Alexander Hamilton should be the team’s coach and not just its mascot.

I support the CPA because of its purpose, excellent staff, and the work it carries out on a daily basis.  My purpose within the CPA is to persuade the organization to expand both politically and intellectually beyond the confines of macroeconomic policy by developing industrial policies that engage the interests of diverse portions of the electorate.

  • Winning trade case is wonderful, right up until the next Administration decides its not. A better long term solution is industrial policy legislation that establishes permanent levels of domestic market share based upon objective performance criteria. This is something that neither macroeconomics nor punitive tariffs can accomplish.

  • Tax and financial policy ideas are a core strength of macroeconomics and it shows here in the clarity and simplicity of the SFA concept. Macroeconomics, however, also has inherent weaknesses, as the new book, “The Economists Hour” makes abundantly clear.

  • It is admirable to deploy the rigorous mathematical analysis necessary to imagine the global economy in mechanistic terms and develop recommendations to improve it based upon such a supposition. Doing so entitled one to say, “Ideally” such and such would be true. And given that ideals and calculations are indeed present in the global economy, such recommends are useful, more or less.

    But anybody whose imagination can encounter the incredible complexities of the global economy and come away with only a “watch” as an appropriate metaphor lives an extremely impoverished life.

    There was intellectual room available for the CPA to find common cause with Mr. Goldman, while still robustly disputing his criticism of the MAC.

    Instead the two parties are locked in a dispute with no off ramp. Multiply this by a thousand other similar useless disagreements and you can begin to see why the CPA lacks the political support necessary to advance its agenda.

    What concerns me here is not so and so’s professional standing, but rather the interests of the manufacturing community they purport to represent.

    And I for one would be prefer to see hundreds of unemployed macroeconomists rather than the millions of under-employed former manufacturing workers their policies have produced.

  • What a great time to impose this tax! We need the revenue and negative interest rates are beginning to emerge in Europe!

    But where is the political coalition needed to push the legislation through Congress and over the dead body of Wall Street?

    It is, of course, nowhere to be found! And it will never emerge so long as the manufacturing community continues to worship macroeconomic policy and turn a deaf ear to the development of industrial policies supported by a broad and diverse coalition of domestic interest groups!

    Steel tariffs are in place and the stock price of US Steel plummeted along with its workforce!

    What will you do after you have destroyed our relationship with China and find out domestic manufacturing is still being screwed!?!?!? Well, I guess it will just have to be on to the next “Cheater”!!!

    The funny thing about all this is that the CPA has adopted Alexander Hamilton as its team mascot when it should be making him the coach!!!

  • I started my career at a float glass plant near Harrisburg PA operated by PPG. We shipped hundreds of tons of glass to the furniture industry in North Carolina every year just for mirrors. No more.

    So I appreciate your essay very much. But I do wonder where all the political support is supposed to come from to enact these sweeping macroeconomic policies that you mention? At last count there were about 12,000,000 manufacturing workers left in the United States. That is not a lot of votes.

    I do not believe you can generate the political support necessary to address macroeconomic issues without building a strong political base through specific industrial policies, as in, for example, doing the hard work necessary in North Carolina to elect Senators and Congressman dedicated to bringing the hardwood furniture industry back.

  • I agree Henry, the 2016 election was about trade both directly through its negative impact on manufacturing jobs and disgust with the constant drumbeat extolling the virtues of Free Trade. And it was an issue embraced by both Bernie Sanders and Trump.

    But it is not the case that the Trump Administration would like to engage the legislature but is unable to find the means to do so. The Trump Administration has simply not even tried.

    I had an opportunity to bring the issue up with Navarro at the beginning of this Administration. I found him to be the most open minded person in the room. The rest of the CPAs team of disgruntled macroeconomists could not have been more dismissive.

  • These are, indeed, positive conceptual breakthroughs in an international trade agreement. But the caveats and concerns identified above are enormously troubling. It is not enough, for example, to hope one has “thrown sand in the gears” of outsourcing.

    Businesses thrive and business plans become financible when their markets are growing and uncertainty is mitigated. Sound, industry specific industrial policy is the most direct and sure way to create these market conditions.

    The CPA’s focus on macroeconomics and trade agreements has prevented it from organizing its own members to engage in political action, form coalitions, and impact the elections of legislators.

    Following the progress of the CPA is like watching a man with one hand trying to clap, and being satisfied with having at least created a bit of a breeze.

  • The balance of power between economic and political actors as well its characteristics are quite different in China compared to the United States.

    Expecting some globalist conception of the “Rule of Law” to remedy the philosophical and practical failures of Free Trade strikes me as an exceptionally futile adventure; surpassing even the difficulty of eliciting any sympathy for the trials and tribulations of DuPont.

  • It is a pleasure to read a thoughtful analysis of China’s situation that is devoid of the demonization the leadership of the CPA prefers to employ. Absent all the self-righteousness, the virtues of the U.S. pursuing a comprehensive industrial policy rather than knee-jerk tariffs to “punish” trade cheaters is much easier to discern.

    With regard to the virtues Mr. Mead believes “70 years of history” imbues the vision of political-economy advanced by the Western world post WW2, I am decidedly more skeptical.

    American public policy in particular is not informed by a robust, nuanced view of our political-economy. To the contrary, our mainstream economists zealously promote “Free Trade”. And their critics are afraid to move intellectually past the discipline’s focus on macroeconomic monetary policies.

    If the CPA is truly interested in pursuing policies that bring our trade accounts into balance, it will have to enlarge the intellectual framework with which it operates.

    For example, surely to God, somewhere in our political firmament there exists a Senator or Congressman willing to bring forward a specific industrial policy proposal. My own longstanding favorite target in this regard is our domestic hardwood furniture industry. I would argue that it would be wise for the U.S. to produce 80% of all the hardwood furniture sold domestically. And I would greatly enjoy seeing President Trump put on the spot to support or attack such a proposal.

  • This is a truly delightful essay!

  • Being critical of China stops being useful when we begin to blame them for our problems. Society’s evolve. It is not our working class that has failed to keep up economic and political change. It is our intellectual and political leadership that has failed to do so. And the gravity of their failure is increased 10 fold by the fact that they have not only let our nation down but also turned their backs upon the intellectual foundations of the West. Our citizens suffer while thinkers from Alexander Hamilton to Socrates roll around in their graves.

  • Good Morning Michael!

    Interesting analysis of HD, demonstrates the value of an economic research assistant too!

    Tariffs, tariffs, tariffs; everyone it seems believes money rules the world, or at least should. Is there a limit to its power? What if other nations have evolved their system of political-economy to exploit money’s limits?

    Is the correct response to try to make money even more powerful, say by taxing international capital flows to forcibly adjust exchange rates?

    Would that solve the problem? Probably not, but it would surely be helpful and provide a new means of taxation aimed directly at the problem Piketty discusses: the return on capital exceeding the rate of economic growth.

    What if, however, the entire global monetary system was thought of as one form of power and the capacity of deliberative democracies to set absolute quotas on imports was recognized as a complementary power?

    Quotas, in that case, would provide an affirmative national industrial policy, which is what stable political coalitions can form around.

    The Trump presidency is a grand poetic moment in the life of our nation, a grand experiment in breaking down our familiar patterns of discourse.

    At present domestic manufacturers are seeking to exploit this opportunity for their own gain, Nucor included. But the Trump presidency should also be used to break open the discourse on the subject of quotas and industrial policy.

    The most promising venue for such a maneuver, in my opinion, is the production of domestic hardwood furniture.

    Perhaps your incoming economic analyst should take a look at that possibility.

  • Your right, in fact Trump said that very thing in his speech on trade in China. “Who can blame another country for taking care of its own people.”

    Unfortunately, most of the critics of trade policy in the United States do nothing but blame everyone else for “breaking the rules” and plead for a “level playing field.”

    Tweaking our macroeconomic policies would surely be helpful but it is no substitute for an industrial policy with more substance than Dan D. brings to the table, i.e. inflating national security concerns beyond any reasonable pretext.

    The domestic manufacturing community wants the government to do its bidding without doing what it takes to make some new political friends.

  • Jeff,

    Great research and analysis.

    The question that has been bothering me lately though concerns how a path can be constructed for actually bringing our trade deficit into balance.

    The “national security” argument is a good one, but it has a very limited range. And the steel industry should also fall under a general argument with a very broad scope.

    Should everything that does not fit into the national security framework just have to wait for the wonders of macroeconomic tinkering to reverse their fortunes?

  • If you are wondering why our actual trade deficit has continued to increase despite all of these laudable efforts by the Trump Administration, it is because you just can’t get there from here! Here being the "Free but Fair and any other adjective you wish to append paradigm.

  • Interesting, so if I told you that manufacturing flatware using casting and forging techniques had been successful for over 200 years, but that every firm in the industry went broke trying to perfect 3 dimensional printing technology over the last 50 years, you would hope they would finally figure out how to use 3D?

    Similarly, Congressional tariff legislation worked fine for about 150 years, but now we have to somehow fix macroeconomics?

    The point I am trying to get to here is that you do know something and should be able to petition your elected representatives to fix the problem. You should not believe you are ignorant because you do not have a PhD in economics!

  • The CPA’s political effectiveness is greatly limited by its reliance upon macroeconomic policy critiques focused on influencing the actions of the President / Administration. The CPA needs to develop specific industrial policy proposals that focus on influencing and electing members of the legislature.

    Think, for example, of the impact that a small group of legislators could have right now on our trade deficits if they refused to support the Republican tax cut legislation unless specific new tariffs and quotas were put in place to defend our furniture and steel industries!

    After all these years of hard work that the CPA is unable to inject trade policy into tax debate is very troubling, especially given that the major pretext for the proposed tax cuts is to spur economic growth.

    Unfortunately the CPA’s reliance upon critiques of Free Trade and the macroeconomists who develop them has prevented it from moving beyond the Free Trade paradigm and its associated politics.

  • A wonderful story and truly inspired leadership. I sincerely hope the Thomasville community is able to develop some new market niches for its aspiring manufacturers to produce for.

    But, the community should not be hoping for the best and fighting for the scraps of the domestic furniture industry. It should be electing politicians at every level of government that are dedicated to bringing the domestic furniture industry back.

    And it should not be a lonely voice in the crowd. John Hansen is a brilliant economist with excellent ideas for helping domestic industry. But it is nevertheless macroeconomists like him who have denigrated the worth of our democracy and supported an ideology that has stood in the way of promoting protecting and sustaining specific industries in the name of the collective good.

    The self-indulgent arrogance and misguided knowledge claims of macroeconomists has destroyed our manufacturing base and led to the extraordinarily ugly politics symbolized by the ascendancy of the Trump Administration.

  • Dear Jeff,

    Since all the macroeconomists associated with the CPA routinely and dogmatically dismiss the credibility of the legislative process, what business do you have appealing to the members of Congress to do anything?

    And since all your macroeconomists believe in is telling the executive branch what to do, why aren’t you dissing the Trump Administration for failing to keep those pesky legislators in line?

    If you want to make direct appeals to the legislature, I suggest you get up off your intellectual behind and come up with a theory of political economy that encompasses such activities.

  • “If you’re trying to change something that’s in either draft and you don’t have votes on your side, you’re just a lot of noise.”

    This comment was made about the lobbying going on now to influence the tax reform legislation that the Republican Party is pursuing. But it also applies to the CPA’s efforts to change U.S. trade policy.

Intellectual and turnaround management specialist with 20 years of experience working with small manufacturers In Pennsylvania.