Here Is an Interesting Historical Tidbit That I Was Unaware Of

It appears that the contemporaneous record shows that the deindustrialization of the United States was a deliberate policy. It's goal was to create prosperity in China, so as to create a more friendly relationship and move the "Middle Kingdom" to a more democratic and pluralistic society.

One of the things left unsaid here, because it makes the promulgators of such a policy look like blithering idiots, is that many of the foreign policy and defense "experts" favored this because they had not, and still have not, adjusted their thinking about a need for China to counterweight the USSR.

he argues that te destruction of US manufacturing to aid China was a deliberate policy.

I have been puzzling over this from Paul Krugman:

Donald Trump won the electoral college at least in part by promising to bring coal jobs back to Appalachia and manufacturing jobs back to the Rust Belt. Neither promise can be honored – for the most part we’re talking about jobs lost, not to unfair foreign competition, but to technological change. But a funny thing happens when people like me try to point that out: we get enraged responses from economists who feel an affinity for the working people of the afflicted regions – responses that assume that trying to do the numbers must reflect contempt for regional cultures, or something.

Is this the right narrative? I am no longer comfortable with this line:

…for the most part we’re talking about jobs lost, not to unfair foreign competition, but to technological change.

Try to place that line in context with this from Noah Smith:

Then, in the 1990s and 2000s, the U.S opened its markets to Chinese goods, first with Most Favored Nation trading status, and then by supporting China's accession to the WTO. The resulting competition from cheap Chinese goods contributed to vast inequality in the United States, reversing many of the employment gains of the 1990s and holding down U.S. wages. But this sacrifice on the part of 90% of the American populace enabled China to lift its enormous population out of abject poverty and become a middle-income country.

Was this “fair” trade? I think not. Let me suggest this narrative: Sometime during the Clinton Administration, it was decided that an economically strong China was good for both the globe and the U.S. Fair enough. To enable that outcome, U.S. policy deliberately sacrificed manufacturing workers on the theory that a.) the marginal global benefit from the job gain to a Chinese worker exceeded the marginal global cost from a lost US manufacturing job, b.) the U.S. was shifting toward a service sector economy anyway and needed to reposition its workforce accordingly and c.) the transition costs of shifting workers across sectors in the U.S. were minimal.

As a consequence – and through a succession of administrations – the US tolerated implicit subsidies of Chinese industries, including national industrial policy designed to strip production from the US.

It's a straight path from these policies to Donald Trump, particularly as Mr. Duy observes, the transition costs were not minimal, they were huge.

Thanks, Bill.