Trump and Manufacturing Protectionism

JayfromBrooklyn’s piece on the “Many Theories of Trump” hit on a topic I was going to write about but the early (non-lazy) bird gets the worm.

I too have noted how many people have been using Trump’s ascendancy to push their own pet narratives and agendas:

“It’s the Establishment!” they cry, as if Trump voters were well aware of contents of the Cromnibus bill or piping mad about not shutting down the government over Planned Parenthood. “If only McConnell hadn’t voted for cloture!”

“It’s the immigration!” they exclaim, which is silly when you consider that Romney (!) was well to the right on immigration and Cruz’s immigration plan is all but indistinguishable from Trump after he asserted U.S. Immigration and Customs Enforcement would pursue all illegal aliens currently here.

“It’s the white identity politics!” Well, maybe for some. But this a flaw in the electorate, not a mistake by the Establishment to pander to this element.

But one other Trump theory that continues to be bandied about is “It’s the manufacturing jobs protectionism!” And it is this aspect I wanted to address or I would have nothing left to write about. I was curious as to how strong the manufacturing sector was in states where Trump was faring well. Let’s use South Carolina. Actually, first, begin with Scott Lincicome’s excellent deconstruction of Trump’s protectionist proposals.

Did you read it?

Good.

Now back to South Carolina.

I won’t begrudge people who have been personally affected by jobs and production facilities moving overseas their frustrations, but here is the SC manufacturing picture, a place where Trump pulled over 30% of the vote. Note the constant uptick in manufacturing output since 1997, just 3 years after NAFTA was signed. And this data reflects the national trend as well:

It is true that while manufacturing production has increased, manufacturing employment overall has diminished beginning in the year 2000 (or 6 years after NAFTA was signed) and this effect only accelerated with two worldwide financial crises. States like Arkansas and Tennessee, places where Trump did very well, have incurred the most manufacturing job losses in these areas from their peak. As an aside- if this is a motivating cause, why didn’t it manifest itself politically more plainly in 2004?

So why are the jobs “missing” while output is increasing? The answer is primarily productivity gains.

Had we kept 2000-levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers. Instead we employed only 12.1 million.

Output in these southern manufacturing states has increased over time but the overall employment levels have dropped. We simply need fewer workers per production unit of output. This has been the trend in agriculture as well.

If we were really losing manufacturing to China, we would expect both jobs and output to be diminishing. This has not been the case.

One area where manufacturing jobs are actually returning to the South is the textile industry. It was an industry that had been on the decline for decades. And by the way, those weren’t really great jobs. Yes, as an aside- let’s not romanticize manufacturing jobs. Michael Moore began his career railing against the capitalistic injustices of the automated production line system in his book “Roger and Me.” When Henry Ford first began mass producing cars, his plant had to hire approximately 1000 people to keep 100. And at the time, as the U.S. and other western powers undergoing the Industrial Revolution shifted from agricultural to production work, entire political and intellectual movements were based upon the nostalgia of agricultural and trade work and the ills of the Industrial Revolution. So it’s not the form of work necessarily that creates dissatisfaction beyond change and nostalgia for days gone by, rather it’s the actual standard of living.

The Obama Economy

My pet theory is that people are frustrated from having lost wealth and income in the Obama era. The economic recovery the past 7 years has been one of the slowest on record. Bernie Sanders, running for the nomination of Obama’s party, has stated that the economic picture is even more dire than what appears on the surface. Not only do people have less money, but prices for goods and services have remained constant or increased (save for the recent drop in the price of oil). One area that has not only increased in price but dropped in quality is health care, one of the President’s key initiatives. All of this has lowered people’s standard of living.

What has happened to real median income in those states where Trump has shown strength? Real median income in Arkansas has barely moved at all but it has a lower baseline than most states. Tennessee’s real median income has fallen (-$4,014 /year) more significantly since the 2007–8 housing and financial crisis and the picture is similar in South Carolina (-$4,236/year from peak) and in states like New Hampshire (-$4,682/year from peak), another Trump win. The stories in these states track what has taken place nationally as well (-$3,763/year from peak). On top of that, people in the U.S. possess much less individual wealth. There has been a 35% decrease in net median household wealth between 2005 and 2011. What happened? The housing and financial crisis.

Imagine making $55,000 year in 2007 and now earning $51,000 for a family of four. In addition, Obama promised your premium would decrease by $2,500 on average while you kept your insurance plan. Instead, you’ve experienced double digit premium percentage increases while your deductibles and co-pays have concomitantly increased. Your mortgage and car payments have not gone down; nor has the price of milk. Your main capital asset, your home, is worth 35% less and your retirement account has similarly suffered. The media isn’t telling you where to fix the blame for your frustrations like it clearly did under Bush, which is born out by Obama’s surprisingly high national approval ratings. People’s angst has nowhere to go.

Enter the Prosperity Gospel populist candidate selling facile economic thinking on the credibility of his manufactured image as a successful multi-billionaire businessman, aided by millions dollars of free network TV advertising and we have the Rise of Trump. Trump isn’t selling National Greatness- he has no foreign policy plan nor reform ideas for government. His most concrete ideas are a wall and deporting 11 million people. He has seemingly no idea how a Republic even works. It’s not “Make America Great Again” but rather “Make America Rich Again.”

Trump and Obama have reduced America to an economic pact; they just differ on who the government should support and how to divide up the pie. Manufacturing is a synechdoche for American prosperity for Trump; a reference to a romanticized era in the aftermath of WWII where America was producing everything for the world, incomes were on the rise, and families were blissfully stable.

Or maybe people just want to return to their 2004 incomes and standard of living as they were during the housing bubble.

Not much changes. People vote with their wallets but they are not always rational in how to go about that. In the aftermath of the Great Depression and Great Crash, all sorts of bad economic ideas were put into place that actually hurt people yet they approved of them. It is up to conservatives to be empathetic to people but ultimately hold the line on resisting these policies no matter how popular.

Still, it wouldn’t hurt if other Republican candidates threw in a “We’re fighting for you!” rhetorical line now and again.