I’m not terribly well educated in economics, so I’d welcome any comments on why this suggestion would be impractical or ill-advised.
As several recent threads in GD and the Pit have noted, the number of unemployed in the U.S. much exceeds the number of jobs available. This is in part because the U.S. has seen many, many manufacturing jobs disappear, due to companies who have found they can manufacture overseas much more cheaply due to the availability of low-wage labor.
So my suggestion is twofold:
[ol]
[li]Increase import tariffs on “completed goods” (for lack of a better phrase) – items that are manufactured outside the country[/li][li]Decrease import tariffs on raw materials, which could then be used for manufacturing purposes in the U.S.[/li][/ol]
If the tariffs were adjusted carefully, it would make it cheaper for companies to manufacture goods domestically, even while paying employees the relatively high wages expected in the U.S.
This is such a simple idea, I’m sure a zillion other people have come up with it before, so the fact that it isn’t done suggests that it’s either a lousy idea, or moneyed interests are against it. Can some Dopers fight my ignorance here?
Because raising tariffs tends to cause trade wars which would adversely impact American exports. In addition sometimes its much cheaper and efficient to produce goods overseas-plastic toys for example, while most American workers probably don’t want a job making plastic crap all day. It should be noted that other countries with strong manufacturing sectors such as Germany are not protectionist.
I would wager that other large countries whose bottom line is dependent on manufacturing goods to ship to the US, and manufacture them with cheap materials from not here, would be kinda peeved with us for ruining their economies at the expense of ours.
There’s the general problem with tariffs - they increase the price of goods. Let’s say Japanese cars cost $25000 and American cars cost $27000 so people are buying more Japanese cars. So the government slaps a $3000 tariff on Japanese cars. Now people are buying more American cars but they’re still paying $27000 for them instead of $25000 for the Japanese cars at the original price. Everyone’s paying more for their car and some people now can’t afford to buy a car at all. Multiply this by everything in the market. You’ve increased domestic sales but you’ve done it by increasing the cost of living.
There’s also the problem that the connection between higher prices and higher employment is pretty indirect. The company owners get the benefits of the tariff-derived price increase but they may not pass that on to the workers. Suppose they decide to use the extra money to buy new machinery? They might increase automated production and lay off a bunch of workers.
Big money is against tariffs because the way a lot of big international corporations are making money right now: they manufacture goods overseas where labor costs are so low that American workers can’t match their prices (right now). Then they sell them in America where our expensive (relatively) workers can afford to pay much higher prices than the laborers who actually produce the goods. It has worked out very well for the corporations although eventually our middle class will have much less buying power as jobs continue to be lost. I suspect the corporations hope that eventually the Chinese and Indian economies will really take off, and they will have thriving markets there, leaving American workers to find a rough equivalence with Asian workers. This will seem like falling to extreme poverty to US workers, who will be told it is their fault for not being more educated and productive. And also that any complaint about lowered income, expectations and lifestyles are “First World problems.”
Setting up tariffs to prevent American jobs from being lost is a reasonable thing to do, but it will never happen so long as both parties are pretty much owned by Wall Street and large corporations.
In the long term, say, 50 years or so, robotics promise to make practically all human labor obsolete, but in the short run, the Asian labor markets will drive the American middle class to poverty. The robotics problem is going to demand an thorough rethinking of what capitalism is, probably after much hardship and bloodshed if I know my country.
It’s true that factories being brought back will be more automated than those in China, and thus have fewer line employees. This means more jobs for engineers in robotics and allied fields.
It is also true that the return of manufacturing to higher wage countries is slow. But a fast return driven by protectionist laws, besides igniting US inflation and otherwise harming our economy, would ruin China’s. I’ve been reading about the Boxer Rebellion lately*, and one lesson is that a beggar-thy-neighbor approach to China is dangerous for the West.
Opponents of free trade said that we were exploiting the poor by purchasing Asian imports. Proponents said that export driven growth would help lift them out of poverty. Who was correct?
Basically what the first Emperor of China said…it’s a bad idea because what it will actually accomplish is to have countries reciprocate by raising their own tariffs. In addition, what will actually happen is that the price for goods and services will go up and quality will drop, since what you’ll be doing is attempting to create an artificial local market that will have a competitive advantage over others. Oh, and you won’t actually bring those manufacturing jobs back either, since ‘local’ US companies will simply do what they are already doing…they will build modern, automated manufacturing plants (contrary to what seems to be popular opinion, the US manufacturing sector is quite strong and productive…they just don’t use tons of low end labor anymore). They aren’t going to go back in time to create old style, low or semi-skilled labor intensive manufacturing plants because for one thing American labor costs more.
There is a reason that the US doesn’t really compete with low end mass manufacturing using tons of low skill low cost labor…it’s not our niche and we simply can’t do it anymore. And, IMHO, we don’t want too. It’s better for us to do what we do best, and basically use trade as a huge black box. We ship in food to the box, as well as high skill, vertical and value added products and services and they ship us low cost, low labor manufactured goods, parts (that we add value to by building into high end goods and services or add software or other value adds) and services. It’s a win/win.
If you really, REALLY want those low end low skill jobs back then my suggestion would be to either lower or get rid of the minimum wage laws and toss out all of those nasty environmental regulations and stuff like OSHA. Then we can get back to those nice (read: horrible) low skill low end jobs and entice US companies to use bodies instead of automation.
Naw, it’s really a bad idea and, in truth we don’t want those jobs back again. They give us nothing.
Germany does have protectionist views when it comes to auto manufacturing, the subsidies that they pay are on par with what the US government pays which is far in excess of what the Australian’s do.
We all want free trade agreements, if you put tariffs on say Australian Lamb, then they would put tariffs on say US cars.
If you want to be an export driven economy then you need to ensure that you receive imports at low or no tariffs.
Unemployment is not due to tariffs it is due to companies investing their capital in different areas for high returns.
This is why it won’t work. Are there manufacturing jobs overseas - yes, there are factories full of workers making iPads. But many manufacturing jobs did not just go overseas to foreign workers - people were replaced by robots. You can bring manufacturing back, but that won’t mean low skill jobs.
As to those iPad jobs, you probably wouldn’t find many people willing to do them at what the manufacturer would pay - I worked in a factory that made electronic parts for computers - we didn’t move it overseas because it was cheaper, we moved it overseas because we couldn’t hire people to sit hunched over a table, looking through a microscope, gluing little tiny pieces together for eight hours a day.
Even with anti dumping and countervailing duties on most “raw” materials that are supposed to impose additional duties and are supposed to eventually be used to actually subsidize our industries that brought the case to the trade commission, parity in manufacturing jobs are still being lost. I dealt with steel and plywood…the rawist of the raw. It is simple with steel. Be it pipe or steel coil (coil is used is everything that has a sheet of metal or a band. Literally it all starts with coil, even some pipe) the imported goods are more reliable for delivery time as the suppliers to the wholesale market will keep a good amount on hand at a warehouse. Specialty you may be delayed a few weeks at most but from what I heard from end users they would also wait a couple weeks for an american made product. The main thing that I learned also and have heard it so many times from the companies buying both is our steel just isn’t as good. They are all made to ASTM or API standards but even those have a range that you can stencil it as meeting that standard. We let our steel industry get so far behind they just can’t catch up. They have the same technology overall but as it is now are always playing catch up.
Plywood is kind of the same. With the new regulations at least you have to put what the wood is that made it and where it was harvested. Though illegal logging stiil exists and is flourishing USDA will inspect and demand documentation from the worst offenders…usually southeast Asian countries and south american. So that made imports go up but China…and this really made me mad. They put unwarranted AD/CVD duties on Chinese plywood. The Chinese are so far ahead of us in regards to sustainable tree plantations it is laughable. We have tree farms and most are poplar. They have hybrid poplar that I wasn’t even able to report properly as they hadn’t quite gotten a name down yet as they were still crossbreeding it to get what they wanted. Not a GMO tree, a properly cross bred tree that was much lighter and grew faster. They had that as the core with a birch or red oak to make it look nice for limited purposes. Amercan plywood is mainly hardwood and used for more decorative uses, and our plywood manufacturing plants do not have the technology or haven’t perfected it enough to get as thin a veneer as the Chinese plants can.
When you impose duties on a product you slow down importation you may boost manufacturing a bit but just a bit saving a few jobs. You lose jobs and wages for the truckers, customs brokers, warehouse workers and increase prices of the materials usually making it harder for the craftsmen and construction workers to give a quality product at a fair price.
How many jobs are we talking about? Before we start a trade war (already mentioned) or increase our cost of living (also already mentioned), I’d like to know how many jobs your plan will generate.
Or you could accept that the way wealth is produced is by making things and then trading them, and that countries are actually enriching each other and trade is not a zero sum game.
If trade is a zero sum game, then why does the U.S. allow trade between states? Logically, if raising tariffs between it and the rest of the world would enrich the USA, then raising tariffs between Illinois and the rest of the USA would enrich Illinois. You think that’s a good idea? If not, please explain why not.
We’ve already been though the replacement of almost all jobs by machines and it worked out okay.
Did we get 17 posts into this thread without someone mentioning the Smoot-Hawley Tariff Act? As long as you don’t know much about economics, this would be a good place to start looking. Most economists think it deepened and lengthened the Great Depression, while others say it didn’t hurt all that much, but nobody claims it helped.
Well, I ain’t no economist neither, but aren’t most developed and developing countries part of the World Trade Organization, and didn’t we all sign on as members to prevent unfair trade tariffs and dumping of goods?
It is done. Tariffs on different items are adjusted carefully to benefit domestic industries. It’s all defined in the Harmonized Tariff Schedule, a 5000+ page document that specifies different rates for different products. Generally, higher values for items that are made in the US. (Well, I guess it’s really higher values for products whose US producers have lobbied for it.)