Caveman Brains and International Markets
Description
My first article on the Human Progress website is up.
The American right is obsessed with bringing back manufacturing jobs. Long before Donald Trump’s “Liberation Day” tariffs, free trade was blamed for everything from kids not playing outside anymore to national weakness and the United States being at a strategic disadvantage relative to China.
These perspectives, however, find little support in empirical data, and the ethical arguments underlying protectionism range from underdeveloped to downright odd. The fact that poor arguments against trade persist despite common sense and the overwhelming consensus of economists is a sign that we need to understand support for protecting manufacturing jobs against foreign competition as being rooted in evolutionary psychology. Protectionism is a preference that can be found where two very strong emotions intersect: hostility toward outgroups and an aesthetic preference for work that involves producing tangible objects…
While protectionists focus on jobs their policies save, they ignore the much larger harms inflicted on the rest of society. Steel tariffs imposed by the Bush administration in 2002–2003 were found to have cost 168,000 jobs in industries that have steel as inputs, more than the total number of jobs in the entire steel industry. The first Trump administration’s washing machine tariffs created 1,800 jobs, at the cost to consumers of $820,000 for each job.
None of that should be surprising given the nature of the American economy. Protectionists seem to imagine that manufacturing makes up a massive portion of the national workforce. Yet only 8 percent of the nonfarm labor force works in manufacturing, half of what it was in the early 1990s. Even if you focus on the less educated, such jobs do not represent anywhere near a majority. As of 2015, only 16 percent of men without a bachelor’s degree worked in manufacturing, down from 37 percent in 1960. Thus, even if you ignore women and everyone in the country who completed higher education, most people do not actually have the kinds of jobs that opponents of free trade seek to protect and cultivate.
On what basis, then, should national policy be geared toward helping a very small minority of the public, and even a minority of the working class, at the expense of everyone else?
Economists have spent a lot of time criticizing arguments against free trade, but I think the manufacturing jobs fetish is an underexplored issue. Making tangible things is simply not the basis of a successful modern economy. It would be like if in 1960, Americans became enamored with the idea that more people had to go back to being farmers. The trend towards embracing protectionism represents the intersection of a lot of bad ideas that need to be understood and ultimately defeated.
This is putting aside concerns about manufacturing goods in a few sectors relevant to national security. I’m skeptical of such arguments most of the time, but it’s clear that this is usually just a pretext for those who like the idea of autarky. When people try to explain Trump’s approach to trade within such a framework, as he’s putting massive tariffs on toys while making exceptions for advanced electronics, the results are usually embarrassing.
Read the article at the link, and comment on it here.
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