Drudge Retort: The Other Side of the News
Saturday, May 05, 2018

But it turns out that Trump's story of US manufacturing decline was much closer to being right than the story of technological progress being spun in Washington, New York, and Cambridge. Thanks to a painstaking analysis by a handful of economists, it's become clear that the data that underpin the dominant narrative -- or more precisely, the way most economists interpreted the data -- were way off-base. Foreign competition, not automation, was behind the stunning loss in factory jobs. And that means America's manufacturing sector is in far worse shape than the media, politicians, and even most academics realize.

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The article argues that economists screwed up and missed a weakening manufacturing sector, and then assumed that since output was growing service jobs would replace manufacturing jobs lost to automation.

The rust belt (and Trump) were right, globalization was hurting them.

The politicians listened to the experts, and still think trade deficits are okay.

Trump was right about the problem. Unfortunately his cure is wrong. Tariffs won't help. Fair trade and fair currency exchange might.

#1 | Posted by bored at 2018-05-05 05:04 PM | Reply

Boy. oh boy, have you opened a can of worms.

"A 2017 study on the dollar's appreciation in the early 2000s by economist Douglas Campbell found that the dollar strengthened sharply, in real terms, compared to low-wage trading partners including China. The subsequent increase in foreign imports and diminished demand for American exports resulted in a loss of around 1.5 million manufacturing jobs between 1995 and 2008.

There are also observable signs that automation wasn't to blame. Consider the shuttering of some 78,000 manufacturing plants between 2000 and 2014, a 22% drop. This is odd given that robots, like humans, have to work somewhere. Then there's the fact that there simply aren't that many robots in US factories, compared with other advanced economies.

Good article.

#2 | Posted by SheepleSchism at 2018-05-05 05:33 PM | Reply

Tariffs won't help. Fair trade and fair currency exchange might.

#1 | POSTED BY BORED

I agree about tariffs and fair currency rates ...

But also we have to close the tax loopholes and stop rewarding American businesses with lower tax rates for shipping their manufacturing overseas...

Rewarding US businesses to follow cheap overseas labor is a big part of the reason why American manufacturing is in the doldrums -- it's literally cutting off your nose to spite your face.

#3 | Posted by PinchALoaf at 2018-05-05 05:33 PM | Reply | Newsworthy 3

#2 It has a lot of questions for conventional economic wisdom. I would love to read a Michael Lewis book on this.

The dems better get on top of this and come up with policies to protect US prosperity in the bottom 80%.

#4 | Posted by bored at 2018-05-05 06:12 PM | Reply

- and come up with policies to protect US prosperity in the bottom 80%.

Somehow, I don't believe that's the master plan.

#5 | Posted by SheepleSchism at 2018-05-05 06:16 PM | Reply | Newsworthy 2

"7 out of 10 doctors agree, New and Improved Lucky Charms with No MSG, is a heart-healthy alternative to our Original Formula!" - Snoofy, advertising executive

#6 | Posted by SheepleSchism at 2018-05-05 06:20 PM | Reply

I think that is the intent of many dems, it certainly isn't the intent of the GOP.

#7 | Posted by bored at 2018-05-05 06:21 PM | Reply

- that is the intent

I will agree with you that the intentions of many who enter politics is for good.

There are also those who enter with the intentions of fulfilling their ambitions for power and wealth.

Of those who enter with good intentions, they either become corrupted, or chewed up and spit out.

#8 | Posted by SheepleSchism at 2018-05-05 06:23 PM | Reply

I am a data nerd that works with economists and policy makers that seem to prefer decision based evidence making.

Susan Houseman's work here makes me want to have her babies.
Her publications are here:
papers.ssrn.com

#9 | Posted by bored at 2018-05-05 06:24 PM | Reply

#6 | POSTED BY SHEEPLESCHISM

Crap, wrong thread.

#10 | Posted by SheepleSchism at 2018-05-05 06:24 PM | Reply

- makes me want to have her babies.

I wish I were more wonkish to dive in, but even the titles of her papers are interesting.

I've bookmarked it for later reading.

#11 | Posted by SheepleSchism at 2018-05-05 06:27 PM | Reply

#8 Agreed, the US system seems designed for maximum corruption while appearing like a democracy. Donor call the shots via lobbyists. Congress would be better off with each member taking Gofundme contributions for each vote, and procedural maneuver. If the system is corrupt, at least let it be transparent.

#12 | Posted by bored at 2018-05-05 06:27 PM | Reply

LOL on the babies remark

#13 | Posted by SheepleSchism at 2018-05-05 06:27 PM | Reply

#11 There are Russian translations if that makes it easier. ;^)

#14 | Posted by bored at 2018-05-05 06:29 PM | Reply

Economics is mostly used to cook the books to provide moral cover for the decisions of the wealthy.

That may not be what the field is intended to do, but it's how the knowledge is put to use.

#15 | Posted by snoofy at 2018-05-05 06:30 PM | Reply | Newsworthy 1

Per the article at the top of the thread ...

How, then, do you reconcile the epic employment slump of the 2000s with the steady rise in output? The obvious conclusion is that factories needed fewer people than they did in the past because robots are now doing more and more of the producing. That's tough for factory workers, but US manufacturing is doing fine.

Wrong

China, for example, subsidizes the cost of US businesses to build their factories in China. Yes, Chinese labor is cheap, but the main driver are Chinese subsidies that allow foreign companies to build their factories in China.

So if we following the bouncing ball as to why American manufacturing moved to places like China, it goes like this...

1. Cheaper to build factories overseas than in places like Ohio -- we're talking billions of dollars saved.
2. US Tax Laws does not penalize US businesses to move their factories overseas.
3. Labor is cheaper, along with moving off the US business books the cost of healthcare (pensions were long moved of business books with 401K plans)
4. The cumulative effect is American businesses make huge profits at the expense of the American workers and the American economy in general.

#16 | Posted by PinchALoaf at 2018-05-05 06:44 PM | Reply

#15 Economics is a tool used to create insight and manipulate.
I have a right wing economist friend. He specialized in social services. You might think that he would want to let people pay for their own choices as typical wing dings do. Instead his economics training and not his value system led him to conclude that tax payers should pay for a variety of social programs based on the needs of children (yes, rich white guys paying for black single mother kids). His reason is that it is cheaper, not better, not the right thing to do, simply cheaper that is how you convince intelligent right wing folks to support lefty social programs. (It won't work on Boaz)

The reason social programs are cheaper is that everything has costs, including police, prisons, insurance, injuries, theft, etc. He approaches sociology from the standpoint of which social policies result in lowest societal cost. Kindergarden has been show to benefit society at many times the cost of kindergarden.

What I like about his approach is that lefties will support what aligns with their values, which includes helping the less fortunate. Rigties support charity but typically only to their narrow social group. My friend's approach to promoting social programs is that they save money, and that appeals to righties greedy nature. It is the only way you can get broad based support for tax payer funded programs that often don't directly benefit taxpayers.

The Dems need a younger fact based Bernie to make that case to the 80% that are getting screwed by the system. I am in the 20% that is getting a sweet ride. I feel a bit guilty, but mostly I want my kids to grow up in a nice society, not one where they have to pay guards to make sure their kids don't get kidnapped going to school like what happens in Mexico. Righties need to see the evidence that taxes spent wisely will save them money and make the country a better place for everyone. Low tax countries are typically ---------.

#17 | Posted by bored at 2018-05-05 06:54 PM | Reply

#16 You didn't read far enough. The article shows why your italics excerpt is wrong. That was the point of the article, that the conventional wisdom you highlighted is wrong.

#18 | Posted by bored at 2018-05-05 06:56 PM | Reply

I have to run, feel free to interpret my lack of responses from now on as capitulation in the face of your superior intellect.

#19 | Posted by bored at 2018-05-05 07:00 PM | Reply

#19

Nice try. bored. But they didn't work.

#20 | Posted by rstybeach11 at 2018-05-05 07:01 PM | Reply

#17 | POSTED BY BORED

Great post, I hadn't thought of it in those terms, but it's a great approach.

I whole heartedly agree.

#21 | Posted by SheepleSchism at 2018-05-05 07:11 PM | Reply

#21 In Salt Lake City, that's exactly what they think. They put all their homeless people into cheap apartments because it was cheaper than dealing with their medical bills from being on the streets that where getting defaulting on, by a pretty good margin.

I hope that magic underwear isn't too tight downstairs. Mormon.

#22 | Posted by HeliumRat at 2018-05-05 08:11 PM | Reply

This article is correct and I have said the same since day 1. Blaming technology and automation flies in the face of the factories making the same goods using Chinese people in Chinese factories rather than US citizen in US factories. They didn't move there for Chinese automation and they didn't move there because the jobs are gone forever due to US automation. You had to be be willfully ignorant to buy that narrative - as most were on this website along with Obama. Obama told these people the jobs are gone - never coming back so just shut your poor----------- mouth and deal with it. Obama and his followers were such a clueless and destructive force for this country.

And for those crying about tariffs now while calling for 'fair trade' - they are one in the same. How do you have fair trade with a country that applies tariffs to your products? It is only fair if you apply the same. Lastly, we cannot have fair trade while classifying countries as developing, etc and applying different standards - especially when the stats are manipulated to put China into a 'developing' classification. Our politicians sold out the middle/working class for years. They need to be exposed.

#23 | Posted by Rex_Buyt at 2018-05-05 09:00 PM | Reply | Newsworthy 1

How do you have fair trade with a country that applies tariffs to your products?

You don't.

But instead of blaming Obama, which is ridiculous, blame US corporations who moved their manufacturing to China in order to not pay American workers.

There are 12,000 registered corporate lobbyists in Washington (as compared to 400 union lobbyists) ... is it no wonder why our economy suffers mediocre growth while US corporations still make record profits, all the while sitting on $2 Trillion in off shore tax havens?

Not hard.

#24 | Posted by PinchALoaf at 2018-05-05 09:26 PM | Reply

- all the while sitting on $2 Trillion in off shore tax havens?

How much did Obama track down? I realize he only had 8 years, but I don't recall Holder looking for Grand Cayman cash.

#25 | Posted by SheepleSchism at 2018-05-05 11:23 PM | Reply

The reason social programs are cheaper is that everything has costs, including police, prisons, insurance, injuries, theft, etc. He approaches sociology from the standpoint of which social policies result in lowest societal cost.

No doubt. However, a policy that's good overall is going to be bad for some stakeholders, for example MSgt's private prison stocks.

#26 | Posted by snoofy at 2018-05-05 11:52 PM | Reply

"But also we have to close the tax loopholes and stop rewarding American businesses with lower tax rates for shipping their manufacturing overseas..."

I don't disagree with this, but if we close the loopholes then some other country like the Cayman Islands can open them back up to lure American companies.

#27 | Posted by snoofy at 2018-05-06 12:02 AM | Reply

I don't disagree with this, but if we close the loopholes then some other country like the Cayman Islands can open them back up to lure American companies.
#27 | POSTED BY SNOOFY
==============
Typical libbie response trying to explain your total inaction. Just like with illegal immigration - you think it is not possible to stop (because you lack critical thinking skills) - so you just throw your hands in the air and declare that nothing can be done. It is moronic thinking. If a company offshores jobs to build products exclusively for the international market, well, there is nothing we really can do or even should do as a country. However, the moment they try to import one of those products back into the US, we have A LOT we can do to discourage this behavior. That is also where tariffs come into play. The rest is on the consumers - you need to look for an buy Made In America whenever possible. The US is still a giant consumer market - the US shunning your product is crippling financially.

We cannot have our citizens behaving like the global warming crowd. There was a recent study that showed people with "Green" beliefs are less likely to practice conservation efforts on a personal level. Those that were skeptical of global warming, were more likely to practice environmentally friendly practices on a personal level. We have to - as a nation - realize the importance of Made in America and actually have our actions match our beliefs. No shopping at Wal Mart. Don't buy the cheap Chinese crap tools from Harbor Freight, etc. Reward companies that keep their manufacturing here.

Same goes for tax policies. If your company is successful but refuses to pay US taxes, don't buy from that company - looking at you, Amazon.

#28 | Posted by Rex_Buyt at 2018-05-06 01:16 AM | Reply

"The rest is on the consumers - you need to look for an buy Made In America whenever possible."

No computers, no cell phones, pretty much no consumer electronics, not much in the way of clothing.

You know how people say the carbon reduction needed to fight global warming takes us back to the stone age? You're asking Americans to go there voluntarily.

#29 | Posted by snoofy at 2018-05-06 03:14 AM | Reply

You're asking Americans to go there voluntarily.
#29 | POSTED BY SNOOFY
================
Goofy, please define "whenever possible" for me. After that, please use that definition and re-read your post.

#30 | Posted by Rex_Buyt at 2018-05-06 11:14 AM | Reply

You wrote wherever possible, now you're walking it back to wherever convenient.

#31 | Posted by snoofy at 2018-05-06 11:31 AM | Reply

"No computers, no cell phones, pretty much no consumer electronics, not much in the way of clothing. "

Is it because you prefer paying less for these items on the backs of desperate third world laborers?

#32 | Posted by SheepleSchism at 2018-05-06 11:35 AM | Reply

You wrote wherever possible,
#31 | POSTED BY SNOOFY
================
Yes I did. Unfortunately, you seem too stupid to understand what that means. Please find an 8 year old to explain it to you if that does not violate any court orders.

#33 | Posted by Rex_Buyt at 2018-05-06 11:41 AM | Reply

It's possible for humans to live without anything made in China.

We lived that way for hundreds of thousands of years.

MadB explain it to him please.

#34 | Posted by snoofy at 2018-05-06 11:43 AM | Reply | Funny: 1

"Is it because you prefer paying less for these items"

No, its because they're not made in the USA.

#35 | Posted by snoofy at 2018-05-06 11:44 AM | Reply | Newsworthy 1

I'm actualy with Snoofy on this. I do try and buy American whenever possible it is just frequently impossible at any price.

I mean double the price for a pair of Levis made in the USA wow but ok I'll do it, but many products don't exist at any price.

#36 | Posted by TaoWarrior at 2018-05-06 12:05 PM | Reply

- No, its because they're not made in the USA.

Yeah, why is that?

#37 | Posted by SheepleSchism at 2018-05-06 12:29 PM | Reply

It's possible for humans to live without anything made in China.
#34 | POSTED BY SNOOFY
===============
You don't have the brain power to process basic language. No wonder you have been such a failure in life.

#38 | Posted by Rex_Buyt at 2018-05-06 12:43 PM | Reply

"You don't have the brain power to process basic language."

I'll see if I can't import some from China.

#39 | Posted by snoofy at 2018-05-06 02:56 PM | Reply

one world, one economy, one universal citizenship.

#40 | Posted by ichiro at 2018-05-06 05:43 PM | Reply

#40 | POSTED BY ICHIRO

Yep. it's coming.

#41 | Posted by SheepleSchism at 2018-05-06 05:46 PM | Reply

I'll see if I can't import some from China.
#39 | POSTED BY SNOOFY
=================
Pretty obvious you wouldn't consider hiring an American citizen to teach you. But, please keep whining how Trump is ruining America while you continue to laugh at Made in American labels.

#42 | Posted by Rex_Buyt at 2018-05-06 09:07 PM | Reply

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