This piece by Robert Zoellick – to appear in the April 2nd, 2024, print edition of the Wall Street Journal – is superb. It conveys an enormous amount of relevant facts and insightful analyses in relatively few words, with the help, I add, of the Cato Institute’s Colin Grabow (to whose important work Zoellick justifiably links). I wish that I could reproduce here Zoellick’s entire piece. Unable to do so, I share three choice slices:
America’s elderly presidential candidates want to return the country to a fantasy mid-20th-century past. Their mantra is to restore manufacturing. But neither understands modern manufacturing or how America can forge a dynamic and secure future.
The Cato Institute has reported that—contrary to conventional belief—U.S. manufacturing accounts for a larger share of global output than Japan, Germany, South Korea and India combined. America’s productivity is far ahead, too. In 2019, the value added by the average American manufacturing worker was $141,000, exceeding second-place South Korea by more than $44,000 a worker and China by more than $120,000.
Global markets reflect this strength. Between 2002 and 2021, U.S. manufacturing exports more than doubled, with sales second only to China, which dominated low-end production. Foreigners understand American industry better than Joe Biden or Donald Trump does; they invested $2.1 trillion in U.S. manufacturing, including $121 billion in 2021, before Mr. Biden’s subsidies.
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The U.S. economy’s evolution from agriculture to manufacturing and now to services reflects changes in what Americans buy. Today, that means spending on healthcare, entertainment, sophisticated equipment and education.
The Biden-Trump economy of nostalgia won’t lead to higher wages. Research by the Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis shows that manufacturing workers earn less than the average private-sector worker. Manufacturing workers in higher-tech sectors, with greater productivity, fare better. These jobs benefit from trade, but Messrs. Biden and Trump fail to understand how a modern trade agenda can serve America’s interests and promote our values.
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Yet in the face of change, America’s two protectionist presidents retreated. Their formula has been to tax trade through higher tariffs, restrict the use of foreign inputs for American businesses, and bust the budget with hundreds of billions of dollars in subsidies. By directing patronage to favored causes and protecting others from competition, they are adding costs, limiting the country’s adaptability, and eroding U.S. financial resilience.
