The general attitude toward working from home has certainly changed over the last several years. In 2013, the then-CEO of Yahoo!, Marissa Mayer, banned work-from-home at her company. And in 2017, IBM established a similar ban. Both of these actions were based on perceived needs to improve productivity and collaboration at those companies
But in 2020, a lot of companies that moved to work-from home in the Covid-19 environment…because they had no choice if they wanted to continue operating at all…have apparently found it to be working to their satisfaction, and many though not all employees like it, too. And there is starting to be significant impact on where people choose to live…see these comments from the governor of New Hampshire, Chris Sununu. The term ‘zoomtowns’ has been applied to locations where people choose to live and work remotely, based on a locality’s attractive characteristics and good Internet connectivity.
I do think that a comprehensive work-from-home environment can result in losing something in terms of unplanned interactions…I’ve personally observed several significant product and business initiatives that resulted from such interactions, and there are also interesting historical cases. But such things are difficult to measure, and financial benefits and convenience of work-from-home are likely to prevail, perhaps excessively so in some cases. In any event, the Yahoo! and IBM approach of broad-scale top-down corporate edicts is unlikely to be a good one.
Another kind of remote work involves the use of people at remote locations…though not necessarily at home…to perform machine-control tasks that would previously have had to be done on-site. The robots being used by Federal Express at its Memphis facility sometimes encounter problems that they can’t solve…they can be ‘advised’ by humans located in San Antonio. There are projects underway to make municipal water treatment plants remotely operable, either for emergency backup (as in a pandemic) or for normal operations, and there are also initiatives focused on remote operation of other kinds of infrastructure, utility, and industrial facilities.
If something can be done by people who are remotely located within the United States, then in most cases it will also be doable by people who are remotely located in other parts of the world. In my 2019 post telemigration, I wrote about the increasing feasibility of offshoring services work, not only manufacturing. A lot of this has been going on for software development as well as for customer service.
It may turn out that, in many cases, remote work in the US turns out to be just a waystation on the road to remote work somewhere else.
I’ve got a critical infrastructure business (elecric power) so we were exempt from stay at home. I did let the staff work from home in the first part of the lockdown. Most did and while work was satisfactory it was about 70% as efficient as being in shop (and less happy as our team really like each other).
A lot of my neighbors work for Pratt & Whitney (jet engines) here in CT. They had to get up early to get good spots on the company VPN. We just had a tropical storm come through and lots of people lost internet. Pratt sent out texts that if you lost internet send a note back to ask permission to work at the office (you pretty much had to go in). Since their business is tanking with the loss of air travel, many will lose their jobs soon. I think those who tried to get into the office will be better able to keep their jobs.
My daughter-in-law has worked from home for years. She has done very well but her employer had lost a lot of work as they set up meeting and conventions. My son, her husband, is a fireman and usually works 2-3 days a week. When he works he is gone 24 hours but he is home enough to help with the kids. Now, since her work tailed off, he is doing more overtime to catch up the family income.
They are looking at places to move once he is able to retire. She can work from anywhere with internet. It will NOT be in California. They liked Arkansas a lot.
I have worked remotely from home for the last 4 years on a large project for a major US bank … on most conference calls my other team members are located in 3-4 different states … about half of the team members (prior to covid) worked from an actual company office and half worked from home … effectively EVERYONE was working “remotely” its just the “office” from some of us is our living room desk …
Dirtyjobsguy, Mike K, Dark Lord…how well would it have worked if the people working remotely had been spread across several different countries rather than several different states?
There are projects underway to make municipal water treatment plants remotely operable, either for emergency backup (as in a pandemic) or for normal operations…
Scary from a security perspective, as is remote control of the power grid.
It may turn out that, in many cases, remote work in the US turns out to be just a waystation on the road to remote work somewhere else.
Likely but not always. Our team in the US wound up being ‘offshore’ to our European counterparts. There are probably other niche cases where US-based expertise can work remotely where the local population doesn’t have the skills base. In our case it’s due to the more rapidly aging population in Europe, and less flexible employment practices.
The other thing to consider is how to get on the right side of various political and lifestyle risks. Socialism in one (US) state, such as AB5 in CA, is likely to make cost differentials among states in the US almost as great as actual offshoring, with a lower level of risk.
re Security and remote work…railroads have operated their switch and signal systems (CTC) remotely for decades, and some hydroelectric plants have been started and stopped remotely since the 1930s…BUT, these systems used private communications links rather than the Internet, and, prior to recent years, didn’t include any software. That doesn’t mean they couldn’t have been hacked, but I don’t see how it could have been done without physically tapping into the leased line or company-owned wires (or microwave) that were being used.
One of the railroads (I think it’s Norfolk Southern) has home access to the CTC system for some key employees: it is read-only access, so they can see the track occupancy and the switch settings, but can’t change them.
I read somewhere about a Canadian railway CEO who took over a dispatcher’s shift one night, working from home…he *did* have the ability to control switches and signals, at least on part of the railroad.
Should note, though, that even if a CTC system were hacked, the local interlocking would prevent collisions, although the system could indeed be reduced to total chaos pretty quickly.
David Foster Says:
August 13th, 2020 at 12:42 pm
Dirtyjobsguy, Mike K, Dark Lord…how well would it have worked if the people working remotely had been spread across several different countries rather than several different states?
Most x-rays and CT scans in emergency cases are read from India these days.
Depends what we mean by “work”, doesn’t it?
Some mainly upper middle class administrative types of jobs can be done remotely — at least for a while. There is probably an element of “eating the seedcorn” in today’s remote work — guys doing certain types pf activities who have worked together effectively for a while may be able to continue to work effectively for some time. But as new projects come along and people leave the organization and new people try to find their feet on the job, the lack of face-to-face contact will probably degrade both performance and individual satisfaction.
But the part we don’t want to talk about is that much of that kind of white collar work should properly be classed as “Overhead”. If remote working leads to its reduction, that will be good for those who have to pay one way or another for the Overhead, but not so good for the guys who used to have jobs doing that kind of activity.
Real work — agriculture, making products, construction work, maintaining power stations, delivering services from haircuts to lawn care, will continue to require physical presence where the work needs to be done.
There is a significant danger that working remotely will become a Class issue, with those who have been university-indoctrinated looking down their noses at those who do the real work which keeps the lights on and food flowing to the table. Really, we don’t need another Class issue.
Gavin…”Real work — agriculture, making products, construction work, maintaining power stations, delivering services from haircuts to lawn care, will continue to require physical presence where the work needs to be done.”
I’d argue that dispatching a power grid is real work, and it is inherently done remotely, since the dispatchers can’t be simultaneously everywhere on the grid…so is air traffic control, which in the case of the radar facilities (center and approach control) is conducted in locations which are connected to the actual radar stations by communications links and could in principal be anywhere. (Tower and ground controllers need to look out the windows, but even there, there are some experiments going on with remote tower operation using video) Ditto for Mike K’s example of x-ray and CT scan analysis.
If you define ‘real work’ is limited to doing something that involves physically touching the product or the customer, then offshoring is inherently more limited, but there are still cases where it can happen, as in the example of heavy maintenance on airliners being conducted in low-labor-cost countries.
The Class issue is real, though; look at all the teachers who fear that they are signing their death warrants by going back to work…a lot less of this from non-college-educated warehouse and grocery-store workers, for example.
also, Gavin…”There is probably an element of “eating the seedcorn” in today’s remote work — guys doing certain types pf activities who have worked together effectively for a while may be able to continue to work effectively for some time. But as new projects come along and people leave the organization and new people try to find their feet on the job, the lack of face-to-face contact will probably degrade both performance and individual satisfaction.”
Yes, I think there’s a lot of truth in this. Also, once you have a project defined, it’s much easier to break it into components that can be done remotely. But this ignores the issue of how do projects get conceived in the first place?…How do they get defined?
Let’s step back and look at the bigger picture. In the long run, economies are about the production of goods & services. With all due respect to Keynes, nothing can be consumed until it is first produced.
North America (with Europe following fast behind) has already offshored much manufacturing, leaving us with an economy over-reliant on services (and on the continued willingness of the Chinese & others to accept our IOUs of dubious value). What happens when we offshore large parts of services as well? And David F. is certainly right — once service work is being done remotely, it will inevitably drift to offshore remote locations where it can be done more cheaply.
A country can’t run a trade deficit forever. In the longer (or maybe not so much longer) term, as unemployed Westerners can’t afford to buy and the remote offshore work locations become reluctant to send real goods & services to a West that has nothing real to trade in exchange, Western economies and societies will collapse.
Have a nice day!
It may turn out that, in many cases, remote work in the US turns out to be just a waystation on the road to remote work somewhere else.
Or alternately events such as the present pandemic will make this sort of globalization politically untenable and ultimately something that future Americans will bitterly regret their parents and grandparents allowed to happen.
In fact considering that nationalist Donald Trump is president maybe that’s already happened- and imagining future triumphs of globalism is roughly like counting your chickens before they’ve hatched while not noticing that wolves have eaten all the chickens you had that could actually lay eggs.
Bad idea I think and also wrong.
Xennaddy: “Or alternately events such as the present pandemic will make this sort of globalization politically untenable …”
I hope you are right — but we can all see the wind is not blowing in that direction.
Something the Covid Scam revealed which was probably a complete shock to most of the US population is that much of the medications we take comes directly or indirectly from China, along with much of the medical equipment. Think of the risk to which that exposes us if/when relations with China go south! All China has to do is stop exporting the stuff!
And the manufacture of ethical chemicals is not something where low Chinese wages count for much. It is capital intensive, knowledge intensive. It is an area where the US ought to be able to compete, and the trade should be flowing in the opposite direction, from the US to China. Re-shoring the manufacture of medications would create massive numbers of jobs in construction, would help support medical research, would generate tax revenues. In the run up to an election, it would be natural to expect politicians (especially Democrats) to be banging the drum for bringing the manufacture of medications home.
Instead, we get crickets.
What future Americans are going to bitterly regret is our failure to act, even when hit square between the eyes with a 2 by 4.
“And the manufacture of ethical chemicals is not something where low Chinese wages count for much.”
What is an ethical chemical?
Unless you are standing naked in the middle of a pristine wilderness, LITERALLY everything that meets your eye was made by someone, hauled by someone, assembled by someone. The machinery used to produce it was built by someone, repaired by someone. The materials were… you get the idea.
There are some jobs that can be done remotely, they will done be by whoever will do them cheapest. Most jobs that produce tangible goods aren’t anywhere near that. They still require someone to physically manipulate materials or machines on site. The actual amount of direct labor in goods has been declining since the invention of machines. What has exploded is the shear amount and variety of goods available. The two are closely related.
If your job can be done from your kitchen table, you’d better ask yourself why it can’t be done from Bangalore or Botswana for ten cents to your dollar. Learning to code won’t help.
It goes back to something I first thought about when I bought my first Japanese part for a Ford. The one thing Ford could be sure of is that whoever built that alternator wasn’t ever going to buy a Ford.
I’m pretty sure he meant ethical drugs.
I worked for IBM for 30 years. We did see a lot of changes over that time. I never had any difficulty with corporate edicts impeding or changing the jobs. In the later stage of my career I was working remotely from an office in Boca reporting to a department in Poughkeepsie. What I noticed almost immediately was that without access to the hallway conversations, the decisions made in Poughkeepsie were often a surprise because there was no frame of reference. I also missed the quick technical discussions like “I just ran into this problem. Have you seen it before.”
Working with other companies (my customers) I saw that doing design here, but outsourcing the programming, put a greater burden on the designer in terms of very detailed description of what was to be done because the time differences made quick questions difficult. But, when we got to integration testing, a problem would be hard to get documented and the fix would take a while. Saving money can often cost money.
If making a correction is so hard when it involves “just” a change to few lines of code. Imagine the world where revisions mean changing physical objects.
An acquaintance of mine needed an injection mold set made. The plan was to have it designed here and made in China where it would only cost about $120,000. When the first parts were made, the internal capacity was far too small, the designers somehow misinterpreted the requirement as gross volume rather than net. They ended up eating the cost of a new mold and my friend ate the cost of another few months delay. In this case the mis-communication was between the parties here.
Transferring the intent of whoever conceived an idea, whether it’s a piece of software or physical device, to first the designer, then whoever will actually produce it is hard enough face to face when everyone speaks the same language. I have just enough experience dealing with people in China, India and France that I will avoid it if at all possible. I find especially with China that there are people capable of writing perfectly idiomatic English with exactly zero comprehension. It often takes three or four emails to get answers to perfectly clear, specific questions like how much will it cost delivered here and sometimes the answer is never forthcoming. Of course sometimes the problem isn’t language.
I’m part of a team that manages several thousand servers for a business that operates in almost every country. I live in the Midwest US in a relatively low cost of living area. Following a data center consolidation, the company closed its local data center. 90% of the servers I manage are in Europe or Asia. My day covers their evening and overnight, so system administrators in those countries don’t get calls for middle of the night emergencies. Only a handful of staff are required onsite, mostly to remove and install hardware, and escort service engineers on repair calls.
Neighbors of mine work for two of the US’ largest banks. As those banks bought smaller regional banks, they found the cost of operations was much lower. The first wave moved back-end operations out of Manhattan and downtown Chicago to suburbs or Connecticut. Later waves are moving it to Ohio, Pennsylvania, Texas, and Arkansas.
Gavin – as a long time ChemE, the US chemical industry is very competitive globally, and pretty much always has been since we set the Germans back a decade or more in WWII. Bulk chemicals are far more capital intensive than labor intensive, as the lowest costs come from plants producing at the scale of hundreds of thousands of tons per year. Lot’s of steel, not lots of people. While capital has a significant labor component, there are also real advantages to being connected to the US pipeline network for feedstocks. 10 years ago the US industry was worried primarily about competition from the big national oil companies looking to move up the chain on the back of internal feedstocks (Saudis/Kuwaitis in particular, but also Russia). That threat was wiped out by the fracking revolution, which has driven US feedstocks (mainly natural gas and NG liquids – ethane, propane, butane, which are cheaper to move by pipeline than by sea) to global lows, even relative to national extraction companies who aren’t all that concerned about the return on the chemicals investment (as they are looking to drive local development with it). The industry has been pouring capital into the USGC over the last decade to capitalize on this.
The environmental overhead is less than you would think in chemicals, mainly because the US petro chain has found uses for pretty much every waste or side-stream, so that the cost of compliance is not all that high. OSHA is even less of an issue because safety shortcuts tend to generate big, expensive accidents that make of mess of all that steel. The US actually exports quite a bit, as the feedstock advantage is more than enough to cover other costs and transportation.
Pharma isn’t as well positioned because the manufacturing processes don’t operate at anything like the same scale, and so all of the traditional regulatory short cuts have a bigger impact on production costs (and transportation costs are trivial relative to the value of the product).
Phwest — Thanks for those comments. Yes, the situation with bulk chemicals is different from pharmaceuticals. Even so, it is clear that direct labor costs in pharmaceuticals are like the direct labor costs for bulk chemicals — Small!
It is understandable that the US is at a competitive disadvantage for products where labor is a big element in the manufactured cost. But that does not explain why the pharmaceutical industry abandoned the US. The answer probably lies in regulatory costs & delays, litigation risks, and tax policies — i.e., self-imposed burdens, courtesy of our Political Class.
But the end result is obvious. China can bring the US to its knees any time they choose, simply by stopping critical exports. No need to fire a single bullet to win that war. Imagine millions of senior citizens who cannot get their medications camping out in Washington DC, screaming at their Congresscritters! The Swamp would have to cave to almost any Chinese demand.
Now, “Free Traders” assure us the Chinese would never cut off their exports to the US. Maybe the “Free Traders” are right, maybe not. Time will tell.
Someone at an investment site, who appeared to have been in the Pharma industry, remarked that if you want to build a new pharma plant in New Jersey (or even expand an existing one), you will run into endless approval requirements, outstretched palms, and general unpleasantness…whereas if you want to build one in China, the Mayor will take you out for a wonderful dinner, show you the sights, and call his friends to ensure you quickly get all the approvals that you need. Because he wants to be able to brag about his town’s economic development at the next Party meeting.
It is understandable that the US is at a competitive disadvantage for products where labor is a big element in the manufactured cost. But that does not explain why the pharmaceutical industry abandoned the US. The answer probably lies in regulatory costs & delays, litigation risks, and tax policies — i.e., self-imposed burdens, courtesy of our Political Class.
Oh, I think regulation is key and that is a good reason why Trump is so hated by the regulatory state. I don’t know if it is pure corruption but it seems to be very similar.
Regulations here seem to be burdensome but are there sufficient ones for the Chinese pharma? just asking
On Chinese Pharma, I read an account of FDA inspectors being sent to factories with records in Cantonese that the FDA people could not read and, in fact, some of the factories were mock-ups with no real factory in place.
I wish I could find the link now.
Of course, opening a Chinese pharmaceutical plant is to make a gift of all your IP to your “partners”.
MCS: “Of course, opening a Chinese pharmaceutical plant is to make a gift of all your IP to your “partners”.”
Sadly, that is only half of what has been done. The other half is to close down your US plant — in some cases, even disassembling the machinery and sending it to China. This is rather like lying down on the ground, inviting your Chinese partner to put his boot on your throat, and then hoping he does not press down too hard.
If the Swamp Democrats and their tame house Republicans actually gave a damn about the US, they could change regulations and make it possible to rebuild pharmaceutical plants in the US. But we have not just lost the physical factories; our Best & Brightest have also thrown away the human skills, the people who could run those plants safely & efficiently. Rebuilding the human skills will take a generation.
We have let our Political Class paint us into a very difficult corner.
US Pharma was initially outsourced to Puerto Rico at least as early as the early 70s. The motivation primarily had to do with reduced tax incentives available to the Pharema inductry. By the mid 70s, Ireland got into the picture, again with reduced tax incentives as the prime mover. The shift to China was because everything is easier/cheaper in China. If the cost benefit weren’t there, the environmental hurdles alone would have doomed the domestic manufacture of fine chemicals/pharmaceuticals. To bring it back will require some major regulatory reform which will not happen in any Blue region. Maybe a Red state will give it a try. It will be interesting to see if Kodak (Rochester, NY) can pull it off.
If the industry does manage to re-shore, I wouldn’t expect rusty human skills to be a major impediment. We easily train GIs to cook for a thousand soldiers. Fine chemicals are not a whole lot different, just follow the recipe and don’t taste the stew.
The story of the American and German dye industries–before, during, and after WWI–is relevant to this discussion. See my post here.
I hope you are right — but we can all see the wind is not blowing in that direction.
Well, I note the election of Donald Trump. I think the wind has shifted.
In the run up to an election, it would be natural to expect politicians (especially Democrats) to be banging the drum for bringing the manufacture of medications home.
Except they’re all globalists. They think the United States is ruling the world and is responsible for everyone everyone. I remember a while ago reading of some foreign born tech ceo who opined that if an American losing their job lifted four foreigners out of poverty then it was worth it. The United States just doesn’t rate compared to all those poor foreigners.
Now, “Free Traders” assure us the Chinese would never cut off their exports to the US. Maybe the “Free Traders” are right, maybe not. Time will tell.
Free traders are the least right people ever. But as Thomas Jefferson wrote, merchants have no country, as their attraction is never so strong as that from which draw their gain. These are the people who got rich moving US factories overseas, building new ones outside the US, and importing foreigners to replace Americans here- and then paying armies of lobbyists to tout all the supposed benefits of all this.
Plus, it is difficult to make someone understand something when their living depends upon them not understanding it. For years I was literally the only person arguing against free trade at another site, with rare exceptions. I found I could never get those folks to notice that there was even a potential downside. I still recall arguing about the US machine tool industry, for example. I was told everything was fine- and literally the first item I found searching the internet was an article entitled “How can an industry survive without orders?”
These people are fools.
…there are also real advantages to being connected to the US pipeline network for feedstocks
Reading that the US pipeline network is a big help keeping the country competitive in at least one industry kind of puts a new light on the odd leftist war on new pipeline construction and even replacement of old pipelines, doesn’t it?
Is there are anything about the United States that the left doesn’t want to destroy?
I doubt it.
Free traders are the least right people ever. But as Thomas Jefferson wrote, merchants have no country, as their attraction is never so strong as that from which draw their gain. These are the people who got rich moving US factories overseas, building new ones outside the US, and importing foreigners to replace Americans here- and then paying armies of lobbyists to tout all the supposed benefits of all this.
The merchants and manufacturers got rich because Americans preferred imported products that were cheaper and better than domestic ones. Did you ever own an American car made in the 1970s?
The fact that some of the costs and risks of doing business in China and elsewhere were not obvious to many American business people does not mean that free trade is bad. It means that doing business in China is riskier than many Americans thought. Now they know. The problems are mostly self-correcting as the risks become more widely known.
The role here for the US govt should not be to fight trade wars, to impose tariffs that override the preferences of American consumers, or to protect American manufacturers. It should be to enforce our IP laws, negotiate treaties that do not penalize Americans for the benefit of politically connected foreigners and their US allies, and remove wherever possible regulations that reduce US productivity.
Pharmaceutical chemicals are a different world than commodity chemicals. Quantities tend to be in kilograms and liters rather than tonnes and tank-car loads, it’s much more labor intensive and requires the sort of small plant that can be taken apart and reassembled quickly for the next order.
When the Chinese started they were very hungry, very anxious to get business, very responsive. Their established American and European competitors were convinced nobody could compete and they had a blank check. Sounds familiar. Being able to dump waste in the nearest creek helped too, as well substituting a bandana over the face for PPE.
Kodak has been in the chemical business for a long time, look under Eastman. They were one of the producers described above at one time. It eventually became one of those business that state governments don’t want. Shoveling paper and money from place to place is much more hygienic. Now that this shoveling can be done from literally anywhere with internet, it starts to look less like a sure bet.
People in Texas shouldn’t get too superior. You need a permit from the Department of Public Safety to buy lab quality glassware. It will start decimating the meth problem any day now. Or you can buy from out of state, especially Amazon, no questions asked.
“Did you ever own an American car made in the 1970s?” A few but anything before 72 is good. After that things went downhill pretty fast.
Now my 69 Cutlass was a gem and I built it into a beast. A 502 crate motor and about 8 grand, in the suspension etc, made it somewhat ridiculous. It was built to crush 5 litre Fords, and did. The rather low ratio rear end, made it very fast, but if I put it into 2nd, on my Turbo 400 at around 70 mph and stood on it, it would leave about 8′ of rubber on the road. ;)
The merchants and manufacturers got rich because Americans preferred imported products that were cheaper and better than domestic ones. Did you ever own an American car made in the 1970s?
Have you ever heard of Triffin’s Dilemma? Basically, because it is the reserve currency, the US dollar stays overvalued, which makes American labor relatively more expensive, which makes it cheaper to operate elsewhere. That’s one reason imports have been cheaper. Another is that The US ignored foreign merchantilism during the Cold War, because winning that was more important. But the policy never changed when it ended. And was there only one American car company in the 70s? No foreign companies able to build here? If so, then the quality or lack thereof of American is not particularly relevant for this argument, in my opinion. We had then and still have now a competitive vehicle market, which should eventually resolve the problem.
The fact that some of the costs and risks of doing business in China and elsewhere were not obvious to many American business people does not mean that free trade is bad.
Not obvious? The murderous nature of the Chinese regime was well known when we granted them MFN status. It was a reason why it hadn’t been done earlier, if I recall. But the insatiable avarice of our globalist political class was such that they didn’t care. And they still don’t.
The problems are mostly self-correcting as the risks become more widely known.
So is the Chinese regime going to stop using the IP they stole from us? Not use it to compete against us in the future? Are the dead American industries going to spring back to life, somehow? I doubt it.
The role here for the US govt should not be to fight trade wars…
No, that’s exactly what its role is, among others. If it isn’t going to look out for the interests of the United States vis-a-vis other nations, then it has no reason to exist.
…to impose tariffs that override the preferences of American consumers…
Then why does it get to override the preferences of American consumers when it will not allow us to consume heroin? Or drive without wearing a seatbelt? Overriding the personal preferences of people is a key function of government, and is generally done for a reason. Trade policy is well within the sphere of public policy, and tariffs have a long history.
…or to protect American manufacturers.
Why not? I’ve already said I don’t want to protect American companies against domestic competition, but foreign is a different story. Again, I’m not a globalist, and I don’t see American and foreign as the same.
It should be to enforce our IP laws, negotiate treaties that do not penalize Americans for the benefit of politically connected foreigners and their US allies, and remove wherever possible regulations that reduce US productivity.
It has failed miserably at all of this, especially protecting American IP. Ever wonder why many new Chinese weapon systems look so American?
Because our globalist government doesn’t care about the actual United States, only their own personal bottom line.
By the way- what does the math for free trade look like now, after the trillions of dollars worth of damage done to the economy by the present pandemic?
I suspect that calculation is so ugly that it should be enough to get some of them rethinking their argument- but having interacted with them at that other site, I know better.
Most “Free Traders” have a rather naive view of the process. Free trade works well under certain circumstances, where specialization allows total production to be increased — in the same way that the baker and the motor mechanic are both better off if the baker makes bread for the mechanic and the mechanic fixes the baker’s vehicle than they would be if they both wasted time making their own bread and fixing their own vehicles.
Key assumptions in the Ricardo free trade model are that (a) everybody keeps working full time & producing whatever they have a competitive advantage in making, and that (b) the trade between the two sides is balanced. If those conditions are met, free trade will indeed be advantageous to everyone.
When we have a situation such as the one between the US and China — where US workers are left unemployed and non-productive, and where the trade is extremely unbalanced — this is not “Free Trade”. It is stupidity (on the part of the US), and economic warfare (on the part of China). This is so obvious that only a “Free Trader” could be blind to the consequences.
Much of the problem stems from the stupidity of the Political Class, which includes a lot of “Free Traders”. They impose very tough regulations on production in the US — for example, on environmental protection. But then they allow imports from countries that do not have to meet those standards. This does nothing to help the global environment, simply transfers pollution to somewhere else. Logically, any import should have to be manufactured under the same standards it would have to meet in the US. Then we could have free trade on a level playing field.
Much of the problem stems from the stupidity of the Political Class, which includes a lot of “Free Traders”. They impose very tough regulations on production in the US — for example, on environmental protection.
This resembles the Libertarian arguments that ignore real world in favor of theoretical models.
Interestingly, over at Althouse, she posted some comments from Trump from 2012 when he was thinking about running. Most were about China. I suspect the China trade issues were what got him involved enough to really run.
The naïveté of libertarians doesn’t invalidate libertarian ideas. The dishonesty and corruption of Chinese businesses and govt officials doesn’t invalidate the merits of free trade. China is the problem. Do you oppose free trade with Britain?
Johnathan: “Do you oppose free trade with Britain?”
Jolly Olde England has fallen into the same “Free Trade” trap as the US. What does the UK produce any more? They import their vehicles from Germany, their electronics from Japan & Korea, and everything else from China. And there are large numbers of English who are either explicitly non-productive (on the dole, on disability, retired at a young age, etc) or implicitly non-productive (engaged in useless or obstructive regulatory government work). That is not a sustainable society.
In principle, we should be happy to have genuine reciprocal free trade with anyone — trade which makes all parties better off; trade that meets the tests of leaving both sides with full employment and having balanced trade. Unfortunately, there is almost no genuine free trade in this world. “Free Traders” grab some short-term benefits, but they are too selfish to realize the damage their unilateral “Free Trade” is doing to their fellow citizens, to their societies, and (in the long run) to themselves.
China is not the problem. China’s leaders are acting in the best interests of China — as they should. They see the foolishness of Western “Free Traders” and take advantage of it — and the resulting benefits of rising living standards for the great mass of Chinese people are undeniable. The problem is that Western politicians are not acting in the best interests of their own citizens. No, the problem is not China, it is our own Political Class.
But then we need to look in the mirror — we are the problem; we tolerate politicians who are stupid or corrupt, easily bought or out-maneuvered by smarter Chinese leaders.
As Gavin says, the problem isn’t the party you vote for it’s the people.
Britain came rather late to the “Free Trade” epiphany. British Mercantilism was an overt motivation for our revolution and continued long after there was no longer an Empire to support it. Their latest buckling to blind panic by closing their borders on a few hours notice doesn’t give me much confidence in their adherence to any sort of principal in adversity.
Look at how many American vehicles are imported into Britain compared to the number going the other way. I’d bet you’d find a large demand for firearms of all sorts if you were “allowed” to look.
In 2019 our exports to the United Kingdom were 4.2% of our overall exports.
https://www.exportgenius.in/export-import-trade-data/usa-export.php
Our huge advantage is our infrastructure. There are only a few countries that can load ship after ship with things like grain and other commodities and do it constantly and economically.
The David Ricardo Free Trade was never really the rule in Britain. India was kept as a colony and manufacturing, for example, was not allowed. Free Trade is a worthwhile objective but we went far too far with China. The original Nixon outreach was for worthwhile strategic reasons. China was a counter balance for the USSR. After 1991, Bush opened the floodgates for no good reason that I can understand. But, of course, Bush did a lot things I can’t understand.
Clinton had better reasons but they had nothing to do with US national interest. Clinton was a grifter and China knew very well how to deal them. The Loral deal was only an opening gambit. Gore was collecting checks in Buddhist temples in California. Remember “NO controlling legal authority?” China took then Clintons and Obamas to the cleaners but it was us being cleaned out. There was nothing “free” about it.
One difference with Trump was that he was a builder of things that stayed here. He is not a financier and is more about things that stay here. The tech billionaires see the US legal system as a way to make money and have little or no interest in the USA and its citizens. Look at the names of these CEOs. They are as comfortable in Singapore as in San Francisco.
“They are as comfortable in Singapore as in San Francisco.” This is where the world is going, whether you like it or not.