I’m trying to find some reliable economic blogs that might put these numbers in perspective.

I found one that looks interesting show that overall productivity gains from 2007-2009 were overstated.

Anyway, this isn’t an economics/financial blog, put possibly Neo will post something that will allow us to continue the discussion in the future.

Thank you for taking the time to respond at length to the points I was trying to make.

Some of our disagreements may be due to my not taking the time to fully explain what I mean.

I just have a couple of things to respond with.

——-

I wasn’t trying to cherry pick data in that paper on the effect of imposing import tariffs.
I’ll accept their and your assumption that the only way to truly protect American industries would probably mean tariffs to other countries than Japan, China and Mexico. I think some of that would depend on whether the other countries have similar labor costs, environmental regulations and tax structures as ours.

I didn’t include the lowest and second tier income levels is because those aren’t income levels you would typically see in a household. My wife employs $10 an hour Certified Nurse Assistants which puts their annual income at $20,000. Most have husbands, though a few are single parents. Some are always looking for overtime, so I would expect their income to be in the $25,000 range. Those with husbands probably have household incomes in the $40-50,000 range which would mean they could see a 13% increase in costs ($4900) which is not insignificant.

I was just trying to find data that quantifies how bad it would be if we imposed import tariffs. I could certainly afford it. And it would have to bring back a significant number of jobs to be worth it.

I know you don’t like picking winners and losers, but it certainly should be targeted to industries that other than cheap labor and lax environmental regulations could produce a quality product in American manufacturing plants.

———

I also wasn’t trying to imply that reducing regulations on cars could offset the increased costs because of import tariffs. Just saying that we would all benefit from less expensive cars and here were some numbers to go with the idea of reduced regulations. I’m not sure I need 11 airbags in my car, but if I’m ever in an accident where they all go off I hope the explosion saves our lives, but doesn’t deafen everyone. 🙂

As an aside, just down the road is a manufacturing plant named Takata– which manufactures airbags subject to the recall. I think they make the propellent canisters here.

—————–

Finally, I ran across this website that’s done an interesting analysis of how many jobs were lost to offshoring vs automation in the past couple of decades.

The put the number at 2.3 million. Their conclusion:

“Strictly speaking, it’s impossible to answer this question. Human societies are extraordinarily complex systems nobody really seems to understand. We can’t credibly say we have any idea what the world would look like today if we’d made a few tweaks over the past few decades.

That said, we thought it might be interesting to imagine what things might have looked like if the proportion of American demand for manufactured goods satisfied by domestic production had remained constant since 1990.

One potential interpretation: almost half of the total decline in manufacturing employment – more than 2 million reasonably well-paying American jobs – might be explained by imports displacing domestic production. (The rest would have been lost to machines.)…

…None of this is to recommend particular policies, nor to say America would have been better off in the absence of import penetration. Hopefully, however, it is clear that a significant chunk of the manufacturing jobs lost in the past few years can be attributed to foreign competition rather than “inevitable” technological change.”

https://ftalphaville.ft.com/2016/12/06/2180771/how-many-us-manufacturing-jobs-were-lost-to-globalisation/

You have to register to read this, but it’s free.

I’m going to dust off my economics books and look into comparative advantage, so I can answer you why I don’t think it works in the 21st Century. 🙂

I’ve tried to separate your various post/points by long string of “=” characters, and the start of my new comment with a single “=”, just to be clearer and easier to follow.
==================

No, I don’t think rent controls are the answer just as Nixon’s price controls in the 70’s just delayed price increases. It’s a stop gap measure that might fit an emergency need, but certainly no solution.

I’m not sure how rent controls equate to tariffs though. – Brian
=

Rent controls are yet another government intervention – that’s the relevance.

Where rent controls are a cap on a price of a good, tariffs are effectively a floor on the price of a good. One could point to minimum wage laws as being closer to tariffs, only that they apply across all industries where labor is employed, whereas tariffs tend to target specific industries.

The overall point is it benefits one group, but almost always at the cost to others. Your proposal is no different – there is no free lunch.

“Emergency need”, indeed. These things find a way of becoming permanent. Call me more than skeptical of that claim.
==================

“You and I may have the self aware restraint from using it for personal gain, or for ill will. But, can we be sure we can keep those levers of power in only the hands of those who are “good”?” – Big Maq

“Here’s the problem with this argument. We’ve had so many decades of government intervention in the economy, that it is expected. In the case of Trump, much is going to be done to undue the last few presidents, let alone find new ways to meddle. Having a campaign slogan “We’re going to do less for You” isn’t a winning argument, IMO. – Brian
=

The argument “it is expected” is very much of the “we’ve always done it that way” type, which is not a good basis to continue something that is bad.

Imagine if we operated our own lives on that basis – others’ expectations?

I HOPE trump undoes a lot of what the “last few presidents” did, too. This argument doesn’t mean I am against that.

Neither am I saying we need to campaign on “we are going to do less for you”, either. Not sure where you get the idea that is necessarily so.

That is similar in thinking behind the dems arguing about the “do nothing Congress” and using that to justify obama’s “pen and phone” executive actions – consistent with your “it is expected” – not a basis to justify continuing on a bad path.

All this is to position your proposals as being necessarily the right thing to do. This doesn’t make that case.

I still maintain that your focus is extremely indirect vs helping directly those who need assistance. Treat the problem not the symptom.
==================

“Free trade is built on the theory of comparative advantage, but the concepts built in the 19th century, when capital was localized and it was assumed the markets were at full employment, don’t apply to the 21st century.” – Brian

“Brian, you cannot just say that and not back it up.

I reject that notion completely, and that would take much more than a comment post to address.” – Big Maq

“You reject the notion that capital flowed more slowly, that Ricardo’s theory assume full employment, or the notion that free trade is built upon comparative advantage? – Brian
=

No, I reject the notion that it “(doesn’t) apply to the 21st century”.
==================

Big Maq, You’re example of allowing legal immigration to benefit our economy, is very similar to trade. We should allow trade that benefits our economy.

Unlimited immigration produces a labor glut which suppresses wages. Unlimited trade produces cheap goods, but ultimately hurts the job market.
=

But you miss a critical point. We are already a rather open economy wrt trade, and that trade of goods doesn’t represent a potential existential threat to our country. And, yes, we do have restrictions on such technology that might.

However, we know for a fact that there are individuals, and probably regimes behind them, whose sole purpose would be to damage and wreck havoc our society. Don’t see that we have the means to realistically vet those out on such a scale.

In the ideal I outlined (we are not close to that on a worldwide scale, might be getting close with, say, Canada), I don’t think we’d see a “labor glut”.

As close to a real life experiment on that, you could look at the EU and the free movement of labor within their borders. Perhaps in some narrow sectors there was a temporary glut, but by and large, have not seen major complaints about this being an actual phenomenon overall. But, I admit not having looked at this particularly closely.
==================

“Yes, Amazon does collect taxes (at least in our state), but many internet retailers do not.
In fact I’ve shopped for products from two internet retailers— one located in my state and one not, and guess which one was cheaper (at least 8% cheaper because of the tax advantage).
If your solution is basically “too bad for the retailer that has to collect the tax” isn’t that government picking winners and losers by favoring one retailer and penalizing the other by making them the tax collector for the state?”
=

But the point is that the state already has the power to come after YOU, if they have “use tax” laws on their books for out of state purchases. They don’t need extra laws to do what they want – or, if they don’t, they can pass them individually.

As far as in-state vendors, the state has the power to audit them and assess the tax and penalties as appropriate. The vendors take that risk.

This focus by state governments is really about making use of Amazon to collect their taxes for them, with their ~60% – 70% share of the eCommerce consumer market. Amazon are big enough to absorb the cost of doing so, as are the next several vendors down that list representing ~90-95%.
.

If you so object to it, you could conscientiously pay the tax you do owe.

This is the issue, ultimately.

Why do you (or anyone else) buy something knowing that you / they won’t pay the tax? We “know” they are “cheaper”, because the states are not enforcing their own laws.

If those vendors now have to have the burden to collect out of state tax for those states where they may have minimal traffic for, aside from the extra cost, will anyone in those states bother buying from them at all? Depending on their mix of buyers, that could be minimal, or it could be a business killer.
.

You are trying to make this a case of favoritism, when it is not, but just the opposite.

It is imposing new regulations on vendors to make the job “easier” for the states concerned. It is only the phenomenon of Amazon that they think they can do so.

We all intuitively “know”, by our own actions, that it will impact the small players, by our very patronage of them, because states are not doing their job in enforcing their own laws, representing a “cheaper” cost to ourselves (assuming “we” avoid paying taxes due).

The large players know that they can squeeze out competition from smaller players by advocating this.
==================

“Here’s an analysis of the cost to the average household if a 45% tariff on Chinese and Japanese goods and 35% on Mexican goods were imposed.

http://nfap.com/wp-content/uploads/2016/05/Impact-of-the-Trump-Tariffs.NFAP-Policy-Brief.May-20161.pdf“ – Brian
=

Brian, you are completely misreading the report. You pull “4%” but that is referring to the median income.

From that same report:

“The impact would hit poor Americans the hardest: A tariff of 45% on imports from China and Japan and 35% on Mexican imports would cost U.S. households in the lowest 10% of income up to 18% of their (mean) after-tax income or $4,670 over 5 years.”
.

But that is not where the report stops, as they say that the tariffs would prove ineffective, and would have to be global vs country specific.

Using the All Household median as you have, the figure would be $30.6K, not the $11.1K (i.e. the $2.2K/yr) you referenced – approximately 3x larger!

Again, from the report:

“A Trump tariff against all countries costs households in the lowest decile 53% of their annual income, while it would cost households in the highest decile 7% of their incomes. The tariffs would cost households in the second income decile 20% of their annual income“
.

What do you think will be the political ramifications of that??
==================
““In a recently released Heritage Foundation research paper, we’ve compared the recent price trends to the scholarly predictions and found that if U.S. vehicle prices had followed one of the comparable trends, cars would be between $3,975 and $7,140 cheaper today than they are. This massive expense buys very little change in global warming: less than two hundredths of a degree, according to the Obama administration’s own estimate.”

There are ways to offset increased cost of living— here’s an obvious one.” – Brian
=

Without disputing these precisely calculated estimates (remember the obamacare experts’ prediction on how the costs would go down, etc.?), you are assuming that it can be a one for one substitute.

People don’t purchase new vehicles in a uniform pattern for the “benefits” to land proportionately with the “costs” of the tariffs, to really claim that the offset to COL to be “obvious”.

Seems to me the lower one’s income, they will see little of the actual benefit and a whole lot of the cost.
==================

“I see tariffs as a last resort. Making the US a more friendly place to manufacture will help. Using the bully pulpit to remind US manufacturers that it is in our countries best interest to produce goods locally will help. I would prefer to buy products built here, as Chinese products have the reliability problem that faced Taiwanese and Korean goods when they first went to market.

While buying an American brand built in China usually means better quality control, that’s not always the case. And in some instances former name brands are just a facade for cheap Chinese products.” – Brian
=

Again, this is all a very indirect way to deal with the core problem you say you want to address- assisting people who have been displaced.

Why we think tariffs, or other marketplace interventions, are a way to address that, and, meanwhile, undersizing the downside effects that they have on other people? IDK.

Why couldn’t some kind of direct assistance do the job?
.

I’m all for making the US more business friendly overall.

Those burdens placed by the federal government are the result of all those “experts” thinking they can tinker around to “solve” one social problem or another.

You are suggesting that the only wrong with all that is that they are just not the right policies to address your primary concern, and you would like to see ones of your own making, even if “temporary”.

Could it be that, over time, all these so-called experts are just adding to the pile on the backs of businesses and citizens, all in the name of some “good”, but are cumulatively having the opposite effect?
==================

“One of the things missed in the argument against tariffs is the assumption that costs of affected goods will rise with no benefit to the US.

So the incentive is not just to stop offshoring, but to encourage US companies (and foreign companies for that matter) to locate production in the US.” – Brian
=

Agree with lowering the tax rate (actually, I advocate greatly simplifying them, which probably leads to a much lower rate) to encourage repatriation of the overseas profits, while a good thing, is not a “benefit to the US” from tariffs. Two separate issues, though.
.

I’ve long argued that, aside from existing regulatory burdens and tax rates, the biggest hindrance in our economy and the investment needed to grow it has been “regime uncertainty”, particularly following the 2008 financial crisis.

After having confidence shaken, comments like “you didn’t build that” and “boot on the neck of” (and many, many others from the obama admin) don’t sound like an environment one wants to place bets within.

Not to say that there are not other factors, like Fed driven vs market led interest rates (another confidence shaker / source of uncertainty), which play into why we see stock buybacks vs capital investment, too.

I have mentioned elsewhere that the uncertainty around trump and what he will do has its own impact wrt “regime uncertainty”.
==================

“All this new economic activity is going to strain the job market, which is going to positively impact wages, which will make it easier for American workers to buy American products.

Here’s the kicker. The newest production facility built is usually the most efficient, able to produce goods at the lowest cost. By encouraging new production in the US, these new plants could be efficient enough to compete with lowered tariffs.”

Rather rosy predictions.

I’d say that whatever trump does to improve things domestically to encourage investment and growth may well be off set by trade and other market disruptions.

Which will have the greater impact? We’ll see.
==================

So, Brian, time we move on to another thread.

I like having this conversation, but I cannot devote the proper time to all of it (and I suspect, neither do you).

I don’t think the convo ends here, per se, as I don’t think the stars in your eyes have yet disappeared on the value of “industrial policy” to right all the wrongs of our economy.

And, I’m skeptical as h*ll about all that, not only in theory, but in what we’ve seen worldwide in the relative performances of economies that had more of what you advocate vs less.

Even within the US, we like to point out how the consistently GOP governed states, by and large, performing better than dem ones. Neither are perfect purveyors of free market policy, but for the little difference that there is, the results are unmistakable.

So, last word to you. I will read it at some point, but won’t respond.

Thanks, BM

This will encourage those who have dropped out of the labor market to re-enter it.

Here’s the kicker. The newest production facility built is usually the most efficient, able to produce goods at the lowest cost. By encouraging new production in the US, these new plants could be efficient enough to compete with lowered tariffs.

One of the real problems in this recovery has been the lack of investment by US companies. Rather than expand production, develop new products, expand into new export markets the corporations are buying back stock with their accumulated profits.

Part of the re-vitalization of the US economy is the repatriation of US corporations foreign profits, estimated at $2.5 trillion. By offering a lowered tax rate to bring that money back onshore, and creating a domestic market for many products currently being imported, the incentive is there for new manufacturing plants onshore to make products here.

So the incentive is not just to stop offshoring, but to encourage US companies (and foreign companies for that matter) to locate production in the US.

They estimate it be be 4% of the mean after tax income, or 2,200/year or $183 per month. It would be higher for very low income wage earners.

I haven’t studied it in detail, but will assume it’s correct. I suspect that in some instance consumers will defer purchase or choose a lower value product (cheaper), so it might not be that high in practice.

http://nfap.com/wp-content/uploads/2016/05/Impact-of-the-Trump-Tariffs.NFAP-Policy-Brief.May-20161.pdf

“In a recently released Heritage Foundation research paper, we’ve compared the recent price trends to the scholarly predictions and found that if U.S. vehicle prices had followed one of the comparable trends, cars would be between $3,975 and $7,140 cheaper today than they are. This massive expense buys very little change in global warming: less than two hundredths of a degree, according to the Obama administration’s own estimate.”

http://dailysignal.com/2016/03/28/a-new-car-will-cost-you-at-least-3800-extra-because-of-government-regulation/

There are ways to offset increased cost of living– here’s an obvious one.

I see tariffs as a last resort. Making the US a more friendly place to manufacture will help. Using the bully pulpit to remind US manufacturers that it is in our countries best interest to produce goods locally will help. I would prefer to buy products built here, as Chinese products have the reliability problem that faced Taiwanese and Korean goods when they first went to market.

While buying an American brand built in China usually means better quality control, that’s not always the case. And in some instances former name brands are just a facade for cheap Chinese products.

No, I don’t think rent controls are the answer just as Nixon’s price controls in the 70’s just delayed price increases. It’s a stop gap measure that might fit an emergency need, but certainly no solution.

I’m not sure how rent controls equate to tariffs though.
——
You and I may have the self aware restraint from using it for personal gain, or for ill will. But, can we be sure we can keep those levers of power in only the hands of those who are “good”?- Big Maq

Here’s the problem with this argument. We’ve had so many decades of government intervention in the economy, that it is expected. In the case of Trump, much is going to be done to undue the last few presidents, let alone find new ways to meddle. Having a campaign slogan “We’re going to do less for You” isn’t a winning argument, IMO.

——-

“Free trade is built on the theory of comparative advantage, but the concepts built in the 19th century, when capital was localized and it was assumed the markets were at full employment, don’t apply to the 21st century.”- Me

Brian, you cannot just say that and not back it up.

I reject that notion completely, and that would take much more than a comment post to address.- Big Maq

You reject the notion that capital flowed more slowly, that Ricardo’s theory assume full employment, or the notion that free trade is built upon comparative advantage?

Capital did move from country to country, but certainly not at the rate it does now.

“The Ricardian Model – Assumptions and Results
The modern version of the Ricardian model and its results are typically presented by constructing and analyzing an economic model of an international economy. In its most simple form, the model assumes two countries producing two goods using labor as the only factor of production. Goods are assumed homogeneous (i.e., identical) across firms and countries. Labor is homogeneous within a country but heterogeneous (non-identical) across countries. Goods can be transported costlessly between countries. Labor can be reallocated costlessly between industries within a country but cannot move between countries. Labor is always fully employed. Production technology differences exist across industries and across countries and are reflected in labor productivity parameters. The labor and goods markets are assumed to be perfectly competitive in both countries. Firms are assumed to maximize profit while consumers (workers) are assumed to maximize utility. ”

http://internationalecon.com/Trade/Tch40/T40-0.php

—–

Big Maq, You’re example of allowing legal immigration to benefit our economy, is very similar to trade. We should allow trade that benefits our economy.

Unlimited immigration produces a labor glut which suppresses wages. Unlimited trade produces cheap goods, but ultimately hurts the job market.

—-

Yes, Amazon does collect taxes (at least in our state), but many internet retailers do not.
In fact I’ve shopped for products from two internet retailers– one located in my state and one not, and guess which one was cheaper (at least 8% cheaper because of the tax advantage).
If your solution is basically “too bad for the retailer that has to collect the tax” isn’t that government picking winners and losers by favoring one retailer and penalizing the other by making them the tax collector for the state?