the first Trump China tariffs was a move in manufacturing from China to Vietnam. Or final assembly in Philippines. No manufacturing went back to USA. It was an expensive and time consuming move and I never understood why Americans should care if something was made in China or Vietnam. And who knows what percentage was still made in China.
The period we lost jobs to China was 2002-2009…and that period had a dysfunctional economy long before the Global Financial Crisis. We’ve actually been adding manufacturing jobs since 2010 but we aren’t ever getting back to the level we had in 2000 much less 1979. Trump actually ran for president in 2000 and had he won he couldn’t have been worse than Bush. Most of what Trump focuses on are negative things that happened under Bush that Obama and Trump and Biden fixed already. Really the last thing was Afghanistan that Trump surrendered to the Taliban but Biden ended up taking the hit when Americans woke up after the pandemic.
Also, in 2018, US manufacturing accounted for 18% of GDP, today it only accounts for about 10%. Protectionism isn't the answer. Jobs are not reshoring as Trump promised. Additionally, thanks mostly to tariffs, the US now pays more for basic raw materials than any of it's western competitors. Side note: within 6 months of the start of Trump's trade war, China announced the end of its 50/50 rule and allowed Tesla to build a fully owned factory in Shanghai. Today, that factory is by far the most productive factory that Tesla operates. Musk said he was building cars in China for the Chinese, but has since started exporting those Chinese made cars all over the world. By moving to China, Tesla enjoys lower building costs, cheaper labor, cheaper and more abundant raw materials all while evading Trump's import tariffs. So I ask you, in all honestly, what good does protectionism serve?
That would be worth reading. Their industrial might isn't what it has been but if trade surplusses equalled full employment and social stability, they wouldn't have so much trouble with far right populism.
I actually followed that really clearly thanks to your cogent explanations. Wonksh perhaps, but the tie-ins to politics and affected communities brought it off the Econ textbook and into the real world.
Oh and Enya ♥️
I’m glad you did. I didn’t.
Try again. I’m no economist but I live in the state that lost the furniture manufacturing and for that matter our weaving mills. The two things aren’t connected except for the effect they had.
My grandfather supported a wife and 5 kids and bought a house on his salary as a steel mill worker in a nearby state. It’s now a depressed area and has been for decades because the steel mill closed.
(Trump is gonna mess around and lose us the exports we have - except for our best lumber, which I wouldn’t mind keeping as trees - but I digress).
I learn by observing. Never finished college. As an art dealer I traveled across the country on the road for a month with the collection. As I drove through Ohio, Indiana I saw the devastation of closed factories. I stayed at an Airbnb in Richmond. It is a beautiful ornate house. I expected the owner to tell me the value of the house around half a million and this was late 1990s. It reminded me of the Mark Twain house in Hartford where I live. He told me about $125,000. So I understood industries being wiped out.I understood what NAFTA did to the rust belt. I understood how working class white communities could turn to the wrong party to support. I understood a lot on the 30 day trip. Btw, I camped usually at camp sites and used a mini stove to make me dinners. I bought my Stetson in Butte. I awoke at the local camp site to a cow staring at me. Enjoyed a rodeo with Montana folks on a Saturday night. A local friend once asked me where I wanted to move to and I listed Montana as one place. He then asked me how could I live around all those republicans and I told him that they would be my neighbors that’s how.
My daughter lives in Montana. The neighbors’ views start to rub off on a person. Be aware.
Not necessarily. I think your views are more influenced by where you get your information. I have lots of MAGA friends. We don't talk politics.
It’s like having gay friends and not interested talking about bad man wagon. (It’s a Jamaican term look it up.)
Let me dispel your Montana vision with reality. The $125,000 house is now worth $5 million, best to sell your art collection before you come for top dollar and bring cash, Stetsons still mark a dude, the conservative live and let live Republicans of the 90’s have been replaced with MAGA trans bathroom obsessed culture warriors, homelessness is a problem in everywhere, workforce housing is nonexistent, Yellowstone is still a river but Yellowstone Club the real estate development is a locked multi thousand acre community for elites and the economics of “Yellowstone” the series has inspired a Montana vision that never did exist. And it’s further stomping out of any remnants of the “hard scramble way of life” lived not because it was romantic nor made you a billionaire but rather it is what you grew up with taking care for yourself, your family, land and community.
Yes as a native Republican Montanan(Republicans left me politically decades ago) I like the present economics over the past but the purple state of the past is now the red state of the future brought on by the national divisions forced down politically to the local level. The Anaconda mining interests of 1890’s have been replaced by the Koch brothers of the 1990’s. The legislature has spend over $10 million in legal fees defending laws to overturn the most private rights and environmentally progressive 1972 Montana Constitution(thankfully without success), increased property taxes for home owners, decreased taxes on incomes over 400K and under funded the education system. It’s still a great place to live but most likely so is where you live as the grass in not any greener in this pasture.
Accept that $125,000 house was in Richmond, Indiana not Montana unless you group all those mid west states together.
“A local friend once asked me where I wanted to move to and I listed Montana as one place. He then asked me how could I live around all those republicans and I told him that they would be my neighbors that’s how.”
I addressed Montana and the reality that Republicans and the Republican party of the 80,90,2000 are not the MAGAs of today and Montana has become an expensive playground with all the problems of the nation with none of the governances in place to address the influx of people or their politics. Further MAGA is no help nor or Yellowstone tv visions.
Furniture and textiles was the Carolinas. The Rust Belt boomed after NAFTA because oil was cheap and we had an SUV boom. Just check out Ford Explorer sales figure in the 1990s and if you know anything about the auto industry the numbers are mind boggling because compared to cars made now the SUVs in the 1990s were crappy and needed to be replaced more frequently. I think NAFTA is blamed for several things unrelated to free trade—health insurance and several major technological innovations. So have you followed the US Steel saga?? The company that will potentially buy it is the company that developed mini mill technology that bankrupted Big Steel. So if you are interested in history check out, “Youngstown Black Monday” that happened in 1977 long before NAFTA and the China Shock and Volcker etc.
Edit—technological advancements did Youngstown in although it might not have been Nucor specifically which definitely was a factor in Bethlehem Steel…but the reason the Youngstown factory wasn’t updated was because of the “era of conglomerates” which I came across watch the TV show about how The Godfather was made and conglomerates are just the dumbest thing ever invented.
The main reason why the US steel industry has declined so much since 1970 wasn't foreign competition (the US even now produces about twice as much steel as it imports, and most imports are from Canada and Mexico), unions or bad management (both temporary issues largely solved by the 1990s): it was simply lack of demand.
The rise of mini-mills was part of that, they are much cheaper than traditional steel mills because they have the much simpler function of recycling scrap steel rather than producing new steel from ore.
Most steel production is now in China because most steel CONSUMPTION is now in China, as they embarked on a gargantuan construction spree building new cities, factories and high-speed rail lines.
If Americans want someone to blame for the decline of their steel industry, perhaps they need to be looking at the NIMBYs?
The Nucor CEO was really excited about Trump’s tariffs the first time around…so the company that bankrupted Big Steel now profits from tariffs people in Bethlehem, PA think we bring back their jobs. Btw, cheap steal makes construction cheaper and so there should be no tariffs and the federal government should just subsidize enough steel production capacity to be able to ramp up when necessary. Plus we could have a strategic reserve in Arizona like we have the Strategic Petroleum Reserve. Lastly, the dumbest thing Democrats ever did was prevent Trump from filling up the SPR in 2020 when oil was cheap…that was a factor in Kamala losing because gasoline prices were a factor in her loss.
I lived there for 3 years. Stunningly beautiful if you can afford it.
Good explanation! It shows the complexity of trade. Trump and his enabler need simple solution as they so Not understand complexity.
One strange point I would Like to understand, why do MAGA's believe that other countries steal their wealth? 4% of worlds Population owns nearly 40% of global Assets!!!
Remember during the campaign Vance said at some rally (I paraphrase), "If immigration created wealth, the US would be the richest country in the world." He - a Yale law grad - said this unironically and with apparent zero realization that the US "is" the richest country in the world. They don't know what they don't know.
He knows, but that's not the party line.
"You guys said there would be no fact checking!"
The MAGATs I know down here in the South have a zero sum mentality. Most really can’t believe anything is win-win, except maybe among people they see as their own community. In their worldview if “those people” are getting ahead it’s something is being taken from people like themselves.
I have known some of these people since we were young — in the 1960s — and most had that mindset back then. It makes them easy prey for fear mongering, something our Chicken Little media is addicted to.
Another good post by Krugman.
On a thumbnail, what he is saying is that cheap Chinese goods accrue to our benefit. The way to respond is not with a tariff policy that is too high and un-targeted, alienating friend and for alike.
Internally in the US, cheap Chinese imports normally only hurt a very specific industry, often in a very specific geographic area. In the past, the furniture industry in North Carolina (also Grand Rapids, MI and Gardner, MA). That impact is devastating.
Alas, the US lets winners keep windfall profits and does not aide hard hit areas (Rust Belt). Trump did respond with huge subsidies when China targeted farmers, driving down their revenues.m, adding to the deficit along with billionaire tax breaks.
All roads lead back to income and wealth inequality in the US. If we taxed wealth and windfall profits (like we did from the 1940s through the 1970s) we could both benefit from low-cost imports and have the internal financial resources to take care of those financially and socially dislocated.
This is not a hard sell. It’s hard to implement because the wealthy own all three branches of government and the GOP keeps pretending social programs are responsible for the Nation’s Debt, expecting it can force cuts to government spending.
Bernie was right, but he looked crazy with the pointed-finger rants. We need Mr. Rogers making everyone comfortable with the truth and the solution.
“This is not a hard sell. It’s hard to implement because the wealthy own all three branches of government and the GOP keeps pretending social programs are responsible for the Nation’s Debt, expecting it can force cuts to government spending.”
I think that this *is* a hard sell. Most people admire wealth and despise poverty.
Most people, 90% +, would benefit from a more rational tax policy. I find it illustrative that our representatives and most media personalities live extremely well.
We should admire wealth creation, it’s the distribution system that is wholly out of balance.
If 10 coworkers order a pizza and 5 were told to share a sliver equal to about 4% of the pie, 1 took 90% of it, and the other 4 told they could share the rest what would the reaction be? Would they “admire” that distribution?
I don’t think so.
By the way, that distribution is more equitable than wealth distribution in the US.
I said that the approach was a hard sell. I didn’t say it was a bad idea.
If only they kept their blinders off when it comes to a more egalitarian tax system and salary structure…..
Unless you lose your own wealth.
So, is it’s a zero sum game? “Lose your own” . . . What does that mean? Is the tax code a law of nature or a human construct? Were effective maximum tax rates during a time that the GOP refers to America Being Great, being over twice they are now, good, bad or indifferent? If we are to Make America Great Again shouldn’t we return to those higher rates? Were changes to estate taxes and other shelters that tax wage income but not wealth somehow not dictating winners and losers?
Graph the percentage change in wealth and it is clear the country is becoming dramatically less equitable and extreme wealth concentration is spiking. That’s a fact. The “fairness” is an opinion and if 90% of the country wants to concede it’s fair, so be it. I just think they need to understand historical facts that seem to be obscured despite simple graphs capable of providing that epiphany.
Maybe China isn't a capitalist (capitalust) economy and communism with Chinese characteristics is the new world order that through this will come to be dominant?
The Chinese economy is run to deliberately encourage overproduction of industrial capacity (because it's far better to have more industrial capacity and not need it, than to need more industrial capacity and not have it), much like essentially all rich countries deliberately over-produce food (for the same reason) by subsidizing farmers.
And Chinese subsidies are distributed via local governments so as to encourage competition internally: it is a big enough country (as the US would be) that it doesn't need to concentrate (as South Korea does) on just a few "national champion" firms.
https://drafts.interfluidity.com/2024/08/13/china-as-a-model/
There's only one branch of government now; The "unitary executive," and he owns Congress (see Mike Turner's ouster by a compliant Mike Johnson), and SCOTUS, which is a wholly owned subsidiary of the Trumpian Party.
Yep
The government's goal should be to keep people busy while providing food, clothes, shelter, and healthcare. If the Chinese make too much stuff, they should recycle it and make something else. They could build more high-rise apartments or maybe a pyramid. The goal should be to create enough stress and fear so that people will cooperate, but not so much that they can't relax and enjoy their families and neighbors.
We have bar codes, computers, statistics, and AI. The world has enough resources for everybody if we would stop playing "who's got the bigger penis (money is a symbol)" games and grow up.
I listened to the UnitedHealth Group investor meeting this morning. It was total public relations BS with some numbers thrown in. Oh, and they honored Brian. By the time they were nearing the end of the meeting, I was watching a video of a monkey taking a shower on Facebook. He was really smart and funny.
Of course it is about inequality. But I get really sad. A bunch of working-class whites are being convinced to vote against themselves. Red states are growing populations because their economies are so bad. So no jobs. So the land and housing is cheap. They depend on the Feds and entitlements and then vote for oligarchy. These are NOT the actions of people acting from purely economic motives. On the left when we pretend this is strictly a need to rant about the rich, THAT is liberal socialist racism.
This is one of my adult children’s situation. Lives in a red state where military spouse is retired and has the bulk of income and benefits. Housing is cheap there. But they work for $12 an hour and their HS grad child can’t find a job. So basically government veteran benefits provide the bulk of their income.
We never taxed wealth. It is very difficult to tax wealth.
I would argue North Carolina has been a top 5 economy since the 1990s and so globalization has been very good for North Carolina. Just think about it in terms of sports teams—it went from minor leagues/college sports to major leagues beginning in the 1990s!
Check out my comment—basically North Carolina has been the state most negatively impacted by globalization and yet it’s had a top 5 economy since the 1990s. And exporting cigarettes to China was supposed to lead to a boom in North Carolina and Big Tobacco’s last hurrah was 2000 and Bush and that didn’t work out.
"But that’s arithmetically impossible."
Lots of Americans believe things that are arithmetically impossible, whether because they can't or won't do the arithmetic, or don't care about arithmetic consistency.
The reason tariffs work politically is not because they'll actually work, but they are a simple coherent story. USA good, China bad, China will pay our taxes for us.
I always appreciate the wonk, but this isn't budging any big tariff proponent.
I don't think the good professor thinks that his columns are going to change Republican minds. He's merely trying to keep the sane amongst us informed of what is going on.
Works for me.
Strongman likes simple (even if ineffective) 'solutions'. We are soon to be in the hands of enormous incompetence - worse, I fear, than last time.
To some people the “explain it to me as if I was in elementary school” argument, is the only way it works, and sometimes lying, misleading and misinforming about it is the best solution, even if it’s not true.
Everybody wants to believe they fully understand the intricacies of brain surgery in one simple argument, when it took them a lifetime to connect cigarette smoking with cancer
Same with things like Social Security.
swiley,
Social Security can and does work. It needs approximately the infusion of another Gulf war's worth of investment. The alternatives are bleak. GW Bush tried to privatize it (that was a lark), and if you think the homeless situation is bad now, just wait until we pull out SS. Nearly a third of Americans rely on SS to live in their dotage.
I'm not saying we don't need reform. Tax cuts don't imply that SS doesn't work.
Tim
It's a Ponzi scheme that only works with increasing demographics. We voted against Social Security when we collectively decided not to have a lot of kids.
Geoff,
Like in many ways but far from "is". Social Security is like a Ponzi scheme in that it relies on contributions from newer participants to fund payouts to earlier ones, creating potential sustainability challenges if the base of contributors shrinks, as you say. However, Social Security is a transparent, legal program designed as a social safety net rather than an investment, with benefits determined by established formulas rather than promises of profit. After having paid into the "scheme" for my life, granted, it's hard not to think of it as an investment (speaking for myself here - I get that idea when making the Ponzi comparison.)
Fundamentally, Ponzi schemes are fraudulent and unsustainable. Social Security, on the other hand, is backed by the government's authority and has mechanisms for reform, such as adjusting tax rates or benefits to address demographic changes. Its primary goal is to provide financial security for retirees, people with disabilities, and survivors, reflecting a social contract rather than an exploitative system. The alternatives to not performing this social contract are bleak.
I'm open to alternatives, but we need to make good on the commitment we signed on to when we created the system to get there. It's kind of like (not is) Healthcare reform. The most significant difference is that we don't have a private insurance market driving care for our elderly.
I appreciate metaphor but would like to stick to simile when it comes to a program like Social Security, where many people end up by design or misfortune in their dotage.
Thanks for getting back here - this is important stuff,
Tim
I have no doubts it imploding will be hellish but there just isn’t growth to keep it going. The idea that it will continue is completely delusional. We should be preparing for it to end not pretending we can patch it and crushing the rest of the economy.
As GGP said: politicians love telling their constitutions everything is going to be ok right up until guillotines come out because there’s no incentive to solve the problems.
If it were possible for it to work then whatever strategy they use could be used by private retirements. There’s no arbitrage here, just nice sounding lies.
swiley,
It's the tax cuts that have made SS apparently unsustainable. Don't buy the bait and switch. We can take care of our elderly just fine if we fund appropriately - ie restore the tax cuts.
Are you willing to go through that hell? It is avoidable. Are the tax cuts that vital?
Tim
The production isn’t available.
With America transitioning into an economic zone from an actual nation there’s also nothing to keep productive people here. If it got any more expensive to live here you’d see competent people fleeing (this is already starting.) You’re wishing the pyramid scheme worked out. Everyone knew it wouldn’t. Now the question is: do we take the remainder of the country with it or just let it die?
As Tim noted, we have plenty of money to keep SS afloat, but our tax policy is stupid and works to the benefit of the wealthiest people.
Are you predicting that if Trump goes ahead with his high tariffs they will work politically ? Are you sure you want to do that ? I get the point you are making. Some people reason from experience. Others from belief. And some can not be swayed by reason at all. I would agree that big tariff proponents should be placed in that category.
My belief ? Tariffs against our major trading partners on the order Trump is talking about will give America a heart attack. In his previous post about this, Prof. K inserted a quasi Laffer set of curves for tariffs that suggested the tipping point for marginal revenue gains in some general sense could be expected to be around 50%. Figures lie and liars figure. My senses tell me that is way too optimistic. In fact, I don’t see a 50% tariff on Chinese imports bringing in any net revenue at all. Nor a 35% one for that matter. I see them as bringing trade with China to a halt. And relying for the time being on the assumption that a rational man is presumed to intend the reasonably foreseeable consequences of his actions, I have concluded that this must be Trump’s intention. For Trump was an honorable man, and a wise one. And he knows what he is doing. On some level. In short, much of this discussion, like Krugman’s post, for sake of argument, presumes many facts not in evidence. These proposed tariffs are not intended as revenue measures. They are killers….deadly weapons for use in a trade war he is about to start. And since they will do at least as much harm to America as it will to its enemies…..whoever they are…..I am forced to conclude that djt aims to destroy America.
For the time being, there may be some who believe what he is saying, or for some reason do not feel free to dispute it. But in time we will come to find out how popular his trade policy becomes. Prof. K is only hinting at how bad this will be.
Excellent article and great explanations. It’s a shame that mostly lawyers run for political office. Wouldn’t it be nice if a good economist would threw his/her hat in the ring once in a while? Lawyers make lousy economists and it usually shows. Harris and Obama were terrible at disseminating economic reports. Biden was a complete “no-show!”
Our problem isn’t trade deficits, it’s macro economic policies, that view our economy as a national issue, not a local one (ie. National unemployment stats). We need better micro economic targeting when we lose manufacturing jobs, or any jobs, as automation will replace millions of manufacturing jobs in the next decade; like it or not!
And agreed, most industries adopt an area for growth. Silicon Valley draws tech firms. North Carolina was a furniture hub, as the Mid-West is an automotive manufacturing powerhouse.
However, we never really promote business initiatives from a local prospective. When we sign trade deals, we need to understand where the biggest job losses will occur, and plan accordingly, so we can attract other businesses to the area, which already has a highly skilled workforce.
And education is the key. To attract jobs, we need an educated and productive workforce. For far too long, our education system as a whole has been on the decline. We spend more, but get fewer positive outcomes. Musk and other billionaires would rather we outsource our jobs to foreigners. Don’t get me wrong; we have over 6 million jobs that Americans don’t have the skill set to fill. This creates slack in the economy, as we are not running g an efficient or productive economy, with so many highly skilled jobs available; which creates an additional 5-7 jobs for every skilled worker hired. My point, billionaires don’t want to invest in our education, which means we will always need outside help, and this is a detriment to our future generations.
That said, can debate the issue of education all day long, but if we are to adapt to the technology economy that will eventually cost millions of manufacturing jobs, regardless of skill set (automation), we need a workforce skilled enough to compete with the new generation of jobs, available in an automated American economy.
Robert,
Workforces don't drive competitive advantage without infrastructure and intellectual property rights. The Chinese are currently positioned, by intent, policy, execution, and some covert actions, to outproduce all but the most adept. To out America's problem as a workforce problem is not productive.
We need a coherent state-backed infrastructure - like China has and is doing, guided by a protective IP policy to drive our AI advantages into the marketplace. Sure, we need education and workforce training, but that isn't the competitive advantage of America.
If I were pushed to name the American competitive advantage, it would be unfettered capitalism. Historically, it was freedom.
Sigh...
Tim
china has central planning....we have....Trump....bigger sigh.
Tim, I’m not just equating it to only be a workforce problem. Many of the issues are mutually exclusive. And I agree, infrastructure is key, and needs to be addressed; although, much of it has been as a result of the infrastructure and CHIPs Act which passed a few years back. Granted, to your point, more still needs to be done!
That said, without a strong, educated workforce, it’s a moot point!
Robert,
Fair enough; thanks for taking the time to respond.
STEM education is broken. Corporate America has sloughed that off; to be fair, we have sloughed healthcare off on corporate America. Unfortunately, higher education (including community colleges) and corporate America are sloughing. America is left holding the bag in oppressive student loans that aren't productive to the changing marketplace.
Thanks again for the response,
Tim
Thank you, and excellent points…:)
Robert,
Same to you. Have a good day.
Tim
Contemporary worker (and investor at the same time, because an act of choosin jobs, activities, education, professions (callings, as for politicians), also needs some investment-like solutions) should know Law, ancient people treated Law as a science, Medieval ended with the finding of Justinian's Digests, Gaus created a system of elements, just like Mendeleev, Kant thought: "Law goes just from Reason", lawyers name states "law orders", Law is more systematic science than Economics (that still needs to become a system of elements, like chemistry and Law (civil).
“Wouldn’t it be nice if a good economist would threw his/her hat in the ring once in a while?” You might enjoy this: https://youtu.be/zs8St-fF0kE?si=SjX1mIA1Ceu4xYVu
Could you explain why imports and investments need to balance? Is that balance in accounting terms? I’m interested in understanding economically how that works. Thank you for these wonderful essays.
You and me both, sister.
me too! he did not say need to....he said they do...as in "zero out"
Not imports rather ( trade balance plus net inflows = 0 ). Both are net of.
Thank you very much for this comment: "in practice, the winners don’t compensate the losers." In the 300 or so years of our diligent effort to become more efficient, we have thrown generations of workers out of work. Seldom has society reimbursed those workers for their losses. And a question: will we ever be able to have an economy that doesn't have a lot of people working much harder than others for a lot less income?
They were often promised job training as a sort of compensation. But it never happened.
There’s actually a lot of job training available in the United States. Look at community colleges. The problem is that job training, while a worthy goal, is limited in actual practice as to its effectiveness. For one thing, the reality is many workers have aged out of the optimal age to start new careers. And even younger workers in many cases aren’t willing or able to undertake the relocation that is often necessary. Job training can be part of the solution, provided we recognize its significant limitations. It’s not a panacea.
Or they received job training, but the new job was in an industry that soon imploded because of advances in technology. So then they go through another round of training. The cycle continues ad nauseam and they never achieve stability.
Paul Krugman I see you live in Manhattan yes? Come on down to The People’s March on Centre Street on Saturday and say hello. I’ll have a guitar on my shoulders, lol. It ends in Washington Square Park with more of the same.
With apologies to Enya, the less-venerable “Team America F**k Yeah” rounds out this post nicely
https://youtu.be/LasrD6SZkZk?si=I-DX3jA1ltvjR0oD
"Compensation never happens" ... here.
In the Netherlands the HQ of ABP (pensions of gov. personal) was moved from Den Haag to Heerlen to compensate for the loss of the mining industry. Maastricht, in same region, got an university. The former, state owned, mines (DSM) transformed into petro chemical industry. This might not have been enough. People did fall through the cracks, but it did help the local economy and prevented social breakdown.
"Crude Mercantilist" is my new favorite moniker for Trump - thanks for making my day!!
Yes. he's stuck in the 18th century. Not, of course, in 1776, when Adam Smith pretty much invented economics as a serious study (quickly expanded and improved, of course, by others, as necessarily happens in the post-Gutenberg world) - no, the earlier time when Mercantilism ruled because it was so simple and intuitively obvious to the ruling class.
Yes, the same thought crossed my mind, as well.
Great intro to international finance, however the policy recommendations seem kinda weak and steer right back to the bad place we are headed with the FFOTUS. Just how would tariffs fix anything? Wouldn’t it be more effective to deal with the localized disruptions/displacements with financial assistance, retraining, relocation (god forbid!)?
There's a lot here I don't quite understand. I'm not an economist, obviously.
According to Google AI, "According to the 2000 census, the Hickory-Lenoir-Morganton metropolitan area had a population of 341,851, and as of recent estimates, the population has grown to around 370,000, showing a positive population change since 2000; this represents a significant increase in population within the area."
I don't understand how this population has grown in the face of such an adverse effects from the loss of so much of its primary employment.
The author presents a graph showing a declining level of Chinese currency versus a weighted basket of Western currencies since 2022. but when I look at the Yuan-US dollar exchange rate since 1985 (https://www.macrotrends.net/2575/us-dollar-yuan-exchange-rate-historical-chart), what I see is the yuan basically pegged to the dollar since at least 2010. Perhaps I'm looking at the wrong comparison, but if not, I fail to understand how this shows a serious inflating of the Chinese currency in order to make its products more competitive abroad.
As I said, I have no real training in economics, so I defer to Prof Krugman with all due respect.
From personal experience I know that In 2014, one could buy a dollar with about six RMB. Now it requires more than seven. Also, it doesn’t seem so improbable that a metro that was buffeted by trade-related economic problems two decades ago is now on the mend, especially if it’s located in a *region* that has been growing pretty rapidly (in part due to affordability).
What I observed in my industry during the first Trump China tariffs was a move in manufacturing from China to Vietnam. Or final assembly in Philippines. No manufacturing went back to USA. It was an expensive and time consuming move and I never understood why Americans should care if something was made in China or Vietnam. And who knows what percentage was still made in China.
The period we lost jobs to China was 2002-2009…and that period had a dysfunctional economy long before the Global Financial Crisis. We’ve actually been adding manufacturing jobs since 2010 but we aren’t ever getting back to the level we had in 2000 much less 1979. Trump actually ran for president in 2000 and had he won he couldn’t have been worse than Bush. Most of what Trump focuses on are negative things that happened under Bush that Obama and Trump and Biden fixed already. Really the last thing was Afghanistan that Trump surrendered to the Taliban but Biden ended up taking the hit when Americans woke up after the pandemic.
That's a keen observation.
Also, in 2018, US manufacturing accounted for 18% of GDP, today it only accounts for about 10%. Protectionism isn't the answer. Jobs are not reshoring as Trump promised. Additionally, thanks mostly to tariffs, the US now pays more for basic raw materials than any of it's western competitors. Side note: within 6 months of the start of Trump's trade war, China announced the end of its 50/50 rule and allowed Tesla to build a fully owned factory in Shanghai. Today, that factory is by far the most productive factory that Tesla operates. Musk said he was building cars in China for the Chinese, but has since started exporting those Chinese made cars all over the world. By moving to China, Tesla enjoys lower building costs, cheaper labor, cheaper and more abundant raw materials all while evading Trump's import tariffs. So I ask you, in all honestly, what good does protectionism serve?
Yeah, I truly understood about 60% of this but you advance my education so I always give you a go. Loved the leaping frog in the song video.
Same here. And I am saving this to read again and hopefully learn more!
Great post! Now do Germany’s surplus
That would be worth reading. Their industrial might isn't what it has been but if trade surplusses equalled full employment and social stability, they wouldn't have so much trouble with far right populism.