(What’s Left of) Our Economy: Why China Really is Like Nazi Germany

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Albert O. Hirschman, allies, Biden, China, dumping, Information Technology and Innovation Foundation, intellectual property theft, Japan, multilateralism, NATO, Nazi Germany, nuclear umbrella, Robert D. Atkinson, sanctions, South Korea, tariffs, tech industry, technology extortion, Trade, tripwire, Trump, {What's Left of) Our Economy

Because Nazi references can be so irresponsibly inflammatory, and therefore have been so often abused, I haven’t yet compared the threat posed by China to the rest of the world to that posed by Nazi Germany. (In my view, these comparisons have been used even more recklessly lately in U.S. domestic politics, chiefly to describe former President Trump and his views and policies.) So even though the People’s Republic, its ambitions, and its burgeoning capabilities do scare the living daylights out of me (and should scare you), I was nonetheless pretty surprised to see precisely this comparison just made by Robert D. Atkinson.

Atkinson is the head of a technology-focused Washington, D.C. think tank who I’ve known since the early 1990s. I’ve admired some of its work and haven’t been so crazy about other examples of its output, but I’ve never, ever considered him a boat-rocker, much less a rhetorical bomb thrower. In fact, my criticisms of the numerous studies and articles issued by his Information Technology and Innovation Foundation stem from my view that they’re way too cautious when it comes to countering China’s wide range of predatory economic practices (which include predatory technology policy practices like the theft and extortion of intellectual property).

And I’ve attributed much of this caution to the Foundation’s donor base – which is dominated by the U.S. and in some cases foreign tech and manufacturing companies that have worked so hard to send so much production and employment, and (voluntarily) so much technology to China for decades. It’s true that many of these firms are now crying foul as Beijing in recent years has aimed to strengthen its own entities’ positions at the foreigners’ expense. Yet their stubborn opposition to the unilateral Trump tariffs and some key sanctions on the Chinese tech outfits that have been major customers made clear their vain hope that they could somehow have their China cake and eat it, too.

Yet here comes Atkinson in the Fall issue of The International Economy (a publication that’s as – proudly – establishment oriented as they come) with a piece titled “A Remarkable Resemblance” likening China’s international economic policies to those of “Germany for the first forty-five years of the twentieth century” – which of course include the twelve Nazi years (1933-1945).

As the author argues, Germany during these decades was:

“a ‘power trader’ that used trade as a key tool to gain commercial and military advantage over its adversaries. Likewise, China’s trade policy is guided neither by free trade nor protectionism, but by power trade, with remarkably similar strategy and tactics to those of 1940s Germany. Understanding how Germany manipulated the global trading system to degrade its adversaries’ capabilities, entrap nations as reluctant allies, and build up its own industries for commercial and military advantage, just as China is doing, can shed light and point the way for solutions to the China challenge.”

Atkinson reports that this description of German policies came from a 1945 book by the important economist Albert O. Hirschman, which concluded that “[I]t’s is possible to turn foreign trade into an instrument of power, of pressure, and even of conquest. The Nazis have done nothing but exploit the fullest possibilities inherent in foreign trade within the traditional framework of international economic relations.”

The author rightly observes that

“Hirschman’s key insight was that some countries— in this case Germany under three very different government regimes from 1900 to 1945—focus not on maximizing free trade or even on protecting their industries, but on changing the relative power of nations through trade to achieve global power. Germany’s policies and programs were designed not only to advance its own economic and military power, but to also degrade its adversaries’ economies, even if that imposed costs on their own economy relative to a free trade regime.”

Germany also consistently sought, as the author points out “to make it more difficult for its trading partners to dispense entirely with trade with Germany, thus creating dependency.” And if that’s not enough to convince you about the comparison with China today, Atkinson himself notes that the German policy recipe also included massive industrial espionage, and Hirschman identified a major element as the equally massive dumping (selling at prices way below production costs) of goods into foreign markets to destroy overseas competition.

Atkinson’s diagnosis of the problem is so spot-on that it makes his recommended solution especially disappointing. Kind of like President Biden, he believes that the best internationally oriented option by far (on top of more effective support for U.S. industry, which I strongly support) is forming a “NATO for trade” that would be

“governed by a council of participating [free trading] countries…if any member is threatened or attacked unjustly with trade measures that inflict economic harm, DATO [the “Democratically Allied Trade Organization] would quickly convene and consider whether to take joint action to defend the member nation.”

I’ve already pointed out that the consensus on standing against China economically among America’s allies is way too weak to enable such multilateral approaches to succeed. But as long as we’re talking in terms of NATO – the military alliance between the United States and much of first Western and now Eastern Europe – and the Cold War, let’s not forget two other big problems. First, NATO (and this also goes for America’s security ties with South Korea and Japan) was never so much an alliance as a protector-protectorate relationship. The vast bulk of the heavy lifting was always done by the United States.

This allied security dependence in turn has produced the second major obstacle to a DATO’s effectiveness. Because the United States coddled allied defense free-ridingcand opened its markets one-sidedly for so long, the allies’ protectorate status was substantially cost-free economically, and even came with trade rewards no other country could remotely offer. (In addition, as I’ve also written, the creation of an American nuclear umbrella combined with the stationining of U.S. “tripwire” forces on the NATO frontlines in Germany also greatly minimized the military risks of siding with Washington.)

Today, however, economic power between the United States and the allies is more evenly distributed, and the allies’ profitable trade with and investment in China has, as noted in my aforementioned writings, greatly increased the economic price they would pay for lining up against China.

Still, by comparing the China threat to the Nazi threat, Atkinson’s article significantly bolsters the case for the United States escalating its response to the “all of society” level – or at least intensifying it qualitatively. Let’s just hope, as the author writes, that this time around the United States fully awakens a lot faster.

(What’s Left of) Our Economy: Why Today’s Fed U.S. Manufacturing Report is So Bullish

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737 Max, aircraft, aluminum, automotive, Boeing, China, Federal Reserve, inflation-adjusted growth, Joe Biden, machinery, manufacturing, medical supplies, metals, pharmaceuticals, PPE, real output, steel, tariffs, Trade, vaccines, {What's Left of) Our Economy

Think for a moment about this morning’s very good manufacturing production figures from the Federal Reserve (for December) and a case for major optimism about U.S. industry’s foreseeable future is easy to make. Not only has the advent of highly effective vaccines greatly boosted hopes for a return to normality sooner rather than later. But much of the underlying data was collected before the vaccine production surge began.

Moreover, although Boeing aircraft is still dealing with manufacturing problems, its popular 737 Max model is being recertified or nearly recertified for flight by numerous countries (including the United States) and any continued significant rebound in air travel levels is sure to help the company’s order book for all of its jets.

And again, the data themselves were strong. According to this first Fed read for the month, American inflation-adjusted manufacturing output rose by 0.95 percent sequentially. Moreover, November’s initially reported 0.79 percent improvement was upgraded to 0.83 percent, and October’s results were revised upward for a second time – to 1.34 percent.

These noteworthy advances – which add up to eight straight months of increases – brought price-adjusted U.S. manufacturing production to 22.05 percent above the levels it hit during its CCP Virus-induced nadir in April, and to within 2.40 percent of its last monthly pre-pandemic numbers (for February).

Especially interesting, and another cause for optimism: The December manufacturing growth was so broad-based that it was achieved despite a 1.60 percent monthly drop in constant dollar automotive production. Combined vehicle and parts output has rebounded so vigorously since its near-evaporation last spring (by just under six-fold) that on a year-on-year basis, it’s actually grown by 3.64 percent. But today’s Fed report represents evidence that many other sectors are now catching up.

The crucial (because its products are used so widely throughout the entire economy) machinery sector enjoyed a good December, too, with after-inflation production increasing by 2.07 percent sequentially. That welcome news more than offset a downward revision in the November results, from a 0.51 percent to 0.99 percent shrinkage. Due to this growth, this real domestic machinery output is now just 1.53 percent off its pre-pandemic level.

As for the pharmaceutical industry, its price-adjusted output expanded by a solid 2.12 percent sequentially in December, but November’s disappointing initially reported 0.76 percent fall-off was downgraded to a 0.84 percent decrease, and October’s results stayed at minus 1.01 percent.

Moreover, year-on-year constant dollar pharmaceutical production is up only 0.18 percent – anything but what you’d expect for a country suffering through an historic pandemic.

But the first batch of Pfizer anti-CCP Virus vaccines didn’t leave the factory until December 13, and key data behind this first read on the month’s performance were gathered beforehand. So it’s likely that the huge ramp in vaccine out could start showing up in the revised December results in next month’s Fed manufacturing report (for January), which will reflect more relevant statistics.

Similar optimism seems warranted for the U.S. civilian aerospace industry and especially its beleaguered collosus, Boeing. Despite the safety woes of the popular 737 Max model and its consequent production suspension, the domestic aircraft and parts sectors have actually staged a powerful real output recovery since a 32.85 percent nosedive in February and March. Since then, inflation-adjusted production has boomed by 52.30 percent, fueled in part by December’s 2.78 percent sequential jump and November’s upwardly revised 2.39 percent growth.

In fact, constant dollar output in civilian aerospace is now actually 2.27 percent higher than its last pre-CCP Virus level. The 737 effect isn’t over yet, as made clear by the 11.49 percent real production decline since last December. But it seems evident that the industry is and will remain on the upswing barring any new seriously bad news.

Unfortunately, little such optimism appears justified in the case of medical equipment and supplies – including face masks, protective gowns, ventilators, and the like. Inflation-adjusted production in their larger subsector sank in December by 0.36 percent on month, and although the November increase has been revised up from 1.56 percent to 1.60 percent, October’s growth has been downgraded again – from an initially judged 3.54 percent all the way down to a decidedly non-pandemic-y 1.75 percent.

And since April, the after-inflation production recovery has been only 21.02 percent – still less than that for all of manufacturing. The year-on-year December result is no better, as it’s down 5.44 percent. And of course, those 2019 levels were revealed by the pandemic to have been dangerously inadequate.

But before ending, I couldn’t forgive myself if I didn’t say something about tariffs, and as with last month’s Fed manufacturing figures, the performance of the primary metals sectors for December is sending this loud and clear message to President-Elect Joe Biden: Keep them on.

For in constant dollar terms, these protected industries have recorded strong monthly growth since June, and November’s upwardly revised sequential 3.98 percent pop has now been followed by a 2.51 percent increase in December.

All told, since the April bottom, price-adjusted production has risen by 29.01 percent – expansion that looks inconceivable without the trade curbs preventing the U.S. market from being flooded with Chinese steel and aluminum along with product transshipped through the ports of those U.S. allies with whom Biden is so keen on repairing tattered Trump era ties, and greater metals shipments they often send America’s way to offset their own China-related losses.

(What’s Left of) Our Economy: Biden Trade Policy’s Off to a Flying Stop

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China, inflation, Joe Biden, Katherine Tai, National Foreign Trade Council, offshoring lobby, tariffs, Trade, trade policy, trade war, Trump, U.S. Trade Representative, USTR, {What's Left of) Our Economy

Any minimally intelligent discussion of the incoming Biden administration’s trade policy and the role of his pick for U.S. Trade Representative (USTR) needs to recognize at the start that Katherine Tai will make exactly none of the big calls on trade.

That’s not a knock on her specifically. But as nearly always the case (and the Trump administration was a major exception, as its trade envoy, Robert Lighthizer, was a prime author of specific, central initiatives), these decisions will be made way above her pay grade – almost certainly by the President himself or Treasury Secretary-designate Janet Yellen, or a combination of those two, along with the various special interests they need to please.

Even so, Tai will play an important message-bearing and policy defense role, especially in testimony before Congress, and in this vein, her first effort following her brief remarks following her nomination announcement got the Biden team’s record off to a start just ever so slightly above “same-old-stuff” level.

Most noteworthy, puzzling, and perhaps revealing was the choice of audience: the National Foreign Trade Council. For with its membership consisting of U.S. multinationals and big firms from highly protectionist economies like Germany and Japan, it’s long been a pillar of the corporate Offshoring Lobby.

Sure, many of these members have started to voice complaints about their China-related troubles in particular. But they’ve made equally clear that they have no clue as to realistic ways of solving them. In fact, their dogged opposition to unilateral, Trump-like U.S. tariffs as remedies (which have sharply curbed the access to the American market of their overseas production, and the availability of massively subsidized Chinese inputs for their domestic operations) has rendered them big obstacles to the remaining overhaul national trade policy needs.

It’s also true that everything known about Biden’s own long record on the matter, and his own statements during the campaign, makes clear the incoherence – and just as likely cynicism – of his own current stated approach (notably, stressing the imperative of working with – deeply conflicted and chronically fence-sitting — American allies to counter China’s trade and broader economic abuses).

Even so, given the pains Biden took to portray himself as “Middle Class Joe” whose trade initiatives and related decisions would prioritize American worker interests above all else, it needs to be asked why, from a purely political standpoint, his choice for trade negotiator chose an audience whose members have long pushed for exactly the opposite. Why not appear before a union audience?

Just as bizarre, Tai emphasized to these died-in-the-wool offshorers that “The President-Elect’s vision is to implement a worker-centered trade policy. What this means in practice is that U.S. trade policy must benefit regular Americans, communities, and workers.”

What did she and her superiors (who of course cleared her remarks) hope to accomplish with this declaration? Agreement? Or even the beginnings of theological conversion?

Weirder still: Her observation that “people are not just consumers — they are also workers, and wage earners” and, more pointedly, that when thinking about trade, it’s crucial to emphasize that “Americans don’t just benefit from lower prices and greater selection in shops and markets.” After all, her boss emphasized throughout the campaign that “President Trump may think he’s being tough on China. All that he’s delivered as a consequence of that is American farmers, manufacturers and consumers losing and paying more.”

It’s of course possible that Biden and his team could figure out a way to shield the entire U.S. domestic economy, from Chinese – and other countries’ – predatory practices without reducing the price competitiveness of these imports in the U.S. market. But it’s suggestive at the very least that after months on the campaign trail – and many decades in public life – the President-Elect has offered no specifics. And Tai’s speech did nothing to clear up this mystery.

(Not that there’s been any sign of noteworthy trade-related inflation during the “trade war” period – as shown, e.g., here – but one way greatly to boost the odds that tariffs don’t send prices upward would be to accompany trade restrictions with greater anti-trust enforcement that increases domestic competition, as I’ve argued here.)      

Tai advertised her and the broader Biden trade policy points as part of the former Vice President’s promise to “Build Back Better.” So far, though, the most charitable description of these is actually more like “Pretend More Assertively.”

Im-Politic: Looking Backward and Forward on Trump and Trumpism

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cancel culture, Capitol Hill, Capitol riots, China, climate change, Congress, Conservative Populism, Constitution, Democrats, election 2016, election 2020, election challenge, Electoral College, establishment Republicans, Hillary Clinton, identity politics, Im-Politic, Immigration, impeachment, incitement, insurrection, Joe Biden, Josh Hawley, left-wing authoritarianism, mail-in ballots, nationalism, Populism, Republicans, sedition, separation of powers, tariffs, Ted Cruz, Trade, trade war, Trump, violence

(Please note: This is the linked and lightly edited version of the post put up this morning.)

The fallout from the Capitol Riot will no doubt continue for the foreseeble future – and probably longer – so no one who’s not clairvoyant should be overly confident in assessing the consequences. Even the Trump role in the turbulent transition to a Biden administration may wind up looking considerably different to future generations than at present. Still, some major questions raised by these events are already apparent, and some can even be answered emphatically, starting off with the related topic of how I’m viewing my support for many, and even most, of President Trump’s policies and my vote for him in both of his White House runs.

Specifically, I have no regrets on either ground. As I’ll make clear, I consider Mr. Trump’s words and deeds of the last few weeks to represent major, and completely unnecessary, failures that will rightly at least tarnish his place in history.

All the same, legitimate analyses of many developments and resulting situations need to think about the counterfactual. Here, the counterfactual is a Trump loss to Democratic presidential nominee Hillary Clinton in 2016. And I’m confident that her presidency would have been both disastrous in policy terms (ranging from coddling China to moving steadily toward Open Borders immigration policies to intervening militarily more often and more deeply in numerous foreign conflicts of no importance to the United States) and heatedly divisive in political terms (because of her grifting behavior in fundraising for the various supposedly philanthropic initiatives she started along with her husband, former President Bill Clinton; because of her campaign’s payment for the phony Steele dossier that helped spur the unwarranted and possibly criminal Obama administration investigation of the Trump campaign; and because of intolerant and extremist instincts that would have brought Identity Politics and Cancel Culture to critical mass years earlier than their actual arrivals).

As for the worrisome events of the last several weeks:

>As I’ve written, I don’t regard Mr. Trump’s rhetoric at his rally, or at any point during his election challenges, as incitement to violence in a legal sense. But is it impeachable? That’s a separate question, because Constitutionally speaking, there’s a pretty strong consensus that impeachment doesn’t require a statutory offense. And since, consequently, it’s also a political issue, there’s no objective or definitive answer. It’s literally up to a majority of the House of Representatives. But as I also wrote, I oppose this measure.

>So do I agree that the President should get off scot free? Nope. As I wrote in the aforementioned post, I do regard the Trump record since the election as reckless. I was especially angered by the President’s delay even in calling on the breachers to leave the Capitol Hill building, and indeed the entire Capitol Hill crowd, to “go home.” In fact, until that prompting – which was entirely too feeble for my tastes – came, I was getting ready to call for his resignation.

>Wouldn’t impeachment still achieve the important objective of preventing a dangerously unstable figure from seeking public office again? Leaving aside the “dangerously unstable” allegation, unless the President is guilty (as made clear in an impeachment proceding) of a major statutory crime (including obstruction of justice, or incitement to violence or insurrection), I’d insist on leaving that decision up to the American people. As New York City talk radio host Frank Morano argued earlier this week, the idea that the Congress should have the power to save the nation from itself is as dangerously anti-democratic as it is laughable.

>Of course, this conclusion still leaves the sedition and insurrection charges on the table – mainly because, it’s contended, the President and many of his political supporters (like all the Republican Senators and House members who supported challenging Electoral College votes during the January 6 certification procedure) urged Congress to make an un-Constitutional, illegal decision: overturning an election. Others add that the aforementioned and separate charge not includes endorsing violence but urging the January 6 crowd to disrupt the certification session.

>First, there’s even less evidence that the lawmakers who challenged the Electoral College vote were urging or suggesting the Trump supporters in the streets and on the lawn to break in to the Capitol Building and forcibly end the certification session than there’s evidence that Mr. Trump himself gave or suggested this directive.

>Second, I agree with the argument – made by conservatives such as Kentucky Republican Senator Rand Paul (often a Trump supporter) – that authorizing a branch of the federal government unilaterally to nullify the results of elections that the Constitution stipulates should be run by the states is a troubling threat to the Constitutional principle of separation of powers. I’m also impressed with a related argument: that sauce for the goose could wind up as sauce for the gander.

In other words, do Trump supporters want to set a precedent that could enable Congress unilaterally to overturn the election of another conservative populist with something like a second wave of Russia collusion charges? Include me out.

>Further, if the Trump supporters who favored the Electoral College challenge are guilty of insurrection or fomenting it, and should be prosecuted or censured or punished in some way, shouldn’t the same go for the Democrats who acted in the exact same ways in other recent elections? (See here and here.) P.S. Some are still Members of Congress.

>Rather than engage in this kind of What About-ism, and help push the country further down the perilous road of criminalizing political behavior and political differences, I’d much rather consider these challenges as (peaceful) efforts – and in some cases sincere efforts – to insert into the public record the case that these elections were marred by serious irregularities.

>How serious were these irregularities? Really serious – and all but inevitable given the decisions (many pre-pandemic) to permit mass mail-in voting. Talk about a system veritably begging to be abused. But serious enough to change the outcome? I don’t know, and possibly we’ll never know. Two things I do know, however:

First, given the thin Election 2020 margins in many states, it’s clear that practices like fraudulent vote-counting, ballot-harvesting, and illegal election law changes by state governments and courts (e.g., Pennsylvania) don’t have to be widespread. Limiting them to a handful of states easily identified as battlegrounds, and a handful of swing or other key districts within those states, would do the job nicely.

Second, even though I believe that at least some judges should have let some of the Trump challenges proceed (if only because the bar for conviction in such civil cases is much lower than for criminal cases), I can understand their hesitancy because despite this low-ish bar, overturning the election results for an entire state, possibly leading to national consequences, is a bridge awfully far. Yes, we’re a nation of laws, and ideally such political considerations should be completely ignored. But when we’re talking about a process so central to the health of American democracy, politics can never be completely ignored, and arguably shouldn’t.

So clearly, I’m pretty conflicted. What I’m most certain about, however, is that mass mail-in ballots should never, ever be permitted again unless the states come up with ways to prevent noteworthy abuse. Florida, scene of an epic election procedures failure in 2000 (and other screwups), seems to have come up with the fixes needed. It’s high time for other states to follow suit.

As for the politics and policy going forward:

>President Trump will remain influential nationally, and especially in conservative ranks – partly because no potentially competitive rivals are in sight yet, and possibly because Americans have such short memories. But how influential? Clearly much of his base remains loyal – and given his riot-related role, disturbingly so. How influential? Tough to tell. Surely the base has shrunk some. And surely many Independents have split off for good, too. (See, e.g., this poll.) Perhaps most important, barring some unexpected major developments (which obviously no one can rule out), this withering of Trump support will probably continue – though the pace is tough to foresee also.

>The Republican Party has taken a major hit, too, and the damage could be lasting. In this vein, it’s important to remember that the GOP was relegated to minority status literally for decades by President Herbert Hoover’s failure to prevent and then contain the Great Depression. Those aforementioned short American memories could limit the damage. But for many years, it’s clear that Democratic political, campaigns, and conservative Never Trumper groups like the Lincoln Project, will fill print, broadcast, and social media outlets with political ads with video of the riot and Mr. Trump’s rally and similar statements, and the effects won’t be trivial.

>What worries me most, though, is that many of the urgently needed policies supported and implemented by the Trump administration will be discredited. Immigration realism could be the first casualty, especially since so many of the establishment Republicans in Congress were such willing flunkies of the corporate Cheap Labor Lobby for so much of the pre-Trump period, and Open Borders- and amnesty-friendly stances are now defining characteristics of the entire Democratic Party.

The Trump China policies may survive longer, because the bipartisan consensus recognizing – at least rhetorically – the futility and dangers of their predecessors seems much stronger. But given Biden’s long record as a China coddler and enabler, the similar pre-Trump views of those establishment Republicans, and their dependence on campaign contributions from Wall Street and offshoring-happy multinational companies, important though quiet backtracking, particularly on trade, could begin much sooner than commonly assumed. One distinct possibility that wouldn’t attract excessive attention: meaningfully increasing the number of exemptions to the Trump China and remaining metals tariffs to companies saying they can’t find affordable, or any, alternatives.

>Much of the political future, however, will depend on the record compiled by the Biden administration. Not only could the new President fail on the economic and virus-fighting fronts, but on the national unity front. Here, despite his reputation as a moderate and a healer, Biden’s charge that Republican Senators Ted Cruz and Josh Hawley have used Nazi-like tactics, and race-mongering comments accusing law enforcement of handling the overwhelmingly white Capitol Rioters more gingerly than the racial justice protesters earlier this year represent a lousy start. And as his harsh recent rhetoric suggests, Biden could also overreach greatly on issues like climate change, immigration, and Cancel Culture and Identity Politics. Such Biden failures could even shore up some support for Mr. Trump himself.

>How big is the violence-prone fringe on the American Right? We’ll know much more on Inauguration Day, when law enforcement says it fears “armed protests” both in Washington, D.C. and many state capitals. What does seem alarmingly clear, though – including from this PBS/Marist College poll – is that this faction is much bigger than the relatively small number of Capitol breachers.

>Speaking of the breachers, the nature of the crimes they committed obviously varied among individuals. But even those just milling about were guilty of serious offenses and should be prosecuted harshly. The circumstances surrounding those who crossed barriers on the Capitol grounds is somewhat murkier. Those who knocked down this (flimsy) fencing were just as guilty as the building breachers. But lesser charges – and possibly no charges – might be justifiable for those who simply walked past those barriers because they were no longer visible, especially if they didn’t enter the Capitol itself.

>I’m not security expert, but one question I hope will be asked (among so many that need asking) in the forthcoming investigations of the Capitol Police in particular – why weren’t the Capitol Building doors locked as soon as the approach of the crowd became visible? The number of doors is limited, and they’re anything but flimsy. The likely effectiveness of this move can be seen from an incident in October, 2018 – when barred Supreme Court doors left anti-Brett Kavanaugh protesters futilely pounding from the outside when they attempted to disrupt the new Supreme Court Justice’s swearing in ceremony. Window entry into the Capitol would have remained an option, but the number of breachers who used this tactic seems to have been negligible.

What an extraordinary irony if one of the worst days in American history mightn’t have even happened had one of the simplest and most commonsensical type of precaution not been taken.

Making News: Podcast On-Line of NYC Impeachment & Economy Interview, New Appearance Coming Today … & a Correction

Tags

China, Frank Morano, impeachment, Making News, manufacturing, Market Wrap with Moe Ansari, Mueller Report, obstruction of justice, Republicans, tariffs, The Other Side of Midnight, Trade, trade war, Trump, Trump-ism, WABC AM

I’m pleased to announce that the podcast is now on-line of an interview last night in the wee hours on New York City’s WABC-AM’s “Other Side of Midnight” program. Click here for a timely conversation with host Frank Morano on the possibility of a Trump impeachment, the political impact of the Capitol riot, and what the latest official U.S. trade report told us about the health of the economy and the effects of Mr. Trump’s tariff-centric policies. (You’ll see my segment right at the top.) 

In addition, I’ll be discussing the same subjects later today on Moe Ansari’s nationally syndicated “Market Wrap” radio show. Click here and then on the “listen live” link on the right starting at a few minutes before 8 PM EST. My segment will probably begin about halfway into the hour-long program. And if you can’t tune in, as usual I’ll be posting a link to the podcast as soon as one’s available.

As for the correction, in yesterday’s post laying out the case against impeaching the President, I stated that the Mueller report into the Trump-Russia collusion charges presented on p. 89 of its second volume the argument that mitigating against accusing Mr. Trump of obstruction of justice was abundant evidence that the President lacked criminal or corrupt intent.

This argument was indeed made, but not on that page. Instead, you’ll find on pp. 7, 47, 51, 56, 57, 62, 76, 97 and 157, descriptions of episodes indicating that the President acted out of a genuine belief that he was being framed and due to other legitimate considerations.  And on p. 7, you’ll find the explanation that the obstruction statues require “consideration of [such] motives for his conduct.”  You can also read these passages in this post.

I apologize for the error and for any confusion caused. Thanks to the careful, sharp-eyed reader who caught the mistake!

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: More Manufacturing Jobs Strength – & Vindication of Trump Tariffs

Tags

737 Max, aerospace, automotive, Boeing, CCP Virus, China, coronavirus, COVID 19, Employment, Jobs, machinery, manufacturing, manufacturing jobs, non-farm payrolls, pharmaceuticals, PPE, private sector, tariffs, Trade, trade war, Trump, vaccines, Wuhan virus, {What's Left of) Our Economy

This morning’s official U.S. jobs report, for December, shows that, to paraphrase that unforgettable battery ad slogan, domestic manufacturing just keeps hiring and hiring and….

As a result, the December data also add to the already compelling case that domestic industry’s continued resilience – including an ongoing hiring out-performance – owes significantly to the Trump tariffs that have prevented imports from China from flooding U.S. markets and massively depriving Made in America products of customers as they had before his presidency.

The nation’s manufacturers boosted their payrolls by 38,000 on month in December, even as the private sector shed 95,000 jobs and government at all levels lost 45,000.

Moreover, in line with the strong overall employment revisions for October and November, industry’s previously reported 33,000 hiring improvement for the former (which had already been downgraded from 38,000) is now judged to be 43,000. And November’s figure has been upgraded from 27,000 to 35,000.

Although this performance pales compared with the 333,000 jobs added in manufacturing in June, the sector continues to punch above its employment weight, and in fact has now won back a status it apparently had lost in the fall.

As of December, U.S.-based industry had regained 60.16 percent (820,000) of the 1.363 million jobs it had lost during the worst (so far) of the pandemic-induced downturn in March and April.

That’s slightly ahead of the total private sector, which has recovered 59.91 percent (12.696 million) of its 21.191 million drop last spring.

And its considerably ahead of the overall economy’s record. Non-farm payrolls (the definition of the American employment universe used by the Labor Department, which issues these jobs reports) have risen by 12.321 million since April, a bounceback reprsenting only 55.60 percent of their 22.160 million plunge that month and in March.

The big reason is the slump in government jobs at all levels, and especially in states and localities. Public sector employment sank by 45,000 sequentially in December and by 81,000 the month before. And the outlook for public sector employment remains clouded by the brightening (due to the nearly final 2020 election results) but still uncertain prospects for a federal bailout of state and local governments, whose December monthly job losses totaled 49,000. (The federal government actually added positions.)

Manufacturing’s biggest monthly employment winners in December were plastics and rubber products (up 6,900), the automotive sector (6,700), non-metallic mineral products (6,100), food manufacturing (5,500), and apparel (4,000).

Especially encouraging were the 2,800 jobs created by domestic machinery makers, since the equipment they make is so widely used throughout the rest of manufacturing and elsewhere in the economy. November’s on-month machinery jobs gains were revised up from 1,900 to 2,500, but October’s totals were revised down for a second time, from 3,000 to 2,700.

December’s biggest manufacturing job losers were miscellaneous non-durable goods (down 11,200 sequentially) and primary metals (down 2,100).

Also on the encouraging side: Better progress has been made in job-creation for the CCP Virus-related medical manufacturing categories. These only go through November, but they show that the the broad pharmaceuticals and medicines sector added 1,000 new jobs that month, and its October figure was upgraded all the way from 100 to 1,100.

In addition, the sub-sector containing vaccines increased payrolls in December by 1,100, and its October performance was revised up from 600 to 1,100.

But in the manufacturing category containing PPE goods like face masks, gloves, and medical gowns, along with cotton swabs, the previously reported October employment increase stayed unreivsed at 400, and the November growth was only 500.

These results, however, still mean that the PPE category’s job gains since February have been much stronger (7.85 percent) than those of the vaccines category (a disappointing 2.82 percent) and of the broader pharmaceuticals industry (an even weaker 1.40 percent).

Finally, other than the prospect of a vaccine-related return to normal in the U.S. and global economies (for domestic manufacturing is a big exporters), the biggest reason for further manufacturing employment optimism concerns the aerospace sector. It’s been pummeled by both the pandemic-induced nosedive in air travel around the world, and by Boeing’s safety woes.

The U.S. aerospace giant isn’t out of the woods yet. Its troubled 737 Max model has now been recertified by the federal government as safe to return to flight, but new production-related problems have cropped up, too. Moreover, who can say with any confidence when “normal,” or enough of it to help, Boeing, returns?

Yet assuming some substantial Boeing recovery in the foreseeable future, a major restart of its own manufacturing could give a big boost to domestic industry as a whole, given its many and long domestic supply chains.

(What’s Left of) Our Economy: U.S. Manufacturing Revival Plans Still Need Trump-like Tariffs

Tags

Buy American, carbon tariff, carbon tax, Dan Breznitz, David Adler, health security, infrastructure, Joe Biden, manufacturing, manufacturing trade deficit, research and development, supply chains, tariffs, taxes, technology, The New York Times, Trade, {What's Left of) Our Economy

I was thrilled to see today’s op-ed piece on U.S. manufacturing in The New York Times, and not just because co-author David Adler is a good friend. I was also thrilled to see it because a careful reading reenforces the essential notion that all the worthy proposals made by policy analysts and politicians lately (including apparent President-elect Joe Biden) on reviving industry will either come to naught or greatly underperform without steep, and indeed Trump-like, tariffs to shut a critical mass of imports out of the economy.

Those domestically-focused manufacturing revival measures have included more federal funding for research and developments, greater federal efforts to help smaller manufacturers in particular learn about and access research breakthroughs in academia and existing government labs, measures to help these smaller industrial firms access capital more easily, tax breaks to foster production and innovation in the United States, and more ambitious and better enforced Buy American requirement for federal purchases of manufactured products. In general, I’m strongly supportive, and have even criticized the Trump administration for giving them short shrift (even on the tax front, where the big 2017 cuts should have come with more investing and hiring strings).

From knowing David, I feel sure that he backs these intiatives, too; indeed, the article concentrates tightly on the Buy American slice of this agenda. And the piece gratifingly (but probably unknowingly) endorses an idea that I’ve made for many years, but that has gotten zero traction: requiring “all manufacturing industries to disclose how much of their sourcing and critical production takes place in the United States.” After all, how can Washington make the right manufacturing policy decisions when it relies so heavily for such crucial information from crumbs self-servingly cherry-picked by offshoring-happy companies themselves?

Yet as also suggested by David and co-author Dan Breznitz – who studies innovation policies at the University of Toronto – except for the Buy American proposals, the standard raft of manufacturing revival plans could work to  stimulate more production and supply, but pays inadequate attention to ensuring that all that supply is actually bought – which would eventually make companies think twice about producing more.

The authors place much stock in government’s ability to soak up this output, and so does Biden – who on top of making sure that more of what government currently purchases is American-made, has pledged to spend “$400 billion in his first term in additional federal purchases of products made by American workers, with transparent, targeted investments that unleash new demand for domestic goods and services and create American jobs.”

The former Vice President correctly contends that these measures will “provide a strong, stable source of demand for products made by American workers and supply chains composed of American small businesses.” The history of U.S. industrial policy also shows that early guaranteed government purchases helped new industries demonstrate the usefulness of innovative products that eventually interested the private sector and produced enormous new markets for their products on top of federal contracts. (Think “computers” and all the hardware and software used pervasively now not only in technology sectors but in virtually the entire economy.)

But U.S.-based manufacturers turned out just over $2.35 trillion worth of goods in 2019 (the last full pre-CCP Virus year). And the manufacturing trade deficit that year was $1.03 trillion. So unless it’s supposed that that 2019 level of domestic manufacturing production is remotely adequate (and clearly, the manufacturing policy reform supporters don’t), or unless they believe that government should buy much more of the output than the $400 billion Biden proposes over not one but four years (to sit in warehouses?), generating more private demand for industry’s output will be essential as well.

As indicated above, David and Dan Breznitz argue that more detailed, accurate labeling will help by enabling more consumers and private businesses to act effectively on their naturally strong preferences for Made in the USA goods – not only out of patriotism, but because of reasonable convictions that their quality and safety are superior. I remain all in favor, but the immense popularity of imports among both classes of customers (made clear by the huge and chronic manufacturing trade deficits) despite numerous news accounts over the years of shoddy, outright dangerous foreign-made products (especially from China), demonstrates that much more will need to be done to spur demand for U.S.-produced manufactures.

RealityChek regulars will not be the slightest bit surprised that I’m ruling out overseas demand as a promising net new source of customers for American domestic manufacturers. Unfortunately, the persistence of the huge manufacturing trade deficits is also evidence that most of America’s international trade partners are far too devoted to the health of their own industrial bases to permit major U.S. inroads. In fact, if anything, they’re likely to step up their own efforts to strengthen their own domestic industries by further curbing U.S. and other foreign competition. And that’s where the tariffs come in.

Not that David and Dan Bernitz, or Biden, overlook the need for U.S. market protection entirely. The former, for example, call for “Stopping predatory pricing by foreign manufacturers” – which entails slapping tariffs on these usually government-subsidized artificially cheap goods. The latter makes similar points, and has also mentioned a carbon tariff on products from countries that base their competitiveness on ignoring “their climate and environmental obligations.” (At the same time, Biden could use a similar levy to punish domestic companies that don’t measure up in his administration’s eyes climate-wise, leaving the net benefit to U.S.-based manufacturing minimal.)

Moreover, to ensure adequate domestic supplies of the healthcare goods needed to fight the next pandemic, simple stockpiling of products by government will be necessary. And since practically everything wears out over time, or becomes outmoded, lots of re-stockpiling will be necessary. Meanwhile, it should go without saying that many of the government purchases of manufactures will be used for critical national purposes – like repairing and building all kinds of traditional and technology infrastructure systems, and producing whatever new military equipment or refurbishing of old equipment the new Congress and the likely new administration wind up supporting.

But these are of course public purposes, and since the United States is still a strongly private sector-driven economy, that’s what’s inevitably going to determine the success of most manufacturing revival efforts. So unless manufacturing revivalists want government to play a veritably dominant role in production and consumption decisions, their strategy will employ tariffs – but not in a targeted, sector-specific, and reactive way, much less as an afterthought to domestic initiatives. Instead, they’ll be proactive, come in a flat-rate form, and stand high enough to encourage plenty of new market entrants that it makes sense to join established enterprises in vigorous, overwhelmingly domestic competition for America’s immense pool of customers.

(What’s Left of) Our Economy: Blaming the Restaurant Crisis on…Trump’s Tariffs

Tags

Europe, food, imports, productivity, restaurants, spirits, tariffs, The Washington Post, Trade, Trump, wine, {What's Left of) Our Economy

It’s like the Washington Post, and especially the folks who run its op-ed page, will do anything to slam President Trump’s tariff-centric trade policies. Example number 4,369,589? A piece not from an Offshoring Lobby mainstay, or one of this pressure group’s hired gun think tank hacks, or an academic economist with his or her head stuck in the clouds – but from two of America’s leading chefs and restaurateurs.

I’ll give Post editors and the authors – Kwame Onwuachi and Alice Waters – style points for creativity at least. The article contends that a great way for apparent President-elect Joe Biden to provide some desperately needed help for a national restaurant sector decimated by the CCP Virus would be to lift a set of tariffs imposed by Mr. Trump on European food products. The tariffs, they contend, are adding 25 percent to the costs of restaurants that use these products exactly at a time when few establishments in this usually low-margin sector can afford such burdens.

Unfortunately, all the piece makes clear is that chefs and restaurateurs should stick to cooking and serving and running their own businesses rather than advising the nation on trade, and that the folks at the Post should try requiring their authors to meet some minimal standards of credible argumentation.

After all, as Onwuachi and Waters themselves point out, these Trump tariffs were imposed last October 19. And the nation’s restaurants seemed to be doing just fine until…the pandemic and the lockdowns came along. So blaming the trade curbs for any significant contribution to the restaurant crisis seems a major stretch.

No doubt dining establishments that rely heavily on sales of products stressed by the authors like “wine from France, Spain and Germany, whiskey from Ireland and Scotland, and Spanish olives and olive oil, along with cheeses from all over the continent, pork, and much more” are now seeing their remaining (post-lockdowns) earnings suffering.

But nowhere in the piece are readers given the bigger picture. For example, what share of the nation’s restaurants even serve any of these foods or beverages? And what share of their total costs do such imports from Europe represent? Further, what percentage of these restaurants have closed for good, meaning that tariff elimination won’t provide them with a speck of relief at all? As RealityChek regulars know, presenting economic data in isolation is the first refuge of an intellectual scoundrel.

The authors – and their editors – also seem unaware that lots of domestic substitutes are available for these European products. For instance, on the eve of the pandemic, U.S.-produced wine accounted for about two-thirds of all the wine sold in the country both by value and by volume. I’m no oenophile, but I keep hearing that many measure up quite well against their foreign counterparts – and often better. In addition, not all the imports, or even the choice imports, come from Europe, as connoisseurs of Australian, South American, and South African wines can attest.

It’s a shame that the Trump tariffs won’t enable the restaurants that do maintain an extensive European wine menu to offer their customers exactly what they want, at exactly the prices to which they’re accustomed. But I strongly suspect that diners today are in a pretty supportive, accomodating mood. And if restaurateurs are indeed desperate – which so many clearly are – they won’t gripe excessively about switching to non-tariffed wines.

Moreover, any restaurateur worth his or her salt should have the marketing chops to encourage customers to expand their palates. Heaven knows they’ve succeeded extraordinarily in persuading Americans to sample all sorts of new, exotic, and often downright weird dishes and drinks containing equally new, exotic, and often downright weird ingredients and combinations thereof.

Since wine and other spirits play an outsized role in restaurant sales and profits, it’s that alcohol trade picture that counts most, and it’s enough to refute in large measure the case for saving or even meaningfully boosting the dining industry by rescinding the tariffs. But as opposed to my indifference to wine, I am a cheese lover, and can personally attest that many outstanding domestic varieties are available, too, for gourmet chefs to place on appetizer or dessert plates.

Finally, both the authors and the Post editors ignore the economics maxim holding that businesses facing cost increases can absorb them without raising prices by boosting their productivity. And although cooking, serving, and dining probably don’t strike many as an activities where efficiency can be greatly raised, the industry itself admits that its productivity growth is unacceptably low and needs to get on the stick.

Just as important, unless Unwuachi, Waters, any other spokes folks for their sector, or Post editors can come up with more convincing evidence that U.S. trade policy has decisively impacted their fortunes, focusing on improving productivity would sure be a better use of their time than whining about Mr. Trump’s tariffs.

Im-Politic: Big Media Praise for Trump’s Trade and Manufacturing Policies…Post-Election

Tags

Biden, Bloomberg.com, Carrier, China, election 2020, Im-Politic, Indiana, Jobs, Mainstream Media, manufacturing, Mexico, Nelson D. Schwartz, tariffs, The New York Times, Trade, trade war, Trump, Trump Derangement Syndrome

Boy, here are two Mainstream Media articles that President Trump and his supporters (like me) sure would liked to have seen come out before Election Day in November rather than afterwards. Not that their appearance would have made much difference in the apparent outcome. But they did resoundingly vindicate high-profile Trump decisions that epitomized his approach to the trade and manufacturing issues so central to his agenda, and that were roundly criticized by his opponents – including apparent President-elect Joe Biden and union leaders.

The first came from Bloomberg.com, and it declared on December 20 that “Biden Will Inherit a Strong Hand Against Xi, Thanks to Trump.” That header was nearly as much of a stunner as the lead sentence: “Joe Biden will take office next month wielding more leverage over Beijing than he would have ever sought.” And the first reason cited? “Biden will be sworn in as president after Trump’s administration spent years ramping up pressure on China, including levying tariffs on $370 billion in imports….”

I call these statements stunners not because I don’t believe them, or because you may not believe them. Instead, they’re stunners on two main counts.

First, the apparent President-elect himself apparently doesn’t believe them. After all, he claimed earlier this year that, because of the Trump trade curbs, “Manufacturing has gone into a recession. Agriculture lost billions of dollars that taxpayers had to pay.” And last year, he argued that “President Trump may think he’s being tough on China. All that he’s delivered as a consequence of that is American farmers, manufacturers and consumers losing and paying more.”

Obviously, no one who really put any stock into these propositions could possibly also believe that such self-defeating moves could be of much use against foreign antagonists. Employing them or even threatening to employ them would be tantamount to vowing to hold your breath until you get what you want.

Maybe Biden regards the costs created by the Trump tariffs as smaller than the pain they’ve inflicted on China, and/or that they’re a reasonable price to pay for advancing or protecting U.S. interests threatened by China? Maybe. But the former Vice President has never made those points. At the same time, he’s also (since the election) decided to keep the tariffs in place pending a policy review. That makes no sense, either, if he really views them as an unmitigated disaster, and as a result, it will be fascinating to see if his deeds as President match these lastest words.

What seems certain, though, is that the political impact of a pre-election Biden acknowledgment that the trade levies have served any useful purpose would have had an awfully interesting impact on those manufacturing-heavy Midwestern battleground states that swung so narrowly back into the Democrats’ presidential corner after backing Mr. Trump in 2016.

But the Bloomberg article was also stunning because the folks at Bloomberg themselves never seemed to believe that the Trump tariffs did any good for Americans. For example, in September, 2019, a Bloomberg analysis (by a different author, but it ultimately was approved by the same editors) contended that “China is Winning the Trade War with Trump” because “On just about every metric that matters, China is ahead. At every turn, Trump seems to have been outplayed and outsmarted throughout the global trade war that began shortly after he took office.”

Two months later, Bloomberg readers were treated to this header: “How Trump’s Trade War Went From Method to Madness.” And let’s not forget December 10, 2019’s article with the news that “Trump’s China Tariffs Boomerang on America” because “Thanks to trade wars, companies are skimping on new U.S. plants and equipment.” Maybe I’m missing something, but none of these developments sounds like a source of leverage to me.

The second stunner article came out two days after Bloomberg‘s post-election paean to Trump-created trade leverage, and concerned the President’s efforts, which began early in his first White House run, to save jobs at Carrier manufacturing facilities in Indiana that were slated to be moved to Mexico. As a December 18 piece by New York Times reporter Nelson D. Schwartz reminded, the saga began with the company’s announcement in February, 2016 that was closing an Indianapolis furnace factory and sending its operations – and of course jobs – south of the border, where wages are much lower.

Candidate Trump quickly seized on the situation as a perfect example of how the offshoring-friendly trade policies of recent establishment Presidents, like the North American Free Trade Agreement were shortsightedly hollowing out the U.S. industrial base, and enriching executives and stockholders at the expense of American workers. And he quickly declared that, if elected, he would force the company to reverse the decision and save the jobs.

A not neligible firestorm ensued, with economists insisting that Mr. Trump’s actions amounted to pointless at best and bad at worst economics, and the usual gang of free market zealots in the media and think tank worlds condemning the candidate for seeking to move the United States well down the road to socialism and even worse. At least one local union leader called the arrangement reached by the then-President elect a “phony operation” and “a dog and pony show.”

And I wasn’t crazy about the specific measures eventually used by Mr. Trump to keep much of Carrier in Indiana, either – arguing that although such jaw-boning had major uses, tariffs were greatly preferable to the tax breaks that kept some of the company’s work and employment in the Hoosier State.

To their credit, Schwartz and other reporters didn’t forget about the story, but their follow-ups were overwhelmingly downbeat. (See, e.g., here, here, and here.) Schwartz’ own coverage sounded pretty grim, too. (See, e.g., here and here.)

So imagine my surprise to read the December 18 article’s headline proclaim that the “Carrier Plant is Bustling” and the text inform readers that

> “The assembly line is churning out furnaces seven days a week”;

>“overtime is abundant”;

>“Carrier has been hiring, adding some 300 workers and bringing the total work force to nearly 1,050”;

>”the Indianapolis plant offers a shot at a solidly middle-class lifestyle, with wages of more than $20 an hour, with time-and-a-half pay on Saturdays and double-time on Sundays”; and that 

>”it’s clear that without Mr. Trump’s intervention even before he took office, the factory would never have become so prominent, if it had survived at all.”

Yes, Schwartz also noted that Carrier workers still feel highly insecure. But he also made clear that the reason is because they don’t trust Biden to look after them the way the President has.

As RealityChek has documented time and again, the Mainstream Media has displayed more than its share of Trump Derangement Syndrome over the last four years. Now that the President seems certain to leave office, is a wave of Trump Revisionism Syndrome in store?

(What’s Left of) Our Economy: New Evidence that Trump’s Tariffs Have Bolstered U.S. Manufacturers

Tags

aluminum, CCP Virus, China, coronavirus, COVID 19, GDP, gross domestic product, inflation-adjusted growth, lockdowns, manufacturing, metals, metals tariffs, real GDP, real value-added, recession, steel, tariffs, Trade, trade war, Trump, value added, Wuhan virus, {What's Left of) Our Economy

As everyone knows, at least as of the final (for now) official third quarter growth figures just released, the entire U.S. economy remains in a severe recession thanks to the arrival of the CCP Virus and the subsequent tight curbs on business activity.

Less widely known:  A separate set of official figures released along with yesterday’s government release on third quarter gross domestic product (GDP) shows that, by the measures most closely watched (i.e, inflation-adjusted), domestic manufacturing never suffered a recession by one crucial definition – a cumulative downturn lasting at least two quarters. And can it be mere coincidence that the entire time, President Trump’s sweeping and steep tariffs on hundreds of billions of dollars worth of Chinese goods, and of steel and aluminum from most major foreign producers, have remained in place?

Below are the growth (and contraction) figures for the entire U.S. economy and for the manufacturing sector for the entire CCP Virus period so far – the first quarter through the third quarter of this year. They come from the Commerce Department’s data on four measures of output tracked by the folks who look at “GDP by Industry” and consist of gross output both pre-inflation and adjusted for price changes, and value-added (a gauge of production that tries to remove the double-counting that results from gross output’s inclusion of both inputs for products and services and the final products and services themselves) in pre-inflation and price-adjusted terms. All the non-percentage numbers are in trillions of dollars at annual rates.

                                                      1Q                2Q                3Q            1Q-3Q

v/a whole economy:                 21.5611        19.5201        21.1703    -1.81 percent

v/a manufacturing:                     2.3643          2.0537          2.3291    -1.49 percent

real v/a whole economy           19.0108        17.3025        18.5965    -2.18 percent

real v/a manufacturing:              2.1999          1.9629          2.2132   +0.60 percent

gross output whole econ          37.8268        34.2600         36.9425    -2.34 percent

gross output mfg                        6.1163          5.3334           6.0134    -1.68 percent

real g/o whole economy           34.2613        31.3989         33.4440    -2.39 percent

real g/o manufacturing               6.2038          5.6162           6.2089    +0.08 percent

Probably the most important of these results is real value-added, since its topline economy-wide numbers are identical to the inflation-adjusted GDP figures regarded as the most important measures of economic growth. And in real value-added terms, manufacturing output in the third quarter was actually slightly (0.60 percent) higher than in the first quarter. Manufacturing expansion has also taken place according to the real gross output figures, though it’s been marginal.

Also crucial to note although both pre-inflation measures show first-third quarter cumulative manufacturing downturns, they’ve been shallower in both cases than the economy-wide slumps.

It’s true that the virus and related shutdowns have more dramatically impacted the service sector when it comes to first-order effects – because so many service industries entail personal contact. But the case for the tariffs’ benefits for manufacturing looks compelling upon realizing that U.S. services companies are major customers of domestic manufacturers. So although the virus obviously crimped these markets, it seems that the tariffs preserved a good many of them by pricing out much Chinese and foreign metals competition.

One way to test this proposition, of course, would be for apparent President-elect Joe Biden to lift the levies while the pandemic keeps spreading. Unless powerful evidence comes in to the contrary, manufacturers, their employees, and indeed all Americans should be hoping this is a bet Biden won’t make.