Report Card for Donald Trump

[Warren Dew]

(01-08-2017, 07:16 PM)SomeGuy Wrote: I personally am inclined to think that a reduction of manufacturing imports from low-wage nations, particularly in Asia, in favor of domestic production would be a net positive, but I cannot claim to know how all of those issues I mentioned above would play out and I accept that there may be perfectly valid differences of opinion here in the absence of more data.

Are we talking about natural movement of manufacturing back to the US due to use of automation and relative advantage, as in the case of modern cotton mills someone - I believe you - linked to earlier, or are we talking about forced movement of manufacturing back to the US due to tarriffs or other barriers?

The natural movement case is very likely advantageous to the US, as there is no inflation directly involved, so any jobs created, even if they are small in number, are a net positive.  There might be some diffuse secondary inflation in whatever industries the workers come from, if any, but by definition, if the worker moves to a better paying job in a free market, his time is being used more efficiently from an economic standpoint.

I don't see how the forced movement case can possibly be positive in the current economic environment.  The labor market is tight, as evidenced by low unemployment, so we're not talking about employing large numbers of people who are currently unemployed.  Given the very large wage differentials involved, and given the offshored work is exactly that work which is labor intensive, forcing movement back to the US is likely to result in extremely high inflation in the relevant industries, and consequently massive production and consumption decreases in those industries, and massive reduction in associated consumer surplus and well being.