Trump's Cargo-Cult Economics

Thursday, September 07, 2017

John Tamny makes an interesting connection regarding Trump's pro-manufacturing brand of economic meddling. First summarizing observations about the economic stagnation of Russia and Afghanistan, where visits spaced decades apart yield remarkably similar views of their inhabitants' working days, Tamny considers what those observations mean:

Image courtesy of Unsplash.
So while it's popular to say that the disappearance of some forms of work tells the story of a formerly glorious city, state, or country's demise, the paradoxical truth is that the non-departure of specific work is the bigger signal of looming demise. Investors are the creators of all jobs, and they want dynamism. Locales defined by static working conditions are the opposite of dynamic, and as such they're an investor repellent. New York City thrives by virtue of it having shed its manufacturing past, while Flint languishes for it having not shed manufacturing work quickly enough.

Investors want change, simply because profits are, like luxury, an historical concept. Just as entrepreneurs commoditize luxuries every day to our benefit, so do they aggressively compete away profits. This explains why the nature of work is constantly changing. It simply must. Where it doesn't is where opportunity is slight mainly because investment is. [bold added]
True, at one point, the mere presence of factories was an indicator of economic strength and progress but, for reasons Tamny elaborates on, they aren't, any more. And measures, such as jacking up prices via tariffs to make manufacturing things here again seem attractive, would just as surely squander American talent and wealth as "employing" armies of ditch-diggers after banning heavy construction equipment. The change investors want is increased efficiency. Factories filled with human beings who have to be paid more than others (or robots) are today's ditch-diggers. They might do a job, but there are better ways of doing it. One can see either doing work with his eyes, but one must hold the context in which such work is valuable (because it is the most efficient alternative) with one's mind. To embrace manufacturing as a panacea for the former reason is foolish; to do so in a given case for the latter, is wise.

It is a shame that politicians have enough power to saddle us, even partly, with their own foolishness.Trump's economic ideas -- like those of Bernie Sanders and Nicolás Maduro -- were discredited decades ago. Were the state and economics separated, discussion of them would be the academic exercises they should be, and nowhere near the realm of implementation.

-- CAV

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