Hooray for Scarcity?
Trump's weird rhetoric on trade.
This is quite a thing for the President of the United States to say. He is predicting people will have less, and it will cost more.
I realize counterfactuals are of limited efficacy, but let’s say that was President Biden or candidate Harris telling Americans back in October, “You don’t need three 3-eggs in your omelet, you can do with two and it might cost a little extra.”
Setting aside the actual numbers (30 v. 3 or 4 and 250 v. 5), this is an argument that tariffs will cause scarcity and prices to go up, but that somehow we are collectively going to be wealthier.
The only way for common people to have less and yet for the country as a whole to be wealthier is for the already wealthy to be even wealthier.
I am not, by the way, endorsing his theory that having a trade surplus means we are wealthier and a trade deficit means we are getting screwed. We could see the trade deficit shrink, and may all end up poorer because there is simply less trade. Or, if the price tag on the goods I buy goes up and my income remains stable, I am poorer for the situation, even if someone else is making more money.
The utter insanity of all of this is stunning.
Of course, the fact that so many polls put his approval in the low 40% range, after only 100 days in office, suggests that his rhetoric and policies are not resonating with the populace.
And yet, the parade of off-putting pronouncements continueth.
The following from Bessent isn’t exactly encouraging. He says essentially that in the short term, the stock-up in advance of the tariffs will provide inventory, but hopefully negotiations will lead to a resumption of normal trade. Note that he is acknowledging the conditions for a serious disruption.
And China has to know that its greatest leverage is in making those shelves empty. Xi can withstand more pain and more directly control his side of this equation than can Trump.
These people are playing with fire. The funny thing is that the best possible outcome is likely more or less the status quo ante with some figleafs that Trump can say he got via his arting the deal.
One last entry from Lutnick. There is something creepy about asserting a “new model” (which sounds very command economy) where generations will all work in the same plants. It is enhanced when a billionaire is making the assertion.
While there is some real political appeal for bringing back manufacturing to the US in the abstract, the notion that a given manufacturing operation will be a generational trap for Americans is less appealing.
Indeed, note this survey via the Cato Institute (emphases mine):
One of the more intriguing results of a recent Cato Institute–commissioned poll about trade and globalization was the respondents’ views on manufacturing. When asked whether the country would be better off if more Americans worked in the sector, 80 percent responded in the affirmative. Given widespread perceptions of American industrial decline—very much at odds with available evidence—that’s not entirely surprising.
But here’s the interesting part: among those same respondents, just 25 percent stated that they would personally be better off in a factory instead of their current work. It’s a result that holds across class, education, and racial lines. The most enthusiastic group, those aged 18–29, still registered just 36 percent interest in manufacturing employment.
The write-up further notes:
Americans love the idea of people working in manufacturing, but most don’t think they would benefit from such work themselves.
The poll result comports with manufacturing job data. As of May, there were over 600,000 open positions in manufacturing, and the number hasn’t dipped below 300,000 in roughly a decade. These openings are one reason why the National Association of Manufacturers has championed a plan to expand immigration. Similarly, the secretary of the navy has called for increased immigration and work visas to address a lack of workers at the country’s shipyards.
Such jobs can’t find enough interested Americans to fill them.
There is a lot of romance about manufacturing.* There are also real frustrations linked to places where the loss of manufacturing hit hard, but the notion that we are going to go, en masse, into manufacturing as our national livelihood is another discussion.
I think we are going to find out, if we continue down the trade war path, that people actually like cheap goods and lots of choices more than they like years-long scarcity and higher prices in the hopes of maybe, someday, on-shoring more manufacturing (that will likely be done mostly by robots anyway).
*And as economist Kenneth Rogoff noted this week on the Ezra Klein Show,
Back in the 1970s, you had the same ads where you see the person working on the machine line or something but you saw them with farmers. They were constantly showing the farmers. We had to help the farmers.
And you know what? Those jobs went away even though we’re the agricultural powerhouse in the world. Because everything became mechanized. That’s a lot of what’s going on in manufacturing. What we blame on China — a lot of it just has to do with the way of the world.
These jobs are going away. It doesn’t matter. If we don’t trade with anyone, these jobs aren’t going to exist. And that’s just a false sale that’s being made about that.
On Herman Lutnick: His disturbing, Fritz Lang’s Metropolis-like vision of a “new model” is a prime example of why (1) the health of the economy and the well-being of the citizens who comprise it and (2) the fortunes of a single company, especially one of the modern American zaibatsu, are not the same.
On the current occupant of the Oval Office: He says anything that, in the moment, justifies whatever he is doing, or excuses him from the disasters he has created. Maybe he’s part of some sinister plot to create a “new model,” but it’s just as likely that he’s merely spewing whatever verbal vomit seems most advantageous at the moment.
So the prize is a lifetime of operating a drill press? That’s the glorious future? Everyone who thinks their kids want jobs assembling furniture in South Carolina for 30 years, raise your hands.
You have to narrow down what goals people want to achieve with more manufacturing. If its national security issues those seem valid but are likely addressed by targeted policies, not broad tariffs. However, I think what a lot of core Trump supporters want is to bring back high paying manufacturing jobs to the Rust Belt areas, and similar areas, that lost those high paying factory jobs. The kinds of jobs where auto workers and steel workers were actually highly paid. The problem is that those jobs paid so well because they had strong unions. Most fo those jobs actually left long ago as companies moved south to avoid unions. As a result, unions have largely been destroyed. Even if some manufacturing jobs come back and even if some go back to the Rust Belt they are going to be the lower paying jobs now common in manufacturing. The premium for manufacturing jobs is now at about 10%.
Also, having spent my high school years in a company town, part of the fantasy people have is that they would go into these high paying jobs right out of high school and then have them forever like their parents had. However, they ignore that the trend has been towards requiring more education with the WSJ noting a few years ago that half of manufacturing jobs now require post-secondary education. The good old days when you could goof off through high school knowing that your dad would get you a good job at the factory where they would train you are gone and not coming back.
Steve
I don’t think anyone needs 30 million dollars; they can be fine with 3 or 4 million
One thing Trump has LONG been consistent on is his love for and belief in tariffs.
I see this as cognitive dissonance working, as the effects of the tariffs can’t be ignored. So the rhetoric switches from the idea that there are no tradeoffs with tariffs to the idea that the negative consequences of tariffs will be transitory, a bump in the road to economic Nirvana. We’ll have to see how bad things get before his belief in tariffs starts to really buckle, and my guess is that it will likely get pretty bad before that happens. And if/when he changes course, then the effects can’t be undone instantly.
Slate has already pointed that Trump is actually right about one thing. Your kid doesn’t need 30 dolls. If we paid the true cost of everything, including the environmental costs of manufacturing, shipping, and eventually dealing with the microplastics of said doll, they’d cost a lot more.
Of course that’s not what Trump’s itsy bitsy brain is thinking. It’s all to defend his stupid policy decisions and piss poor negotiation skills.
I mean, at least Trump didn’t go to jail amirite?
@Andy:
I doubt Trump’s faith in tariffs (and bad economic policies in general) is breakable. He’s just too stupid.
I think the more interesting question is how long can the GOP in general hold out. I figure the religious freaks like Johnson, the MAGA deadenders, and sundry freaks like Rand Paul/Chip Roy will hold on forever cause they have other priorities. But their margin is thin and if they start losing people it’ll get weird.
@Beth:
Assume two things, that we will have a presidential election in 2028 and the felon will continue with tariffs. Whoever is the MAGAt candidate(s) will face primary opponents that will promise to eliminate the tariffs, the world’s best campaign slogan, I’ll lower prices and fill the shelves.
@Franklin: I dunno, if the dolls in questions are Star Wars action figures, I am sure I had at least 30.
In all seriousness, sure, 30 dolls may well be excessive. But arguing against market-based abundance is an odd thing for a president to do, especially a Republican!
@Michael Reynolds:
Don’t be daft, Michael. We’re cutting OSHA enforcement, so those kids will probably only be working in the furniture factory 15 years tops.
What a maroon…
@Sleeping Dog:
I don’t think we can assume that we’re going to have actual elections anymore. I suspect once the shit hits the fan over the tariffs and economic destruction the GOP won’t let actual elections take place. It’ll be a whole lotta “management” from here on out.
I also don’t think Trump will allow any GOP primary to have someone going against him. Especially on his signature issue.
I’m pretty sure that they jobs Americans say they want aren’t actually manufacturing jobs, but rather union jobs. Lutnick would be perfectly happy with a hundred Shirtwaist Factory fires and a hundred thousand men with black lung.
I actually intended this comment to go here, so I decided to move it. Comments on the other thread triggered my thought; I just didn’t get the best placement.
[…]
FDR is attributed as having said
The test of our progress is not whether we add more to the abundance of those who have much it is whether we provide enough for those who have little.
In a better world, Trump’s statement “Maybe the children will have two dolls instead of 30 dolls” could be greeted as an optimistic forecast of a land in which while some children will “suffer” from having fewer, children in aggregate will benefit because more, hopefully maybe even all, will have some dolls–including some who will move up from none.
Sadly, we don’t live in a better world, as comments about the economy continually demonstrate. Oh well. At least Trump is finally being honest that he cares nothing about the resources available to his subjects. Even Kim Jong-un does a better impersonation of FDR–and he’s a sociopath.
“You” will be poorer but “we” will be rich?
Something tells me that, aside for a few of the bats in his belfry, that this isn’t going to fly very well. The closer gaslighting gets to people’s wallets the less power it has, generally speaking.
I’m old enough to remember Reagan selling trickle-down economics with the rising tide bullshit. Trump isn’t even pretending anymore. “2 dolls” is a weird flex for a guy who packed his inauguration with billionaire oligarchs.
@Michael Reynolds: “So the prize is a lifetime of operating a drill press? That’s the glorious future? Everyone who thinks their kids want jobs assembling furniture in South Carolina for 30 years, raise your hands.”
Michael, you are being deceptive, and not counting all of the additional factors which Our Lord God Trump will bring us:
1) No safety rules – your hands and lungs and eyes will be glorious sacrifices!
2) No corporate liability for unsafe work conditions.
3) No pension.
4) No Social Security.
5) No Medicaid.
6) No Medicare.
Factory workers from the 1950’s will pity us.
@Steven L. Taylor: “In all seriousness, sure, 30 dolls may well be excessive”
I mentioned this in another forum, so please forgive me, but it’s really troubling me…
The fact is there are parents in this country who will skip meals just to be able to buy their daughter one doll. And there are plenty more who can’t even do that.
There’s a lot that’s wrong with an economy built on the marketing of cheap goods… but it’s what we’ve got, and we’ve also got a lot of people who are barely holding on even in that market.
@Gromitt Gunn: “I’m pretty sure that they jobs Americans say they want aren’t actually manufacturing jobs, but rather union jobs. ”
Yes, but — alas — Americans being Americans, the vast majority aren’t aware of that.
@Daryl: ” “2 dolls” is a weird flex for a guy who packed his inauguration with billionaire oligarchs.”
It’s just unusual honesty.
@Michael Reynolds:
Well the Republican plan is for your kid to start working in the factory at 12, so they can stop woring at 42.
Of course, its because their body is so broken they can’t walk, but…
“You will in a pod and eat the bugs. And be grateful.”
Few people who worked in mines and mass-manufacturing factories had much desire that their children should do the same, if possible.
One reason why the British Labour movement was always enthusiastic about improving education.
Just as, previously, agricultural labourers often decided factory work beat working as hired hands on farms.
You might compare agriculture in Europe: agricultural protectionist policies and subsidies and price supports have tended to preserve the small farmer, and bring prosperity to previously poor rural areas.
But that has led the small farmers, and the “co-operatives” to enthusiastically embrace mechanized methods (and more recently computerised management).
So the numbers involved in farming have still dropped enormously.
In France it now stands at about 2.5% of total employment iirc.
Though those employed in support services, food processing etc based on the agricultural sector is considerably larger; perhaps around 5% of total employment.
The same pattern can be see across the entire EU which has had a consistent policy of easing the transition from peasant farming to modern agriculture.
And has, in general, done very well in this regard.
Not just in France, but in ending the burden of rural peasant poverty and backwardness across the entire continent.
But one thing it has NOT done is to sustain the numbers directly engaged in agriculture.
See also Germany, which remains one of the pre-eminent advanced manufacturing centres on the planet.
But the percentage employed in manufacturing is now about 20%.
Higher than the US 8%, but still massively down from almost 50% in 1960.
(And the US is obviously going to have a different overall employment profile to Germany, given its very different geographic economics and population profiles)
In short: you cannot have the employment patterns of the 1950’s unless you revert to the economy and technology of the 1950’s.
Which is not going to happen.
Your grandchildren will see things differently when they each have five beautiful pencils made in America from American hardwood and graphite mined by an American company in Ukraine, and they can look forward to secure lifelong jobs in a doll factory.
@JohnSF:
“You will live in a pod and eat the bugs. And be grateful.”
dammit
Proofread, John.
How many times must I tell you this?
*slaps self upside head*
I think Lutnik’s remark is the least dumb of those in the piece. I think there are folks who look back fondly on the days where they worked in the same plant as Dad and maybe Granddad. It’s stability. It’s predictability. It’s a pension. It’s decent health care. It’s a nice living that folks used to have, and they felt some dignity from making things.
It’s true that I have more ambition than that for me, and my kids. But then, my own father didn’t work in a plant, either. I know people though, that did have that sort of thing going on.
When I graduated from highschool in 1966, my father, who had supported our family of 5 working 10 hours a day, 6 days a week in a union factory job, went to his union local and found an entry level summer union job for me that paid 230% of minimum wage. After that summer, I went to the University of California, where, as a California resident, I paid zero tuition for my engineering degree. Upward mobility in action for a first generation college student in the days when the top tax rate was 70%. Since then, unions have fallen out of favor, factories have become highly automated, free world class universities have all but disappeared, and my siblings who went to work right out of highschool paid the price. We can’t go back to humans doing the work that robots do, but with the political will we seem to be lacking, we could make things a lot better for the kinds of families I came from.
@wr:
The point is fair and is taken.
But, to me, the main point is not to parse the specifics of Trump’s obviously arbitrary set of numbers and get to the heart of what he is saying. He is saying that his policies will lead to fewer and more expensive goods.
@Jay L Gischer: I understand what you are saying, but I am not especially willing to cut Lutnick much slack. As @stevenoted above, what people are pining for isn’t factory jobs, its union jobs of the type that aren’t going back.
And to @Ed B‘s point about tuition: we are also pining for better social services that aren’t coming.
I don’t think Trump has factored in the long-term damage being done to US interests abroad. In the UK the majority of people no longer consider the US a trusted ally. That was partly a result of the Trump/Vance behaviour over Ukraine and Greenland. The tariffs have accelerated that. It’s not just owning a Tesla that is now socially unacceptable. A number of my contacts have cancelled subscriptions to American owned software / media companies eg Apple tv. This is going to have consequences. I feel for the American businesses and their employees who will lose out.
Not in my family.
I was born in a small midwestern county seat with one dominant employer, a factory producing household appliances. I had enough uncles who were missing fingertips or toes and aunts with carpal tunnel syndrome to wipe away any romanticization of manufacturing work.
@Steven L. Taylor: Well, all I can say is I described Lutnick’s remark as the least stupid. Which does not claim that it isn’t stupid.
However, thinking politically, it’s not a good avenue of attack, at least not directly.