The Manufacturing Economy, The Service Economy, Tariffs and a Few Other Points

Chick emails:

I understand that any tariffs that Leviathan puts on imports into the US are ultimately paid by consumers here. But apologists for Leviathan say we need to do that to protect US manufacturers from other countries that unfairly subsidize their exports to undercut our domestic production. I also accept your point that "protecting" US manufacturing selects for the inefficient and possibly obsolete processes and products and is ultimately counterproductive in the long run. It is also understood that the US is no longer primarily a manufacturing economy but a consumer economy, which is also what China is striving to switch to. I realize this is a very broad and general question but, would you please explain if US manufacturing vanishes due to more efficient and cheaper manufacturing in other countries along with specialization, what will workers in a consumer economy do for work...become primarily a service economy [learn to code ]? 

RW response:

Wow, there is a lot to unpack here.

First, a tariff is often paid for by consumers but not always.

I explained the different impact that tariffs can have here:



The contrast between a manufacturing economy and a consumer economy is a misleading contrast.

The goal of all manufacturing is ultimately consumption. People work so that they can buy things (or to save so they can buy even more things at a later time).

The idea that China is striving to switch from a manufacturing economy to a consumer economy is just Keynesian babble. The more that is manufactured, the more that is consumed. If they sell goods to us, well then they have more money to buy goods (or to save so they can buy even more goods at a later date).

If someone wants to just work and not consume, they are just what I am looking for, send them over, I have plenty of work for them.

Finally, when you ask, "I realize this is a very broad and general question but, would you please explain if US manufacturing vanishes due to more efficient and cheaper manufacturing in other countries along with specialization, what will workers in a consumer economy do for work...become primarily a service economy [learn to code ]?"

My answer is I have no idea.

The point that needs to be understood is that we do not live in the Garden of Eden and, therefore, there is always plenty to do.

What exactly? No one knows in advance.

For example, when the automobile was driving buggy whip drivers out of work, it is doubtful I would have predicted that jobs for taxi cab drivers would emerge or that it would have freed up more men to become doormen at hotels and at luxury buildings.

-RW