In handicapping what kind of President Trump would be just before he was inaugurated, Brad DeLong did not consider “Russian traitor,” which now might be the most obvious choice.
The economic historian did write these chilling words about the Silvio-style kleptocracy that seemed poised to unfold: “Italy lost a decade of economic growth, I think, because of Berlusconi.” If Trump survives the corrupt and perhaps treasonous morass he’s engulfed in, America could be headed down the same sinkhole, which would be awful for us and wonderful for China and other autocracies.
Already have written that in addition to various high-tech fields, America should invest in creating positions that focus on maintenance of many kinds: health, environment, infrastructure. The demand is certainly evident. In the Financial Times, Martin Sandbu argues the new Administration’s manufacturing fetish is regressive, especially in a society heading deeper into automation, while the “caring industry” is the future.
The economic nationalism of President Trump and Messrs Navarro and Bannon can be described as Germany-envy. In those manufacturing powers, they see countries that have fought to hold on to the good, manly jobs that validate the status of the native working class. Like so often with machismo, the envy is rooted in insecurity — a feeling of inadequacy compared with the perceived strength sported by these economies. Since export surpluses cannot be enjoyed by all countries (unlike broader gains from trade), manufacturing fetishism leads logically to a zero-sum view of trade policy. It entails an attempt to displace the current surplus of manufacturing producers. Thus, in the context of a Germany-envying inferiority complex, the desire to repatriate global supply chains, limit imports and boost manufacturing makes sense.
But, outside the fetishists’ fantasies, it will not produce the desired effect. First, manufacturing machismo itself is a handicap when it comes to grasping the opportunities for a thriving economy. By far the largest number of jobs to be created in the US over the next decade will be in services, in particular the caring professions.
Factory fetishists might retort that it is this development they want to oppose by resurrecting factory employment. But this runs headlong into a second obstacle. Regardless of trade, automation is reducing the need for manufacturing jobs everywhere.•