Should-Read: Martin Sandbu: Donald Trump’s Love of Manufacturing Is Misguided
Should-Read: Martin Sandbu: Donald Trump’s Love of Manufacturing Is Misguided: “Donald Trump and his economic team love manufacturing…
…Peter Navarro’s attacks on Germany and stated goal to repatriate international supply chains…. The high productivity of manufacturing means a country with a large proportion of its workforce in factories needs to ship a lot of its output abroad: it will simply be producing too many goods for its own population to consume…. On a global level, there are… only so many manufacturing jobs to be had…. There are three countries that have traditionally been goods producers to the world: Germany, Japan and China…. The economic nationalism of President Trump and Messrs Navarro and Bannon can be described as Germany-envy….
But… manufacturing machismo itself is a handicap when it comes to grasping the opportunities for a thriving economy. By far the largest number of jobs to be created in the US over the next decade will be in services, in particular the caring professions…. Regardless of trade, automation is reducing the need for manufacturing jobs everywhere. As the economist Brad DeLong pointed out in a recent essay, that is true in Germany, too, which has seen a fall in factory employment almost as sharp as in the US (the same holds for Japan)…. Many German workers have faced long wage stagnation. And all the big industrial economies have chosen to internationalise their supply chains….
It gets worse. If the factory fetishists are obsessed enough to throw themselves into a battle for a steadily shrinking type of employment, they may well find that their most obvious weapons are doubled-edged at best. Suppose the Trump administration forced through changes in the North American Free Trade Agreement so as to repatriate all parts of the car production process, the most salient of the supply chains Mr Navarro says he wants to bring back. The result will be to make US-produced cars more expensive. How is that going to help expand American car exports?… Protectionist policies are likely to shrink imports and exports, leaving the protected economy worse off than before and in no better position even by the misguided measures of the manufacturing fetishists themselves.