Biden’s Manufacturing Plan Is $700 Billion Worth of Protectionism

“The claim that we need a national industrial policy because U.S. manufacturing is in decline is usually based on two trends: the fall in both U.S. manufacturing employment and the sector’s declining share of total U.S. economic output (measured by gross domestic product). Each of these trends, however, started decades ago. And neither tells you anything about the productive capacity of the nation overall or the vitality of the industries being targeted by the industrial policy.

As Lincicome shows, the reduction in manufacturing employment is occurring in every industrialized nation, including those countries with economies more centered on manufacturing than the United States. It’s also occurring in nations with longstanding trade surpluses in goods, and even in those countries that already have aggressive industrial policies. The real reason for a decline in manufacturing employment is mostly due to labor-saving technologies that raise worker productivity. In fact, anyone who wants to understand this reality ought to visit contemporary steel mills. They look nothing like mills of the past, as they’re automated, clean and employ highly skilled and well-paid workers.

The decrease in the share of GDP generated by manufacturing is mostly the result of the fact that our modern economies are increasingly service economies. That’s consumers’ choice. This trend, too, exists in all developed countries.”

“U.S. manufacturing continues to be at or near the top of most categories, including output, exports and investment. Industrial capacity is also growing, and industry-specific data show strengths where it counts (durable, high-value-added goods).”

Biden Administration Affirms Support for Protectionist Jones Act, Throwing Hawaiians, Puerto Ricans to the Sharks

“Biden made it abundantly clear that he supports the Jones Act, a 1920 federal law that requires that cargo ships traveling between American ports be made in America and owned and crewed by American citizens”

“The Jones Act is an absolutely terrible law, designed purely for protectionist measures, that shields maritime companies and unions in the United States from competition. The consequence of the Jones Act is that a foreign commerce ship that goes to states like Hawaii or Alaska or to territories like Puerto Rico can engage in domestic trade in only one American port. It can travel to other American ports but cannot take on or deliver goods unless it goes to a foreign port and then returns. A vessel from Japan that’s heading to Los Angeles cannot also stop in Hawaii along the way and engage in commerce, despite the logical economic efficiencies in doing so.”

“The end result of this restrictive law is that only two percent of U.S. freight is transported by sea, despite our long coasts, our many ports, and island states and territories. It’s in part why we have to depend so much on trucks and trains for transporting goods, even along coastal regions. Cato notes that internal shipping is about half the volume it was in 1960, while rail and truck commerce both saw dramatic increases.

Nowhere are the burdens of the Jones Act more apparent than in places like Hawaii and Puerto Rico. These restrictions distort market forces and significantly drive up the costs to transport goods to these places. The New York Fed calculated that it can cost twice as much to ship something from the American mainland to Puerto Rico as it does to nearby island nations like Jamaica. Puerto Rico actually imports jet fuel from other countries rather than the Gulf Coast because it’s just too expensive to get Jones Act-compliant vessels.

There’s no need to exaggerate the impact of the Jones Act on domestic transport costs because whenever a disaster comes around, like Hurricane Maria in Puerto Rico in 2017, the government will temporarily waive the Jones Act’s requirements so that the costs of recovery aren’t quite as back-breaking.”

“”Among the obstacles to Jones Act reform is the complex web of special interests that benefit from preservation of the status quo. Among Jones Act supporters are U.S. shipbuilders, merchant mariners, various maritime unions, and those who actually believe the law is essential to national security.””

Food Truck Operators Are Still Fighting an Uphill Battle Against Protectionism

“Last week, a restaurant owner in Seymour, Indiana, told her local paper that the city should restrict access to food trucks as a way to bolster business at her brick-and-mortar restaurant. She’s taken issue with a particular food truck owned by a national chicken chain.
“The days they were in town, we did have a considerable loss, and they had a line all day,” Lori Keithley, owner of Brewskie’s Downtown in Seymour, told local newspaper The Tribune. She claims Brewskie’s “can’t compete with Chick-fil-A.” So she wants the city to force food trucks operating in the city—including the Chick-fil-A truck, which went through the same licensing, permitting, and inspection process as other food trucks operating in the city—out of the downtown area.”

“some who can’t or won’t compete throw up their hands and ask the government to limit choice by stifling competition. That’s protectionism.”

Tofurky is suing Louisiana for the right to label its veggie burgers “veggie burgers”

“As of October 1, a new law in Louisiana bans grocery stores from calling veggie burgers “veggie burgers,” as well as many similar product labels like “plant-based sausages” or “seitan-based vegan bacon.”

The justification? That consumers might get confused about whether veggie burgers are made of beef. It’s the latest of a series of attempts by meat companies to ban their plant-based competitors from grocery store shelves — and many legal experts say it’s probably unconstitutional.”

“Last year, Arkansas tried a nearly identical law, and Tofurky sued. A judge issued an injunction a few months later, finding that the law violated the free-speech protections of the US Constitution and telling Arkansas it may not enforce the law while the case proceeds through the courts. Mississippi tried a similar law, too, and backed down, promising to revise it, when sued. That didn’t stop Louisiana from proceeding with its own, nearly identical law, but it is likely no more constitutional than the Arkansas or Mississippi ones.

Why are we fighting about Tofurky? There are no indications that consumers are confused about whether veggie burgers are made out of meat. But as plant-based products get more popular, these labeling laws are one of the meat industry’s favorite tools to fight back — even though courts keep on soundly rejecting them.”

“The First Amendment can be applied to commercial speech — though the law is a bit complicated. In the 1940s, the Supreme Court ruled unanimously that there were no First Amendment protections for purely commercial speech. By the 1970s, the Court had reconsidered that and overturned it in 1976.

In 1980, the Court supplied the rules for First Amendment protections on commercial speech that are still applied today. Those rules are called the “Central Hudson” test because they were laid out in Central Hudson Gas and Electric Corp. v. Public Service Commission.

Here are the rules: First, commercial speech “must concern lawful activity and not be misleading.” Supporters of Louisiana’s law might argue that the term “almond milk” is misleading, while opponents argue that consumers know perfectly well what almond milk is — that, as Utah Sen. Mike Lee (R-UT) put it, “No one buys almond milk under the false illusion that it came from a cow. They buy almond milk because it didn’t come from a cow.”

“There’s nothing misleading about the name of a veggie burger, or vegan hot dog, or seitan bacon,” Jessica Almy, an attorney and director of policy at the Good Food Institute, told me when we spoke about a similar Missouri case. “The packages clearly disclose that this is plant-based food that has the taste or texture of this familiar food.”

“There is not one consumer complaint to the AG’s office ever filed,” Amanda Howell, co-counsel on the Louisiana case, told me. “All plant-based products I’ve seen are doing their best to make sure consumers know that they’re plant-based.”

Even if the speech concerns lawful activity and is not misleading, the government can still regulate it. But it has to meet the following standards: The government must have a “substantial interest” at stake, the regulation must “directly and materially advance the government’s substantial interest,” and “the regulation must be narrowly tailored.””

A new government study shows how Trump’s tariffs have backfired

“Economists Aaron Flaaen and Justin Pierce, who describe their study as “as the first comprehensive estimates of the effect of recent tariffs on the US manufacturing sector,” argue that the data shows that any benefits from protection from foreign competition have been more than canceled out by retaliatory tariffs from trading partners and an increase in the cost of components sourced from abroad.

As a result, US manufacturing has seen job losses and higher prices for consumers.”