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One of high school pals went to the Univ of PA in Phila where he achieved a PhD in Classical Archaeology; not many jobs for that degree but he could tell you all about ancient coins in between classes at his job with the city of Baltimore teaching Latin to gifted students.
The VP in charge of QA & Documentation where I work has a PhD in music. He's written an opera or a symphony or something. I think my colleague and your high school pal would have been just fine without the PhD and I'll venture they were probably destined for college from birth. Others living in ghettoes and trailer parks across America are destined for prison, early death, or a life on the dole because there are not enough low-skill jobs for them to fill. We have exported most of those.
There is a political solution to that problem. But we have enough bread and circuses for now that voters don't really want to get into it.
Quote:
Originally Posted by SkyDog77
Sorry, what is that solution?
That's a complicated topic but I'll give you an example.
Puerto Rico used to be a haven for U.S. pharmaceutical manufacturing due to profits being free from federal taxes under IRS Rule 936, enacted in 1976. Nearly every big U.S. pharmaceutical company set up manufacturing in Puerto Rico.
In 1996 Democrat Bill Clinton and Newt Gingrich's Republicans in congress decided to phase that rule out over a 10 year period that ended in 2006. Political forces argued that the tax advantage was unfair and amounted to "corporate welfare". But with the repeal, Big Pharma did not move manufacturing back to the mainland U.S. They went overseas to places like China and Brazil where it's much cheaper to operate. So no jobs came back to the U.S. mainland, Big Pharma got richer, and the economy of Puerto Rico nosedived. BTW Big Pharma still has a presence in PR and accounts for 30% of the island's economy. But as Ireland's single-crop economy in the 1840's caused a famine when that crop failed, Puerto Rico suffered disproportionately when their main source of economic activity left their shores.
When the 2020 Covid-19 pandemic caused supply disruptions and it became apparent that China was not going to ship antibiotics and other life-saving medicine to the U.S. when their own citizens needed them, people began to clamor for a return of pharmaceutical manufacturing to the U.S. That clamoring has died down as supply chains have returned to normal. I wrote to a congressman from a neighboring district, who had run TV campaign ads that explicitly said he wanted to bring Big Pharma back to the U.S., and I heard nothing back from him.
IRS Rule 936 was technically "unfair" because it favored one area of the U.S. against others. But I believe a return to something like that would actually benefit the entire country.
That's a complicated topic but I'll give you an example.
Puerto Rico used to be a haven for U.S. pharmaceutical manufacturing due to profits being free from federal taxes under IRS Rule 936, enacted in 1976. Nearly every big U.S. pharmaceutical company set up manufacturing in Puerto Rico.
In 1996 Democrat Bill Clinton and Newt Gingrich's Republicans in congress decided to phase that rule out over a 10 year period that ended in 2006. Political forces argued that the tax advantage was unfair and amounted to "corporate welfare". But with the repeal, Big Pharma did not move manufacturing back to the mainland U.S. They went overseas to places like China and Brazil where it's much cheaper to operate. So no jobs came back to the U.S. mainland, Big Pharma got richer, and the economy of Puerto Rico nosedived. BTW Big Pharma still has a presence in PR and accounts for 30% of the island's economy. But as Ireland's single-crop economy in the 1840's caused a famine when that crop failed, Puerto Rico suffered disproportionately when their main source of economic activity left their shores.
When the 2020 Covid-19 pandemic caused supply disruptions and it became apparent that China was not going to ship antibiotics and other life-saving medicine to the U.S. when their own citizens needed them, people began to clamor for a return of pharmaceutical manufacturing to the U.S. That clamoring has died down as supply chains have returned to normal. I wrote to a congressman from a neighboring district, who had run TV campaign ads that explicitly said he wanted to bring Big Pharma back to the U.S., and I heard nothing back from him.
IRS Rule 936 was technically "unfair" because it favored one area of the U.S. against others. But I believe a return to something like that would actually benefit the entire country.
Your example works for products that could be classified as critical to national security, but it creates false economies for those products. We may decide that is worthwhile for a few select products, but it is not an economically viable solution for most. Forcing the means of production back onshore does not work for most things. Firms will innovate to reduce labor even more, firms will find a way to keep production offshore, or firms will pass increased costs onto consumers.
Regarding pharma, Canada will be an interesting country to watch in the next decade. They were caught flat footed by having no vaccine manufacturing capacity inside their borders and this has resulted in a slow vaccine rollout. Political pressure has built and they are adding new infrastructure, but will it be economically viable once the pandemic is over, or will it need significant subsidy to continue operation? Time will tell.
Your example works for products that could be classified as critical to national security, but it creates false economies for those products. We may decide that is worthwhile for a few select products, but it is not an economically viable solution for most. Forcing the means of production back onshore does not work for most things. Firms will innovate to reduce labor even more, firms will find a way to keep production offshore, or firms will pass increased costs onto consumers.
My example is just one example among potentially thousands. I'm just a guy on the internet; I don't do this for a living.
On Friday the CEO of Nucor Steel pointed out that steel manufactured in the U.S. is much "greener" than steel made in China. Right now that's a just marketing angle but I was glad to hear it. Most people who buy steel are looking for the best product at the lowest price. But if there someone were to come up with (just riffing here) a "Climate Tariff" on non-green steel, then that would be Advantage: America. After all, we have self-imposed Climate Tariffs on vehicles and fuel sold in California. Why not a Climate Tariff on everything?
My example is just one example among potentially thousands. I'm just a guy on the internet; I don't do this for a living.
On Friday the CEO of Nucor Steel pointed out that steel manufactured in the U.S. is much "greener" than steel made in China. Right now that's a just marketing angle but I was glad to hear it. Most people who buy steel are looking for the best product at the lowest price. But if there someone were to come up with (just riffing here) a "Climate Tariff" on non-green steel, then that would be Advantage: America. After all, we have self-imposed Climate Tariffs on vehicles and fuel sold in California. Why not a Climate Tariff on everything?
Tariffs are a slippery slope and do not operate in a vacuum. A “climate tariff†on Chinese steel would most certainly elicit a response from China by placing tariffs on US soybeans. Nobody wins trade wars.
Tariffs are a slippery slope and do not operate in a vacuum. A “climate tariff†on Chinese steel would most certainly elicit a response from China by placing tariffs on US soybeans. Nobody wins trade wars.
Actually I believe China targeted corn a few years ago, because senators from corn-producing states supported the tariffs.
Anyway I didn't say it had to be pretty. I'm saying that when the bread and circuses get stale and we have more and more native-born generational poverty while we import millions more unskilled laborers every year, a political solution will force itself on us. That could come in the form of a populist POTUS or something else entirely whether we're ready for it or not.
Actually I believe China targeted corn a few years ago, because senators from corn-producing states supported the tariffs.
Anyway I didn't say it had to be pretty. I'm saying that when the bread and circuses get stale and we have more and more native-born generational poverty while we import millions more unskilled laborers every year, a political solution will force itself on us. That could come in the form of a populist POTUS or something else entirely whether we're ready for it or not.
It was largely targeted at pork and soybeans, but there may have been other pieces as well.
Tariffs do not help achieve what you think. They simply do not work. The net effect is negative to our GDP. Nobody wins.
To your other point, the data clearly show that importing unskilled (non-college educated) labor does not have any impact on native wages. I recently took a Global Business Strategy class at Wharton and spent a bit of time looking at this subject.
It was largely targeted at pork and soybeans, but there may have been other pieces as well.
Tariffs do not help achieve what you think. They simply do not work. The net effect is negative to our GDP. Nobody wins.
To your other point, the data clearly show that importing unskilled (non-college educated) labor does not have any impact on native wages. I recently took a Global Business Strategy class at Wharton and spent a bit of time looking at this subject.
OK, you've had a chance to poke holes in my solutions. What are yours?
Other than the fact that you can't even get an interview without a basic college degree and in many arenas a graduate degree, a college degree is only worth what the individual student puts into getting it.
I have been a practicing engineer for over 40 years and I have probably only used 20% of my college training in those 40 years. The rest comes from working experience and OJT.
OK, you've had a chance to poke holes in my solutions. What are yours?
This is getting further off-topic, but I will try to bring it back to the topic, which was the value of a US college degree. We asked what can we do for American workers who cannot, or should not, go to college. I see no evidence to suggest that government protectionism is the correct answer.
I think free markets move most goods the most efficient way possible. Restricting trade is not a viable long-term solution. For the US to remain competitive, we need to have a competitive education system that works for high-income and low-income families. With that said, trying to create a world where the jobs that existed in past generations is the strategy is not a realistic solution. We have to adapt if we want to survive. I find a certain romanticism on the forum when it comes to trade jobs. The world does need plumbers and electricians, but that is not the answer for everyone.
When it comes to immigration, the data show that when we limit H1-B visas, companies respond by increased outsourcing. They do not add more American workers. The data also show that bringing in high skill immigrants increases GDP and domestic worker wages. Immigrants found companies and innovate at a higher rate than domestic workers. I would say setting up a business climate that attracts immigrants is a step in the right direction for long term sustainability. 5% of the world's immigrants have a college degree, but 15% of America’s immigrants do. They are a key economic driver for us, and we should be doing everything we can to increase that number.
I wish I had a great answer for you. I do not, but I can tell you that a tariff based proposal is significantly worse for us than the status quo.
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