Alan Tonelson: Key to a Great Economy Is a World-Class Manufacturing Sector

November 23, 2016


[John Hayward| November 16, 2016 |Breitbart]

Economist Alan Tonelson, founder of the economics and public policy blog RealityChek, joined SiriusXM host Alex Marlow on Wednesday’s Breitbart News Daily to talk about Donald Trump’s vision for the economy.

Tonelson said it was “painfully clear” that “tens of millions of American voters were reacting to not only the version of globalism and internationalism and so-called ‘free trade’ and open borders that President Obama had been preaching and practicing for eight years.”

“They were reacting to the same policies being pursued by the last few presidents, for literally decades, that had brought them nothing – at least as they saw it – except stagnating incomes at very best and major cultural divisions that threatened to simply break apart the kind of healthy unity that this country has enjoyed for so long,” he continued.

“I think they were absolutely right to rise up, to revolt, and to demand something different,” Tonelson said. “And I think that it’s no accident that the version of populism that they chose was that nationalistic version that Mr. Trump stood for.”

As for Trump’s economic vision, Tonelson said an important element is what he called “economic realism.” He defined this as recognizing that “even though when you’re dealing with the world economy, you certainly pursue cooperation with other countries wherever you can, that’s not always going to be possible – and that when it’s not, the very best guarantee of continued or improved American prosperity is America’s own economic power.”

“Just as important, it also recognizes that when we do cooperate, the crucial question that we’ll face is, how do we ensure cooperation on U.S. terms? Because cooperation will always have content,” he continued.

Tonelson agreed with Marlow’s contention that other countries frequently look for “cooperation” on grounds that are quite far from America’s best interests. He added “one more very important element: whether they’re acting in what we would consider ‘good faith’ or not, they will inevitably have different – at least in many circumstances – inevitably have different economic interests because they’ve chosen to run their economies along different lines, and they’ll see things differently.”

“We have to make sure, once again, that when we are dealing with them, when we are quote ‘cooperating’ unquote, that that cooperation needs to take forms that serve U.S. interests,” he stressed. “And we have dropped the ball on that completely.”

“For example, we make absolutely sure that when we sign trade agreements with countries – again, whose structures can be radically different from ours – that we understand that when they make promises on paper, to, let’s say, reduce or to eliminate policies that we consider to be antagonistic, that we can’t automatically assume that they’ll follow through,” he advised, “that we need monitoring mechanisms, that we need enforcement mechanisms that actually work, and we can’t simply assume that problems get solved because treaties get signed.”

Tonelson said he was not surprised that “an economic nationalist and populist candidate” won over voters in the upper Midwest and Rust Belt.

“I was a little surprised that they were willing to overlook what were clearly some very important mistakes that Mr. Trump made during that campaign and essentially decided to take a chance on him occupying the most important political position in the entire world,” he confessed. “But certainly, it’s no surprise that somebody standing for the ideas that he stands for had great appeal with them.”

“In fact, that brings us to the second critical element of his economic vision, which is, Mr. Trump recognizes that the key to American economic success is ensuring that the productive core of the American economy is world class, and that, of course, means first and foremost, a world class manufacturing center,” Tonelson added. “And on that score, we’ve certainly fallen way short recently.”

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  • Thanks Jim and I agree with you again. Although I would like to point out that over at the web site OECD.org there are many studies and reports that may shed a bit more light rather than anger would be more beneficial to the CPA readers. Go see the many good reports and information there especially Catherine Mann’s plan for “deploying effective fiscal initiatives to promote inclusive trade policies to escape the low growth trap”. Increasing productivity and growth is still about working smarter rather than harder…
  • Mr. Ryan & Bishop,

    I greatly appreciate your anger towards the idiots and abusers that created this mess and largely share it at the personal level. In fact it was that anger in the electorate that brought about the changes to come in our trade policies. I do not believe, however, that such anger will work to our advantage in producing public policies that actually work better than the current regime. For one thing framing the issue in the black and white terms of good versus evil makes for better action movies than public policy discussions.

    There are, for example, very good historical reasons for the evolution of the economics profession into a cult.

    If Trump is unable to frame his trade policy within a philosophy that provides both domestic and global leadership then it is likely, in my opinion, that global trading relationships will breakdown rather than fruitfully restructure. At which point the cult of economics will rear its ugly head.

    To date, I have not heard anyone even articulate a sufficiently encompassing narrative. Instead everyone seems to have all the answers even though there is no simple solution to the problem at hand.

    Best wishes to you both for a great Christmas and New Year! I am very glad to be able to share my thoughts with you both!


  • Thank you Mr. Crawford for your direct response to my rhetorical question. I do agree with your view and statement whole heartedly that the cult like promoters of so called “free trade” promoter groups like US Chamber of Commerce has Not been beneficial to our economy. These were front groups that used “free trade” lies and logic to promote the selling out of American jobs and manufacturing and middle class with no accountability and was supported by our own government was a massive selling out of the American people! Their so called “Free Trade” has really been “one way trade” that has caused us huge trade deficits and massive loss of livable wage jobs that was used for self enrichment and the revolving door between lobbyist and Washington law makers. As Bruce informs us we definitely need to bring back “The American Plan” logic again as the corner stone of our new trade reforms For any trade to be a good thing it must be mutually beneficial to both countries . This is very basic logic.
  • Mr. Ryan,

    Why it took so long and required an outsider are great questions. I place the majority of the blame on mainstream academic American economists. These people are like a cult in their devotion to and promotion of free market fundamentals. And they had positions of power in every Administration.
  • Most of our manufacturing jobs have gone to Communist China, a criminal enterprise that uses essentially slave labor, and has zero concern for worker safety, human rights, or the environment. We should not be doing business with China at all, much less allowing them to steal our technology, our intellectual property, and our jobs. They are draining our wealth, not to improve the lives of their citizens, but to build up their military (Why?), and to enrich the honchos of the Chinese Communist Party. You only need to ask why Foxconn, the Chinese company that manufactures our iPhones, had to install suicide nets under the windows of its worker dorms.

    Alexander Hamilton convinced George Washington that, if we were to become an independent nation, we must have tariffs on anything we could produce ourselves, including raw materials. Those tariffs, known as The American Plan, made us the the wealthiest, most powerful nation on earth. In recent years, our greedy, incompetent politicians have politicked those tariffs away, allowing nations like China, which spent decades wallowing in communism, to take over the greatest engine of prosperity the world has ever known.
  • This is an excellent short essay. By focusing on the inherent and evolving differences between nations, Tonelson calls attention to the necessity of political negotiations and the difficulty of obtaining good results.

    I would emphasize that the necessity of domestic political engagement in managing trading relationships is provided for in our Constitution and properly made Congress’s responsibility. The least possible intrusion of politics into economics is not produced by restricting it to uniform financial mechanisms such as Buffet’s import certificate proposal. Rather, it is produced by intervening politically at the most appropriate point in the process: Congressional negotiations to establish specific domestic market shares by industry – then let the market work its magic without every state in the country falling all over themselves to offer tax breaks and sweetheart deals to steal corporations from one another😀
  • I think that Alan Tonelson is absolutely right and correct. But why did it take so many so long to recognize this problem and then have to rally behind a political outsider to get anything done about it?