Reply To: US-China Trade Relations


One simple way to think about the issues is to contemplate your questions with respect to changes in the division of labor among the states in the U.S. Are Pennsylvanians really worse off because manufacturing jobs have moved to Georgia, South Carolina, and Alabama and been replaced by jobs in healthcare. Pittsburgh was filthy and depressing in the 1970s during the heyday of manufacturing. Now it’s largely a service economy, clean with burgeoning culture. If Pittsburgh would have put up tariffs against manufacturing imports from the South isn’t it obvious how this would make Pittsburghers worse off, including those in manufacturing since they would be selling to customers who were poorer because they couldn’t sell as much to outsiders (and, of course, outsiders will not buy Pittsburgh manufactured goods since Pittsburgh manufacturers are inefficient and so ask higher prices.) Isn’t it obvious, that the others who were being harmed by the tariffs would simply move out of Pittsburgh or invest outside of Pittsburgh further lowering the standards of living of those remaining in Pittsburgh, including the workers in manufacturing.

The recent dip in manufacturing jobs in the U.S. is the result of the liquidation of malinvestments during the boom which ended in 2007. Here are the numbers:

After hitting a trough in 2010, the number of manufacturing jobs has been steadily increasing.

If you look at manufacturing jobs post WWII, you can see that they have risen from around 12 million right after the war to an average of around 17.5 million from the late 1960s to 2000 then they fell until 2010 and have since risen back to around 12 million.

Finally, in the same way that you assert the superiority of manufacturing jobs over service jobs, some once asserted the superiority of agricultural jobs over manufacturing jobs. Two hundred years ago, more than 90 percent of Americans worked in agriculture, now fewer than 2 percent do so. How has this made America weak or inferior? Isn’t is a sign of strength when workers become more productive, i.e., each worker produces more output.