Here’s the abstract of a new paper by Alexander Klein and Christopher Meissner:
We study the relationship between tariffs and labor productivity in US manufacturing between 1870 and 1909. Using highly dis-aggregated tariff data, state-industry data for the manufacturing sector, and a novel identification strategy, results show that tariffs reduced labor productivity. Tariffs also generally reduced the average size of establishments within an industry but raised output prices, value-added, gross output, employment, and the number of establishments. We also find evidence of heterogeneity in the association between tariffs and value added, gross output, employment, and establishments across groups of industries. We conclude that tariffs may have reduced labor productivity in manufacturing by weakening import competition and by inducing entry of smaller, less productive domestic firms. Our research also reveals that lobbying by powerful and productive industries may have been at play. The era’s high tariffs are unlikely to have helped the US become a globally competitive manufacturer.
Wall Street Journal columnist Jason Riley is unimpressed with Kamala Harris’s weak attachment to economic reality. Two slices:
The late Walter Williams, who taught economics at George Mason University for 40 years while also writing a syndicated newspaper column, liked to remind his students and readers that political leaders often exploit economic illiteracy to win votes. “I think it’s important for people to understand the ideas of scarcity and decision-making in everyday life so that they won’t be ripped off by politicians,” he once told me.
…..
Whatever her proposals, Ms. Harris’s overriding problem is that she can’t run away from the Biden administration’s record. Her campaign’s closing message is that Mr. Trump is a fascist threat to the republic, which is something you come up with when you can’t defend what your administration has been doing for the past four years about inflation, the economy, border security and other issues that voters care most about. Ms. Harris has spent a lot of time ducking serious interviews and deflecting tough questions so that she could focus on telling people what they already know about Donald Trump.
Proponents of the position that Ms. Harris’s economy would outperform Mr. Trump’s should show their work. If other macroeconomists quibble with aspects of our approach, we welcome scientific debate about it. Such debates are more consistent with the values that animate scientific discovery than ham-handed declarations, regardless of how many Nobel laureates sign on.
Tyler Cowen predicts that the global demand for U.S. dollars will remain high. A slice:
As for China, the third-largest debt market, it shows few signs of moving to a freer economy with open capital movements. That postpones the day when the world’s other largest economy can offer a potential rival to the dollar. If anything, Chinese governance seems to be growing more autocratic and less predictable.
At the recent BRICs meeting, there was much talk of alternatives to the dollar. Russia promoted the “Brics Bridge” idea, to limit the impact of dollar-connected international sanctions, but it does not seem to be taking off, largely because it has few practical benefits. Foreign countries still can curse the US, and then turn around and use its currency.
Clark Neily remembers IJ co-founder Chip Mellor.
“Grow the economic pie, don’t reallocate it.”
Regarding school choice for children, teachers unions are best understood as Terminators, as in the movie series. They are relentless, and they won’t stop until any alternative to their education monopoly is killed. The latest example is Nebraska, where unions are pushing a ballot measure to repeal a modest K-12 scholarship program.
Thomas Gale Moore has died; David Henderson remembers him. A slice:
Tom was one of the early advocates of deregulation. At a forum on inflation held by President Ford in 1974, Tom circulated a statement calling for deregulation of transportation, airlines, energy, and a number of other sectors. (I’m going by memory here. The copy he gave me was destroyed in my 2007 office fire.) As I recall, he got the vast majority of economists, a group that included many Democrats as well as Republicans, to sign the statement.
Tom also wrote, for the second edition of the Concise Encyclopedia, the article “Global Warming: A Balance Sheet.” I reread his piece as background to this post. I find heartening how well some of his analysis holds up almost 20 years after he wrote.
