The real problem is automation

While politicians search in vain for trade deals that will help blue-collar workers, the real problem is being ignored.

U.S. Steel Corp. plunged after delivering a barrage of harsh news, warning of a loss and announcing it will shut down most of its Great Lakes Works facility near Detroit, lay off workers and slash its dividend.

. . . The industrial icon plans to lay off as many as 1,545 workers from the Michigan plant, reduce its quarterly dividend to 1 cent from 5 cents, and prune capital expenditures.

U.S. steelmakers are facing slowing demand in the manufacturing sector, even though mills have enjoyed protection because of Trump administration tariffs. U.S. Steel has been a laggard in the domestic industry, with aging plants that are less efficient than rivals with newer technology.

Tariffs can’t save steel jobs, which are going the way of the dodo bird. And the effects of automation are not gradual; they come in big chunks as obsolete mills close down.

Mark Perry directed me to a couple of stories that illustrate the problem:

In the 1980s, American steelmakers needed 10.1 man-hours to produce a ton of steel; now they need 1.5 man-hours, says Joe Innace of S&P Global Platts.

Most American steel is now made at super-efficient mini mills, which use electric arc furnaces to turn scrap metal into steel. (Traditional integrated steel mills make steel from scratch, feeding iron ore and coking coal into blast furnaces.) Some mini-mills need just 0.5 man-hours to produce a ton of steel, Innace says.

Increased productivity means today’s steel mills don’t need as many workers. Steel industry employment peaked at 650,000 in 1953. By the start of this year, U.S. steelmakers employed just 143,000.

We still produce as much steel as in the 1950s, but with far fewer workers. And the problem is about to get much worse:

“So steel and aluminum will see a lot of good things happen. We’re going to have new jobs popping up,” Mr. Trump told steel and aluminum executives last Thursday at the White House as he announced his 25% and 10% tax on imports.

Someone should tell him about Voestalpine AG ’s steel plant in Austria, which reveals the reality of steel production and jobs. A Bloomberg News story from June 20, 2017 offered a fascinating look at how a modern plant can now produce high-quality steel with few workers.

The plant in Donawitz, a two-hour drive from Vienna, needs all of 14 employees to make 500,000 tons of steel wire a year. The same mill in the 1960s would have needed as many as 1,000 workers to produce a similar amount albeit of lesser quality.

Free traders like Paul Krugman claim that mercantilists don’t understand basic Ricardian trade theory. Mercantilists claim that neoliberals put too much weight on efficiency and don’t understand the pain inflicted on blue-collar workers by import competition. The fact that mercantilists are almost totally silent on automation is the “tell” that Krugman is right—they really are ignorant of the basic ideas of comparative advantage. If they weren’t they’d focus on automation, not trade.



33 Responses to “The real problem is automation”

  1. Gravatar of Benjamin Cole Benjamin Cole
    20. December 2019 at 17:06

    Improving productivity is good news.

    But what concerns many is not improving productivity in steel mills, but rather that other new manufacturing jobs are locating offshore, such as in smartphone manufacturing, and that the US runs very large and chronic current account trade deficits.

    David Ricardo never imagined that capital would cross national borders. Thus Ricardo’s observations are obsolete.

    Ricardo’s insights are doubly outdated in that whatever comparative advantages exist today in manufacturing, they are almost always the result of government intervention.

    Did I say smartphones? India has required Apple to build a iPhone manufacturing plant in India to provide their market. Apple is complying. It is too soon to tell, but in time India’s smartphone manufacturing may scale up and become more efficient than that of China’s.

    The orthodox macroeconomics profession, which has sacralized free trade theory to the point it has become free-trade theology, offers exactly no solutions to the problem of a large and chronic US current account trade deficit.

    Mark Perry, cited above, even regards the large and chronic US current account trade deficit as a positive, as it it means Americans are consuming more and thus winning. My first wife thought we were winning when she finished an exceptionally large shopping mission armed with credit cards.

    Why does Singapore, which has a national policy of running current account trade surpluses, have a per capita GDP PPP 50% higher than that of the US?

    The International Monetary Fund has issued statements that the US should move to cut its current account trade deficit in half, at least for starters. The IMF contends that the large axiomatic capital inflows into the US economy and financial system are resulting in artificial and bloated asset values.

    Why are the bloated US asset values “artificial”? Because trade deficits are the result of government policies, such as export policies of Far East nations, says the IMF.

    To conclude—

    Here is a quote from a prominent and intelligent scholar: “Indeed farm exports are one of America’s big success stories.”

    Interesting, in that the ability to export is in fact stated as a positive, and that the US agriculture sector is completely invested with government intervention and support, and some sectors, such as milk and sugar, are protected.

    In this world, there is no such thing as international “free,” “fair,” or “foul” trade. There is only trade and you better hope your government uses the crowbars to keep jobs within the national borders.

  2. Gravatar of Benjamin Cole Benjamin Cole
    20. December 2019 at 17:17

    OT but…PCE core Nov. 1.6%

    You know, you run an easy money policy and large federal deficits for 40 years and you get hyperinflation.

    Japan is even worse.

  3. Gravatar of LC LC
    20. December 2019 at 17:50


    What do you think of the following from Dean Baker (

    Past trade deals were about making it easier to trade manufactured goods, making it as easy as possible for corporations to take advantage of low-cost labor in the developing world. This has the predicted and actual effect of putting downward pressure on the wages of less-educated workers.

    The impact of trade was devastating for large segments of the U.S. workforce. It cost 3.4 million manufacturing jobs (20 percent of the total) between the years 2000 and 2007. (It cost almost 40 percent of all unionized manufacturing jobs.) Note, that this was before the Great Recession, which began in December of 2007.

    The argument that this was technology and not trade is truly Trumpian and deserves the same sort of derision as Trump’s claims about his “perfect” phone call with Ukraine’s president. We lost relatively few manufacturing jobs between 1970 and 2000, and we have gained a small number since 2010. So the Trumpers arguing for the technology story want us to believe that technology only cost us manufacturing jobs in the years when the trade deficit exploded, but not in the years prior to that or in the years since. Right.

    It is also worth noting that the “free traders” have pretty much zero interest in free trade in professional services. Even though we could save on the order of $100 billion a year ($700 per family per year) if we liberalized rules for physicians, and allowed qualified doctors in places like Canada and Germany to practice in the United States, the people who think that “global economic integration amounts to human progress,” have little interest in global integration when it might reduce the living standards of highly paid professionals.

    I don’t know where he got his numbers but I recall from Krugman’s “Pop Internationalism” that US manufacturing jobs have been in steady decline since 1970s.

  4. Gravatar of Lorenzo from Oz Lorenzo from Oz
    20. December 2019 at 18:27

    Perhaps the real problem is that we are not following Pareto optimal policies. (I.e. failure to compensate the losers..)

  5. Gravatar of jim jim
    20. December 2019 at 19:42

    Random question, but many on twitter say ‘Open market operations are just an asset swap and theres no reason it should increase nominal growth.’

    My general response has been below. Is my understanding about right?

    ” (ignoring IOR), in general when a central bank buys treasuries in exchange for reserves, its injecting a 0% yielding asset (reserves) in place of a slightly riskier, positive yielding asset (treasuries). If it keeps doing this, the commercial banks balance sheets will be overly conservative/unprofitable and in order to ‘rerisk’ their balance sheets, commercial bank CEOs will increase nominal lending, etc in order to bring risk metrics, etc back in line. Since reserves are stuck in the commercial banking system, in aggregate more reserves usually leads to increase lending and nominal GDP growth”


    I know this is a bit over simplistic, but is it right at a high level?

  6. Gravatar of Mike Sandifer Mike Sandifer
    20. December 2019 at 20:41

    Benjamin Cole,

    You wrote: “David Ricardo never imagined that capital would cross national borders. Thus Ricardo’s observations are obsolete.

    Ricardo’s insights are doubly outdated in that whatever comparative advantages exist today in manufacturing, they are almost always the result of government intervention.”

    Nothing could be further from the truth. Comparative advantage is the best established principle in economics. Trade restrictions never make sense economically. They are only worth doing to oppose dangerous regimes like Hilter’s.

    There’s no escaping the logic of comparative advantage, though it isn’t the only principle important in trade.

  7. Gravatar of Mike Sandifer Mike Sandifer
    20. December 2019 at 20:50

    Lorenzo from Oz,

    You wrote: “Perhaps the real problem is that we are not following Pareto optimal policies. (I.e. failure to compensate the losers..)”

    I absolutely agree. That’s why I favor a generous negative income tax. It won’t solve all of our problems in the US, but I think it would alleviate a lot of insecurity and perhaps take an edge off the tribalism.

    The problem is much broader than workers insecure about being replaced by robots, immigrants, or offshoring. The majority of American men absolutely hate their jobs. Thi sis also true of many women. I think many in Washington and in academia have a hard time understanding that. Most employers are absolutely awful to work for, most jobs are meaningless and are barely tolerated. Many people just try to make it through each day, one day at a time, in varying degrees of desperation, trying not to burst at the seams.

    Then, consider that they are increasingly squeezed by rising healthcare costs and costs of higher education, have their expected standards of living cut due to bad monetary policy leading to below potential economic growth, and some of them are also uncomfortable with the pace of social changes.

    Is it any wonder the country’s in trouble? And many other countries are in similar situations.

  8. Gravatar of Mark Mark
    20. December 2019 at 21:49

    The disconnect between how mercantilists respond to automation versus trade is interesting. You have to wonder, what is the difference in losing a job to a machine versus losing a job to a human? Here’s a thought experiment. Suppose all Mexicans were merely automatons with no human consciousness or sentience. Would we be okay employing them to do work then? What if they looked like robots too, to avoid the uncanny valley problem? If you’re fine with that, then what is it about Mexicans being humans that makes it not fine?

    When you add in the fact that many mercantilists seem upset at losing jobs to Mexican, Chinese, or Japanese workers, yet fine with losing jobs to German workers (despite the fact that Germany has the biggest current account surplus in the world, double that of China), it seems that there might also be just a bit of racism beneath the surface.

  9. Gravatar of Rajat Rajat
    20. December 2019 at 22:12

    Russ Roberts had a recent discussion with Susan Houseman which disputed this new conventional wisdom:

  10. Gravatar of Todd Kreider Todd Kreider
    21. December 2019 at 01:42

    LC wrote:

    “The argument that this was technology and not trade is truly Trumpian …

    I don’t know where he got his numbers but I recall from Krugman’s “Pop Internationalism” that US manufacturing jobs have been in steady decline since 1970s.”

    But Krugman also wrote in Pop Internationalism: “No one can say with certainty what has reduced the relative demand for less skilled workers throughout the economy. Technological change, especially the increased use of computers, is a likely candidate; in any case, globalization cannot have played the dominant role.”

  11. Gravatar of dtoh dtoh
    21. December 2019 at 03:30


    1. The problems of US Steel the company are not the same problems as the problems of the United States steel industry. The company got its butt whupped by domestic competition.

    2. The problem of the industry is not automation (automation is rarely a problem for industry…. typically it’s a boon.)

    3. If the industry had not lost worldwide market share to foreign producers, employment in the US steel industry would be substantially higher now than it was in 1953.

    4. If you wanted to make an objective argument about automation you should have picked an industry that is less capital intensive and where the impact of capital intensification on employment is more typical of manufacturing generally.

    5. Even ignoring the other flaws in your argument, the annual compounded decline in employment in the steel industry was only 2.25%…. well below natural attrition rates for companies and easy to absorb.

    6. What is not easy to absorb is changes in trade policy which trigger more dramatic declines in employment, which aren’t amenable to natural and gradual adjustment, and which can be devastating to families and communities.

    7. Workers and people in general are much more tolerant of natural change (e.g automation) than they are of artificial change and disruption caused by politicians who make sudden changes to the rules.

    If you think trade restrictions are bad, make that argument. Even if your argument about automation were correct, pointing out another problem doesn’t score any debate points on the question of whether trade restrictions are good or bad.

  12. Gravatar of rayward rayward
    21. December 2019 at 03:50

    One of the top priorities, if not the top priority, of Trump’s trade negotiators is a veto power over China’s industrial policy, something China, a sovereign country, finds objectionable if not offensive. If one believes that in the long run markets provide the most efficient allocation of resources. That being the case, why would we want China to stop doing what will make China less efficient over time. I’ve spent my (long) legal career in a sunbelt city, where government subsidies are rare. But I have also worked on projects in Michigan, where government subsidies for the car industry are common. If one looks at the plight of the American car industry, one might argue that all those government subsidies encouraged inefficiency. So let China subsidize industry and encourage inefficiency. Eventually, China will pay a heavy price. Why is that logic wrong?

  13. Gravatar of Benjamin Cole Benjamin Cole
    21. December 2019 at 04:20

    Mike Sandifer: thanks for your comment.

    The US is a major exporter of agricultural products.

    What is the comparative advantage of US farmers?

    Perhaps it is that almost all rural infrastructure in the United States is subsidized or cross subsidized, from highways to rails to power lines to internet connections to airports to waterways and water systems, to phone service even to medical services.

    And what is the purpose of the Department of Agriculture? Really, is there no end to the subsidies, crop insurance, controlled production and 40,000 agriculture extension agents?

    Then we have excellent ag schools in every state, such as Texas A&M, producing employees, scholars and research beneficial to the farm sector,

    Actually, with many variations, what you see in the US agriculture industry is what you see in manufacturing industries in other pro-business nations such as Germany, Japan or South Korea and even communist China.

    I repeat, to an overwhelming extent “the comparative advantages” of any industry are almost invariably provisions of government.

    There maybe some sourcing of industry where labor shares of income are repressed, such as in communist China.

    Interestingly, Michael Pettis contends that the way a nation can compete globally is to reduce labor share of income, as did Germany after the 1990s. This has a certain, unappealing “race to the bottom” aspect, in addition to an element of class warfare.

  14. Gravatar of Michael Rulle Michael Rulle
    21. December 2019 at 07:10

    Even in my stupid teens I was able to grasp the idea that the less labor one needed to produce X amount of goods and services, the better off we are. That was something that both Marcuse and Hayek could agree on.

    So, I am trying to understand the point of this essay by Scott. If he is saying that politicians are often stupid or liars, I can agree. We also know that people will always seek advantages if they can get it. I am pretty sure real life does not work exactly like theory says it should.

    The numbers Scott shows for Steel is replicated across all industries. Pew did a 30 year study (‘87-17) showing that real output approximately doubled while employment declined by about 1/3rd in manufacturing. Efficiency happens regardless of attempts to limit it.

    Trade theory is a slightly different point. Regardless of efficiency changes comparative advantage still makes sense——it becomes more dynamic however with changes in efficiency.

    I think Scott likes to write this obvious stuff to “prove” how dumb Trump is—-as if he is unique in that regard.

    It is clearly true that the real world is constantly causing disturbances for individuals in the “short run”(which for individuals does not feel short at all). I still believe the best solution is let markets adapt—-but it never hurts to try and help with transitions.

    I would prefer if Scott wrote of more complex issues——such as why we have “rust belts” when efficiency changes.

  15. Gravatar of ssumner ssumner
    21. December 2019 at 09:18

    Ben, You said:

    “David Ricardo never imagined that capital would cross national borders. Thus Ricardo’s observations are obsolete.”

    Maybe you ought to understand his theories before criticizing them. No, they are not “obsolete”.

    LC, I agree with him on IP rights, but he’s completely wrong on automation.

    Lorenzo, That’s basically impossible.

    Jim, If you increase the supply of a given asset it’s value will generally fall. Since money is the medium of account, that means more NGDP.

    Mark, I agree.

    Rajat, The data are pretty clear.

    dtoh, Automation is no more “natural” than trade. The changes resulting from trade do not result from sudden changes in US trade policies, for the most part they reflect changes in technology (container shipping), or political changes in places like China.

    I did not confuse US steel with the US steel industry, I cited entire industry data. Read it again.

    Job loss from automation is very “lumpy”, almost as much so as from trade. Most of it does not occur through attrition. Ask the coal workers in West Virginia. They have not been affected at all from trade, and yet they’ve lost the vast majority of their jobs. Steel is basically the same. Huge numbers of manufacturing jobs have been lost all over the world. Ironically, nowhere more so than in China! And it’s not from imports from Mars and Venus.

    You are wrong in claiming that trade is a big factor in steel industry job losses. Even if the US didn’t import any steel, the job losses in steel would have been almost as horrific, devastating many steel towns.

    I know you have tried to make this argument before, but it’s flat out wrong.

    Rayward, Of course you are right. It’s our government that is stupid.

    Ben, Do you even know ANYTHING about the wage levels in Germany? They do not have low wages.

    Michael, I hate to tell you this, but Trump isn’t the only politician who doesn’t understand trade. The Democrats are no better.

  16. Gravatar of Gene Frenkle Gene Frenkle
    21. December 2019 at 09:32

    I always thought the most obvious question to ask Trump was how many workers were needed to build Trump Tower versus how many workers are needed to build a similar building now?

    Rulle, several concurrent trends created the Rust Belt—Americans prefer warmer climates. Another trend was people liked the Sun Belt suburbs with bigger affordable houses and quality schools. And to go with that cost of living was generally cheaper because Texas and Florida don’t have the legacy costs of the once powerful unions. A slice of union life is depicted in The Irishman which is completely foreign to someone like me that grew up in a Sun Belt suburb.

  17. Gravatar of Benjamin Cole Benjamin Cole
    21. December 2019 at 17:43

    Scott Sumner: Michael Pettis contends that certain labor reforms of the 1990s increased the national savings rate in Germany, thus resulting in larger export surpluses.

    He is pretty clear that reducing labor share of income is one effective way to compete globally, and that is what is happening in China, Japan, and Germany.

    A nation can have (relatively) high wages, such as Japan or Germany, and yet have high savings rates that promote exports. Germany is not Burma. A reduction in labor share of income does not mean German workers are dressed in tatters.

    I understand the theories of David Ricardo, and his observations are no longer relevant, due to international flows of capital and the large and intrusive role of government in enterprise.

  18. Gravatar of Benjamin Cole Benjamin Cole
    21. December 2019 at 17:57

    Actually, David Ricardo himself knew that if capital could flow between nations his theories were undermined.

    Having observed that capital mobility would undo his theory, David Ricardo then argues why capital will not, in fact, be mobile:

    “Experience, however, shows that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connections, and entrust himself, with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations.”


    Well, David Ricardo was a smart guy.

  19. Gravatar of Benjamin Cole Benjamin Cole
    21. December 2019 at 20:57

    Here is a bit from Michael Pettis:

    “Still other mechanisms used to force up savings involved keeping workers’ wages low to increase international competitiveness which, of course, also limited consumption growth. Germany’s Hartz reforms (2003-5) are the most obvious recent example, and I think Germany in the 1930s is another. In the former case, after the labor reforms, wage growth dropped significantly below GDP growth, driving down the household share of GDP in exchange for an explosion in the share of business profits.”


    Germany became an exporting nation after (relatively) reducing wages. Hey,that is what Pettis say.

    But like I say, no one is ever wrong in macroeconomics.

    So what if David Ricardo did not anticipate capital flows between nations, or that government and business would hold hands in so many nations?

    The Ricardo escutcheon is still proudly displayed in the Temple of Orthodox Macroeconomic Theology!

  20. Gravatar of dtoh dtoh
    22. December 2019 at 17:59


    1. I feel like I’ve fallen down the rabbit hole hearing a Chicago trained economist offering a Luddite explanation that automation is causing job losses.

    2. Citing coal as an example in a post on job loss from automation seems a little weird. Productivity in coal mining has been flat for the last 25 years, and coal is clearly an industry where job losses (in this century) are primarily due to government regulation.

    3. Job losses in the steel industry have been lumpy, but it’s not because of automation. It’s because of imports, high tax rates in the upper mid-west, union wages and work rules that have debilitated the older producers and resulted in plant closures rather than a more orderly introduction of new technology.

    4. In my experience (which is sufficient to be statistically significant and includes a decade as Chairman of a company with a United Steel Workers union), automation rarely requires job reduction beyond what can be achieved with normal attrition.

    5. If you believe trade did not cause job losses in the steel industry, you must not have made it back to the mid-west in the 70’s and 80’s when imports of Japanese steel and autos were killing the economy.

    6. The view that increased aggregate utility (as in the benefits from trade) are always good regardless of the distribution of that utility (or the destruction of individual lives) is contrary to the ethical views of a majority of Americans. The failure of the policy and academic elite to consider the lives of individual citizens is IMHO one of the primary reasons for the results of the 2016 election.

  21. Gravatar of Brian Donohue Brian Donohue
    23. December 2019 at 08:47

    LC is right about the early 2000s. Yes, manufacturing has been in relative long-term decline for decades, and yes automation is a good thing for raising wages, but 2001-2007 saw a huge and rapid drop in manufacturing employment unlike anything seen before or since. This of course was right on the heels of China entering the WTO.

    This rapid pace of change devastated lots of communities. I was blind to it, as were most people, as you still are. Russ Roberts had an Econtalk with Susan Houseman on this in October.

  22. Gravatar of ssumner ssumner
    23. December 2019 at 10:36

    dtoh, You said:

    I feel like I’ve fallen down the rabbit hole hearing a Chicago trained economist offering a Luddite explanation that automation is causing job losses.”

    Then clearly you don’t understand Chicago economics. Chicago economists have NEVER argued that individual workers are wrong to fear job loss from automation.

    You said:

    “coal is clearly an industry where job losses (in this century) are primarily due to government regulation.”

    Coal production has increased as jobs have fallen by close to 90% since the early 1900s. The problem is automation. By “this century” almost all the jobs had been lost.

    Your mistake to to visualize automation in terms of examples you’ve seen where automation is introduced into existing factories, which keep operating. Only a few workers lose their jobs, as you say. The much big effect of automation is the closing down of now obsolete factories as state of the art ones are built. That’s harder to see, unless you look at the aggregate data.

    BTW, the job situation in coal is even worse than this graph shows, as clerical workers were added in 1973.

  23. Gravatar of art andreassen art andreassen
    23. December 2019 at 15:39

    Scott: I got into a discussion with Pierre Lemieux on EcoLog and he insisted that imports have no impact on GDP. If that is so and in fact if imports are such a benefit, why do you never hear of a country manipulating the value of its currency higher to increase imports and decrease exports, (or does that mean that only exports impact GDP)?

    Does the fact that Ricardo wrote when the trading countries were relatively the same size without a country like China?

    I spent a week driving around Normandy and the only US cars I saw were a few Teslas. Can’t help feeling that had something to do with the VAT.

  24. Gravatar of dtoh dtoh
    23. December 2019 at 17:07


    You need to look carefully at the coal numbers. Yes, productivity resulted in aggregate job losses, but not at a rate that could not have been absorbed by attrition. The real losses came from a shift of mining to the west where coal was available at the surface rather than in deeper mines… but to argue that that is a result of automation is like arguing that higher corn yields in Iowa than in Vermont are a result of automation.

    Factories don’t get closed down because they are obsolete for a lot of reasons…

    1. Fully depreciated capital is highly productive.

    2. Companies don’t want to move and lose their huge investment in human capital.

    3. Technological advancement is (contrary to your assertion) mostly incremental.

    4. When companies do shut down plants and fire workers en masse, it is almost always due to differential wage and tax rates, government policy and regulation, union restrictions, trade policy and/or sometimes really bad management.

    5. The examples I’ve seen do influence my view on this, and it’s not because I’m mistaken about how technology is incorporated in factories, it’s because anybody who has seen how the economy works in the real world doesn’t need data to conclude that transporter beams which will instantly whisk you from Point A to Point B don’t exist.

    6. There are some industries (e.g. steel where investment is lot more lumpy) but that as I said earlier makes it a bad example to cherry pick to support your argument about automation, and….even in the steel industry, automation would not have caused significant individual job losses absent the rise of low wage, non-union producers in low tax states with deregulated electricity pricing. (And I suspect a lot of the skilled workers in Gary and Youngstown didn’t actually lose their jobs, they just packed up and moved to South Carolina… Nucor did not train people from scratch to operate steel mills.)

  25. Gravatar of Gene Frenkle Gene Frenkle
    23. December 2019 at 17:25

    Brian Donahue, that was part of our quiet energy crisis. So the Fortune 500 CEOs believed North America was running out of natural gas and that only China would be willing to kill their citizens with coal and displace them with massive hydropower projects.

  26. Gravatar of Georg Georg
    24. December 2019 at 04:10

    Interestingly, Krugman has railed against democratic presidential candidates making the case that automation was responsible for the loss of US jobs, for example on his twitter feed and in his NYT column ( where he defended candidates who blamed job loss on trade policy moving jobs overseas as being correct, and described candidates putting forward the idea that automation is playing a big role in job loss as bringing up an “imaginary problem”.

    This makes it interesting that you bring him up as an example of someone who is “right”, since his description of automation being an “imaginary problem” is perhaps the exact opposite of how you described it as the “real problem” in the title of this post.

    I am fairly sure I’ve represented his views fairly, he genuinely doesn’t seem to think that automation is at all responsible for US job loss, citing slow worker productivity growth as the stat backing his claim.

  27. Gravatar of Gene Frenkle Gene Frenkle
    24. December 2019 at 15:09

    Georg, the problem with automation is that two trends happened at the same time—automation AND migration to Sun Belt. Believe it or not Detroit and Cleveland and Pittsburgh have logical locations for the time they were populated. But automation made many of the jobs in those cities unnecessary and then Americans started migrating to the Sun Belt.

  28. Gravatar of Gene Frenkle Gene Frenkle
    25. December 2019 at 19:18

    I came across something I believe is interesting—apparently the Steelers logo is the Steelmark logo:

    In fact, the three four-pointed starlike figures within the circle, called hypocycloids for their geometric origin, made it to the NFL in 1962, when Rooney adopted the Steelmark for his football team. The Steelers logo is based on the Steelmark logo belonging to the American Iron and Steel Institute (AISI). The Steelmark was originally created for United States Steel Corporation to promote the attributes of steel: yellow lightens your work; orange brightens your leisure; and blue widens your world. The logo’s meaning was later amended to represent the three materials used to produce steel: yellow for coal; orange for iron ore; and blue for steel scrap.'-helmet

    So US Steel originally promoted steel as something that makes life easier…which is exactly what automation does. And then for some reason the meaning of the logo was changed and it coincided with the increase in the strength of the United Steelworkers…and shortly thereafter a decline in the power of pretty much all unions. Maybe I am seeing things not there but I found that interesting in the context of Trump trying to bring back an industry that peaked decades ago.

  29. Gravatar of george george
    27. December 2019 at 22:22

    Mercantilism, you mean businessmen, are focused on automation. Who do you think is developing automation. And who do you think benefits from trading automation? Businesses who make them of course. Innovators get paid for products they create, and those products get send wait for it…..ABROAD….. to other people that need them. Its called trade.

    Amazing concept.

    Every industry that has been protected has flourished. If we were to follow krugmans advice, there would be no google, no Microsoft, and no apple. Why? because those companies never would have succeeded. Japan was so far ahead of the technology curve that Reagan had to desperately and I do mean desperately, protect the industry by enacting some pretty high import tariffs on the products coming from japan.

    Go down the line of every successful industry, and they were only allowed to succeed because of the tariffs.

    Retarded Ricardy was wrong then, and he is wrong today.

  30. Gravatar of george george
    27. December 2019 at 22:27

    In addition to the above, there is a human concept to this.
    Even if its more efficient, it doesn’t make it right.
    People’s lives are worse today.
    It used to be that you’d go to work, and have purpose in your life, because you were known as a craftsmen, a tool maker, a whatever….

    Nowadays, you stand in line putting a part on an other part, and you do a million times. Adam Smith warned about that. If you actually read the damn book, you will see that he was warning against this. Not advocating for it.

    And ricardy was just retarded of course. no need to go in depth there.

  31. Gravatar of amy amy
    27. December 2019 at 22:47

    The whole discipline of economics is based on nonsense.
    Adam Smith used the invisible hand twice, and it had nothing to do with market correction.

    The first time he mentions it in wealth of nations, he suggests that the UK would be safe to trade because businesses would feel an allegiance to their own country, and not move operations abroad for cheaper labor. Obviously, he was wrong.

    And the second time in moral sentiment, he says even if a property owner was to control all of the property he would still divide it and share it with those less fortunate because of the sympathy he felt for them?

    So yeah, seems to be wrong on both fronts. Then somehow, someway, we are taught in economics 101 that the invisible hand is a term that describes self regulating, self correcting economies.

    And don’t even get me started on the axioms.

    Perfect competition? Are you serious? I’d love for you to point to one market in history that was perfectly competitive. You’d have to go back to the very beginning of the state of nature. And believe me, it didn’t last very long. About one week, before the bigger stronger bullies decided to go pillage and rape, and create the first governments. Afterall, why pay, when you can beat the farmer up, and sleep with his wife and daughters.

    Just read the harrowing words of ghenghis khan: “The greatest happiness is to vanquish your enemies, to chase them before you, to rob them of their wealth, to see those dear to them bathed in tears, to clasp to your bosom their wives and daughters.”

    There is your proof. Economics is a joke discipline that emerged from philosophy. lets get back to philosophy please, and leave this garbage where it belongs, in the trash barrel of human history.

  32. Gravatar of michael michael
    27. December 2019 at 23:07

    I think George is right. Ricardo’s theory is flawed.
    I mean, history has really proven that to be true.
    If we didn’t protect our industry, we’d be making t-shirts and exporting cotton. We’d have very little industry in the UK. If I remember correctly, I also remember Ricardo mentioning that UK would suffer in the short run. He did not see the exportation of labor and capital as a necessarily a great thing. He saw the efficiency of it, but understood full well the consequences of such actions.

  33. Gravatar of george george
    27. December 2019 at 23:16

    Study what happened to Tasmania, and you will see the terrible benefits of comparative advantage. the theory was put forth by a knuckle-dragging, foot-dragging, neanderthal who was one of the 18th centuries leading retards. Seriously, only a moron could put believe that exporting all of your industry, and all of your labor, except for one thing, would be advantageous to your happiness, and lifestyle. These people are really pushing the limits of human retardness. Wow. 😀

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