TRUMP TAKES AIM AT TRADE, SUP­PLY MAN­AGE­MENT

The Woolwich Observer - - FRONT PAGE - WORLD AF­FAIRS

HALF­WAY ACROSS THE PA­CIFIC Ocean, Don­ald Trump heard the clos­ing state­ments from the G7 sum­mit in Que­bec (which he had left early to meet North Korean dic­ta­tor Kim Jong-un in Sin­ga­pore).

All the G7 coun­tries had signed up to an an­o­dyne clos­ing com­mu­niqué that pa­pered over the huge gap be­tween the United States and the other six on world trade – but Canada’s Prime Min­is­ter Justin Trudeau then said once again that he would an­swer Trump’s big new tar­iffs on steel and alu­minum im­ports with new Cana­dian tar­iffs hit­ting U.S. ex­ports just as hard.

He had said it be­fore, in­clud­ing to Trump’s face just the pre­vi­ous day. The other na­tional lead­ers present in Que­bec said ex­actly the same thing, and none of them had changed their po­si­tions be­fore the fi­nal com­mu­niqué was agreed. But Trump flew into a rage.

No jumped-up leader of a rinky-dink coun­try like Canada was go­ing to get away with talk­ing to the pres­i­dent of the United States like that. Trump re­tracted his en­dorse­ment of the joint com­mu­niqué, called Trudeau “very dis­hon­est and weak,” and hinted heav­ily that his next tar­get would be Canada’s car-mak­ing in­dus­try (which is al­most com­pletely in­te­grated with its U.S. coun­ter­part).

No sur­prises here. The other coun­tries of what used to be called ‘the West’ have grown used to Trump’s tweeted out­bursts, and French Pres­i­dent Em­manuel Macron re­stricted him­self to say­ing that “in­ter­na­tional co-op­er­a­tion can­not be dic­tated by fits of anger and throw­away re­marks.”

True enough, but what also needs to be said loudly and of­ten (but gen­er­ally isn’t) is that the whole con­fronta­tion over trade is ir­rel­e­vant to Trump’s real po­lit­i­cal con­cern, which is van­ish­ing Amer­i­can jobs. He’s not just bark­ing up the wrong tree on this is­sue; he is bay­ing at the moon.

Trump’s line is that the very high un­em­ploy­ment rate in the United States (which he is al­most alone among Amer­i­can politi­cians in ac­knowl­edg­ing) has been caused by free trade. The evil for­eign­ers took ad­van­tage of gullible Amer­i­cans to make free trade deals, and then lured ruth­less Amer­i­can man­u­fac­tur­ers to re­lo­cate their fac­to­ries in their low-wage home­lands.

This only made sense for Amer­i­can man­u­fac­tur­ers if there was more or less free trade be­tween their new base and the United States, so that they could still sell their prod­ucts back home with­out tar­iffs. For Trump, there­fore, free trade is the mother of all evils. But while more than a mil­lion Amer­i­can jobs did get sent abroad like that in the 1990s, very few have been ex­ported in the past 15 years.

In the first decade of the 21st cen­tury, the United States lost one-third of all its man­u­fac­tur­ing jobs, and the vast ma­jor­ity of them were killed by au­to­ma­tion. They didn’t ‘go’ anywhere. They just van­ished.

It hap­pened first in what be­came known as the Rust Belt, be­cause that was the main cen­tre of as­sem­bly­line in­dus­try in the U.S. As­sem­bly lines, which break a com­plex task down into a se­ries of sim­ple and highly repet­i­tive ac­tions, are the eas­i­est thing in the world to au­to­mate.

Job de­struc­tion then slowed down un­til other new com­puter-driven tech­nolo­gies ma­tured: self­driv­ing ve­hi­cles, on-line shop­ping, ‘dark’ fac­to­ries and ware­houses. But they are ready now, and the car­nage in retail jobs, driv­ing jobs and ware­house jobs is just get­ting un­der­way. To worry about free trade while this is go­ing on is pure folly.

Not only has the ‘off­shoring’ of jobs vir­tu­ally stopped, but there is a new phe­nom­e­non called ‘reshoring.’ Some Amer­i­can man­u­fac­tur­ers are bring­ing their fac­to­ries home, be­cause with full au­to­ma­tion you have to hire only one-tenth of the high-paid Amer­i­can work­ers you used to em­ploy, and by reshoring you get to work in a pre­dictable le­gal en­vi­ron­ment in your own lan­guage.

Trump can do a lot of dam­age to em­ploy­ment both else­where and in the United States by launch­ing a trade war, but he can­not ‘bring the jobs back.’ They are gone for good, and a lot more will fol­low. Au­to­ma­tion may be slowed down here and there for a while, but even­tu­ally it will elim­i­nate at least half the ex­ist­ing jobs – and the no­tion that it will cre­ate equiv­a­lent num­bers of new good jobs is an ami­able myth.

So while the lead­ers of other rich coun­tries will have to di­vert some at­ten­tion and ef­fort to cop­ing with the neg­a­tive im­pacts of Trump’s trade war, they must not let that be­come their ob­ses­sion too. It’s a side is­sue, though po­ten­tially a very ex­pen­sive one.

In Canada, in France, in Japan, in all the de­vel­oped coun­tries, the real prob­lem is the same as it is in the U.S.: the in­ex­orable ad­vance of au­to­ma­tion and the re­sult­ing haem­or­rhage of jobs. So de­vote most of your at­ten­tion to that, and only re­spond to Trump’s dec­la­ra­tion of trade war to the ex­tent that is po­lit­i­cally un­avoid­able.

In the end, you’ll be glad you did.

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