Two comments on this, starting backwards. David Henderson building off of Ron Paul’s – admittedly mixed up – answer on manufacturing jobs.

The other candidates did a poor job too. All of them seemed to see the lack of manufacturing jobs as a problem per se.

As is my wont, allow me to get a little meta here. Suppose that the topic had not been manufacturing jobs but infanticide. If the candidates had taken it for granted that infanticide was a bad thing per se, would we have let them off the hook?

At the end of the day, infanticide happens and the more infants there are, all else being equal, the more will be murdered. The history of society is one of more babies being born and consequently more of them being murdered.

I have the strong urge to go deeper and suggest that the configuration of subatomic particles we call a dead baby is not in its essence more or less outrageous than the configuration of subatomic particles we call an unemployed manufacturing worker.

These configurations matter because they matter to someone. People are obviously very concerned about unemployed manufacturing workers and thus they matter, per se.

On a more concrete level we can see this by imagining that all of the former manufacturing workers had owned stock in their companies. The companies then discovered some way radically increase productivity, lower costs and send profits through the roof. All of the former workers lost their jobs but became millionaires. Would there be a lot of handwringing over this – I am guessing not.

Which is to say that people complain about things because they are painful, we should take their pain seriously and speak about what can be done to alleviate it.

If the answer, is: it is not worth it for me to alleviate your pain because any feasible method would be too costly to the whole economy, then we have to recognize that that is in fact our answer and does in fact suck for the person hearing it.

Now, on to Ron Paul, he said many things but key among them was

But as long as we run a program of deliberately weakening our currency, our jobs will go overseas, and that is what’s happened for a good many years, especially in the last decade.

This is, of course, exactly backwards. Weakening our currency will bring jobs to America. This is why exporting countries have a deliberate and successful policy of weakening their currency.

However, my point is not to hit Ron Paul over the head with this. I am sure he has sort of put this together in his head. Its to point out how ubiquitous the trap of imagining that good things lead to other good things can be.

Ron Paul believes for many reasons that a strong currency is good. He also believes that seeing all of these job losses is bad. My strong suspicion is that it is difficult for him to reconcile the idea that a good idea could have such a bad outcome.

However, of course this happens all the time, because happiness and prosperity are not rewards for doing the right thing. They are simply one of many possible states of the world that result from the unique interaction of the events which preceded it.

Very few choices are clean in the sense that they will make everything better and nothing worse and none are clean with probability one.

 

So lets step back from all of this and looking at the policy dimension of the jobs question. My narrative is that the United States has somewhat passively allowed itself to get into a position of being consumer of last resort.

Other nations, most recently China, have run deliberate policies to suppress household consumption. The result was a rapid increase in both investment and net exports. This has the inverse effect of increasing US consumption and decreasing US net exports.

The costs and benefits of this policy accrue unevenly to Americans. Most Americans benefit slightly in the form of cheaper consumption goods. A few Americans benefit immensely by working in the financial sector of a country experiencing huge capital inflows and cheap financing. Another subset of Americans suffers miserably from losing employment and seeing the agglomeration effects that built their entire communities unravel.

The true policy question is: are we indifferent to this? I don’t think a simple appeal to Laissez-Faire is enough, if for no other reason than because this is not a Laissez-Faire outcome. It is the result of the deliberate policy of another government. Should that matter? I am not sure.

At a minimum, however, I think as intellectuals we should recognize the suffering of people affected by this and address it directly. Even if what we have to say is: I’m sorry but there is just nothing I think we should do to help you.

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