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Donald Trump and Obi-Wan’s Gambit – Article by Daniel Bier

Donald Trump and Obi-Wan’s Gambit – Article by Daniel Bier

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The New Renaissance HatDaniel Bier

You Cannot Win By Losing

In Star Wars: A New Hope, the last Jedi Knight, Obi-Wan Kenobi, is confronted by his former pupil, Darth Vader, as he races to escape the Death Star. The two draw their lightsabers and pace warily around each other. After deflecting some heavy blows from Vader, Obi-Wan’s lightsaber flickers, and he appears tired and strained.

Vader gloats, “Your powers are weak, old man.”

The hard-put Obi-Wan replies, “You can’t win, Darth. If you strike me down, I shall become more powerful than you can possibly imagine.”

Obi-Wan backs away from Vader but finds his escape cut off by storm troopers. He is trapped. He gives a mysterious smile, raises his lightsaber, and allows Vader to cut him in half.

This is Obi-Wan’s gambit, or the “win by losing” strategy. Lately, it has emerged as a distinct genre of commentary about Donald Trump.

Take, for example, “The Article About Trump That Nobody Will Publish,” which promotes itself as having been rejected by 45 publications. That’s a credit to America’s editors, because the article is an industrial strength brew of wishful thinking, a flavor that is already becoming standard fare as a Trump presidency looms.

The authors give a boilerplate denunciation of Trump (he’s monstrous, authoritarian, unqualified, etc.), but then propose:

What would happen should Trump get elected? On the Right, President Trump would force the GOP to completely reorganize — and fast. It would compel them to abandon their devastating pitch to the extreme right. …

On the Left, the existence of the greatest impossible dread imaginable, of President Trump, would rouse sleepy mainline liberals from their dogmatic slumber. It would force them to turn sharply away from the excesses of its screeching, reality-denying, uncompromising and authoritarian fringe that provided much of Trump’s thrust in the first place.

Our daring contrarians predict, Trump “may actually represent an unpalatable but real chance at destroying these two political cancers of our time and thus remedying our insanity-inflicted democracy.”

You can’t win, Donald! Strike me down and I shall be… forced to completely reorganize and/or roused from dogmatic slumber!

The authors assert these claims as though they were self-evident, but they’re totally baffling. Why would a Trump win force the GOP to abandon the voters and rhetoric that drove it to victory? Why would it reorganize against its successful new leader? Why would a Hillary Clinton loss empower moderate liberals over the “reality-defying fringe”? Why would the left turn away from the progressives who warned against nominating her all along?

This is pure, unadulterated wishful thinking. There is no reason to believe these rosy forecasts would materialize under President Trump. That is not how partisan politics tends to work. Parties rally to their nominee, and electoral success translates into influence, influence into power, power into friends and support.

We’ve already seen one iteration of this “win by losing” fantasy come and go among the Never Trump crowd: the idea that Trump’s mere nomination would be a good thing, because (depending on your politics) it would (1) compel Democrats to nominate Bernie Sanders, (2) propel Clinton to a landslide general election victory, or (3) destroy the GOP and (a) force it to rebuild as a small-government party, (b) split it in two, or (c) bring down the two-party system.

But, of course, none of those things happened. Clinton has clinched the nomination over Sanders (his frantic protests notwithstanding). Meanwhile, Clinton’s double digit lead over Trump has evaporated, and the race has narrowed to a virtual tie. Far from “destroying the GOP,” Trump has consolidated the support of the base and racked up the endorsements of dozens of prominent Republicans who had previously blasted him, including Marco Rubio and Paul Ryan.

The GOP is not being destroyed — it is being gradually remade in Trump’s image, perhaps into his dream of a populist “workers’ party,” heavy on the protectionism, nativism, and authoritarianism. Meanwhile, knee-jerk partisanship and fear of Clinton are reconciling the center-right to Trump.

Moderates win by defeating the fringe, not by losing to it. Yet, for some reason, conservatives, liberals, and libertarians all like to fantasize that the worst case scenario would actually fulfill their fondest wishes, driving the nation into their losing arms — as though their failure would force the party or the public do what they wanted all along. This is the bad-breakup theory of politics: Once they get a taste of Trump, they’ll realize how great we were and love us again.

But the public doesn’t love losers. (Trump gets this and has based his whole campaign around his relentless self-promotion as a winner.) Trump’s inauguration would indeed be a victory for him and for his “alt-right” personality cult, and a sign of defeat for limited-government conservatives and classical liberals — not because our ideology was on the ballot, but because all our efforts did not prevent such a ballot.

Trump embodies an ideology that is anathema to classical liberalism, and if he is successful at propelling it into power, we cannot and should not see it as anything less than a failure to persuade the public on the value of liberty, tolerance, and limited government. Nobody who is worried about extreme nationalism and strong man politics should be taken in by the idea that their rapid advance somehow secretly proves their weakness and liberalism’s strength.

This does not mean that we’re all screwed, or that a Trump administration will be the end of the world — apocalyptic thinking is just another kind of dark fantasy. As horrible as Trumpism may be, it cannot succeed without help. And here’s the good news: Most Americans aren’t really enamored with Trump’s policies. The bad news is that they could still become policy.

Classical liberals who oppose Trump should realize that things aren’t going to magically get better on their own. We cannot try to Obi-Wan our way out of this. We will have to actually make progress — in education, academia, journalism, policy, activism, and, yes, even electoral politics.

If this seems like an impossible task at the moment, just remember that the long-sweep of history and many trends in recent decades show the public moving in a more libertarian direction. It can be done, and there’s fertile ground for it. We have to make the argument for tolerance and freedom against xenophobia and authoritarianism — and we have to win it. The triumph of illiberalism will not win it for us.

Daniel Bier is the site editor of FEE.org He writes on issues relating to science, civil liberties, and economic freedom.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Trump and Hillary Don’t Know How to Fix the Economy – Article by Justin Murray

Trump and Hillary Don’t Know How to Fix the Economy – Article by Justin Murray

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The New Renaissance HatJustin Murray
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Recently, Hillary Clinton was taped ridiculing Donald Trump for lacking a detailed plan for the American economy. The message, so it goes, is that Trump is not suited for the presidency because he doesn’t have a plan on how to turn the American economy around.

But is it really more dangerous to elect a president who makes up economic policy on the fly than one who proclaims to have a detailed plan for us?

The answer to this is no, it is not more dangerous to elect someone who makes up economic policy by the seat of his pants — as Donald Trump is prone to do — than it is to elect someone who thinks she can have the future of the economy neatly mapped out. However, this does not imply that seat-of-the-pants method is less dangerous either. The underlying problem is we have two competing people who think they can manage the American economy.

The core of why both philosophies are equally dangerous is best summarized by F.A. Hayek and the pretense of knowledge. Hayek notes in his speech in 1974:

Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones … in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process … will hardly ever be fully known or measurable.

We are incapable of knowing what the future will bring. No president can come up with a detailed or air tight plan or can accumulate a sufficient stable of experts to be able to guide the behavior, wants, and needs of 320 million people.

For example, if we were to have asked George Bush and his economic experts in 2002 to develop a five year plan for cell phones, we would have built up a massive production capacity and R&D structure around miniaturizing phones as that was all the rage. If someone said in 2002 that people in the future would give up physical buttons and want larger screens, they would have been looked upon as mad. People are buying smaller and smaller phones, there’s no way they could touch the screen and get anything done! But come 2007, Apple introduces the iPhone and the older-style button phone has nearly vanished from the marketplace. Had the government decided it needed to plan the economy around smaller phones, we wouldn’t be enjoying a mobility revolution.

This extends well beyond cellular phones and into all walks of our lives. We don’t need central planning on how we consume our energy, what cars we can buy, what we charge people for borrowing money, and so forth.

All behavior is risky. Even if central planners could somehow canvass all of our wants and needs, figured out when exactly we want to satisfy those needs, and determined who gets what in a world of scarcity, the planners would still fail. This is because even we have no idea what we’ll want in the future. If we were to ask someone to write down exactly what they would buy on August 14, 2017 and put it in an envelope then open it up and compare it to what was bought on that day, there is little doubt the results would be wildly different.

The planner is going to do no better. Instead of a single individual failing to predict his own habits in a fun exercise, we’ll be malinvesting untold amounts of money into unwanted industries and imposing counterproductive and dangerous rules on businesses — the effects of which are impossible to predict. Furthermore, central planning shuts down innovation and the entrepreneurial process because it assumes to know today what is wanted tomorrow. Most innovation arises when someone produces a product we had no idea we wanted and couldn’t fathom existing.

Does Hillary Clinton’s plan for the economy make her a more qualified president than Donald Trump, who will likely create plans spontaneously? No, it makes them equally dangerous as both assume they have the ability to do what countless officials over the centuries have never managed to do — predict the future.

Justin Murray received his MBA in 2014 from the University of St. Gallen in Switzerland.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Three Popular Myths behind Trump’s Success – Article by Barry Brownstein

Three Popular Myths behind Trump’s Success – Article by Barry Brownstein

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The New Renaissance HatBarry Brownstein

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Why the Unprincipled Worst Get on Top

“Nothing sinks people faster in their careers than arrogance,” according to Stephen R. Covey, the bestselling author of The Seven Habits of Highly Effective People. But it is hard to imagine a less humble or more arrogant individual than Donald Trump, and to date, his shoot-from-the-hip, prideful, self-referencing arrogance has not sunk his career.

In his book Principle-Centered Leadership, Covey described “politics without principle” as a politics of personality focused on “the instant creation of an image that sells well in the social and economic marketplace. You see politicians spending millions of dollars to create an image, even though it’s superficial, lacking substance, in order to get votes and gain office.”

The marketplace imposes a check on empty promotion and false confidence, which is why, as Covey observes, the most successful leaders in the private sector are often also quite humble.

So why do the arrogant do so well in elections? Is there something different about the political process that allows the worst to succeed?

In his seminal book The Road to Serfdom, Nobel laureate F.A. Hayek offers part of the answer. He lists three widely held beliefs that allow arrogant politicians to emerge.

Belief 1: We should be able to get out of our economic difficulties without pain.

As Hayek saw it, some people blame “the system” for their troubles and “wish to be relieved of the bitter choice which hard facts often impose upon them.” They “are only too ready to believe that the choice is not really necessary, that it is imposed upon them merely by the particular economic system under which we live.”

Let the implication of Hayek’s words sink in. The successful politicians may be those who increasingly blame the “system.”

With a majority of Americans feeling economically insecure, there is plenty of fear for Trump to exploit and a ready audience for promises that he can ease the economic pain of ordinary Americans.

Trump postures as a great fixer. Consider this retweet on Trump’s official Twitter page:

trumptweet20150824

He promises that things are going to be “great again,” once he gets us a better deal with China. Trump tells us he gets what he wants. To purchase a hotel in Miami, he brags, “I went in and punched and punched and beat the hell out of people, and I ended up getting it.”

Of course, Trump is not alone. In their arrogance, politicians will claim to fix social pain points — while they create many, many more.

Belief 2: Government should command or partially command significant portions of the economy.

Hayek observes that many well-meaning people ask, “Why should it not be possible that the same sort of system, if it be necessary to achieve important ends, be run by decent people for the good of the community as a whole?”

Those who believe in command economies think that when things go wrong, it must be because the wrong people are in charge. They don’t question their core belief that controls are needed.

History, economics, and the contemporary world teach lessons of command-and-control societies that have experienced economic failure. Yet, the wrong-person-in-charge belief is sadly all too common.

In her book The Art of Choosing, social psychologist and business professor Sheena Iyengar reports on 2007 research about societal attitudes in East Germany. She observes that among former East Germans, “more than 90% believed socialism was a good idea in principle, one that had just been poorly implemented in the past.”

Look around at your friends and neighbors who are supporting a candidate who advocates top-down solutions to social and economic problems. With few exceptions, they want the same things that you want: prosperity and peace for their family and the world. It is not that they want different outcomes than you do. They simply don’t understand that command economies are inherently, fatally flawed and cannot accomplish those goals.

Without examining their core beliefs, decent people tell themselves they’re choosing the “right” person to put in charge. Arrogant politicians are standing by, posturing as the “right” people.

Belief 3: There is a “good of the community as a whole” that our current economy is not meeting.

It is essential to understand why there can be no such thing as the “good of the community as a whole.” Hayek explains,

The “social goal” or “common purpose” for which society is to be organized is usually vaguely described as the “common good,” the “general welfare,” or the “general interest.” It does not need much reflection to see that these terms have no sufficiently definite meaning to determine a particular course of action.

All top-down solutions will be win-lose, benefiting some and harming others, for as Hayek explains,

The welfare and happiness of millions cannot be measured on a single scale of less or more. The welfare of the people, like the happiness of a man, depends up on a great many things that can be provided in an infinite variety of combinations.

Some see health care as a common good and a human right that the market system has failed to provide. In my FEE essay, “Castro and Obama Are Wrong about ‘Human Rights’” (FEE.org, March 25, 2016), I explain why real rights are win-win, not win-lose. “Rights” such as health care are win-lose and not real rights at all.

The arrogant believe they know what is best for you and best for the community. To them the course of action is clear. However, Hayek warns that in collectivist ethics, the ends justify the means and thus lead to amoral totalitarianism:

There is literally nothing which the consistent collectivist must not be prepared to do if it serves “the good of the whole” because “the good of the whole” is to him the only criterion of what ought to be done.

The Consequences of Our False Beliefs

Since there is no majority to agree on a specific plan of action to promote a nonexistent “common good,” the worst get on top in a centrally planned economy.

The “worst” will take advantage of the fact that agreement can be more readily forged by focusing on a “negative program.” Hayek writes,

It seems to be almost a law of human nature that it is easier for people to agree on a negative program — on the hatred of an enemy, on the envy of those better off — than on any positive task. The contrast between the “we” and the “they,” the common fight against those outside the group, seems to be an essential ingredient in any creed which will solidly knit together a group for common action. It is consequently always employed by those who seek, not merely support of a policy, but the unreserved allegiance of huge masses.

The “mass” that the “worst” seek to mobilize will include those who themselves are not grounded on principles. Hayek cautions that those having “imperfectly formed ideas are easily swayed”; their “passions and emotions are readily aroused.”

Hayek helps us to understand why the careers of arrogant politicians do not sink fast. The careers of arrogant politicians rise as long as we believe in a common good, seek the “right” politicians to be in charge, and support those who promise to shelter us from the work of examining our beliefs and the pain of making a different choice.

We shouldn’t be surprised when the outcome is not what we expect. As Freeman editor B.K. Marcus observes, “The more decisions we cede to the political process, the less we should expect anyone to protect our interests” (“Why Do We Believe These Pathological Liars?” FEE.org, April 27, 2016).

As individuals, we can question our core beliefs. We can humbly “try to live in harmony with natural laws and universal principles.” And we can demand the same of our politicians.

Barry Brownstein is professor emeritus of economics and leadership at the University of Baltimore. He is the author of The Inner-Work of Leadership. He blogs at BarryBrownstein.com, Giving up Control, and America’s Highest Purpose.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Is Trump a Howard Roark? – Article by Edward Hudgins

Is Trump a Howard Roark? – Article by Edward Hudgins

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The New Renaissance HatEdward Hudgins
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Roark vs. TrumpDonald Trump recently said he’s a fan of Ayn Rand’s novel The Fountainhead. Even if you haven’t read it, a reflection on the key characters in that excellent work will help you understand much of what’s wrong with The Donald. Not wishing to write a book-length treatment on the subject, I’ll focus on just one thing that’s relevant to the presidential election: how one treats others.

In an interview with Kristen Powers, Trump said of The Fountainhead, “It relates to business … beauty … life and inner emotions. That book relates to … everything.” (Here he’s right!) He identified with Howard Roark, the novel’s architect hero, loosely based on Frank Lloyd Wright. Trump builds buildings too, so no doubt a novel on the subject would interest him. But much of the resemblance between Roark and Trump ends there.

Roark treats people with respect
Howard Roark loves the creative work of designing buildings for the purpose of seeing them built just the way he designs them. His work is his source of pride. He doesn’t work for the approval of others.

Roark must struggle because in his world established architects simply want to imitate the styles of the past, mainly to impress other people who, for the most part, aren’t particularly impressed in any case.

Roark must find individuals and enterprises that want his buildings. But he is quite clear that “I don’t build in order to have clients. I have clients in order to build.” He does not bastardize his buildings—sticking columns or balconies on them just to make sales. He has his standards. He is honest with his prospective clients and tries to educate them. He respects them enough to treat them like intelligent individuals. If they can’t accept his style, that is unfortunate, but Roark will not pander. Roark has integrity.

Wynand panders to the lowest
Another major character in the novel is Gail Wynand, who rose from nothing to build a chain of “Banner” newspapers. Wynand is good at what he does but what he does is not good. He builds his empire by appealing to the lowest common denominator among his readers. He is a yellow journalist who feeds them scandal, sensation, and schlock. He sees his readers as basically stupid and irrational, and his idea of success is not to appeal to the best within them but, rather, the worst, assuming they deserve nothing better.

And that is how Trump approaches prospective voters in his political campaign. It’s all a sensationalist, headline-grabbing show. It’s saying the most outrageous things to appeal to emotions on the assumption that his audience can’t or doesn’t want to actually think.

Which works?
But there is a major difference between Wynand and Trump. Wynand wants power over others but his sense of self-worth is not dependent on the adulation of the mob he wants to rule. Trump, on the other hand, seems to drink up the applause of his audience, and if someone challenges him, it’s personal and rates the response of the most insecure playground bully.

By contrast, in The Fountainhead, when the novel’s most malicious villain who has tried to block Roark’s career approaches him and asks “What do you think of me?” Roark responds, “But I don’t think of you.” That’s true self-esteem!

Which approach works better: Roark’s career built on dealing with people based on reason, or Wynand’s career built on treating people like idiots? Read The Fountainhead to discover the intriguing answer you probably already suspect. In terms of Trump’s political career, it will depend on how many voters prefer to be treated like idiots rather than with respect.

Dr. Edward Hudgins directs advocacy and is a senior scholar for The Atlas Society, the center for Objectivism in Washington, D.C.

Copyright The Atlas Society. For more information, please visit www.atlassociety.org.

Donald Trump Is the Nightmare Version of a Political Outsider – Article by Lucy Steigerwald

Donald Trump Is the Nightmare Version of a Political Outsider – Article by Lucy Steigerwald

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The New Renaissance HatLucy Steigerwald
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Trump Is Not an Alternative to Politics as Usual: He Is Its Purest Form

At a CNN-hosted town hall debate, Donald Trump said that the US government’s core focus should be on security (times three!), health care, and education. In spite of this vague, rambling answer, and much other blathering in support of big government, the real estate mogul has a large, intense following, which includes people on the right, the left, and even some paleoconservatives and libertarians.

In some ways, it’s understandable: if the normal process of politics revolts you in any way, the dream of anti-candidate Trump is sweet. The approval rating for the presidency in general is around 30 percent, according to Gallup. For Congress, it’s a stingy eight percent. People — or at least the people Gallup calls — do not seem terribly impressed by their elected officials.

Nor should they be. Powerful men and women spy, meddle, steal, and go to war, whether the people want them to or not, and then pat them on the head and coo euphemisms when people get upset with the results.

Into this travesty strolls Donald Trump, with a terrible, shallow campaign, brilliant in its bombastic vagueness. Populism, it’s been a while. You’re looking tanned, rested, but disturbingly familiar.

When Trump boasts about being against the Iraq war, or disses Dick Cheney, or says that being called a politician is insulting, it’s all too easy to like him. It would be so nice to believe he is not one of them, but one of us. Sure, he’s a billionaire on his third wife, with numerous failed business ventures, a love of eminent domain, and his own brand of “luxury” steaks, but he feels our loathing of the political class.

Yet it is infuriating that this is the year, and this is the man who has stolen the heart of the people fed up with DC. Not someone with principles (such as one against, oh, gleefully saying literally anything to be elected), not someone notably different from the elites he professes to loathe — merely a man who knows how to blab with the purest, most bald-faced confidence ever seen on a national stage.

In one way, Trump’s presidential run is about an outsider group revolting against the status quo, the way that fringey, quixotic campaigns like Pat Buchanan, Dennis Kucinich, or Ron Paul’s were. And some libertarians and paleocons have jumped on the Trump float, but it is clearly not their parade. The cause of Trump is not small government or social democracy or even Catholic populism.

It is Charlie Sheen-esque nationalism. It is strident whining confused for truth-telling. It is nonsense mercantilist ideas, bullying as public policy, and the worst anti-immigrant scapegoating in decades. However, there are no ideas here: it’s merely a billionaire playing that he’s angry about Mexicans and rallying swarms to his meaningless sort of “patriotism.”

Whether Trump was inevitable, or whether he simply speaks to the truly mediocre 2016 candidates is uncertain. But boy is it frustrating that the man who wants to raze DC is the one who wants to erect a statue of himself in its place. He tells it like it is, he knows politicians don’t work for the people! But he’s going to wave his hands and make a Mexico wall and 18th-century trade policy appear by incantation.

Back in September, the New Yorker wrote that “Trump … is playing the game of anti-politics.” We should be so lucky. Trump is merely politics distilled down to the size of one angry rich guy. On the campaign trail, would-be officials swear they can do anything and everything (and in the first 100 days, no less). Trump is bolder, brasher, and even more divorced from reality. But he’s still essentially that. The waking reality of the presumptive GOP nominee — who disses Dick Cheney, Hillary Clinton, and both party establishments — is that he is, heart and soul, a consummate politician.

His critique of the political class is not that they meddle too heavily in the lives of individuals, but that they haven’t done enough. If they had, wouldn’t we have a 50-foot wall on the southern border? Wouldn’t all those manufacturing jobs come back from China? For Trump and his supporters, the problem with Washington is not the inherent disaster of a massive bureaucracy with no consequences for failure and a surplus of corrupting power. No, it’s lack of strident, Trump-like spirit: a lack of will.

In spite of his twitches towards a less militaristic foreign policy — in between suggesting the United States rip up the Geneva Conventions, bomb the hell out of Syria, and seize Iraq’s oil — there is nothing really consistent about Trump. He may or may not be worse in practice than the status quo, but there is no reason to suspect that he is the savior of anything except his own ego. Indeed, his view that the government is incompetent due to bad managers sounds more like progressive technocracy than anything conservative. But somehow his screaming fans have gotten their signals crossed or, more grimly, they are as disinterested in small government as he is.

Hating DC is fun, but it doesn’t magically translate to supporting liberty. And populism is a not principle — it has no policies, feasible or otherwise. It is raw emotion. It is preaching. It is the flimflam, finger-pointing, and impossible promises of traditional assembly-line politics, just stripped down to bare parts. Trump is the schoolyard version of everything Marco Rubio or Bill Kristol advocates. He isn’t flattering anyone’s intelligence with his policy acumen. He doesn’t think we’re terribly smart, but he also thinks those fancy pants DC elites are not as smart as they pretend. He’s right about all of that. It’s not as if politics is noble or deserves better than Trump. It is Trump.

The Donald is not some demon summoned from another dimension to destroy America. He probably isn’t a new Hitler or Mussolini. He is a part of us, a glitzy, gilded reflection of the dark soul of politics: the lies, the self-promotion, and the delusion. Take a good, long look.

Lucy Steigerwald is a contributing editor to Antiwar.com and a contributor to Playboy; she previously worked as an Associate Editor for Reason magazine. Her articles have appeared at Playboy, Vice, Antiwar, Reason, Pittsburgh City Paper, the Pittsburgh Tribune-Review, and various libertarian blogs.

This article was originally published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Demagoguery vs. Data on Employment in America – Article by Tyler Watts

Demagoguery vs. Data on Employment in America – Article by Tyler Watts

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The New Renaissance Hat
Tyler Watts
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Demagogue politicians love to play on popular fears that low-wage foreigners are “stealing” good-paying American jobs by way of outsourcing and globalization. The claim is made by nativists and protectionists of all political stripes, whether leftists complaining of a “rigged economy” or rightists speaking of other countries “beating us” economically.

A sound economic analysis of the claim about job losses due to international trade should address two questions: First, is it true that the US has lost jobs due to trade (or other factors)? Second, is this phenomenon good or bad overall for the US and world economies?

On the first point, it can appear as though the US has lost jobs. For example, as Figure 1 shows, manufacturing employment in the US has declined by about 2 million from pre-Great Recession levels, and is down by over 7 million, or 37 percent, from the all-time high reached in 1979.

Figure 1: Total Manufacturing Employment, 1940–2016

watts1

The problem, though, is that by looking at manufacturing in terms of jobs, we’re missing the full picture of industrial production.

Nevertheless, the demagogues still argue that, even though high-paying service sector jobs have more than replaced lost factory jobs, “we don’t make things here anymore” and we should lament this. This oft-heard refrain is patently false. We don’t make certain things, such as garments, toys or electronics, because global free trade and technological advances tend to shift America’s output into those industries in which our comparative advantage is greatest. But Americans do indeed make things — quite valuable things.

This can be seen in Figure 2, which shows the US Industrial Production Index for the “de-industrialization” period. After the expected steep decline following the Great Recession of 2008–2009, US manufacturing has slowly bounced back and is now producing more products, in value-added terms, than ever before. Indeed, this index, which consists mainly of manufacturing, has grown by over 100 percent since the 1979 peak in manufacturing employment.

Figure 2: Industrial Production Index for the United States, 1979–2016

watts2

In other words, thanks to productivity gains, we need fewer workers to make more stuff.

From an economic perspective, nothing could be better news. US manufacturing creates 100 percent more value with 37 percent fewer workers. Creating more value with fewer workers means we’re more efficient than ever, or put another way, more productive than ever. These awesome productivity gains have many sources, especially in the form of technological advances in areas like software, robotics, and communications. Globalization and outsourcing have also played a role, as they allow American workers a greater degree of specialization in those sectors where our productivity edge is largest.

The good news gets better, though: not only have we gained jobs on net, but jobs have grown faster than the population over time. Since the 1979 peak in manufacturing employment, the US adult population grew by 53 percent, whereas employment grew by 59 percent, as shown in Figure 3.

Figure 3: Population Growth vs. Employment Growth Since 1979

watts3Source: Federal Reserve Economic Data

Despite these generally positive facts, some still contend that we’ve replaced “good” manufacturing jobs with lousy service sector jobs. Well, of course it must be true that, if we’ve lost manufacturing jobs, but gained jobs overall, then all of the job gains must have come from non-manufacturing sectors. And indeed the service sector, broadly defined, has seen employment growth of 90 percent since our 1979 benchmark. But beware of making hasty earnings assumptions about a sector that employs nearly 124 million people. To see whether the newly-created “service sector” jobs really don’t pay as well as the vaunted manufacturing jobs, we need to drill down into the employment and earnings data. What we’ll find is that a large majority of the new service sector jobs pay just as well or much better than manufacturing jobs.

Table 1 presents Bureau of Labor Statistics data on the 15 largest sectors and sub-sectors of the US economy, which together represent over 96 percent of the total net increase in payroll employment for the post-peak manufacturing jobs era (1979 to 2016). This might come as a surprise to the anti-globalization crowd: despite the loss of 7 million manufacturing jobs (and some mining, logging, and utilities sector jobs), we’ve seen a net increase of nearly 53 million total jobs. Of these net new jobs, fully 62 percent of them feature, as of January 2016, average hourly earnings equal to or greater than current average hourly manufacturing earnings. In other words, most of the 53 million new jobs pay the same or better wages than the demagogues’ benchmark “good” manufacturing jobs. So we lost 7 million good jobs, only to gain about 32 million equal or better-paying jobs, along with about 19 million lower-paying jobs (about 38 percent of net new jobs pay less than manufacturing).

Table 1: Employment Changes and Current Earnings by Sector

watts4Source: Bureau of Labor Statistics

We’ve established that, despite a major decrease in employment in the manufacturing sector, we’ve gained many more jobs than we’ve lost in the past 35 years or so, and that most of these new jobs pay better to boot. Economic changes, while painful in the short run, have brought gains in output and employment not only for the US, but for the rest of the world as well. Overall, this is good news for the US and world economies.

So, as the campaign season heats up, let’s not be misled by baseless arguments about America “losing jobs” or other countries “beating us” at trade. Trade is a positive sum game, and the benefits for both the US and world economies are, shall we say, “yuge.”

Tyler Watts earned his PhD in economics at George Mason University in 2010. He currently teaches economics at East Texas Baptist University and runs the Institute for Economic Education (see YouTube channel here), a public outreach focused on integrating economics with a Biblical worldview and providing unique teaching tools for high school and college economics students.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Will Trump Boycott Grocery Stores for Their Unfair Trade? – Article by Edward Hudgins

Will Trump Boycott Grocery Stores for Their Unfair Trade? – Article by Edward Hudgins

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The New Renaissance HatEdward Hudgins
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Donald Trump’s stump thump against Mexico is that it runs a $58 billion annual trade surplus with the United States. Trump somehow thinks this leaves America the poorer.

He claims that it is out of that money, presumably sitting in some giant vault in Tijuana, that Mexico will pay for the border fence he wants to build to keep immigrants from entering the United States illegally. Trump’s pronouncements only demonstrate how he keeps facts and reason from entering his thoughts and, how he would keep Americans from making their own free choices in a free market.

International free trade is win-win
Trump’s very language reveals a glaring error concerning trade. Mexico and America do not trade. Mexicans and Americans do. Mexicans have $58 billion more in cash (pieces of paper with George Washington’s picture on them or the equivalent credits on bank ledgers) and Americans have $58 billion more in goods (electrical equipment, Trump-themed apparel).

And Trump doesn’t bother to ask, what are those Mexicans supposed to do with those pieces of paper? If they don’t spend them in America, they’ve got nothing but useless paper. So the Mexican trade surplus also means that Mexicans are investing an equivalent amount in America, helping the U.S. economy grow.

Further, the fundamental nature of trade between individuals is a win-win situation. Someone who buys an orange Donald hat for $20 to show his support for the former host of “The Apprentice” values the hat more than the twenty. And the manufacturer in Mexico who has a warehouse full of said head gear prefers the $20.

If The Donald slaps a 30% tariff on all goods coming from Mexico, maybe his starry-eyed supporters would shell out $26, the higher cost of the hat. But a poor mother with five kids seeing the price of a pair of shoes jump from $20 to $26 might be hard-pressed to afford the extra $30 she’d need to cover the feet of all her five little ones. But Trump doesn’t care. He wants to get rid of that pesky trade imbalance and what better way than to discourage that mom from buying Mexican-made shoes for her family! On the other hand, maybe he will notice when Mexican investors pull out of his latest golf resort or skyscraper projects, because his policies have destroyed their profits.

Trump’s grocery store trade deficit
If Trump is so against trade deficits, he should have a serious problem in his own household. Trump no doubt runs a huge trade deficit with his grocery store. He gives them piles of money when he buys food—no doubt top-priced cuisine—but the store never buys anything from him. Maybe he should boycott it. Maybe we should all boycott our local grocery stores lest we be victims of a trade deficit. Maybe if elected president, Trump will slap a 30 percent “grocery tariff” on everything that those stores try to sell to us poor, exploited schleps until those stores start purchasing stuff from us.

Trumps versus liberty
Trump poses as a friend of the people, but he wants to use government to prohibit the Americans from purchasing goods from whomever they wish—including Mexicans. The Donald presumes to know better what individual Americans should buy with their own money and at what price than they do. He’s determined to drive up the prices for Americans buying from Mexicans to teach those Mexicans a lesson. So what if American consumers and businesspeople are collateral damage.

Trump’s policies would only add more instability to an already unstable world. Ayn Rand explained that “The essence of capitalism’s foreign policy is free trade—i.e., the abolition of trade barriers… the opening of the world’s trade routes to free international exchange and competition among the private citizens of all countries dealing directly with one another. During the nineteenth century, it was free trade that liberated the world, undercutting and wrecking the remnants of feudalism and the statist tyranny of absolute monarchies.”

When governments take away the liberty of individuals to pursue their self-interest by trading freely with other individuals—a win-win situation—they set the stage for conflicts and even wars between countries. Trump’s proposed trade war is really a war on the American people.

Dr. Edward Hudgins directs advocacy and is a senior scholar for The Atlas Society, the center for Objectivism in Washington, D.C.

Copyright The Atlas Society. For more information, please visit www.atlassociety.org.

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

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The New Renaissance HatDaniel Bier
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A Vesuvius of Tribalism and Economic Illiteracy

At Sunday’s Democratic presidential debate, Bernie Sanders attacked American trade with Mexicans, Chinese, Vietnamese, and presumably all other foreigners who might try to steal our jobs. Sanders harangued Hillary Clinton,

NAFTA, supported by the Secretary, cost us 800,000 jobs nationwide, tens of thousands of jobs in the Midwest. Permanent normal trade relations with China cost us millions of jobs.

Look, I was on a picket line in early 1990’s against NAFTA because you didn’t need a PhD in economics to understand that American workers should not be forced to compete against people in Mexico making 25 cents an hour.

… And the reason that I was one of the first, not one of the last to be in opposition to the TPP is that American workers … should not be forced to compete against people in Vietnam today making a minimum wage of $0.65 an hour.

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

First, let’s note his dodgy job numbers. As Dan Griswold noted in 2011, in response to a similar claim about jobs “lost” from the “trade deficit” with Mexico,

In the first five years after NAFTA’s passage, 1994-98, when we could have expected it to have the most impact, the U.S. economy ADDED a net 15 million new jobs, including 700,000 manufacturing jobs.

Behold, the horror unleashed on US manufacturing jobs by trade with Mexico:nafta-manufacturing

In fact, since NAFTA went into effect in 1994, total US employment has increased by 28 million jobs. Even if we buy the dubious claim that NAFTA “cost us 800,000 jobs” over the last 22 years, this amounts just 36,000 jobs a year.

As Griswold noted, even in good times, 300,000 Americans file for unemployment each week. The US economy creates and destroys more than 15 million jobs every year. This alleged displacement amounts to less than one day’s worth of job losses.

It’s true that, in the long-run, manufacturing jobs have been in decline in the United States. But this is not because manufacturing is in decline. The myth (promoted by the other nationalist blowhard in the race) that United States “doesn’t make stuff anymore” is not just wrong — it couldn’t be further from the truth.

Real US manufacturing output is the highest it has ever been. Simply put, the US makes more stuff than ever.

manufacturing-indexHow can this be? Because manufacturing productivity — the amount of value added per hour worked — has gone up dramatically in recent decades. Manufacturing employment is declining because of automation; a US factory worker today can add a lot more value per hour than one in 1970.

manufacturing-employees-output-per-hour

It’s simply not true that trade devastated the US economy and wiped out millions of jobs. Employment has shifted within the US economy, out of industry into service jobs, and manufacturing has shifted around the globe, aligning production with the comparative advantages of each country’s labor and capital markets.

The resentment stoked by nationalists like Trump and Sanders is based on a nonsensical proposition, a mirage of high-paying blue collar jobs stolen by conniving foreigners, which we could reclaim if only we had the will to wage a trade war.

But the machines and global production chains are here to stay, and the jobs being done in Vietnam and China for fifty cents an hour are on the extreme low end of the value-added chain — which should be obvious, when you think about it, since they pay so little. (On the back of every iPhone is a short economics lesson on this point: “Designed by Apple in California. Assembled in China.”)

Do we really want to “bring those jobs back”? Do we envision a future where the American middle class is sewing textiles in sweatshops for a dollar an hour? Of course not. Americans today likely wouldn’t do those jobs at any wage, but especially not at the wages paid to low-skilled workers in developing Asian and Latin American countries. Those jobs only exist at those wages; at higher wages, they are scarcer, higher-skilled, and more capital intensive.

True, we could make t-shirts and Happy Meal toys in the United States, but we’d be doing it with far, far fewer workers and a lot more capital. Instead of 30 workers at fifty cents an hour, it’d be one person with a machine for $20 an hour.

The real difference would be that everyone would be poorer as a result: consumers paying higher prices, foreigners working in worse conditions and for less money, and American resources being diverted away from where they are most productive.

This is where economic ignorance stops being morally neutral and becomes a real threat to the life and well-being of the poor, especially in the developing world.

Not content to merely keep Mexicans from working in the United States (where, thanks to US capital and infrastructure, they could earn three or four times more than they make in Mexico), Bernie Sanders now objects to the right of Mexicans to work in Mexico, if they dare to sell goods and services to Americans — or, God forbid, try to compete with American firms.

For a champion of the poor like Sanders, there’s a double irony here, in that poor Americans are already much wealthier than poor Mexicans, and that tariffs also make goods more expensive for native consumers, disproportionately hurting the poorest Americans. Not only are poor Mexicans made worse off, by losing access to the US market and thus losing jobs, but poor Americans are also made worse off by having less disposable income, which is thus not spent elsewhere in the economy to sustain other American jobs.

And this is just the first order effects of closing off trade with Mexico. When the Mexican government inevitably retaliates, US exports to Mexico (which totaled $236 billion in 2015) will also be devastated and more jobs will be lost. And of course, simply multiply this orders of magnitude for China, Vietnam, and every other country on the nationalistic hit list.

Who gains from this? In the long run, nobody, which is why (after decades of gradual reform) we finally got relatively free trade with our closest neighbors, signed into law by a liberal Democrat. But in the short run, a few US corporations and labor unions would benefit from trade tariffs — at the expense of both poor foreigners and poor Americans as a whole.

(For those keeping score, this makes it an ironic hat trick for Sanders, whose tirades against free trade and open borders are laced with fear-mongering about “corporations.”)

Finally, let us ponder Sanders’ Alice-in-Wonderland solution to the imagined ills of free trade:

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

Did I say Alice in Wonderland? I meant Atlas Shrugged. Ayn Rand was justly accused of having unbelievable, one-dimensional stereotypes, but sadly, American politics seems to have the same problem.

It’s anyone’s guess how Sanders imagines he could force factories not to close and order companies to stay in the United States, but the “you can’t shut down” solution is almost directly lifted from “Directive 10-289,” the order that Rand’s antagonists use to try to “stabilize” the economy:

All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment… All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation…

Faced with economic decline, the government believed that the only option was to stop the decline, rather allowing people to go where they choose, buy what they choose, and make what they choose. “What it comes down to is that we can manage to exist as and where we are, but we can’t afford to move!” archvillain Wesley Mouch exclaims. “So we’ve got to stand still… We’ve got to make those bastards stand still!”

When Rand first published this in 1957, this was hyperbole about the fear of change, the reductio ad absurdum of the argument for keeping things as they are. Now, it’s an applause line for mainstream presidential candidates.

Daniel Bier is the site editor of FEE.org He writes on issues relating to science, civil liberties, and economic freedom.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

One Bad Reason to Hate Trump – Article by Sarah Skwire

One Bad Reason to Hate Trump – Article by Sarah Skwire

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The New Renaissance HatSarah Skwire
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99 Reasons, But the Name Ain’t One

I have 99 (thousand) reasons to hate Donald Trump and to find his campaign stomach turning. I won’t list them here. The Google graph showing the rising use of the word “bloviate” in American political discourse should stand in place of any detailed accounting.

bloviategraph

But what’s grabbed most of the attention since John Oliver mentioned it recently on his show, Last Week Tonight, is Trump’s name. As Oliver notes, “Trump sounds like money.” But, he continues in tones of shock and dismay, “It turns out the name Trump was not always his family name.… An ancestor had changed it to Trump from Drumpf.”

My family name wasn’t originally Skwire. It was Skwirsky. My grandfather and his brothers changed it — right around when Trump’s ancestor changed the family name — because back in those days, it was hard to get jobs in the United States with an obviously foreign name. Trump’s ancestors, I’m sure, did the same thing.

There’s no shame in being from places that aren’t America. There’s no shame in having a last name that’s unusual. And I am bothered by the pleasure we are taking in mocking a name that sounds a little bit funny and a whole lot foreign. It sounds like the kind of rhetoric Trump uses. So I’m not going to indulge.

However.

(And this is a very big “however.”)

I do think there’s something to talk about here, and I don’t think it’s funny at all.

The focus on Trump’s original family name is not analogous to the focus on former Republican presidential candidate Chris Christie’s ample girth. Governor Christie’s poundage was immaterial to his campaign. He has not publically bloviated about the need for the obese to stop being lazy, to start exercising, and to start eating right. He has not signed on to regulatory agendas like former New York mayor Michael Bloomberg’s attempts to control what and how much people eat and drink. He hasn’t, in other words, turned his weight into a centerpiece of his campaign.

Trump, however, has made immigration one of his central issues. Even those of us who have tried desperately to avoid the whole political season have heard that he wants a bigger wall along the border with Mexico, that he wants Mexico to pay for it, and that he would deport 11 million illegal immigrants in short order. A little research turns up Trump’s repeated references to immigrants as criminals, drug dealers, and rapists. Birthright citizenship is dumb, he opines. And the barriers to immigration should be towering, because, Trump says over and over, the people born here should be our first concern.

It’s not funny that Trump’s family name used to be Drumpf. That’s just a standard American story that most of us probably share. To be an American, for most of us, means we’re not really from around here.

But the idea that we might have an American president who thinks it’s fine for the Drumpf family to come to America and achieve unimagined success in a few generations, but who will do everything possible to keep the Rodriguez family or the Habib family from doing the same?

That’s a tragedy.

Sarah Skwire is the poetry editor of the Freeman and a senior fellow at Liberty Fund, Inc. She is a poet and author of the writing textbook Writing with a Thesis. She is a member of the FEE Faculty Network.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.