Thursday, August 16, 2012

Add Rana Foroohar to the list of Pop Internationalists

NPR's Tom Ashbrook interviewed non-economist Rana Foroohar this week on her TIME magazine piece arguing that local production is the future of manufacturing.

It was like 45 minutes of hearing someone say Halloween is caused by a surplus of monster costumes and candy.

She hits on all the cliches. There are calls for protectionism (and concerns other nations will also be protectionist), focusing on creating meaningless jobs and not improving efficiency, claims that the rules of economics have fundamentally changed, summaries of international trade as if countries compete with each other like rival businesses, requests for government subsidies, the presentation of labor rates as the sole determinant of manufacturing location and she speaks about the loss of manufacturing jobs as if they simply moved to other nations, instead of being replaced by robots.

There isn't enough time to dive into every fallacy she presents, but the most important thing to say here is that despite her claims, nothing about international trade has really changed.

She misinterprets new American manufacturing jobs as some kind of shift in attitudes about international trade. In reality, it's the total cost of producing a unit and the reliability of the infrastructure that encourage businesses to set up show in one area over another. Some jobs are coming back to America because the labor rates aren't so different, the infrastructure is trusted and we are good at producing that product. As soon as we can get them cheaper from Estonia, we will.

Foroohar does not seem to care one bit about the prices consumers pay, merely on who gets stuck making the product. That's not how you improve an economy; it's how you reward cronies at the expense of the public..

I'm reminded of one of my favorite Paul Krugman lines on this subject:

Exports are not an objective in and of themselves; the need to export is a burden that a country must bear because its import suppliers are crass enough to demand payment.

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