“Manufacturing” jobs

We’re not really talking about “manufacturing”, are we

I see there is a debate running on the internets about whether the combination of protection *  and fiscal stimulus might reasonably be expected to bring back manufacturing jobs. I won’t provide the links because I fear I already seem to be stalking Paul Krugman.

But one argument is that a US fiscal stimulus would likely push up bond yields, force the dollar higher, and undermine competitiveness in the traded goods sectors, of which manufacturing is the most prominent.  This effect could easily dominate protection, particularly given that protection itself would probably force the dollar higher, unless it led to retaliation, in which case the primary and currency knock-on effects would both be mitigated. **

It is not clear that what the Trump-led Republicans actually have on offer is fiscal “stimulus”, in conventional Keynesian terms.  Tax cuts concentrated at the upper end and an infrastructure spending program comprising mostly public-private partnerships, might raise the fiscal deficit without moving the ex-ante savings-investment gap much. So they might not be that stimulative.

The economy hasn’t much use for stimulus just now, so the lack of it would not necessarily be a flaw.   To me, the issues are much more that income pre-distribution upward is not a great idea and that PPPs are fertile ground for corruption.

But if the fiscal changes are not stimulative in the Keynesian sense, then the whole discussion of their mitigating protection — in terms of the impact on manufacturing jobs — might be beside the point.  There are a lot of moving parts here and the sitch might not be well described by a reductionist approach.  The Reagan-Volcker policy mixed sped de-industrialization, true. That is one observation. One could imagine a scenario where some sort of fiscal stimulus delivered in the form of a spending program with buy-American provisos would lift manufacturing employment. It is not the main scenario, but a plausible one.

As I have mentioned before, it is not obvious that theTrump-led Republicans have a macroeconomic strategy to speak of, so I am not inclined to try to analyze it. As Douglas Hotlz-Eakin once said memorably of fiscal policy in a different context, Congress does things and then we have fiscal results: it does not follow from this that there was a policy. *** DHE has since disappointed me, something I am sure he would be devastated to hear, but to me that was a very good point, with broad application.

So rather than speculate on the effect of a macroeconomic strategy that probably does not even exist, I would like to engage in some totally groundless speculation based on amateur psychobabble. When people say they want “manufacturing” jobs, I doubt they really have manufacturing in mind. Rather, “manufacturing” is a stand-in for other considerations, just as Freud’s cigar was. I am an evidenced-based liberal, which excludes being Freudian, but still.

Can you imagine anyone turning 14 considering the life that stretches out before him and thinking, what I really want to do with my life is sit on an assembly line and turn the same screw the same 42 degrees clockwise for the next 25 years, before taking retirement? That seems unlikely.

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So I am going to throw out there that “manufacturing” jobs are a symbol for other things. Maybe it is high wages? Unionization? A different set of power relationships between the sexes and races?  Hell, a different take on religion. America rules the waves.  I don’t know.

One thing I do know: I am not the first genius to come up with this super-obvious idea. But it would be rather odd to have this huge debate about “manufacturing” when we are not really talking about manufacturing.

* I am going to call this protection, rather than protectionism.  Protectionism is a mental state that is interesting if it leads to protection.

** There is a fun bit of complexity here. If multilateral protection were to reduce global trade generally, without affecting desired net capital flows (admittedly unlikely), then the currencies of trade-deficit / capital-surplus countries might rise. I am going to steer away from that, it being beyond me.

*** I am treading dangerously close to semantics here.  Regardless of whether or not the tariff and fiscal changes reflect a macro policy strategy, they might have predictable macro effects that people might wish to consider. I guess it is a matter of how you spend your time. To me, the key issue with President Trompe has nothing relatively little to do with macroeconomics.

Separately, here is Ramesh Ponnuru on the border adjustment tax. He is absolutely right that the discussion has been befuddling.  You guys figure it out and get back to me. Ponnuru is my kind of conservative. He reminds me of Josh Barro fives year ago. He will formally switch sides soon enough. 😉

Chemical Worker’s Song

And its go boys go
They’ll time your every breath
And every day in this place your two days near to death
But you go

Well a process man am I and I’m tellin’ you no lie
I work and breathe among the fumes that tread across the sky
There’s thunder all around me and there’s poison in the air
There’s a lousy smell that smacks of hell and dust all in me hair

Well I’ve worked among the spitters and I breathe the oily smoke
I’ve shovelled up the gypsum and it neigh ‘on makes you choke
I’ve stood knee deep cyanide, got sick with a caustic burn
Been working rough, I’ve seen enough, to make your stomach turn

There’s overtime and bonus opportunities galore
The young men like their money and they all come back for more
But soon your knocking on and you look older than you should
For every bob made on the job, you pay with flesh and blood

Well a process man am I and I’m telling you no lie
I work and breathe among the fumes that tread across the sky
There’s thunder all around me and there’s poison in the air
There’s a lousy smell that smacks of hell and dust all in me hair