Rustbelt Politics & The Death of America

“Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.”
Milton Friedman

So Donald Trump‘s grand plan to restore America’s Rustbelt is slapping tariffs on steel and aluminum imports and starting a trade war. His economically illiterate supporters, convinced as they are that flag waving and howling “‘Murica!” at anyone that doesn’t look like them constitutes sound economic policy, are predictably on board. Meanwhile, the left will oppose Donald’s plan, albeit for precisely the wrong reasons, most of all being it’s Trump’s idea. While this all demonstrates just how ignorant Americans are of even basic economic concepts, there is yet a sliver of hope for free market advocates still threading the needle between the pig ignorance of Nationalist socialists and the willful ignorance of Marxist socialists in the “Trump Era“.

The Dow Jones Industrial lost more than 1500 points over the last few days, which should make it very clear what Wall Street thinks of Trump’s planned policy. To put it in terms hopefully even MAGA supporters can understand, the prices of everything from cars to canned beer, is going to spike overnight. Why will this happen? Higher commodity prices drives up production costs, which causes higher market prices. Higher market prices means fewer sales, and fewer sales means companies don’t need to produce as much. This means two things: lay offs and recession.

Trump’s trade policy will be an economic disaster, and everyone on Wall Street knows it. Making cheaper options more expensive doesn’t make American steel and aluminum any more cost effective. It simply means that now American producers no longer have any good options, and, worst of all, it doesn’t even address the main reason American industries have been going overseas in the first place: bad minimum wage policy driven by leftist labor unions and politicians for over a century.

“Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.”
Milton Friedman

Just in case anyone hasn’t figured it out, steel and aluminum are made overseas, because, especially in countries like China, a company can hire a plant worker for an entire day for what an American worker is paid for an hour, doing exactly the same work, using exactly the same equipment, and producing largely the same quality of product, all with better scalability and more flexibility. Thanks to wage laws put in place since the New Deal and the activism of labor unions run by the mafia since the 1960’s, inflated wages in every American heavy industry create are a barrier to entry for American products internationally.

No politician wants to talk about this, least of all “the Donald“, because the American Rustbelt working class simply isn’t interested in hearing he’s unemployed and largely unemployable because he’s absurdly overpaid. The uneducated Rustbelt steel worker is simply not worth the nearly $25 an hour (median) he’s paid in the US for a job that any 14 year old can be trained to do in 20 minutes. It’s long past time someone said, “Hey, American Rustbelt working class, you’re only worth what the guy your employer replaces you with will work for, and if that guy is in China, that’s $2.50 an hour.

Instead, we hear exactly the opposite out of the American political establishment, with Trump being, as always, the first to toot his own horn, even when it’s not his horn, and he has no business at all tooting it. Politicians regularly brag about increases in average hourly earnings, even though (1) these “increases” have practically nothing to do with what politicians have or have not done, (2) these “increases” are largely an artifact of our ridiculously inflated minimum wage laws, (3) these “increases” ignore the millions of unemployed Americans making $0 an hour, and (4) those “increases” are a clear sign of inflation (which is bad).

There’s no need to worry about inflation, however, because nothing fixes problematic inflation like a recession.

“When government – in pursuit of good intentions – tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom.”
Milton Friedman

The only rational path to solving America’s Rustbelt isn’t going to be punishing the rest of the world for not adopting the same bad policies that have put millions of American workers, largely minorities, out of the workforce for generations and seriously damaged our ability to compete in an increasingly global economy. Americans must undo what they have done to themselves. No one is “cheating us” by working for less than we are willing to work for. It’s called market competition, and Americans can either adapt to the market or it can die a slow economic death of its own making.

In the end, we are the only people that we are really going to hurt, if we don’t.

 


Liberty is For The Win!

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