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

I wonder why people never contrast and compare the American industrial experience to the German one. The latter somehow managed to thrive, while the US suffered - and it had little to do with tariffs for Germany, a lot to do with a leadership that made an active commitment, a national industrial policy if you will.
I was hinting in that direction. Coal and steel areas like the Ruhr have been transformed with much less sacrifices than, say, Michigan.
But that was not national industrial policy so much as it was regional: Northrhine-Westphalia's Social Democrats have achieved this with an expansion of education, public building and infrastructure, limited subsidies and let's not forget there was generally a cultural climate more conducive to social Plans for Job reductions etc. US political culture, we are told, is more pro-market... I wonder whether it really was around the Great Lakes and in the now Rust Belt in the late 60s...
 

kernals12

Banned
I wonder why people never contrast and compare the American industrial experience to the German one. The latter somehow managed to thrive, while the US suffered - and it had little to do with tariffs for Germany, a lot to do with a leadership that made an active commitment, a national industrial policy if you will.
France had lots of industrial policy. Correlation =/= causation. The Germans just happen to be very good at making cars.
 

RousseauX

Donor
I was hinting in that direction. Coal and steel areas like the Ruhr have been transformed with much less sacrifices than, say, Michigan.
But that was not national industrial policy so much as it was regional: Northrhine-Westphalia's Social Democrats have achieved this with an expansion of education, public building and infrastructure, limited subsidies and let's not forget there was generally a cultural climate more conducive to social Plans for Job reductions etc. US political culture, we are told, is more pro-market... I wonder whether it really was around the Great Lakes and in the now Rust Belt in the late 60s...
White flight basically killed the possibility of that
 
Tariffs would help ensure that American Industry would remain and continue to grow. There would still be lot’s of higher paying industrial jobs in America. The labor movement would still be strong. And economic inequality would be a lot less. However this would come at a price. These tariffs would anger Western Europe, and Japan. Reducing the strength of America during the cold war. Which is why IOTL America didn’t implement tariffs. There economically a good idea, but they cost you geopolitical influence. Which is what Cold War America cared about.
 

kernals12

Banned
People act like the rust belt was the only region that lost manufacturing jobs. Nothing could be further from the truth. Seattle, Los Angeles, New York, and Boston all used to be teeming with factories. Seattle's fortunes were once so tied to Boeing that when they announced 20,000 layoffs in 1970, the resulting depression caused a pair of realtors put up a billboard saying "Will the last Person Leaving Seattle Please Turn Out The Lights"
 

kernals12

Banned
Tariffs would help ensure that American Industry would remain and continue to grow. There would still be lot’s of higher paying industrial jobs in America. The labor movement would still be strong. And economic inequality would be a lot less. However this would come at a price. These tariffs would anger Western Europe, and Japan. Reducing the strength of America during the cold war. Which is why IOTL America didn’t implement tariffs. There economically a good idea, but they cost you geopolitical influence. Which is what Cold War America cared about.
Wrong Wrong Wrong
The rise in the value of the dollar would negate all the impacts. And any economist will tell you that tariffs are regressive. We would have more, not less, inequality.
 
For anyone here interest in tariffs I recomend watching this

It goes into detail about the impact tarrifs play in modern soceity and the impact they have.
 
I’m suprised no one has mentioned the Cold War. The Cold War really created modern free trade as we know it. American trade with NATO allies was viewed as a stalwart against the communist Soviet Union.
 
Manufacturing jobs were replaced by better paying service jobs. . .
In many cases, yes . . .


http://www.pewsocialtrends.org/2015/12/09/the-american-middle-class-is-losing-ground/

The gold-colored Middle is defined as adults in households between 2/3’s of median income and twice median income. And please notice, more people have moved into the upper categories than the lower ones.

Yes, questions about how tolerant we as a society are of income inequality. But overall, a situation much better than many alarmist statements we hear all the time would lead us to believe. And I think, a situation which remains eminently winnable.
 
Wrong Wrong Wrong
The rise in the value of the dollar would negate all the impacts. And any economist will tell you that tariffs are regressive. We would have more, not less, inequality.
Tariffs would lead to inflation which would weaken the dollar. Higher wages plus inflation leads to less inequality. Newer service jobs were harder to unionize that industrial jobs, which is why wages have remained stagnate sense the 70s. Besides when America embraced Free Trade IOTL inequality rose. A protectionist America would be a Titan of Industry, with an industrial output much higher than any other country.
iCTuo.jpg
 

kernals12

Banned
Tariffs would lead to inflation which would weaken the dollar. Higher wages plus inflation leads to less inequality. Newer service jobs were harder to unionize that industrial jobs, which is why wages have remained stagnate sense the 70s. Besides when America embraced Free Trade IOTL inequality rose. A protectionist America would be a Titan of Industry, with an industrial output much higher than any other country.
View attachment 409243
That chart needs to be nuked from orbit, it's totally and completely wrong.
-It deflates wages and productivity using 2 different measures of inflation
-It ignores the growth of fringe benefits such as health insurance
-It's based on survey data, which is less accurate than that based on tax returns, and by focusing only Goods producing workers, you introduce a whole host of measurement problems

Here is Real GDP divided by total hours worked compared to total compensation of employees, adjusted using the GDP deflator, and divided by total hours worked.
Screen Shot 2018-09-19 at 5.43.46 PM.png

When you measure correctly, we are 90% better off now than when Richard Nixon was President.

Also, the "wages being the same as in 1970" story is very difficult to square with physical measures of affluence. Our homes are bigger than ever, we spend more money at restaurants than at grocery stores, and we use 50% more electricity on a per person basis than in 1970 despite quantum leaps in energy efficiency.
 
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kernals12

Banned
Tariffs would lead to inflation which would weaken the dollar. Higher wages plus inflation leads to less inequality. Newer service jobs were harder to unionize that industrial jobs, which is why wages have remained stagnate sense the 70s. Besides when America embraced Free Trade IOTL inequality rose. A protectionist America would be a Titan of Industry, with an industrial output much higher than any other country.
View attachment 409243
Inflation is caused by too much money chasing too few goods. If we put tariffs on, our imports would drop and so too would demand for foreign currency which would depreciate in value as a result.
 
I wonder why people never contrast and compare the American industrial experience to the German one. The latter somehow managed to thrive, while the US suffered - and it had little to do with tariffs for Germany, a lot to do with a leadership that made an active commitment, a national industrial policy if you will.

There are a few reasons for this. First and foremost, industry is a particular point of pride for Germany and it was made a national policy, backed across the then-viable political spectrum there (CDU/CSU, FDP and SPD, to maintain a strong competitive position for German industry. Second, unionization in Germany is far different and much more cooperative in its nature. This makes adjustments to things a bit easier and less acrimonious than in the US. German industrial workers are among the world's best paid; management accepts this as part of the social contract and necessary to maintain high quality. Management attitudes in the US are a bit different and deindustrialization was accompanied, not coincidentally in my opinion, by deunionization throughout the 1980s. This is one reason US manufacturing moved into the Sun Belt -- these were so-called "right to work" states that banned the closed union shop. The other aspect of difference was that German industry had become a major exporter while the US had difficulty exporting US cars and consumer goods due to competition from other nations with lower costs, perceived quality issues and, in some cases, yes, tariffs that priced American goods out of reach. For Germany, this support for exports was necessary, but it was considered less important in the US, which still had the advantage of being the global reserve currency and thus was better able to run a balance of payments deficit. The US balance of payments deficit turned sharply negative in the 1980s and has been negative ever since.
 

kernals12

Banned
232130178480.jpg

This Woodrow Wilson campaign ad from 1912 does a better job than anything else I've seen of explaining the costs of protectionism. Those who want protectionism need to learn that there is no such thing as a free lunch.
 

kernals12

Banned
With the gray vertical lines being periods of recession.

I see a gap opening up from about 2001 to the present, arguably bigger than it should be.

PS And if it’s readily available, I would like to have a link to a page with more info.
I can't make a link. It's a custom chart from the St Louis Federal Reserve using several publicly available datasets.
And that gap is a helluva a lot smaller than the one depicted in the other chart.
 
That chart needs to be nuked from orbit, it's totally and completely wrong.
-It deflates wages and productivity using 2 different measures of inflation
-It ignores the growth of fringe benefits such as health insurance
-It's based on survey data, which is less accurate than that based on tax returns, and by focusing only Goods producing workers, you introduce a whole host of measurement problems

Here is Real GDP divided by total hours worked compared to total compensation of employees, adjusted using the GDP deflator, and divided by total hours worked.
View attachment 409254
When you measure correctly, we are 90% better off now than when Richard Nixon was President.

Also, the "wages being the same as in 1970" story is very difficult to square with physical measures of affluence. Our homes are bigger than ever, we spend more money at restaurants than at grocery stores, and we use 50% more electricity on a per person basis than in 1970 despite quantum leaps in energy efficiency.


What do the examples in the final sentence have to do with wages? The graphs could show the top 20/30 percent getting a pay bump while the bottom 80/70 don't see a big pay bump. I found a FRED graph that could account for this a bit more.
U.S._Hourly_Wages_-_Real_or_Adjusted_for_Inflation_1964-2014.png

Also found a median income graph
chartoftheday_8774_real_median_household_income_in_the_united_states_n.jpg
 
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