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I'm starting to see a consensus that one of the biggest drawbacks to free trade is the loss of skills. It is great to get cheap steel from China and great for C

I'm starting to see a consensus that one of the biggest drawbacks to free trade is the loss of skills. It is great to get cheap steel from China and great for China to sell steel at a profit, but it sucks losing the engineering jobs. But what truly is awful is now there is hardly anyone who knows how to run a steel mill anymore in the US. The US might not always be friends with China, but the US will always need steel.

js2 6y ago
The trick is convincing customers to pay more for a domestic product. Consumers don't really seem to care in large enough numbers.
- ralph84 6y ago
  It's not so tricky. Make the imported product more expensive. Tariffs more or less funded the entire US federal government for the first half of its existence.
admax88q 6y ago
On the other hand free trade stops wars. If each party is specialized in a needed item that the other side no longer knows how to produce, its much harder to go to war. The fact that the US will always need steel helps ensure that they _will_ always be friends with China, so long as they also specialize in something that China needs.
- walterbell 6y ago
  Changing delta in values is an additional factor in changing the relationship between former partners.
- eloff 6y ago
  Economists were saying that about the interconnected economies of Europe prior to WWII. War is declared by human politicians in an instant. It is not required to be rational any more than human behavior is in general.
  - missedthecue 6y ago
    On the other hand, it's been what... 80 years since a conflict between continental European nations. Has there ever been a gap that long in recorded history?
    - deleted 6y ago
      [deleted]
    - tomp 6y ago
      The first 50 years of that peace was Europe being split between two nuclear superpowers. So the “peace” (more like a standoff) isn’t entirely our (European) fault.
      - triceratops 6y ago
        France and the UK still maintain nuclear arsenals.
        eloff 6y ago
        Not really relevant to the cold war standoff in Europe though.
    - eloff 6y ago
      I think the last 80 years have been the most peaceful in recorded human history in spite of, or perhaps because of the constant threat of nuclear Armageddon. Globalization is a part of it, but I don't think it's sufficient in itself to keep the peace.
      - SomewhatLikely 6y ago
        Better Angels of Our Nature by Steven Pinker examines this and the general decline in violence on many levels.
    - avmich 6y ago
      Sigh. If only. Do you know what happened with Crimea in 2014 - and what was going on in Debaltsevo, Donetsk region, Ukraine, in February 2015?
- hyperpallium2 6y ago
  Though China's trajectory is to not need the USA.
  - NovemberWhiskey 6y ago
    Given that China invests gigantic sums of money in the US and has vast segments of industry dedicated to selling goods to the US, it is not very clear to me how you've concluded that.
    - kevin_thibedeau 6y ago
      The US is a convenient parasite. Uplift their domestic population, throw in India and all of Africa and China can bear to lose 370 million consumers.
    - jbay808 6y ago
      > vast segments of industry dedicated to selling goods to the US If they don't want anything from their trading partners, the output of those industries can just as easily be directed to their own population.
- foolinaround 6y ago
  > so long as they also specialize in something that China needs tomorrow, China may learn to specialize in that something. It is never a good strategy to depend on the weakness of others for the long term.
  - admax88q 6y ago
    That's the whole argument of comparative advantage though, even if China is better at everything its still in their best interest to trade because everyone comes out ahead if they specialize in what they're best at.
geofft 6y ago
How long would it take to figure out how to run a steel mill from (more or less) first principles? That is, if you're a country that has zero steel mills and zero people who have worked at one, and for some out-of-game reason (like a global pandemic) you can't travel to one, but you know that they exist, you have access to books, and perhaps you can interview people, how long will it take to build an acceptable-quality mill? After all, a) humankind developed steel mills in the absence of any steel mills at all, and b) multiple countries have developed much more complicated things in secrecy from each other (like atomic weapons and orbital rockets and radar), so it seems like it should be doable. It's to your advantage to give up your skills if the cost of regaining them if you need to is smaller than the comparative advantage of having China make steel for you in the meantime.
- Ma8ee 6y ago
  It is certainly doable, but it will take time. Any country can probably get some kind of small scale steel mill up in a few months (or a long afternoon if the scale is small enough). But getting producing high quality steel at industrial scale with economy would probably take longer than a decade.
- fragmede 6y ago
  The metal (steel, aluminum, etc) used in new cars didn't exist 10 years ago. From first principles, making steel is easy. Making stainless steel, figuring out when to add additives and what those additives should be, is harder. Doing it at scale, in quantity, cheaply, and safely, taking all aspects into consideration is dramatically harder, and if you dump the expertise now, and then have to restart from first principles 10 years from now, then you're multiple decades behind the competition. Geopolitical considerations may mean there's a business advantage to having it made in China as opposed to elsewhere, but as we've seen with the US pandemic response, there are sectors where it's just plain stupid to believe that expertise can be summoned up as needed, and that it's somehow cheaper not to pay for it in the interim. Government isn't a household, and you can't restart having expertise like canceling Netflix for a few months.
  - chii 6y ago
cafard 6y ago
According to Wikipedia, in 2014 the US was the world's third-largest producer of raw steel. The industry's website says that US has produced almost 55 million tons of steel this year through the week ending September 12.
- tsss 6y ago
  It's not about the damn steel.
tuatoru 6y ago
> one of the biggest drawbacks to free trade is the loss of skills. The Economics jargon is "real option value". When you have engineers making widgets of type A, it's easy to get them to make types B, C, and D should the need arise. This potential to do other things has real value even if in fact you never do them. Real option value should always be evaluated when choosing a course of action, but since it's about non-existent things, it's usually skipped. (Edit: calling it "real" must be economist humor.) Ricardo didn't know about, or chose to ignore, real option value. In the classic England = cloth, Portugal = wine trade, Portugal would be better off making cloth because of real option value.

js2 6y ago

The trick is convincing customers to pay more for a domestic product. Consumers don't really seem to care in large enough numbers.

ralph84 6y ago
It's not so tricky. Make the imported product more expensive. Tariffs more or less funded the entire US federal government for the first half of its existence.

admax88q 6y ago

On the other hand free trade stops wars. If each party is specialized in a needed item that the other side no longer knows how to produce, its much harder to go to war. The fact that the US will always need steel helps ensure that they _will_ always be friends with China, so long as they also specialize in something that China needs.

walterbell 6y ago
Changing delta in values is an additional factor in changing the relationship between former partners.
eloff 6y ago
Economists were saying that about the interconnected economies of Europe prior to WWII. War is declared by human politicians in an instant. It is not required to be rational any more than human behavior is in general.
- missedthecue 6y ago
  On the other hand, it's been what... 80 years since a conflict between continental European nations. Has there ever been a gap that long in recorded history?
  - deleted 6y ago
    [deleted]
  - tomp 6y ago
    The first 50 years of that peace was Europe being split between two nuclear superpowers. So the “peace” (more like a standoff) isn’t entirely our (European) fault.
    - triceratops 6y ago
      France and the UK still maintain nuclear arsenals.
      - eloff 6y ago
        Not really relevant to the cold war standoff in Europe though.
  - eloff 6y ago
    I think the last 80 years have been the most peaceful in recorded human history in spite of, or perhaps because of the constant threat of nuclear Armageddon. Globalization is a part of it, but I don't think it's sufficient in itself to keep the peace.
    - SomewhatLikely 6y ago
      Better Angels of Our Nature by Steven Pinker examines this and the general decline in violence on many levels.
  - avmich 6y ago
    Sigh. If only. Do you know what happened with Crimea in 2014 - and what was going on in Debaltsevo, Donetsk region, Ukraine, in February 2015?
hyperpallium2 6y ago
Though China's trajectory is to not need the USA.
- NovemberWhiskey 6y ago
  Given that China invests gigantic sums of money in the US and has vast segments of industry dedicated to selling goods to the US, it is not very clear to me how you've concluded that.
  - kevin_thibedeau 6y ago
    The US is a convenient parasite. Uplift their domestic population, throw in India and all of Africa and China can bear to lose 370 million consumers.
  - jbay808 6y ago
    > vast segments of industry dedicated to selling goods to the US If they don't want anything from their trading partners, the output of those industries can just as easily be directed to their own population.
foolinaround 6y ago
> so long as they also specialize in something that China needs tomorrow, China may learn to specialize in that something. It is never a good strategy to depend on the weakness of others for the long term.
- admax88q 6y ago
  That's the whole argument of comparative advantage though, even if China is better at everything its still in their best interest to trade because everyone comes out ahead if they specialize in what they're best at.

geofft 6y ago

How long would it take to figure out how to run a steel mill from (more or less) first principles? That is, if you're a country that has zero steel mills and zero people who have worked at one, and for some out-of-game reason (like a global pandemic) you can't travel to one, but you know that they exist, you have access to books, and perhaps you can interview people, how long will it take to build an acceptable-quality mill? After all, a) humankind developed steel mills in the absence of any steel mills at all, and b) multiple countries have developed much more complicated things in secrecy from each other (like atomic weapons and orbital rockets and radar), so it seems like it should be doable. It's to your advantage to give up your skills if the cost of regaining them if you need to is smaller than the comparative advantage of having China make steel for you in the meantime.

Ma8ee 6y ago
It is certainly doable, but it will take time. Any country can probably get some kind of small scale steel mill up in a few months (or a long afternoon if the scale is small enough). But getting producing high quality steel at industrial scale with economy would probably take longer than a decade.
fragmede 6y ago
The metal (steel, aluminum, etc) used in new cars didn't exist 10 years ago. From first principles, making steel is easy. Making stainless steel, figuring out when to add additives and what those additives should be, is harder. Doing it at scale, in quantity, cheaply, and safely, taking all aspects into consideration is dramatically harder, and if you dump the expertise now, and then have to restart from first principles 10 years from now, then you're multiple decades behind the competition. Geopolitical considerations may mean there's a business advantage to having it made in China as opposed to elsewhere, but as we've seen with the US pandemic response, there are sectors where it's just plain stupid to believe that expertise can be summoned up as needed, and that it's somehow cheaper not to pay for it in the interim. Government isn't a household, and you can't restart having expertise like canceling Netflix for a few months.
- chii 6y ago

cafard 6y ago

According to Wikipedia, in 2014 the US was the world's third-largest producer of raw steel. The industry's website says that US has produced almost 55 million tons of steel this year through the week ending September 12.

tsss 6y ago
It's not about the damn steel.

tuatoru 6y ago

> one of the biggest drawbacks to free trade is the loss of skills. The Economics jargon is "real option value". When you have engineers making widgets of type A, it's easy to get them to make types B, C, and D should the need arise. This potential to do other things has real value even if in fact you never do them. Real option value should always be evaluated when choosing a course of action, but since it's about non-existent things, it's usually skipped. (Edit: calling it "real" must be economist humor.) Ricardo didn't know about, or chose to ignore, real option value. In the classic England = cloth, Portugal = wine trade, Portugal would be better off making cloth because of real option value.