AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (3 comments)

  1. Todd Mason

    PGO. Penetrating glimpse of the obvious.

  2. Benjamin Cole

    Not sure about this one.

    We pay for imports by printing money, btw. In general, foreigners send us goods, and we sent them IOUs (paper), as the dollar is an international reserve currency.

    If an imported good, displaces US workers, we should be able to put those workers to work in another field, and have even higher living standards.

    Automation leads to higher living standards, for the whole group. If you have an island with 10 workers, 3 of whom make goods, and then discover a way to make those goods with just 2 workers, then that third worker is freed up to do other productive work. Now you have a guy painting houses where before they weathered away…

    So in the USA factory hands became waiters and waitresses.

    Probably the reason for lousy job growth since 2000 has been a too-tightmonetary policy, not only at the Fed, but the ECB and the BoJ.

    Check out long-term sovereign debt yields. Trending down for the last 30 years. Fighting inflation has been the war of central banks since the early 1980s. And they won.

    But as public agencies, central banks became ossified. They are never run out of business by better competition. They develop insular icons and cloistered exalted virtues. For the last 30 years, every central banker has had to pettifog against the perils of inflation. It was a moral crusade, nearly.

    If it is HUD, the USDA, Defense or the Fed, they all become ossified, this is hardly an exotic notion. Why should central banks be any different from HUD or the VA?

    The Fed is ossified into the inflation-fighting stance, consistent with its exalted (but obsolete) mission.The Fed became less effective in the 2000s, and was a disaster in 2008 to present. But market forces do not get rid of the Fed, as they did floppy disks. The ECB is worse. The BoJ has been a disaster and we have to see what happens next.

    This is not to say inflation cannot become a problem. Someday we might actually need to help impoverished farmers again, or facedown a Cold War giant. But those days are over now, and fighting inflation is over now.

    Right now we have the opposite problem—too tight money.

  3. juandos

    Our results suggest that rising import competition from China has contributed significantly to the decline in U.S. manufacturing employment since 1991, with most of the adverse employment effects occurring between 1999 and 2007“…

    The clueless rantings of an Obama simp…

    Manufacturers: EPA Regulations Will Severely Harm Economic Growth
    NEW REPORT DETAILS THE SIGNIFICANT ECONOMIC IMPACT OF QUESTIONABLE EPA REGULATIONS

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