[Noah Smith] Trump still dreams of 1950s economy

Have you ever had the wild thought that if you shut your eyes really tight and then opened them again, you’d wake up and find that you were a kid again, and that your whole adult life had been one long dream? No more backaches, no more mortgage payments, just Saturday morning cartoons and mom and dad waiting for you with a bowl of your favorite breakfast cereal.

This fantasy is kind of like “MAGA.” Short for “make America great again,” the slogan of Donald Trump’s 2016 presidential campaign, that four-letter acronym has come to represent the idea that a strong leader, by force of will, can return the US to the industrial economy and international dominance of the 1950s. All that Americans have to do is to elect the right man, and steel mills and coal mines will begin to dot the plains once again, good high-paying blue-collar jobs will return, and competitors in China will once more bow before the might of US industry. It’s eerily reminiscent of the neoconservative fantasy that the Middle East could be transformed into a stable democracy by pure willpower.

The power of the MAGA dream can be seen in the optimism of people like Steve Straub, the owner of a metal-fabrication company in Ohio, who wrote a recent piece in the Daily Caller trumpeting Trump:

“On the president’s first day in office ... I said that America’s doers, makers and hard workers were ready to “power on” and “be the solution” to drive our economy forward. ... Well, as we approach the one-year anniversary of his presidency ... there is a lot to celebrate for manufacturers. ... Optimism is skyrocketing. Customers are increasing orders. Some are looking to launch new products. And we are growing.”

Meanwhile, Breitbart pundits breathlessly celebrate every sign of increased manufacturing activity.

I couldn’t be happier for Steve Straub and his company, and any good numbers are welcome news. But let’s zoom out and look at the long-term picture.

As of December 2017, manufacturers employed 4.9 percent of Americans -- up from 4.84 percent in November 2016, but still below the 4.94 percent recorded in December 2014, during Barack Obama’s presidency, and still only about half of the 9.49 percent that prevailed in 1990. In numerical terms, Trump’s industrial revival has been the slightest of blips.

Meanwhile, the Carrier plant in Indiana that Trump promised to save just laid off another 215 workers.

There are two reasons presidential willpower can’t bring back the old industrial economy. First, presidential willpower just isn’t that important in real life. Optimism might cause a few manufacturers like Straub to engage in a small burst of hiring, but in the long-term it will be cold hard economic incentives that prove decisive.

Here, Trump so far has had little to offer. Although policies such as the corporate tax cut might have a marginal effect on manufacturing, taxes overall are a small factor for industry. Although corporate tax rates remained steady or came down during the 1990s and 2000s, manufacturing employment fell off a cliff. Rebuilding US manufacturing is a good goal, but there are no quick fixes.

Second, even if US manufacturing regains its dominance, most of the jobs aren’t coming back. Like agriculture a century ago, manufacturing is doing more with less -- productivity continues to increase, even as demand for manufactured goods remains relatively constant. Meanwhile, no tax cut can bring US labor costs in line with countries like Bangladesh, Indonesia or Ethiopia. US manufacturing supremacy will have to be rebuilt on a foundation of capital and technology -- in other words, with robots, not with human hands.

Trump doesn’t seem to realize that the industries of the future won’t be the same as those of his own childhood. Coal mining, a Trump darling, experienced a burst of optimism after his election, but since then has slid back into its long-term decline -- coal production is now below its 2016 levels. Natural gas and solar power are the future.

No matter how hard Trump supporters shut their eyes and visualize the past, the average American is not going to time travel back to the world of the 1950s. Some Americans will work tending the robot factories of the future, but many others will have to find jobs as craft brewers, or construction workers, or social media managers, or nurses.

Making America great again can be done. But it will take more than aggressive presidential bombast and ham-fisted policies designed to protect dying industries. In order to win the future, the country has to let go of the past.


Noah Smith
Noah Smith is a Bloomberg View columnist. -- Ed.

(Bloomberg)