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Monday, August 29, 2016

Trump campaign benefits from criticism of trade imbalances

The headline is misleading.  The argument in this article (which appears in today's FT) has major implications beyond the current election campaign.  Among these, cooperative labor-management relations in Germany and Japan minimized layoffs as a response to market pressures, forcing companies there to seek efficiency by investing in automation, thus raising productivity at home.  Antagonistic American labor-management relations (amply reflected in current ratios of pay for CEOs to pay for workers) made layoffs and offshoring to places with cheaper labor more attractive to U.S. corporate management than trading capital for labor by investing in automation to raise productivity at home. In other words, rather than seeking efficiency to compete, U.S. companies sought lower labor costs overseas.  Other factors, like tax structures, exacerbated this trend.  The result: high employment in manufacturing in Germany and Japan by work forces accustomed to robotics contrasted with major losses in manufacturing jobs and a workforce not retrained to rely on robotics here in the United States.  Or at least these seem to me to be some of the inferences one might draw from Mr. Ross's argument.

Trump campaign benefits from criticism of trade imbalances

The fall in productivity and stagnant wages have been allowed to happen, writes Wilbur Ross
by: Wilbur Ross

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