Tag Archives: manufacturing

What Would Truly Make America Great Again?

Donald Trump ran three presidential campaigns under the banner Make America Great Again (MAGA). He also promised to put “America First,” a reference to the 20^th century interwar movement that opposed further involvement in foreign wars. Instead, its adherents then and a large portion of Trump’s supporters now believe the wars America has fought have not served the interests of Americans and that the federal government should address those instead of “going abroad in search of monsters to destroy.”

But therein lies the rub. Whether or not MAGA and America First are compatible largely depends upon how one defines “great.” And based upon the president’s actions thus far during his second term, his definition does not jibe with that of his America First supporters nor their 20^th century predecessors.

Trump’s supporters are sometimes criticized for romanticizing the 1950s, a period of relative peace and domestic prosperity. From the early 50s through the mid-1960s, life most approached what they consider the American ideal. Jobs were plentiful, including high paying manufacturing jobs, and most American households could live comfortably on one income.

They believe economic “globalization” ruined this idyllic lifestyle. Specifically, “free” trade agreements like NAFTA and allowing China to enter the WTO resulted in U.S. manufacturing being outsourced to cheaper labor markets abroad. This, they contend, has resulted in a dearth of high-paying jobs and the necessity for at least two people in the average household to work just to scrape by.

Thus, Trump’s first inaugural promised to reverse this “American carnage,” bring high paying manufacturing jobs back to the U.S., and restore the idyllic lifestyle Americans once enjoyed as their birthright.

It’s a compelling story and has certainly created a vast political movement. It’s also demonstrably false on every point.

First, American manufacturing has not been “hollowed out.” Manufacturing output is currently at an all-time high and any honest analysis of its virtually uninterrupted ascent over the past 100 years would conclude that the only interruptions to this success story have been the two financial crises – and accompanying monetary inflation – in 2008 and 2020. More on that later.

It is true that manufacturing jobs have declined precipitously, but that just means that the U.S. manufacturing sector is becoming more efficient, able to produce more output with fewer workers. The same thing has happened in farming over the past 100 years. In any case, the trend has nothing to do with NAFTA or China entering the WTO, as this chart clearly demonstrates:

If one were to take away the years at the bottom of that chart, no one claiming NAFTA or China entering the WTO were the driving factors in the decline of manufacturing jobs would be able to find those trade agreements on the chart. In fact, if one were to pull the timeframe out to include pre-WWII periods, it would show that WWII and the years immediately afterward were the highwater mark in terms of manufacturing jobs as a percentage of all jobs.

In other words, for most of American history, including most of the 1950s, 70% or more of American workers had non-manufacturing jobs. And somehow they were able to live middle class lifestyles.

It isn’t even true that increasing the number of manufacturing jobs would make the average American wealthier today. The median annual wage or salary for all full-time jobs in the U.S. economy is about $62,400. The median for full-time manufacturing jobs is about $45,960. Americans leaving the average job for a manufacturing job would not live a higher lifestyle. Quite the contrary.

Nevertheless, there does seem to be an “affordability” problem for average Americans. And the U.S. has been running large net trade deficits for decades, with no foreseeable end in sight. If Trump’s story doesn’t explain these problems, what does?

That brings us back to the definition of “greatness.”

Read the rest on Tom’s Substack…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and host of the Tom Mullen Talks Freedom podcast.

What are the goals of Trump’s tariffs?

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President Trump announced Friday another pause on some tariffs on products imported from Canada and Mexico after a rocky week for equities markets trying to price in their effects. At the same, he says that tariffs could go higher than 25% in the future.

Trump’s stated reason for imposing the tariffs on the two USMCA partners is their failure to control illegal immigration and drug trafficking across their borders into the United States. Apparently, the president believes tariffs are the cure for just about anything, including illegal immigration.

But in a Q&A aboard Air Force One, Trump returned to the more traditional mercantilist arguments in favor of tariffs that he campaigned on. Asked if he is worried about a recession, Trump replied no, adding,

“All I know is this. We’re going to take in hundreds of billions of dollars in tariffs and we’re going to become so rich, you’re not going to know where to spend all that money, I’m telling you, you just watch. We’re going to have jobs, we’re going to have open factories, and it’s going to be great, and the plane is landing, and thank you for a lot of good questions. Thank you very much.”

There is a lot to unpack in that relatively short answer.

First, the president seems to believe taxing and spending are the keys to a strong economy. He tells the reporter “you’re not going to know where to spend all that money.” But it won’t be the reporter or anyone else in the private sector spending the money. It will be the government.

He also says the tariffs will collect “hundreds of billions of dollars.” As the president has also suggested tariffs could replace the income tax, it is worth noting that would require thousands of billions of dollars, not hundreds. Three thousand billion, to be exact, when counting the $500 billion in corporate taxes collected last year in addition to $2.5 trillion in personal income taxes.

But the last part of his answer carries the main foundation of Trump’s economic vision.

Candidate Trump promised tariffs would protect domestic manufacturers and their employees from cheaper foreign competition. Indeed, imposing tariffs similar to those imposed upon U.S. imports to its trading partners would cause manufacturing productions and jobs lost to China and other, lower labor cost countries would return to the United States. All this begs the question: What is the goal of the tariffs? Are they meant to collect revenue, perhaps enough to replace the income tax, or to protect domestic production? “Both!” Trump and his supporters would probably answer. It’s win-win. Americans will be so tired of winning some might be hospitalized for exhaustion. But tariffs can’t do both. It’s physically impossible.

Read the rest on Tom’s Substack…

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Trump confirms he’s a Hamiltonian; invokes Lincoln’s protectionist fallacies

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Is Donald Trump reading this blog? If so, he’s not grasping that Trump Isn’t Hitler; He’s Hamilton and Reality Check: Trump’s Platform is Identical to Lincoln’s weren’t meant to be supportive of his mercantilist economic ideas. Maybe that’s on me, the writer.

Regardless, Trump invoked both Hamilton and Lincoln, starting at about the 10:30 mark, during a speech yesterday. He quotes Lincoln saying, “The abandonment of the protective policy by the American government will produce want and ruin among our people.”

Like all protectionists, Trump seems to have no idea about the concept of opportunity cost. He posits that tariffs on foreign imports will bring back manufacturing jobs, which he says “the nation” desperately needs. But it never occurs to him that when millions of Americans buy sneakers made in China for $100 instead of sneakers made in America for $200.00, they create other jobs with the $100 they save.

Trump’s speech confirms several of the arguments I make in my latest book. One can draw a virtually straight line from the Federalists, through the Whigs, to the Republicans. Obviously, there are nuances over such a long period, but the core tenets of protectionism, crony capitalism and central banking never cease to be the foundation this house is built on.

More importantly, these are the core tenets of true conservatism in the British-American tradition, since before the dawn of the industrial revolution. You can call Trump a lot of things, but “not a real conservative” just doesn’t hold water. Free markets, individual liberty and limited government are classical liberal ideas that have only resided within the conservative movement recently and have never been very welcome. That’s because they are all anathema to the conservative worldview that any change, from within or without, threatens to break the barriers between society and man’s dark nature.

The creative destruction of the market, the free movement of labor, capital and goods, and Jefferson’s libertarian principle that the government should be limited to “restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement” is the opposite of conservatism. That’s why Hamilton feared and loathed Jefferson; that’s why Trump fears and loathes the free market. He’s a true conservative, like Hamilton, Lincoln, Coolidge, Hoover and the rest.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.