Donald Trump has threatened to impose substantial tariffs on steel and aluminum. Assuming that he is more successful at thwarting these metallic immigrants to the U.S. than he has been for human immigrants from violence-plagued countries, what might it mean for American programmers?
Back in the 1980s there were trade barriers that raised the price of steel in the U.S. compared to the world market price (see this Brookings Institution report from 1987). Steel that cost $100,000 in the U.S. could be purchased for $76,000 elsewhere.
A Babcock and Wilcox subsidiary west of Houston made “air-cooled heat exchangers” for industrial plants. These worked like car radiators, blowing air over fluid flowing back and forth through finned tubes. Each one was a steel structure roughly the size of a house and was custom-engineered via a process that included roughly one person-year of work. The company was struggling because Korean competitors were offering finished heat exchangers at a retail price, delivered to the U.S., that was about the same as what Babcock and Wilcox would pay for the raw steel.
Computervision (CV) sold B&W on the idea that CAD would restore their competitive edge. A mostly automated design process would cut the marginal cost of engineering and reduce the time to market. CV was a pioneer in the market currently dominated by AutoCAD, but the system would need an additional software program on top of the basic drawing system. Programmers at CV worked at this unsuccessfully for about a year.
In 1984, I stepped in, through a start-up company, to help build a Lisp Machine program that could process a declarative specification language for 3D structures and, with customer specifications as the input, generate a 3D model and parts list as the output. The CV system would be used to render final engineering drawings. This program served as the foundation of ICAD, which was the most popular application program for the Lisp Machine and led to a plurality of Symbolics sales. Any company that made a customized product that could be broken down into 3D boxes was a candidate for development of a rule base for automating the design in response to customer needs. I described it as “the world’s best CAD system if you have a Ph.D. in mechanical engineering… AND a Ph.D. in computer science.” The company was eventually sold to Oracle and the code became part of their sales configuration software.
That’s my personal experience with steel trade barriers!
Really impressive, especially for an amazingly out-of-the box type of thinker. Thank you Lord that Philip’s plane flight landed safely in high winds, thank you Lord for the pilot’s skill and care, thank you Lord for bringing Philip home safely. May he continue to share with us his extraordinary experiences and thoughts!
Pretty sure the programming would be done in Mumbai, nowadays.
a plurality of Symbolics sales
Somebody’s been hanging out with patent attorneys a little too long.
FREE TRADE = SUICIDE
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Trade is really not that complicated, so if you are talking about it above the 4th Grade level you are not getting it.
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Countries can make things or buy them from other countries. A country like the USA – with a lot of land, resources, technology and people – can make everything that we need and want. However, for many things it is cheaper to buy from other countries than to make it ourselves. This is because American workers get paid more, and because we have costly social and environmental standards. Let’s get one thing straight… it will always cost less for the USA buy rather than to make most things as long as there are countries in the world where workers make peanuts, while our social and environmental concerns are laughed at.
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When we buy more from other countries than sell to them, it is called a TRADE DEFICIT – an outflow of wealth from our country to others. Right now that stands at about $800 billion every year – eight hundred thousand million dollars with eleven zeroes – a figure greater than we spend on defense, education and infrastructure combined. What that means is that $800 billion worth of stuff are not being made in the USA, tens of millions of workers in other countries are employed to make this stuff and tens of millions of workers in the USA are not. If we keep having a massive trade deficit, sooner or later we’ll run out of money to pay other countries for our favorite stuff. When that happens, you won’t be delivering pizza or planning parties for your neighbors because all your neighbors are broke too. It’s that simple; you don’t need a PhD to understand it.
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With Free Trade we will continue to have massive deficits and lose the ability to make most of the things we enjoy in life. It will NEVER END until wage, social and environmental differences in the world are equalized. With Free Trade we’ll enrich other nations and transfer to them the wealth past generations had built up in America until we are poor and the rest of the world is rich. Perhaps after our republic has fallen, after enough blood has been spilled and after we have become the New 3rd World, we will start making stuff and exporting them to whichever the stupid rich country happens to be at the time. But, not until then. That is why FREE TRADE IS SUICIDE!
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But, what we have today isn’t even Free Trade. What we have are unequal deals that permits crafty countries free access to our markets while they close off their markets to whatever niche we still have left to export. While free trade will eventually run us into the ground, unequal trade will knock us out faster than you can blink. These deals were made because our political leaders are behest to special interest lobbies that finance their careers and were not negotiating with our best interests at heart. These scums do not mind impoverishing America, while making our adversaries rich, big and strong. That is why these SCUMS MUST BE FIRED!
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OK, so Free Trade and Unequal Trade sucks. But what should we do instead? Well, for starters we need to make stuff again. Yes, it’ll make things we buy a little more expensive, but all the money we spend on Made in USA stuff will go to American businesses and American workers. It’ll make your neighbors rich and they’ll pay American taxes so we don’t go broke. Yes, we welcome trade with other countries. But, Trade Policy should encourage buying less from other countries, making more here in America and selling as much as we can to other countries so money flows in and not out of our nation. In short, EXACTLY WHAT SMART COUNTRIES LIKE CHINA DOES today. And, yes, we should have a tariff system which accounts not for the interests of BIG LOBBY and their clients, but for the differences in wage, social and environmental expectations between America and whoever we are buying from. Remember… there is no country in existence today, or throughout the annals of history, with consistently high deficits that isn’t in decline, and there isn’t a country with consistent surpluses that isn’t in ascension. Alright, maybe I went to the 5th Grade level there, but you get it don’t you?
dwight, sounds like you are espousing Mercantilism: governmental regulation of a nation’s economy for the purpose of augmenting state power at the expense of rival national powers. …Historically, such policies frequently led to war.
https://en.wikipedia.org/wiki/Mercantilism
The trade situation can never be resolved until there is a new global monetary system. As long as the dollar is the global reserve currency the USA will run massive trade deficits and be at a huge disadvantage for cultivating export jobs. It’s the Triffin Dilema.
Apparently some countries like China have made noises about how maybe we should all get together and figure out some way to fix this, because it’s not working so great as a system anymore, especially for American workers. But it works very well for DC and private equity guys, so nothing will change.
I have had this question for a long time. Perhaps someone here can answer it.
I buy eyeglasses at goggles4u.com. They are made in China and shipped here. Shipping is about $6.00.
I occasionally ship something to China using FedEx or UPS. Shipping is about $80.00.
The freighters sail here full of Chinese goods. They sail back to China half empty.
So, why the large price differential? I will start believing in free trade when an American can start a business and ship to China on something like a level playing field.
Regarding criticism of capital controls:
There are 2 forms of capital controls that differ greatly:
1. Capital cannot leave the country.
2. Capital cannot enter the country.
(1) above is typically cases of confiscating the investment of foreigners, or at least require that the output be spent within the economy of the country.
(2) Is a way of ensuring that the production capacity within a country not be dominated by foreigners. If you as a country can pass the marshmallow test, then perhaps this form of capital controls is for you.
The interesting thing is that economists seem to look at both of these with equal distaste, whereas I think they are quite different.
If limiting foreign ownership of real estate and production capacity (Capital) and US companies, it would enforce trade balance and balanced budget in one operation, but it would necessarily decrease the value of same assets. I don’t understand what is bad about it.
If you’re a “startup country”, it might make sense with foreign investment to kick start the economy, but if you’re a mature economy, what’s wrong about living from the proceeds of prior investments, and use these for formation of new capital as needed? If using Greenspun’s family analogy:
https://philip.greenspun.com/blog/2011/04/10/understanding-congresss-solution-to-the-federal-deficit-problem/
United States is a middle aged to old family, with the kid out in the work force, so why does it need a new mortgage? One can understand how a young couple in their twenties will take on a mortgage to buy a house, but not a couple near retirement. Likewise, a young country like South Sudan might benefit from foreign investment, but it is hard to see how USA would benefit.
When I have a friend that is getting that ol’ fashioned protectionist attitude I ask t them to conduct a thought experiment:
You’re a starving, broke china man that wakes up at the crack of dawn to build a bicycle cheaper than an American. In return for handing over the shiny new bike, you are given $100 of green American money printed on paper. How do you feed yourself?