it is obvious that tariffs will be tacked onto the price of the goods and thus is inflationary, depopulating your workforce will drive up wages (after a long time of businesses just failing from not having any workers) and increase inflation (first by lack of supply then by increased wages), decreasing taxes is inflationary as well, by driving demand a bit and increasing the amount of currency in the market.
This is true.
But what other path is there if the US wants to have a policy of re-industralization? What possible path can be deployed that doesn't include also selective tariffs and an increase of the price of locally-produced goods?
You can argue about the exact shape of an industrial policy. But you cannot pretend that a country with a high cost of living can manufacture goods competitively with others with lower costs in an international market without tariffs. And you are experience enough to know that engineering follows industry, and science follows engineering. A de-industralized US will get more and more backwards in those fields over time. Selling "intellectual property" won't work because the rest of the world is quite capable of producing its own, that you very much. And there is nowhere to "climb in the value scale" when the base is thrown away. The whole thing crumbles without a foundation of
material production. It can take a long, long time but it crumbles. Smaller countries can manage that decline better than larger ones, some (like the netherlands, for an example) can try speacializing in trade to compensate for deindustralization.
The US is too big for that strategy. Its currentl specialization is "exporting dollars". The rest of the world is losing interest on the dollar. It would eventually, but certain recent moves (
sanctions...) brought that moment forward.
The fact is that productivity in the US, mis-measured (over-estimanted!) though it is, has been declining since the great financial crisis. A make-believe economy where medical debt inflates GDP is just that, make believe. The hufe corporate bureaucracies spending their lives
processing finance are not producting anything real. Your country is already in deep crisis, whatever the official statistics say. People there certainly
know it.
So the possible paths to invert, arrest or at least slow decline involve reindustrialization by either:
- tariffs and increased costs of material goods
- lowering production sosts to again have competitive industries, for which it is also absolutely necessary to lower the cost of living (thereby wages) and the financial rents extracted on all kinds of industry
The first is much easier to do. The second is
politically impossible to do without an outright revolution, and wholesale nationalization of healthcare, housing, education and finance.
At the least.
If you ask me, I will of course tell you that ideally the US should go communist and make all those basics public goods, to be managed by the state or states, somehow to be chosen) and apportioned more or less equally to the population in need. But you know and I know that is not going to happen before a complete collapse of the current system.
So if the US wants
any industry back, it will have to do tariffs as
part of an industrial policy (
part, won't work alone). Do not call ignorants to the voters who voted for the guy talking about tariffs. They see what is really happening and they're backing the only stategy they believe possible to at least attempt to adress it. I won't opine here whether it may ever work or not, that's make for a much longer argument, on economics and politics. What I am saying is that your fellow contrymen are not acting irrational. That majority was not acting on mis-information or against their own long-term interests. Those others who believe the economy is prosperous and nothing needs be done, the professional and manegarial classes who so far felt little pain, are the uninformed ones! Just because they had it good so far they think the decay won't thouch them in the future. They're wrong.
All this is true also of western of Europe, whose PMC have been aping the worse that the american ones did. Up to and including creating a phony "union" they would have be federal with a "constitution" (the people were smarter and voted it down), and copying political arrangements like the italians with their "partito democratico". The "western" countries most of us here live in, europeans and americans, have long been run by fools in their own bubble without a care for the future. When they "fail" they fail upwards or laterally, like the incapable former german fdefense minister promoted to EU commisssion president. They never get punished and collectively never learn anything. Why, theirs is the best possible world. Collectively, the people they rule seem at least recently more aware of the reality than the rulers. Despite massive doses of propaganda/circus deployed against the people daily on the media.
I think this is an instance of what Polanyi described as a society reacting in self-defence when capitalism is causing it to crumble. You got Trump, not an FDR. It will suck. But it's already part of the reaction. This reaction is always anti-iberal, because the rot is always politically caused by the liberal* I-got-mine-screw-you ideology.
*talking about the 19th century political liberalism, which can be pretty much summarized as
the ideology capitalists had to create to face the new era of democratic politics.
apps.npr.org
