Trump’s China Fallacy


One aspect of Trump’s victory was his campaign of economic nationalism – that China was stealing our jobs and he was going to bring them back.  Of course, China wasn’t alone in his analysis – Mexico and Ford played a part as well.

The fact is, labor is a commodity and purchasers of labor will buy it at its cheapest.

If we want people to purchase American labor inn greater quantities, we have to make our labor cheaper.

Coyote lists but a few of the ways that we increase, needlessly, that price:

  • minimum wage laws, rising to $15 an hour in many parts of the country, and increasingly draconian overtime rules, both of which substantially raise the cost of hiring someone.
  • minimum benefit laws, including expensive health care requirements in Obamacare and a myriad of other state-level requirements such as mandatory paid sick leave or family leave
  • payroll taxes that act as sales taxes on labor  — we understand that cigarette taxes are supposed to reduce cigarette purchases but don’t understand that payroll taxes reduce purchases of labor?
  • employment regulations, such as chair laws and break laws in California, that make employing people more expensive and risky
  • employer liability laws, that make employers financially responsible for any knuckleheaded thing their employees do, even when these actions violate company policy (e.g. making racist or sexist statements)**
  • laws that make hiring far more risk, including those that limit the ability to do due diligence on potential employees (e.g. ban the box) and those that limit the ability of employers to fire poor performing employees.

We have yet to see how a President Trump will work to try and make the cost of American labor more equitable.

6 responses to “Trump’s China Fallacy

  1. Our workers are paid worse with fewer benefits than those in Germany, yet Germany has a solid labor market and exports goods more than it imports. So there is another way. Maybe reign in CEO pay:

  2. “employer liability laws, that make employers financially responsible for any knuckleheaded thing their employees do, even when these actions violate company policy (e.g. making racist or sexist statements)**”

    This is basically, as a matter of law, wrong.

  3. Scott: “Maybe reign in CEO pay”. Can’t believe you’re quoting the Huffington Post on this one but I would agree with you. Personally, I believe in the Drucker Rule on executive pay, that an exec (CEO) should only make a max of 20x what the lowest-paid person in their company makes. Last I checked I think the ratio is currently at 400:1 for Fortune-sized companies?

    On the rest, I hate to break from my free-market brethren here but I do believe we need to push money down from the top through higher wages and keeping money here through protectionist measures. The trickle-down thing is ultimately bullshit, as is outsourcing and parking money offshore.

    Make American labor cheaper? You’re not going to make our cost of living any cheaper or do it fast enough for cheap labor here to ever compete with it over there. Money, goods, and services move far too quickly now for much/any of those models or theories to truly be realistic for modern times.

    Ultimately I believe in capitalist principles but things have shifted so far to the extreme, I believe a temporary correction in this regard is long overdue.

    Time for a little protectionism to come back and truly put all of America first again. I’ll say this, though: no matter what money we push down to the middle or lower class through an increased minimum wage or whatever, we can be rest assured that they’ll just hand it back up to us in the end one way or another because those are the same groups that feel they “need” $1,000 iphones. 🙂 They’ll just keep buying more high-margin shit from companies that I have stock in.

    And while on that note, I should give a shout-out here and thank you to all the pot smokers on the Internet, too! (Nickgb?) Those Occupy-Loving, Anti-Capitalism/Anti-Corporate reefer addicts continue to make us rich!!! 🙂

    • Dear god, I can’t believe I’m agreeing with Kaine here… Granted, he’s coming a little to the center on this one, so I’ll meet him half way.

      What everyone in the media and most of government forgets is that capitalism flourishes when markets are free to operate *with certain conditions*. For example, anti-monopoly provisions are not anti-captialist, they’re pro-capitalist. A monopoly inhibits the ability of a market to assign appropriate values to goods because it is no longer subject to supply and demand.

      And on Kaine’s anti-capitalism point, I agree that lower wages are a horrible policy. The reason our goods are cheap is that they are manufactured in places that they can pay people less. Pay Americans less to manufacture things and you drive us towards being the next China: all manufacturing and no quality of life. If that’s really what they mean by making America great, then I don’t understand what we’re doing here.

      For the third thing, which should be different, I’m completely in agreement on the marijuana point. This is what legalization advocates have been saying for years: fix your deficits by letting people buy weed and having taxes on it, just like anything else. Instead of spending money on cops and prisons to fight it, raise money by taxing it. I’d feel differently about other drugs, which really do need a closer look before legalization, but weed has been treated stupidly for decades by both parties.

  4. “Dear god, I can’t believe I’m agreeing with Kaine here… Granted, he’s coming a little to the center on this one, so I’ll meet him half way.”

    Haha! You should have came over to my side (or at least the middle) a long time ago, Nick – you’d be enjoying all the spoils and would have enough cash now to save all the trees and manatees and whatevers to your heart’s content. 😉

    Seriously, though, you’ll find I’m actually more to the center on a few of the key issues like gun control and health care. Perhaps it comes from part of my life in Canada. I definitely lean right overall, but fundamentally there are a few topics that I would agree with the moderate left on when you get down into their practical points. Just as the left has ideals which sound great and feel great but are useless from a practical perspective, one can easily find such ideals on the right which do the same.

    I look forward to seeing what Trump does on all of these issues. Having a President or politician who (finally?) can’t be bought by domestic or foreign lobbyists/interests, and having someone who does not want to become a career politician could be interesting on a number of levels. The guy’s a huge klutz though, so my optimism is very conditional at this point.

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