What if Tarriffs to Protect the US Manufacturing Base Were Imposed in the 60s/70s?

[Omar04]

Cheap food for the world courtesy of American taxpayers sounds like a good thing.

Unless you're a farm worker. Doesn't matter if foreign food is cheap if a large enough part of your population relies on farming that the cost savings would result in mass unemployment.

If international trade was harmful, people wouldn't engage in it.

Are the farmers in those poor countries welcoming and throwing parties for cheap fed subsidized US crops and food? What's good for some isn't good for all.

 

[kernals12]

Unless you're a farm worker. Doesn't matter if foreign food is cheap if a large enough part of your population relies on farming that the cost savings would result in mass unemployment.



Are the farmers in those poor countries welcoming and throwing parties for cheap fed subsidized US crops and food? What's good for some isn't good for all.

Why must the universe revolve around farmers? If you found a way to cut your grocery bill in half, you wouldn't feel guilty, you'd spend the extra money on other stuff. That's what happens when cheap food arrives on foreign shores.

As for the first part: See the welfare losses in this chart

By definition, society is better off thanks to imports being cheaper.

 

[kernals12]

The resources and costs of operating the robots wouldn't go away. Also why would the owners of the robots give away free money?

Yeah they would, the robots would operate themselves and be repaired by other robots.

 

[kernals12]

For the people who lives in the coastal area of China, those who live inland but can find jobs as unskilled or skilled labourer in coastal areas, that is true.

But the social fabric in the Chinese 'Rustbelt' in Northeast almost unrevaled and crime rate there soared in the 90s as the country dumped without much compensation the gov owned heavy industry to the market, making millions of people that has not done any other job losing jobs, which created a wave of suicides and tregadies.

Those Northeast provinces did a bit better now, but it remains 3 of the most underperforming provinces despite being heavily invested by central gov.

Tell me you're not saying China should go back to the Pre-Deng era.

 

[kholieken]

If robots automated everything we wouldn't need any income. We would be in a Star Trek style society where everything could be conjured up for free at the push of a button.

We don't exactly have Holodeck or Replicator. besides Star Trek is too vague in its depiction of economics.

Service, Luxury Goods, Handmade Items, and other scarce resources would need economy of buyers and sellers.

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I think we should acknowledge that while Free Trade benefit a lot of people, some people hit hard by it. Third World farmers, Manchuria / NorthEast China, US Rust Belt, Northern England all hit hard by effect of free trade and they need help.

 

[kernals12]

We don't exactly have Holodeck or Replicator. besides Star Trek is too vague in its depiction of economics.

Service, Luxury Goods, Handmade Items, and other scarce resources would need economy of buyers and sellers.

-----

I think we should acknowledge that while Free Trade benefit a lot of people, some people hit hard by it. Third World farmers, Manchuria / NorthEast China, US Rust Belt, Northern England all hit hard by effect of free trade and they need help.

Or, more accurately, they had been extracting rents from their customers under protectionism and are now being paid a fair price for their labor under free trade.

And to claim that any part of China has been hit hard economically is extremely tone deaf when they have managed to mostly eradicate extreme poverty. I don't believe the people of Manchuria were better off in the days when American parents shamed their kids into finishing their dinner by invoking the starving children in China.

 

[marathag]

Unless you're a farm worker. Doesn't matter if foreign food is cheap if a large enough part of your population relies on farming that the cost savings would result in mass unemployment.

So in Mexico, 23.3% of household expenditures are for food, vs 6.5% of the USA

So while it sucks for Mexican Farmers, the rest of Mexico would spend less of their budget on Food, say if they get their costs to twice that of the USA, 13% by large amounts of imported Food.

That frees up 10% of their budget for other goods or services, and that makes for a good hit of growth in the economy, meaning jobs would be open for those Mexican Farmers who can't make ends meet with 10 acres of Corn.

And back in the USA, that Farmer is getting about 5 cents for the product in a box of Breakfast Cereal.
Not a lot, he makes it up on volume, and on subsidy payments, when Corn prices are low

 

[kernals12]

So in Mexico, 23.3% of household expenditures are for food, vs 6.5% of the USA

So while it sucks for Mexican Farmers, the rest of Mexico would spend less of their budget on Food, say if they get their costs to twice that of the USA, 13% by large amounts of imported Food.

That frees up 10% of their budget for other goods or services, and that makes for a good hit of growth in the economy, meaning jobs would be open for those Mexican Farmers who can't make ends meet with 10 acres of Corn.

And back in the USA, that Farmer is getting about 5 cents for the product in a box of Breakfast Cereal.
Not a lot, he makes it up on volume, and on subsidy payments, when Corn prices are low

This This This!!!

 

[Sam R.]

Can we please move away from the off-topic issue of the desirability of tariffs?

Can we please return to the topic of the effects of increased US tariffs in the 1960s and 1970s in the manufacturing sector?

Can we also stop using maximal effective demand as a proxy for the interests of individual working people and their communities? People and communities are demonstrably economic. They are also demonstrably political, cultural, social, religious, ideological, sporting etc. Effective demand is a horrible proxy for the diversity of real interests people face. And real people face frictional and structural economic costs when "finding something else to do" which they may price differently.

 

[elkarlo]

No there isn't. Most people in the third world are busy on subsistence farms. Productivity is so low that children and the elderly are forced to work nonstop.

But you can't just hardwave it and make that happen. Even it happening slowly is massively disruptive .

 

[Barry Bull]

That frees up 10% of their budget for other goods or services, and that makes for a good hit of growth in the economy, meaning jobs would be open for those Mexican Farmers who can't make ends meet with 10 acres of Corn.

Only if they can get those jobs when those jobs is likely to be obtained by better educated city dwellers.

Why must the universe revolve around farmers? If you found a way to cut your grocery bill in half, you wouldn't feel guilty, you'd spend the extra money on other stuff. That's what happens when cheap food arrives on foreign shores.

As for the first part: See the welfare losses in this chart

By definition, society is better off thanks to imports being cheaper.

As @Sam R. said, looking only big picture ignore the suffering below. Farmer is only an example.

 

[marathag]

Only if they can get those jobs when those jobs is likely to be obtained by better educated city dwellers.

Mexico has roughly 20% of their workforce in agriculture, mostly in tiny farms.
You have to go back to the 1930s for a similar percentage in the USA, that is at 2% today

What will happen is what did in the USA, Farmers will have to move to where the jobs are, just as what happened in every other modern economy.

 

[Barry Bull]

Mexico has roughly 20% of their workforce in agriculture, mostly in tiny farms.
You have to go back to the 1930s for a similar percentage in the USA, that is at 2% today

What will happen is what did in the USA, Farmers will have to move to where the jobs are, just as what happened in every other modern economy.

Which is much more difficult to do so today. Different requirment for factory workers and unskill labour.

 

[kholieken]

Or, more accurately, they had been extracting rents from their customers under protectionism and are now being paid a fair price for their labor under free trade.

.

"fair price for their labor under free trade" is not unmitigated good.

Fair Price (or Fair Wages) is always political choice.

Do you want : vibrant town with local industry and mom-and-pop commercial scene and middle class with strong institution OR declining town with Walmart / Amazon as largest employers and half-town unemployed or minimum wage but with 20% cheaper price on everything ?

And to claim that any part of China has been hit hard economically is extremely tone deaf when they have managed to mostly eradicate extreme poverty. I don't believe the people of Manchuria were better off in the days when American parents shamed their kids into finishing their dinner by invoking the starving children in China.

.

There is still many poverty in China. and Manchuria previously once of most prosperous region in China : it industrialize first under Japan, its one of loyal region of Communist Party, it had numerous heavy industry, it had widespread peasant-owned farming sector, and rice bowl employment is gained by many. Its not rich, but possible farther from starvation among Chinese region.

After China opening it failed to modernise as successfully as Coastal province, and hit hard with unemployment's and inefficient industries.

 

[Barry Bull]

.

"fair price for their labor under free trade" is not unmitigated good.

Fair Price (or Fair Wages) is always political choice.

Do you want : vibrant town with local industry and mom-and-pop commercial scene and middle class with strong institution OR declining town with Walmart / Amazon as largest employers and half-town unemployed or minimum wage but with 20% cheaper price on everything ?

.

There is still many poverty in China. and Manchuria previously once of most prosperous region in China : it industrialize first under Japan, its one of loyal region of Communist Party, it had numerous heavy industry, it had widespread peasant-owned farming sector, and rice bowl employment is gained by many. Its not rich, but possible farther from starvation among Chinese region.

After China opening it failed to modernise as successfully as Coastal province, and hit hard with unemployment's and inefficient industries.

And really bad burecracy. Path depedency is also too strong.

 

[GeographyDude]

Those were really rough times in Houston. The oil bust and national recession did a number on the economy down there. Not a great time to be graduating and looking for a job! As for adults not saying much, well, they had their own problems and that generation tended to blame themselves when things didn't go well. Bootstraps and all that BS...

Thank you, but actually the topic is rather embarrassing. Yes, the 1982 recession was bad, but overall the early ‘80s in Houston, didn’t realize how good I had it! I was horsing around with school, trying to be a writer, getting interested in philosophy in the mid ‘80s. Should have been working halftime or a semester on, a semester off, which I think you could do back then, and gaining useful experience.

The oil bust hit the first half of 1986, good for the overall economy, bad for oil producing regions.

In the mid 2000s, I’m figuring out that I’m probably somewhere on the Autism-Aspergers Spectrum. And like anything, being ‘spectrum’ has its pluses and minuses. However, on the job front, it usually is not a positive.

 

[vizzer]

If the US is putting up tariffs to protect their industries will they also stop trying to promote free trade policies to get other countries to lower/remove tariffs on US goods/produce?

 

[kernals12]

Fair Price (or Fair Wages) is always political choice.

Fair prices are whatever produces an equilibrium of supply and demand. Efforts to set "fair prices" by governments have led to shortages and black markets.

Do you want : vibrant town with local industry and mom-and-pop commercial scene and middle class with strong institution OR declining town with Walmart / Amazon as largest employers and half-town unemployed or minimum wage but with 20% cheaper price on everything ?

Wal-Mart pays better than mom and pop retailers.

 

[RousseauX]

.

Do you want : vibrant town with local industry and mom-and-pop commercial scene and middle class with strong institution OR declining town with Walmart / Amazon as largest employers and half-town unemployed or minimum wage but with 20% cheaper price on everything ?

Mom and Pop shops gets romanticized but 1) They sucked if you were an employee working for them and 2) what killed them has less to do with outsourcing and more to do with shopping malls and internal economy of scales larger retailers offer. You can at least sort of make the argument that deindustrialization was the result of free trade, you can't make the same argument for decline of small retailers. Foreign trade could be banned in the 1970s and they still wouldn't be able to compete with larger retailers.

 

[RousseauX]

.

There is still many poverty in China. and Manchuria previously once of most prosperous region in China : it industrialize first under Japan, its one of loyal region of Communist Party, it had numerous heavy industry, it had widespread peasant-owned farming sector, and rice bowl employment is gained by many. Its not rich, but possible farther from starvation among Chinese region.

After China opening it failed to modernise as successfully as Coastal province, and hit hard with unemployment's and inefficient industries.

per capita income in manchuria is like $12,000 though today which is like 15-20x what it was back in the good ol' days of communist heavy industries