Posts Tagged ‘Industrial Policy’

A constructive future for the GOP

August 26, 2020

When Donald Trump was campaigning in 2016, the most powerful thing he said was, ‘We don’t make things in this country anymore.’

He campaigned in the Rustbelt and promised to rebuild American manufacturing.  He said the leaders of China, Mexico and other countries are laughing at us for allowing our industrial base to decline.

He promised to repeal and reject pro-corporate trade treaties.  He promised to stop illegal immigration.  He promised a trillion-dollar infrastructure program. He promise to ‘drain the swamp’ of special interests.

He promised to repeal and replace Obamacare with something better.  He promised to wind down the forever wars in Afghanistan and the Middle East and improve relations with Russia.

Nobody else was talking about these issues except Bernie Sanders.  Npbody, including Sanders, talked about them in this year’s election campaign.

Trump did do some things to carry out his promises.  He rejected the pro-corporate Trans-Pacific Partnership agreement.  He canceled NAFTA and replaced it with a new agreement that was less bad.

He imposed new tariffs on Chinese imports in a willy-nilly way.  He did not propose a systematic industrial policy to rebuild American industry.

On the other hand, he worsened Obamacare instead of improving it.  He did not end the wars.  His administration stepped up the Cold War with Russia.  He did not clean house of special interests; just the reverse.  But it is not as if his Democratic opposition was proposing something better.

Trump benefited from the economic recovery that began under the Obama administration.  If not for the COVID-19 pandemic and his failed response, he would have an excellent chance of winning a fair election.

If I were a Republican strategist, I would be content to see the Democrats win the 2020 election, have them take the blame for the impending economic crash and pick up the pieces in 2024.

There is an emerging school of thought in the Republican Party called National Conservatism.  It consists of an industrial policy to rebuild industry and infrastructure, cancellation of free trade agreements, a non-interventionist foreign policy and social conservatism.

With such a policy, and with a candidate who did not make a fool of himself on a daily basis, like Trump., the GOP could win and deserve to win.

I don’t think a hypothetical national conservative administration would do everything I think needful.  I can’t imagine Republicans supporting a Green New Deal or strong labor unions.  But if such an administration was serious about ending the wars and reversing de-industrialization, it would be an improvement over what we’ve got now.

A certain amount of economic nationalism is needed because all international economic institutions are controlled by global corporations and banks.  At this point in history, the nation-state is the highest level subject to democratic control.

I am not predicting the Republicans will actually choose this path.  I am speculating on the best path open to them.

LINKS

The New Populist Right Imagines a Post-Pandemic America on BIG by Matt Stoller [Added 8/28/2020]

National Conservatism Conference Draws Big Names by Emma Green for The Atlantic.

National Conservatism Conference: ‘Intellectual Trumpist’ Movement Takes Shape by Jimmy Quinn for National Review.

Getting Behind Enlightened Nationalism by Patrick J. Buchanan from his new book.

Joe Biden is already planning a failed presidency by Ryan Cooper for The Week.

The fall and fall of U.S. tariff barriers

March 1, 2019

Click to enlarge. Hat to Barry Ritholtz

The United States, like almost all industrial countries, built up its infant industries behind protective tariff walls that shielded them from more efficient, because longer-established, competitors.

This historical graph shows what has happened since then.  Tariffs against foreign imports are down to a tiny fraction of what they were in the 1930s or 1940s.

President Trump deserves credit for forcing trade policy onto the national agenda.  Unlike his predecessors, he does not argue that more and more globalization is the answer  He is right that it is time for a change.

But trade wars aren’t an answer either

Rather the U.S. should do what successful exporting nations do, which is to build up their industries through a carefully targeted industrial policy.

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Can Trump make U.S. industry great again?

December 1, 2016

Donald Trump in his campaign promised to reverse the decline of American manufacturing.

Can he do it?  I’m willing to be pleasantly surprised, but I don’t think so.

President-elect Trump’s proposed economic policies are the same as what most Republicans and many Democrats have been advocating for 30 years or more—lower taxes, less regulation, fewer public services.

None of these things has stopped the increase in U.S. trade deficits or the increase in economic insecurity of American workers.

Trump did speak against the Trans-Pacific Partnership agreement, promised to renegotiate other trade agreements and threatened to impose punishing tariffs on China and Mexico in retaliation for their unfair trade policies.

I myself am in favor of rejecting the TPP and renegotiating trade treaties.  This would be a step forward.  But it would take more than this to rebuild the hollowed-out U.S. manufacturing economy.

China, Japan, South Korea and most nations with flourishing industrial economies use trade policy as a means of strengthening their economies.

Their leaders, like Alexander Hamilton in the early days of the United States, seek to build up their nations’ “infant industries” under those industries are strong enough to stand on their own feet.

When foreign companies seek to sell these nations their products, their governments demand that the foreign companies not only set up factories in their countries, but that they employ native workers and transfer their industrial know-how to the host countries.  The USA does nothing like this.

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How Apple undermined the US economy

May 8, 2015

I’ve always bought Ford and General Motors cars, partly because I wanted to support jobs for my fellow Americans.

As Abraham Lincoln reportedly put it, “When I buy a shirt from England, I get a shirt and England gets a dollar.  But when I buy a shirt from America, I get a shirt and America gets a dollar.”

At the same time, I’ve always bought Apple computer products, and, in so doing, I may have done more to undermine the U.S. economy than I did when I bought a Ford Escort or a GM Saturn.

9554-1329-applecash-140611-lI read an article yesterday on a blog called Moneyball Economics about how Apple offshored the American smartphone industry to South Korea, Taiwan and mainland China.

This is a big thing.  The writer, Andrew Zatlin, pointed out that the United States imported nearly $100 billion worth of smartphones each year, half of them Apple iPphones.  Smartphones are the third largest U.S. import, behind oil and automobiles.

He said it is like a Marshall Plan for these three countries.  The iPhone industry creates a million jobs in eastern Asia and provides valuable technological knowledge that makes those countries more competitive in the world.   They aren’t all Apple smartphones, but Apple has half the market and sets the pace.

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