Manufacturing and Employment

Samuelson has been writing some really good columns lately. I wonder what happed to him?

Does Samuelson underline the idea that there was (is) far less "off-shoring" than was claimed by many? Of four million jobs in nine years should we look at steel industry and manufacturing research that suggest massive changes in technology on the shop floor that eliminated entire job categories?

-- Personally I think NAFTA was a cunning plan to make companies adopt computer-assisted control and production technologies.

Let me get the first whining riposte out of the way: "But that's 12 million new McJobs as WalMart greeters replacing highly paid assembly line work."

If that were true, then (real) median income would have noticeably fallen. It hasn't. Even with all those poor immigrants skewing the numbers.

Even with all those poor immigrants skewing the numbers.

...and benefits becoming a larger portion of total comp.

Did I miss something? Samuelson's column isn't anti-trade. He concludes "What matters for workers and manufacturers is not what politicians say. It's the consequences of what they do. On trade, many Democrats -- and some Republicans, too -- are fighting the last war."

Now if you want ridiculous rhetoric against trade, look at the churches. For example the Presbyterian Church USA opposed CAFTA because it will "end subsistence farming" in Central America. (http://www.pcusa.org/trade/cafta.htm)</p>

I hope it does.

Dano, the religious left in the country is far more dangerous and reckless than the religious right.

I'd rather not be ruled by either, but if I had to choose, I'll take the religous right.

I enjoyed this Robert Samuelson column. But I wish he would have omitted the statement about the trade deficit dropping:

The overall trade deficit is dropping and, except for higher oil prices, would be dropping faster."

This gives the impression that the trade deficit is something bad, and that we should applaud its dropping. A decline in the trade deficit could be caused by:

<ul><li>reduced imports due to reduced U.S. disposable income; </li><li>lower global prices for U.S. goods due to a declining dollar;</li><li>reduced foreign investment in the U.S., as foreigners spend dollars for goods rather than for investments perceived to now have lower returns.</li></ul>

Do any of those causes reflect a strong U.S. economy?

Sorry, I'm too bitter to read Samuelson's column.

I'm too busy clinging to guns and religion to listen to reason.

Dewey, I agree with your sentiments; Samuelsono has a long way to go. But I am so happy to see him make progress. He would have never written a column like this a year ago.

M. Hodak:

Look at the data by state.

Or would that be too much information.

There's a religious left in the country? I thought the left was a bunch of atheists!

No, STR, it wouldn't. That information is already in the aggregate data cited. If the unions and politicians in Ohio and Michigan insist on running business out of their states, Texas and the Carolinas will gladly receive them. No one I know is talking about blocking trade between the states (not yet, anyway).

Hodak: While I can't find the post, I remember reading over at Coyote Blog that some Arizona politicians were complaining that they were importing electricity from New Mexico. They wanted the state to step in and reduce imports from said neighboring state to create jobs for people in Arizona. I sense if you gave a concerted effort to read what state and local politicians have to say there are plenty of loonies out there that want to restrict trade between states.

Jay: "I sense if you gave a concerted effort to read what state and local politicians have to say there are plenty of loonies out there that want to restrict trade between states."

Fortunately we have the U.S. Constitution, with its Interstate Commerce clause, to protect us from such loonies. Of course, as the Supreme Court recently demonstrated in McCain-Feingold, there is no guarantee our constitution will continue to be the law of the land.

If a trade deficit is good, is a trade surplus bad?

"If a trade deficit is good, is a trade surplus bad?"

I'll take a stab at that. It's neither.

Is there really such a thing as a trade deficit or surplus at all? Let's take it to the personal level. If you decide to buy your neighbor's car, you suddenly have more cars than you had before and your neighbor suddenly has more cash than he had before. To the protectionist mind, you now have a trade surplus versus your neighbor. You also have the car you want. Is that good or bad?

Now, suppose you sell your car to your neighbor. Now he has the trade surplus (and the car he wants), and you have the cash you want. Is that good or bad?

The idea of a trade surplus or deficit is a little questionable as the designation is arbitrary and is based in a mercantilist premise that money is wealth.

We could as easily claim that we have a trade surplus because we got stuff and they got paper.

The holder of the debt (paper money) is at risk should the paper be devalued.

On the other hand, paper is at risk of losing value, but purchased goods are at a much higher risk of depreciating from wear and tear, obsolescence, disposability, etc...