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Thread: Steel tariffs - a teachable moment?

  1. #1
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    Default Steel tariffs - a teachable moment?

    https://rwer.wordpress.com/2018/03/1...chable-moment/


    Donald Trump’s tariffs on steel have elicited near universal condemnation. In addition to issuing warnings from retaliation by our trading partners, the media have also been giving us economics lessons on how steel tariffs will mean higher prices for consumers.

    If we pay 10 percent more for our steel, then the price of cars and other items that use large amounts of steel can be expected to rise. This will reduce demand for these products and might cause consumers to buy more foreign cars and fewer US made cars, possibly leading to a loss of jobs in the auto industry.

    This economics lesson can be useful, but perhaps we can extend this teaching moment to other areas. The basic point economists have been making is that large segments of the population benefit from having access to lower cost imported steel even if it means fewer jobs and lower pay for US steelworkers.

    Over the last four decades our trade policy had been quite explicitly designed to put steelworkers and other manufacturing workers in direct competition with low-paid workers in the developing world. Trade deals made it as easy as possible for US corporations to locate factories in Mexico and other developing countries and import their production back into the United States.

    We can take the same approach to trade of highly paid services, specifically the services provided by doctors, our highest paid professionals. Doctors in the United States earn on average more than $250,000 a year. That’s more than twice the average for their counterparts in other wealthy countries.

    With more than 900,000 practicing physicians in the country, we could potentially save $100,000 billion a year by paying our doctors the same as doctors earn in other wealthy countries. The potential savings come to roughly $700 per household or 10-times as much as what’s at stake with the steel tariffs.

    A major reason that our doctors are able to earn twice as much as their foreign counterparts is that they are explicitly protected from international competition. Foreign-trained doctors must complete a US residency program before they are allowed to practice in the United States. This means that even a well-established physician in a country like Germany or the Netherlands would get arrested if they came to the United States and tried to compete with our doctors.

    While it is reasonable to have high standards to ensure that the people who practice medicine are competent, it is absurd to imagine that the only way a person can become a competent doctor is by completing a US residency program. There is a considerable amount of research showing that other wealthy countries have comparable outcomes, indicating that their training is as good as ours, at least from the standpoint of treating patients.

    Our trade negotiators could be focused on setting clear standards that foreign physicians could meet and then practice medicine in the United States with the same freedom as a US-born and -trained physician. We could do the same with dentists and other highly paid professionals.

    The potential gains from this sort of trade liberalization dwarf the gains from ending tariffs and other barriers to trade in manufactured goods. And, unlike our prior efforts at trade liberalization, removing the barriers that protect highly paid professionals would reduce, rather than increase, inequality.

    Don’t bet on an anti-tariff drive to lead to a reduction in barriers that protect highly paid professionals. Very few of the people complaining about the steel tariffs actually are committed to free trade. They are committed to a trade agenda that redistributes income upwards. When that means removing tariff barriers on steel or other items, they will push for “free trade.”

    But when freer trade can jeopardize the income of those at the top, these same people are perfectly fine with protectionism. This point is perhaps even clearer in the case of patent and copyright protection, where an explicit goal in both domestic and international policy over the last four decades has been longer and stronger protection (yes, as in “protectionism.”)

    We will spend more than $450 billion this year on prescription drugs that would cost us less than $80 billion in a free market. The difference of $370 billion is more than 30-times the amount at stake with the steel tariffs.

    So let’s agree with our “free trader” friends, the steel tariffs are bad news and will impose unnecessary costs on consumers. And let’s ask them to join us in beating back the much more costly forms of protectionism that benefit doctors and other highly paid professionals, as well as drug companies, and the entertainment and software industries. You will see the commitment to free trade vanish very quickly.
    David G
    Harbor Woodworks
    https://www.facebook.com/HarborWoodworks/

    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

  2. #2
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    Default Re: Steel tariffs - a teachable moment?

    Quote Originally Posted by David G View Post
    https://rwer.wordpress.com/2018/03/1...chable-moment/


    Donald Trump’s tariffs on steel have elicited near universal condemnation. In addition to issuing warnings from retaliation by our trading partners, the media have also been giving us economics lessons on how steel tariffs will mean higher prices for consumers.

    If we pay 10 percent more for our steel, then the price of cars and other items that use large amounts of steel can be expected to rise. This will reduce demand for these products and might cause consumers to buy more foreign cars and fewer US made cars, possibly leading to a loss of jobs in the auto industry.

    This economics lesson can be useful, but perhaps we can extend this teaching moment to other areas. The basic point economists have been making is that large segments of the population benefit from having access to lower cost imported steel even if it means fewer jobs and lower pay for US steelworkers.

    Over the last four decades our trade policy had been quite explicitly designed to put steelworkers and other manufacturing workers in direct competition with low-paid workers in the developing world. Trade deals made it as easy as possible for US corporations to locate factories in Mexico and other developing countries and import their production back into the United States.

    We can take the same approach to trade of highly paid services, specifically the services provided by doctors, our highest paid professionals. Doctors in the United States earn on average more than $250,000 a year. That’s more than twice the average for their counterparts in other wealthy countries.

    With more than 900,000 practicing physicians in the country, we could potentially save $100,000 billion a year by paying our doctors the same as doctors earn in other wealthy countries. The potential savings come to roughly $700 per household or 10-times as much as what’s at stake with the steel tariffs.

    A major reason that our doctors are able to earn twice as much as their foreign counterparts is that they are explicitly protected from international competition. Foreign-trained doctors must complete a US residency program before they are allowed to practice in the United States. This means that even a well-established physician in a country like Germany or the Netherlands would get arrested if they came to the United States and tried to compete with our doctors.

    While it is reasonable to have high standards to ensure that the people who practice medicine are competent, it is absurd to imagine that the only way a person can become a competent doctor is by completing a US residency program. There is a considerable amount of research showing that other wealthy countries have comparable outcomes, indicating that their training is as good as ours, at least from the standpoint of treating patients.

    Our trade negotiators could be focused on setting clear standards that foreign physicians could meet and then practice medicine in the United States with the same freedom as a US-born and -trained physician. We could do the same with dentists and other highly paid professionals.

    The potential gains from this sort of trade liberalization dwarf the gains from ending tariffs and other barriers to trade in manufactured goods. And, unlike our prior efforts at trade liberalization, removing the barriers that protect highly paid professionals would reduce, rather than increase, inequality.

    Don’t bet on an anti-tariff drive to lead to a reduction in barriers that protect highly paid professionals. Very few of the people complaining about the steel tariffs actually are committed to free trade. They are committed to a trade agenda that redistributes income upwards. When that means removing tariff barriers on steel or other items, they will push for “free trade.”

    But when freer trade can jeopardize the income of those at the top, these same people are perfectly fine with protectionism. This point is perhaps even clearer in the case of patent and copyright protection, where an explicit goal in both domestic and international policy over the last four decades has been longer and stronger protection (yes, as in “protectionism.”)

    We will spend more than $450 billion this year on prescription drugs that would cost us less than $80 billion in a free market. The difference of $370 billion is more than 30-times the amount at stake with the steel tariffs.

    So let’s agree with our “free trader” friends, the steel tariffs are bad news and will impose unnecessary costs on consumers. And let’s ask them to join us in beating back the much more costly forms of protectionism that benefit doctors and other highly paid professionals, as well as drug companies, and the entertainment and software industries. You will see the commitment to free trade vanish very quickly.
    Just this part...If you change this you had better change the way people pay for medical education, then you gota break their "Union" the AMA.
    PaulF

  3. #3
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    Default Re: Steel tariffs - a teachable moment?

    Quote Originally Posted by paulf View Post
    Just this part...If you change this you had better change the way people pay for medical education, then you gota break their "Union" the AMA.
    Perhaps it would come to that. But I'm not sure it would. Certainly the AMA would fight any such change.
    David G
    Harbor Woodworks
    https://www.facebook.com/HarborWoodworks/

    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

  4. #4
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    Default Re: Steel tariffs - a teachable moment?

    "Donald Trump’s tariffs on steel have elicited near universal condemnation."


    come on finish the statement...

    "Donald Trump’s tariffs on steel have elicited near universal condemnation... From Corporate Elite, anti USA Worker, Free Trade, Multinational, Traitors."

  5. #5
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    Default Re: Steel tariffs - a teachable moment?

    Bush imposed 30% steel tariffs for 21 months and then withdrew. I wonder why...? After all the tariffs resulted, apparently, in the creation of 1,100 jobs in the steel industry. So why did he withdraw them....? Its a hum dinger as you might say in the good ol' USA.

    The Bush administration withdrew the tariffs in December of 2003, about 21 months after they were imposed, but not without a cost. The Consuming Industries Trade Action Coalition found that 200,000 workers in U.S. manufacturing lost their jobs as a result of the tariffs. For comparison, the entire U.S. steel industry employed 197,000 at the time.

    Not knowing exactly why Bush withdrew such a great plan - Noisey, do you want to explain it to us?
    The floor is yours.
    Philip K. Dick — 'Reality is that which, when you stop believing in it, doesn't go away'.

  6. #6
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    Default Re: Steel tariffs - a teachable moment?

    Quote Originally Posted by Daniel Noyes View Post
    "Donald Trump’s tariffs on steel have elicited near universal condemnation."


    come on finish the statement...

    "Donald Trump’s tariffs on steel have elicited near universal condemnation... From Corporate Elite, anti USA Worker, Free Trade, Multinational, Traitors."
    from economists around the world who fear a trade war .... and no, Donald wouldn't win that easily. It would be VERY messy.
    '' You ain't gonna learn what you don't want to know. ''
    Grateful Dead

  7. #7
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    Default Re: Steel tariffs - a teachable moment?

    Quote Originally Posted by PeterSibley View Post
    from economists around the world who fear a trade war .... and no, Donald wouldn't win that easily. It would be VERY messy.
    But, Peter, NOT from the Dingbat Fringe... which is all that matters to some.
    David G
    Harbor Woodworks
    https://www.facebook.com/HarborWoodworks/

    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

  8. #8
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    Default Re: Steel tariffs - a teachable moment?

    David G
    Harbor Woodworks
    https://www.facebook.com/HarborWoodworks/

    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

  9. #9
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    Default Re: Steel tariffs - a teachable moment?

    Job protection under the guise of regulation, etc. is pretty common. Getting arrested for running a crap game on the sidewalk in front of a casino is a good example.

  10. #10
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    Default Re: Steel tariffs - a teachable moment?

    Quote Originally Posted by David G View Post
    Over the last four decades our trade policy had been quite explicitly designed to put steelworkers and other manufacturing workers in direct competition with low-paid workers in the developing world. Trade deals made it as easy as possible for US corporations to locate factories in Mexico and other developing countries and import their production back into the United States.

    But when freer trade can jeopardize the income of those at the top, these same people are perfectly fine with protectionism.

    So let’s agree with our “free trader” friends, the steel tariffs are bad news and will impose unnecessary costs on consumers. And let’s ask them to join us in beating back the much more costly forms of protectionism that benefit doctors and other highly paid professionals, as well as drug companies, and the entertainment and software industries. You will see the commitment to free trade vanish very quickly.
    I find these comments worth remembering.
    Life is complex.

  11. #11
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    Default Re: Steel tariffs - a teachable moment?

    Years back I drove earthmoving machinery. In those days the machines were almost all American, Cat, IH, Case, Le Torneau, Allis Chalmers and so on. At the heavy end, there was almost nothing from anywhere else.
    Today, I went past a big subdivision thats being built near here, and of the above only Cat is still there, about 50% of the fleet which for sure is pretty good, but thinking about it, those are big heavy lumps of steel, and if Caterpillar are forced to use local, more expensive steel, that will put the price of their product up, and when selling against Japanese, Korean and European machinery which is all familiar to the markets outside the USA, thats going to make them much less competitive.
    Does anyone know how much of Cats production goes offshore? I bet its a part of their market that they'd be sorry to lose. And thats only one industry. Think cars, John Deere, tower cranes and a whole lot of other heavy plant and machinery.
    Shipbuilding, machine tools, forestry machinery and such have already gone.

    John Welsford
    An expert is but a beginner with experience.

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