Trump good, bad on the econ­omy

Cecil Whig - - FRONT PAGE - Jay Am­brose

— Merry Christ­mas to those 800 or so work­ers in In­di­ana who are keep­ing their jobs be­cause our bold and dif­fer­ent pres­i­den­t­elect, Don­ald Trump, did some jaw-bon­ing and more with an air con­di­tion­ing plant.

Stay here, he said as he growled about out­sourc­ing work to Mex­ico, and the plant mostly did. It also hap­pened to get about $7 mil­lion in tax breaks from the state govern­ment and still sent some 600 jobs to Mex­ico. It is no doubt hop­ing ear­lier bad pub­lic­ity has been su­per­seded by more re­cent and pos­i­tive front-page im­pres­sions.

So unhappy New Year to those who lost out and to mil­lions more who are go­ing to get cheated out of jobs if reck­less, in­ter­ven­ing Trump should stick to puni­tive plans about other com­pa­nies mov­ing jobs across bor­ders. He wants to stick them with a 35 per­cent tar­iff on the prod­ucts they ship back to Amer­ica, and, of course, it is con­sumers who will pay that tax.

To com­pen­sate for that tar­iff, the com­pa­nies would have to raise prices, but it doesn’t end there. A com­pany out­sourc­ing man­u­fac­tur­ing work does so to stay prof­itable and maybe even ex­pand. If it keeps those jobs here or takes them abroad and pays the tar­iff, the busi­ness could maybe strug­gle might­ily, it might have to lay off more peo­ple, and it could be forced out of busi­ness.

If, on the other hand, Trump and Congress leave them alone, they may do well with their off­shoring, cre­ate other jobs here that go to Amer­i­cans and help the econ­omy boom. Trade in gen­eral serves us. The NAFTA agree­ment with Mex­ico and Canada, which has cost jobs, as Trump has said, has pro­duced far more jobs, as he hasn’t said. Our man­u­fac­tur­ing sec­tor is ac­tu­ally do­ing very well. The thing that has mostly caused fewer jobs is tech­nol­ogy re­plac­ing hu­mans.

Free mar­kets work. They need rule of law to make them work, and some reg­u­la­tions are ob­vi­ously nec­es­sary to keep the worst temp­ta­tions in tow. But too much govern­men-


tal in­ter­ven­tion through over­reg­u­la­tion, high cor­po­rate taxes, and wild and wooly trade i n t e r f e rence keep the best from hap­pen­ing. In­no­va­tion is thwarted. En­trepreneur­ship is de­feated. The econ­omy gets hit with more costs.

Trump is on to this, at least in some ways. His plan is to dereg­u­late where reg­u­la­tions smash en­ter­prises. He wants to lower the cor­po­rate tax from the high­est in the world — 35 per­cent fed­eral — to 15 per­cent. That should un­leash a vig­or­ous new com­pet­i­tive­ness that would spur job growth. Through such ac­tions, Trump could lower the need for off­shoring and pro­vide his promised job growth.

What he must avoid is trade pro­tec­tion­ism, which would raise prices and cost jobs and maybe even ini­ti­ate a dis­as­trous trade war. Trade would never hap­pen if there were not mutual ad­van­tages, and the fear of trade deficits is akin to fear of Christ­mas gifts. We get some­thing we want for our money — that’s the point of money — and the dol­lars come back to us as pur­chases of trea­sury bonds or in­vest­ments, which also cre­ate jobs.

Im­ports, it ought to be re­mem­bered, keep prod­ucts cheap. Be­cause of cheap, Chi­nese-im­ported goods at Wal-Marts, con­sumers save lit­er­ally bil­lions of dol­lars, and prices, it ought to be kept in mind, are as im­por­tant to pur­chas­ing power as wages. WalMart is also the big­gest pri­vate em­ployer in the coun­try, of­fer­ing some 1.3 mil­lion jobs.

Those are jobs, of course, that do not pay much be­cause they do not re­quire in­tri­cate skills. Partly be­cause of trade, there is nowhere near the de­mand for un­skilled la­bor as there used to be, but the an­swer to that is not to elim­i­nate jobs through co­er­cive govern­ment pay de­mands, but to have more vo­ca­tional train­ing in high schools and to take ad­van­tage of com­mu­nity col­leges.

Trump’s bravado has its virtues but it should be fo­cused on what works.

Jay Am­brose is an colum­nist for Tri­bune News Ser­vice. Read­ers may email him at speak­to­

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.