Debate Magazine

How Trump is Wrong on Protectionism, Anti-globalism, and In-sourcing Jobs

Posted on the 28 September 2016 by Doggone

How Trump is wrong on protectionism, anti-globalism, and in-sourcing jobsTrump of the tiny hands and big mouth is apparently willfully ignorant about jobs, outsourcing, the national economy and the global economy.  He is specifically bone ignorant about the auto industry generally and Ford Motor Company specifically.
1. Ford is NOT firing anyone when it exports jobs to Mexico.  Rather it is retooling the existing Ford plant in the US, a process of investment in US manufacturing which itself creates jobs, and it is continuing to employ all of the existing workers on a different set of vehicles.
As noted by CNN Money:
The automaker quickly shot down Donald Trump’s latest hyperbolic claim, made on Fox News Thursday, that Ford plans to “fire all its employees in the United States” as part of a plan to build a plant in Mexico.
Ford said there will be zero job losses in the U.S. as a result of the new plant in Mexico. The Wayne, Michigan, plant that now builds the Focus and C-Max that will move to Mexico will instead start building other models — probably the new Ford Bronco SUV and Ranger small pickup.
“Ford has been in the United States for more than 100 years. Our home is here. We will be here forever,” said spokeswoman Christine Baker.
The company has 85,000 U.S. employees, up 28,000, or nearly 50%, in just the last five years. It has 8,800 employees at Mexican plants, and will add 2,800 jobs there when the new $1.6 billion plant opens there in 2018.
Ford committed to build new vehicles at the Michigan Assembly Plant to take the place of the Focus and C-Max when it reached a new contract late last year with the United Auto Workers union, which represents 3,900 hourly workers at the plant.
2. This shift in manufacturing models is because, as noted in multiple sources, the small cars being sent to Mexico are the least profitable in the United States.
Again from CNN Money:
The small cars Ford is shifting to Mexico are less popular and less profitable models. Trump has been using Ford for months as a prime example of what’s wrong with U.S. trade policy, but Ford has been strongly rebutting the GOP nominee.
3. Cars are assembled, but not manufactured in Mexico; the parts (at least 50%) from which the cars are assembled are made in the United States. That is ACTUAL US manufacturing and product export, unlike the assembly process.
Continuing from CNN Money, addressing multiple products including cars:
But the problem is that almost half of the parts in those cars and ACs originate from U.S. suppliers. In other words, U.S. manufacturers who ship to Mexico stand to lose customers if the U.S. imposes a tariff on the products they contribute to.
4. Cars assembled in Mexico and other foreign countries are not ONLY sold to the US market, they are also sold in many other nations. Central and South America are among the biggest new markets for US vehicles, both used and new, comprising considerable exports that benefit the US economy. This is part of the United States maintaining a competitive economic global presence, which is arguably most important in our own part of the globe.
From the LA Times:
Vehicle sales growth in China, now the world’s No. 1 car market, is grabbing headlines. But Latin American countries including Brazil, Peru, Argentina and Colombia also are seeing car sales skyrocket. A rapidly expanding middle class and easier credit are feeding the regionwide boom.
5. Trump policies panders to xenophobic anti-immigrant members that comprise the majority of his base; however what would really result from those policies is a loss of jobs, NOT the expansion of jobs in the United States.  It is worth noting that multiple sources (besides those listed below) find the same thing, INCLUDING the Wharton School from which Trump himself graduated.
From another piece at CNN money:
Oxford Economics found that if fully implemented, Trump’s economic, tax and immigration policies would cost 4 million U.S. jobs, weigh down global growth and U.S. consumer spending, and could spark a trade war with other nations.
“Combining these policies together, the impact could be significantly negative for the U.S. economy,” says Jamie Thompson, head of macro scenarios at Oxford Economics.
Oxford’s figures are in line with other analysis. The University of Pennsylvania’s Wharton Budget Model forecasts Trump’s immigration policy costing 4 million jobs and Moody’s economist Mark Zandi — a Clinton supporter — also forecasts a similar job loss under Trump.
6. The buying power and a resultant decline in the standard of living from an overwhelming majority of US citizens and residents would be the actual effect, not the result that Donald Trump is selling to largely economics illiterate supporters.  This is the antithesis of what Trump claims he would do in making America great again.  Going this time to economists from a far right source, although this is a finding broadly found across the political spectrum of economics, we see from the National Review, in reference to actual tariffs imposed on China by the Obama administration, that relate directly to auto manufacturing and consumption:
By 2009, the United States was importing tires from China at a rate of about 50 million per year. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union complained to the Obama administration that there was a “large, rapid, and continuing” increase in the number of Chinese-made tires entering American markets. In September of that year, Obama approved relief for domestic producers by increasing tariffs on most new tire imports for three years. But the tariff also forced consumers to spend $1.1 billion more on tires than they otherwise would have — or roughly $900,000 per U.S. tire industry job created. And retaliatory tariffs imposed by the Chinese further hurt our economy. In early 2010, China’s Ministry of Commerce imposed tariffs ranging from 50.3 to 105.4 percent on American poultry imports, which “reduced exports by $1 billion as U.S. poultry firms experienced a 90 percent collapse in their exports of chicken parts to China,” according to Hufbauer and Lowry.

7. Trade wars lead to real wars, and have done so across our history. I considered including my own list of real wars that followed from trade wars, but I found this to be a better summation:
Protectionism has also been accused of being one of the major causes of war. Proponents of this theory point to the constant warfare in the 17th and 18th centuries among European countries whose governments were predominantly mercantilist and protectionist, the American Revolution, which came about ostensibly due to British tariffs and taxes, as well as the protective policies preceding both World War I and World War II.
8. Protectionism, especially as promoted by Trump,  is closely associated with two backward, and ignorant movements: anti-globalization, and anti-immigration.  Trump is quite open about framing it as agit propaganda, falsely promoting an inaccurate and simplistic “us vs them” definition of a far more complex problem.
From South Dakota Public Broadcasting:
Trump said, “This wave of globalization has wiped out totally, totally, our middle class. It doesn’t have to be this way. We can turn it around, and we can turn it around fast.”
The mayor liked what he was hearing.
“Why would you take care of other countries and let your country go like this? And you’ve been around, my city is not the only one,” said Mavrakis.
While Trump would have his supporters, and all prospective voters, believe that he is the only person able to fix the problems facing the American people, he clearly is not, especially in the area he most claims expertise, trade deals and economic policies. When you have economists as disparate as the Nobel prize winners Milton Friedman and Paul Krugman, along with former Fed chair all vigorously opposed to such protectionism, on top of the recent example of it failing to benefit the US, you have to wonder just how ignorant, ill informed, and generally clueless Donald Trump really is.
To quote a nearly 20 year old opinion piece by Krugman in defense of free trade which predicted exactly the opposite outcome as we experienced in the Obama protectionism experiment:
"the growth of manufacturing — and of the myriad other jobs that the new export sector creates — has a ripple effect throughout the economy" that creates competition among producers, lifting wages and living conditions."
A ten year old presentation by Ann Kruger of the IMF both has been prophetic and acknowledges the role of protectionism, (the policy promoted by Donald Trump), as the causes of the world wars and earlier wars. She also noted the overall rise in standards of living world wide under free trade, and the considerable economic benefits to all parties. What Trump erroneously fails to understand, or deliberately, gets wrong to pander to his base, is the very real, very large amount of harm that will result from his policies, which could easily involve destabilizing the global economy and further world wars. We have enormous and growing wealth inequality in this country, but protectionism would only compound that problem, not resolve it.
The past half century has been a period of extraordinary growth for the world economy. Most citizens in most countries are far better off today than could have been imagined in the early postwar years. The pace of technological change has been, and continues to be, remarkable. Globalization has brought enormous benefits. And there are strong reasons for expecting this process to continue.
But at the same time there is no room for complacency. The last great period of globalization, at the end of the 19th century, ended in disaster, with the First World War. Progress was reversed and recovery from that setback took many decades.
A reversal this time may not be likely, but it is not impossible. Much of what has been achieved is a consequence of greatly improved domestic economic policies and, above all, the strength, durability and adaptability of the multilateral economic framework put in place in 1945. There have been many challenges to this framework over the years, all of which have ultimately demonstrated its underlying strength.
But the challenges we face today are, I believe daunting, not least because their seriousness is not fully recognized. The world trading system is at a crucial juncture. ...Tackling these problems will consolidate and increase the gains already reaped from globalization. Ignoring them would be, at best, foolhardy.
We saw what economic ignorance compounded by arrogance did to our economy and our national security under Dubya; Trump has demonstrated a far greater economic ignorance and arrogance that would lead to a proportionately greater catastrophe, for our country and for the larger world in which we inextricably exist.

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