Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Why Protectionism Won’t Save Unskilled Labor

Economics / Employment Aug 15, 2016 - 01:48 PM GMT

By: John_Mauldin


I just read a policy paper from the German Marshall Fund of the United States. It defends the present trade model. The authors do a good job, but in the process, they describe the problem.

Take a look at this part. (I bolded a few key points.)

The global economy is no longer about making a product in one country, and shipping and selling it somewhere else. It is about complex supply chains that weave together activities all over the globe, supported by investment, technology, and skills that know no borders.

Creating an even playing field is no longer just about reducing external tariffs and quotas, but about coordinating and sometimes revising what have traditionally been seen as domestic policies to “stabilize” agriculture, promote national culture and identity, encourage innovation, protect health and safety, and ensure citizens a certain minimum quality of life.

Critics of the Trans-Pacific Partnership (TPP) argue it is no mere “trade” deal, and they are right: more accurately, it is a package of integrated economic policies that will increasingly fuse several national economies into a single marketplace.

Here’s the issue with global deals like TPP. While they may be good for economies as a whole, citizens see that the “good” is unevenly distributed.

That’s why Trump calls them “a job and independence threat.”

After supporting the TPP for years, Clinton now says she won’t sign. Both candidates know the problems caused by the uneven distribution of globalization’s benefits over the last 30 years.

Globalization isn’t the only thing causing people to lose their jobs.

Robots are eliminating jobs and businesses

We are actually in the process of bringing manufacturing back to the US. But just because factories are coming back doesn’t mean jobs are.

A factory that relies on robots has an edge if it is near its markets. When Foxconn in China puts robots in a factory and reduces the number of workers from 110,000 to 50,000, you know the labor arbitrage game is coming to an end. And that’s just one factory.

Self-driving trucks and cars will clearly affect truck and taxi drivers. But think of the impact on insurance companies. Estimates are that revenues will drop by as much as 75% in the coming decades. And we won’t need as many small local businesses to fix vehicles after accidents.

Many related industries will see disintermediation (the elimination of middlemen and the displacement of labor). And that’s just one industry.

Workers and businesses have to adapt quickly to survive

The changes that occurred as work shifted from the family farm to urban manufacturing took place over decades and generations. While the move was hard, there was time to adapt.

Today, things change ever faster. And most of this angst-producing change has happened in the last 30 years.

Adapting to such rapid change has been tougher. A surprising reversal of trend in mortality statistics is that white middle-aged males are now dying at an increasing rate due to drug and alcohol abuse and depression.

Disintermediation is doing more than just making voters mad. It is stealing the hopes of significant subsets of entire generations. When your well-paying job goes away and you can’t find another, the loss hits your sense of self-worth along with your bank account.

As whole new industries develop, technology will continue to create jobs. But these are not jobs that will require old skills. Humans have always had to adapt, but the speed at which we must adapt is accelerating.

In the past, it was the young who did most of the adapting, as they learned new skills for new jobs.

In the future, the young will still be part of the adaptation process but so will those in their 40s, 50s, and 60s.

Postponing the inevitable

The elite or Protected class is right to feel discomfort. The anger of the Unprotected is not just an election-year, flash-in-the-pan trend. It is a movement that will grow as the wall of protection gives way for more and more people.

The presidential candidates offer radically different ways to restore protection. But they are fighting the last war, with the tools of the last war. The impulse of both political parties is to spare their supporters unwanted change.

Unfortunately, protection from change for a few comes at a price. The price is less choice and reduced freedom for all. In an increasingly globalized world, regulators act as prison guards.

The FCC wants to run the Internet like a utility. It’s just one of thousands of government bodies that wants to increase its power because some constiuency is lobbying for protection from its competitors.

In the future, the only way to protect yourself will be to learn to constantly adapt.

It’s not just workers that must learn to surf the waves of change. Businesses will too. Elon Musk may be a visionary, and his battery gigafactory may change that whole business.

But I’ll make you a side bet: Whatever the first set of batteries looks like, the entire process of battery design and production will continue to change dramatically. And by 2030, Elon’s factory will be obsolete.

The only way Elon will survive is to adapt. He must stay on the bleeding edge of innovation—making his own factory obsolete if necessary.

A Glimpse of the Future in Aug. 23 Q&A Session with John Mauldin

If you wonder what the future might hold for the US and global economies and stock markets, get answers in the free Q&A session “When the Future Becomes Today” with John Mauldin and his colleagues Patrick Watson and Robert Ross, on Aug. 23, 2:00 PM EDT. Click here to register for the call and to submit your questions.

John Mauldin Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules