4 ms·

The reason why Middle America has so little spending power is because regulations and taxes have decimated their manufacturing and resource extraction industrie

The reason why Middle America has so little spending power is because regulations and taxes have decimated their manufacturing and resource extraction industries and effectively moved them overseas. This of course led to a loss of specialized workers who can pass down their skills and loss of technical knowledge. Flossing your teeth may be unpleasant in the short-term, but it has long-term benefits.

Analemma_ 9y ago
[citation needed] on every last bit of this. You've bundled a whole bunch of claims into a short space, and all of them are wrong. > regulations and taxes Measured in GDP, American manufacturing has increased since 2000. This suggests that the chief culprit is automation, especially when China's taxes aren't significantly less than ours. > resource extraction industries Need a citation here too. What percentage of the middle class derived its income from resource extraction even when that was at its peak in America? And don't forget to exclude coal from that percentage, because the decline of coal is mostly because it's now cost-uncompetitive with LNG and solar. Nothing about America's current economic woes is going to be fixed by a Chinese tariff. This is firing blind and aiming in the wrong direction.
- drak0n1c 9y ago
  Manufacturing output may have increased along the curve of a plateau, but it is still much lower than what it would be in an unregulated environment. https://www.mercatus.org/publication/cumulative-cost-regulations https://www.mercatus.org/publication/cumulative-cost-regulat... Why do you say they are aimed in the wrong direction? They are reciprocal and only in industrial sectors where China already has tariffs on our goods up to 10x larger than our rates.
  - caseydurfee 9y ago
    "it is still much lower than what it would be in an unregulated environment." Counterfactual. The article you link to is laughable on the face of it. "A new study for the Mercatus Center at George Mason University" carries about the same intellectual heft as "A new study for the Eat More Beef Center at Hamburger University." You seem the sort of person able to recognize others' ideologies while incorrectly assuming your own beliefs are rational and well-founded. Are you generally tolerant of or convinced by counterfactuals when they don't support your ideology?
nostrademons 9y ago
And new tariffs will help that...how? You can't turn back the clock. The factories are already closed, the companies are already bankrupt, the workers have already been laid off and in many cases been out of work for 10-15 years, the young people (those that can get out) have already left. If Middle America wants to rejuvenate itself they need to engage with the world as it exists now and plant new seeds, not try to freeze-frame the world of the 1960s.
- toomuchtodo 9y ago
  You can turn the clock back. And this is how you start. You have to create the economic incentives to have a manufacturing base. Without that foundation, nothing else works.
  - nostrademons 9y ago
    You (or politicians you support) are welcome to try. It probably won't turn out the way you hope. Historically, tariffs and protectionism have benefitted emerging manufacturing powers much more than entrenched incumbents. U.S. manufacturing might was built off the back of tariffs; by keeping them high, the U.S. protected its nascent domestic industries until they could become efficient enough to compete globally. China has been following the exact same playbook, as did Japan before it. But just because tariffs can build emerging industries doesn't mean that they can preserve those industries once they start going into decline. Usually the result isn't that the industries are suddenly revitalized, it's that the whole country goes into decline with them. (We've seen this play out historically with post-WW2 Britain and post-1990 Japan.)
    - toomuchtodo 9y ago
      I intend to try.
  - diyseguy 9y ago
    I don't see China playing fair re IP theft anytime soon. They undercut everyone by exploiting their poor in their factories. So, in order for the manufacturing to start happening here in a way we can afford, wages would have to be very very low, or else robots. So, probably robots. I don't see this creating any jobs here.
dragontamer 9y ago
> The reason why Middle America has so little spending power is because regulations and taxes have decimated their manufacturing and resource extraction industries and effectively moved them overseas. This of course led to a loss of specialized workers who can pass down their skills and loss of technical knowledge. http://www.businessinsider.com/~~/f?id=4aa6761d17a383176e47e77e http://www.businessinsider.com/~~/f?id=4aa6761d17a383176e47e... And yes, this graph is inflation-adjusted. The number of $$ of manufactured goods has risen for like 50 years straight in the USA. Spoiler alert: The US manufactures more today than it did at any other time in history. Automation has killed jobs. It takes far fewer workers to make the same (or even 10x) the number of products. https://www.brookings.edu/wp-content/uploads/2016/07/us-manufacturing-past-and-potential-future-baily-bosworth-figure-1.jpg https://www.brookings.edu/wp-content/uploads/2016/07/us-manu... We in the US are making more product with fewer and fewer workers. That's the truth of the matter.
skybrian 9y ago
American manufacturing is doing fine, thanks to automation [1]. The jobs, not so much. Tariffs aren't going to do anything about the automation trend. [1] https://www.marketwatch.com/story/us-manufacturing-dead-output-has-doubled-in-three-decades-2016-03-28 https://www.marketwatch.com/story/us-manufacturing-dead-outp...
product50 9y ago
This is a good point. Chinese govt is doing a lot of things to keep manufacturing cheap there - from keeping their currency artificially low by buying USD, to using those USD to subsidize manufacturing and then to export those products internationally to decimate local manufacturing. It is not as simple as some who have commented below would say. The fact that the local manufacturing industry has been decimated is no reason to keep it like that. If profit is to be made, industry will come back - that is the beauty of capitalism.
soundwave106 9y ago
From my personal perspective, the main potential impact of this trade war probably won't be my programming career, but the "Middle America" farm that's in our family. One of our crops is soybeans. China loves US soybeans. (https://www.agweb.com/article/will-chinas-hunger-for-us-soybeans-last-naa-ben-potter/ https://www.agweb.com/article/will-chinas-hunger-for-us-soyb...) US soybean exports are one of the obvious targets of any trade war with China. Artificially reduced demand (due to what is in effect a, um, regulation) doesn't seem like really good news if you grow soybeans, right? The consensus in the media is that it is actually the manufacturing / resource / agriculture states (eg: the "red states") who will be hurt the most by tariffs (eg, articles like this: http://money.cnn.com/2018/03/05/news/economy/trade-war-red-states/index.html http://money.cnn.com/2018/03/05/news/economy/trade-war-red-s...). Professional opinion wise, I searched and actually couldn't find an economist who had anything positive to say about tariffs (if someone can find one, I'd love to read the link, but it's pretty telling that the overall sentiment is that negative). So right now, I'm not sure at the moment what long-term benefits you are thinking of. Political or strategic, maybe?
- kregasaurusrex 9y ago
  And the consequence of these groups having lower discretionary income shifts their buying habits to favor items that are cheaper to manufacture and likely don't fall within having an active Chinese patent covering them. Putting a tariff on the foreign good targets people who see equivalent value between the US and non-US good in order to sway their decision to the domestic choice.

Analemma_ 9y ago

[citation needed] on every last bit of this. You've bundled a whole bunch of claims into a short space, and all of them are wrong. > regulations and taxes Measured in GDP, American manufacturing has increased since 2000. This suggests that the chief culprit is automation, especially when China's taxes aren't significantly less than ours. > resource extraction industries Need a citation here too. What percentage of the middle class derived its income from resource extraction even when that was at its peak in America? And don't forget to exclude coal from that percentage, because the decline of coal is mostly because it's now cost-uncompetitive with LNG and solar. Nothing about America's current economic woes is going to be fixed by a Chinese tariff. This is firing blind and aiming in the wrong direction.

drak0n1c 9y ago
Manufacturing output may have increased along the curve of a plateau, but it is still much lower than what it would be in an unregulated environment. https://www.mercatus.org/publication/cumulative-cost-regulations https://www.mercatus.org/publication/cumulative-cost-regulat... Why do you say they are aimed in the wrong direction? They are reciprocal and only in industrial sectors where China already has tariffs on our goods up to 10x larger than our rates.
- caseydurfee 9y ago
  "it is still much lower than what it would be in an unregulated environment." Counterfactual. The article you link to is laughable on the face of it. "A new study for the Mercatus Center at George Mason University" carries about the same intellectual heft as "A new study for the Eat More Beef Center at Hamburger University." You seem the sort of person able to recognize others' ideologies while incorrectly assuming your own beliefs are rational and well-founded. Are you generally tolerant of or convinced by counterfactuals when they don't support your ideology?

nostrademons 9y ago

And new tariffs will help that...how? You can't turn back the clock. The factories are already closed, the companies are already bankrupt, the workers have already been laid off and in many cases been out of work for 10-15 years, the young people (those that can get out) have already left. If Middle America wants to rejuvenate itself they need to engage with the world as it exists now and plant new seeds, not try to freeze-frame the world of the 1960s.

toomuchtodo 9y ago
You can turn the clock back. And this is how you start. You have to create the economic incentives to have a manufacturing base. Without that foundation, nothing else works.
- nostrademons 9y ago
  You (or politicians you support) are welcome to try. It probably won't turn out the way you hope. Historically, tariffs and protectionism have benefitted emerging manufacturing powers much more than entrenched incumbents. U.S. manufacturing might was built off the back of tariffs; by keeping them high, the U.S. protected its nascent domestic industries until they could become efficient enough to compete globally. China has been following the exact same playbook, as did Japan before it. But just because tariffs can build emerging industries doesn't mean that they can preserve those industries once they start going into decline. Usually the result isn't that the industries are suddenly revitalized, it's that the whole country goes into decline with them. (We've seen this play out historically with post-WW2 Britain and post-1990 Japan.)
  - toomuchtodo 9y ago
    I intend to try.
- diyseguy 9y ago
  I don't see China playing fair re IP theft anytime soon. They undercut everyone by exploiting their poor in their factories. So, in order for the manufacturing to start happening here in a way we can afford, wages would have to be very very low, or else robots. So, probably robots. I don't see this creating any jobs here.

dragontamer 9y ago

> The reason why Middle America has so little spending power is because regulations and taxes have decimated their manufacturing and resource extraction industries and effectively moved them overseas. This of course led to a loss of specialized workers who can pass down their skills and loss of technical knowledge. http://www.businessinsider.com/~~/f?id=4aa6761d17a383176e47e77e http://www.businessinsider.com/~~/f?id=4aa6761d17a383176e47e... And yes, this graph is inflation-adjusted. The number of $$ of manufactured goods has risen for like 50 years straight in the USA. Spoiler alert: The US manufactures more today than it did at any other time in history. Automation has killed jobs. It takes far fewer workers to make the same (or even 10x) the number of products. https://www.brookings.edu/wp-content/uploads/2016/07/us-manufacturing-past-and-potential-future-baily-bosworth-figure-1.jpg https://www.brookings.edu/wp-content/uploads/2016/07/us-manu... We in the US are making more product with fewer and fewer workers. That's the truth of the matter.

skybrian 9y ago

American manufacturing is doing fine, thanks to automation [1]. The jobs, not so much. Tariffs aren't going to do anything about the automation trend. [1] https://www.marketwatch.com/story/us-manufacturing-dead-output-has-doubled-in-three-decades-2016-03-28 https://www.marketwatch.com/story/us-manufacturing-dead-outp...

product50 9y ago

This is a good point. Chinese govt is doing a lot of things to keep manufacturing cheap there - from keeping their currency artificially low by buying USD, to using those USD to subsidize manufacturing and then to export those products internationally to decimate local manufacturing. It is not as simple as some who have commented below would say. The fact that the local manufacturing industry has been decimated is no reason to keep it like that. If profit is to be made, industry will come back - that is the beauty of capitalism.

soundwave106 9y ago

From my personal perspective, the main potential impact of this trade war probably won't be my programming career, but the "Middle America" farm that's in our family. One of our crops is soybeans. China loves US soybeans. (https://www.agweb.com/article/will-chinas-hunger-for-us-soybeans-last-naa-ben-potter/ https://www.agweb.com/article/will-chinas-hunger-for-us-soyb...) US soybean exports are one of the obvious targets of any trade war with China. Artificially reduced demand (due to what is in effect a, um, regulation) doesn't seem like really good news if you grow soybeans, right? The consensus in the media is that it is actually the manufacturing / resource / agriculture states (eg: the "red states") who will be hurt the most by tariffs (eg, articles like this: http://money.cnn.com/2018/03/05/news/economy/trade-war-red-states/index.html http://money.cnn.com/2018/03/05/news/economy/trade-war-red-s...). Professional opinion wise, I searched and actually couldn't find an economist who had anything positive to say about tariffs (if someone can find one, I'd love to read the link, but it's pretty telling that the overall sentiment is that negative). So right now, I'm not sure at the moment what long-term benefits you are thinking of. Political or strategic, maybe?

kregasaurusrex 9y ago
And the consequence of these groups having lower discretionary income shifts their buying habits to favor items that are cheaper to manufacture and likely don't fall within having an active Chinese patent covering them. Putting a tariff on the foreign good targets people who see equivalent value between the US and non-US good in order to sway their decision to the domestic choice.