Just in case you thought the change of administration meant an end to stupid and evil trade policies, CNN reports that “President Joe Biden will sign an executive order Monday aimed at boosting American manufacturing, setting in motion a process to fulfill his campaign pledge to strengthen the federal government’s Buy American rules.”
Sigh. I obviously disagree with you about a lot of things, but here we’re in alignment: I was hoping that after the absolute humanitarian disaster in Puerto Rico we might actually have some momentum for repeal of the Jones Act, and this is movement in the exact wrong direction.
Or as Bryan Caplan would say: both political churches are absurd
It is particularly depressing, since one of the few advantages of Trump was that many Democrats suddenly discovered the virtues of free trade. That didn’t last long.
No, I never thought that the Biden administration would ever do anything better than the previous one.
I was thinking that the Covid-related disruption of supply chains – in particular pharmaceutical supply chains – might have raised awareness of the risks of the kind of supply concentration free trade inevitably brings with it. In particular when it’s more of a “unilateral” kind of free trade arrangement, where a country such as China sets the terms.
Apparently not.
Agreed this is dumb. But to play devil’s advocate for a second, the general American public, the average voter, just doesn’t get free trade. The problem is the benefits are spread broadly but the pain is seen, rightly or wrongly, as concentrated in rust belt and other Midwestern states which are important electorally. This is another problem with the electoral college in my opinion.
You won’t believe how many times I’ve tried to explain the benefits of free trade to my right wing family and it never works. But guess what: I’ve tried to explain it to more left wing friends and it doesn’t work either! In fact, with China’s behavior in recent years it’s become even harder. Trump and Bernie have also made it more difficult it feels like, moving people who were at worst indifferent to open trade to signal they “care” about the American worker as well.
My hope is this is mostly signaling for political purposes. Even Trump, with his silly tariffs, could have had higher tariffs and even shut down trade if he thought it was so evil but trade actually increased under him, probably due to offsetting factors like tax cuts. It’s just a really tough topic politically.
That’s OK because we’re gonna have free immigration, which is a substitute for free trade. 🙂
>>> In fact, with China’s behavior in recent years it’s become even harder.
I don’t think it is at all obvious that the kind of unilateral free trade the US has been pursuing with China – where China basically steals/extorts trillions of dollars in intellectual property, and through scale/agglomeration effects becomes the only country in the world with a comprehensive manufacturing base (that is, the only industrially self-sufficient country) necessarily results in a good situation.
China is increasingly becoming a totalitarian police state with TOTAL technological, AI-driven surveillance of its entire citizenry on a beyond-1984 scale, with aggressive territorial ambitions, which sees democracies as a threat to the legitimacy of its leadership, and which seeks the role of global leadership.
At minimum, we should ask the question whether it is a good idea if we are reliant on them for such things as our IT and communication infrastructure, our military production, and our pharmaceutical production.
There has always been recognition that certain strategic things may need to be provided domestically. Agriculture has been viewed as one of these, hence agriculture has more restriction on trade than almost any other sector. This order and Trump’s view seems to effectively move everything manufactured into this group.
Does this mean that U.S. economics educators have done as bad a job at educating the public as U.S. physics educators *would* have done, if calls for a “National Perpetual Energy Initiative” perennially got a lot of public traction?
Eh.
Biden is talking about the feds buying American-made stuff. These types of rules have been around for years. They typically come with loopholes and opportunities to seek waivers.
Sure, I’d prefer the feds put out RFPs and pick the low-cost bidder, regardless of nationality–but it doesn’t surprise me that they don’t. Rather, I’m kind of surprised that Biden has found something more to do in this regard.
And remember: Most of the federal budget is transfer payments (Social Security, Medicare, Medicaid) and interest on the debt. Roughly 20% is national defense–which involves a lot of US labor, plus a lot of capital assets. And roughly 30% is everything else–which, again, is heavily invested in labor. So the economic distortion (or “benefit” if you like the policy) that results from the feds expanding their “Buying American” policies may be less than you’re imagining.
Josh: “… the general American public, the average voter, just doesn’t get free trade. The problem is the benefits are spread broadly but the pain is seen, rightly or wrongly, as concentrated in rust belt and other Midwestern states which are important electorally.”
Indeed, this is nothing new. The principles of economics are somehow so non-intuitive, while superficially simple, that Joe Sixpack can’t grok them. Even after a semester or two at university, the learning fades, and they revert to their previous state.
“My hope is this is mostly signaling for political purposes.”
hmmmm… invoking the theory of rational ignorance, there’s no reason to believe that Biden is informed re economics. His career entails elections and back room deals, that consumes all his faculties. “Buy American” is obviously a good idea, who could oppose that?
The professional political class manifestly displays the same ignorance as the bulk of the electorate. Consistent with your comments above –
arch1 #10: I should have instead used recently-self-declared King Peter I of Germany as my deficient-education benchmark. Astral Codex Ten says that #77 on the list of theses he nailed to the door of the Wittenberg church is ‘Support free energy machines.’