Steel This Job
Trump oversells US economy to push tariffs
THE Trump administration is boasting about the jobs numbers, and properly so. The number of Americans filing for unemployment benefits has fallen to the lowest level since 1969. The January unemployment rate of 4.1 percent is the lowest figure in 17 years.
All good news, but let’s take a closer look. The statistic that bears watching isn’t the unemployment rate so much as the labor force participation rate, which measures the number of Americans in the job market (over 16, not in prison, etc.) who are either working or actively seeking work.
That excludes people who could work but have stopped looking, such as the older worker who has lost his job and figures he’ll never find one again, or the disabled worker on government benefits. They’ve dropped off the chart and don’t figure in the unemployment rate. The unemployment rate is therefore artificially low because we don’t count people who have simply given up.
So how do we fare on the labor participation rate? Terrible. We’re at 62.7 percent, the lowest rate in the Oganization for Economic Cooperation and Development with the exception of Italy. It’s actually declined since President Trump took office. Conservatives used to dismiss Barack Obama’s unemployment numbers by pointing to the labor participation rate. Now they’re supposed to forget that?
Trump apologists might blame it on retiring baby boomers. But if that’s what happened, we should be tied with Canada. Only we aren’t. We trail Canada by nearly 3 percent, 62.7 to 65.5.
Plus, nearly all of the decline in the unemployment rate took place on Obama’s watch.
Yet there are reasons to think things will improve on Trump’s watch. Tax reform has made America a tax haven, relative to several other first-world countries, and will bring back the $2.5 trillion US multinationals have parked offshore rather than pay higher US taxes. That’s going to mean more jobs.
Lifting the regulatory burden firms face will also help bring
back jobs, although in truth we’ve merely stopped adding wasteful new regs. Commendably, Trump also wants to find a way to bring back ex-felons into the labor market.
Trump’s proposed infrastructure spending should also help get Americans working. Our decaying roads, railways and airports recall Sallust’s complaint about Rome’s publice egestas, privatim opulen
tia — public poverty and private wealth. Our cheapo public buildings and institutions don’t reflect how privately we’re rich.
Think of our major airports, and compare them to airports in other countries, or our sorry rail service which could transform the way goods are carried across the country.
The problem is that Trump’s willingness to wage a trade war could easily reverse any gains we might see from tax and regulatory reform, or from infrastructure spending. Trump worries about trade deficits with other countries, but he’s picking stupid fights.
We run a $12 billion trade surplus with Canada, but he still complains about NAFTA. Last week he announced huge new tariffs on steel. But while we import 16 percent of our steel from Canada, we send 40 percent of our exports there. The trade over a single bridge between Michigan and Ontario is equal to all US-Japan trade, and the auto industry in the two countries is highly integrated and dependent on cross-border just-in-time deliveries. Cut off trade with Canada and watch 8 million US jobs disappear.
In the White House, economist Peter Navarro aspires to be a trade-war generalissimo. He’s a monomaniac on the subject of China, which indeed is our principal geopolitical rival and a good example of how one-sided trade deals can hurt us.
But if we conduct trade wars against our friends, fighting uphill and across a river, the principal beneficiary will be China. Sure, it’s a dictatorship with a dismal human-rights record, but it doesn’t betray its friends. Or do stupid stuff.
Trump called the new party he was creating the Republican Workers Party. He said he’d be the greatest jobs president God ever created. And jobs are what we want presidents to provide — jobs that give workers the satisfaction of knowing they’ve made a real contribution. That was Trump’s promise, and that’s why his legacy is on the line with his desire for trade wars.