Notes

The dynamics of markts are fascinating. Consider the UK: Local groups celebrate blocking new chicken farms. But because UK chicken demand keeps growing — it rose 24% from 2012-2022 — the result of fewer new UK chicken farms is just that the UK imports more chicken: it almost doubled its chicken imports over the same time period. While most chicken imported into the UK comes from the EU, where conditions for chickens are similar, a growing share comes from Brazil and Thailand, where regulations are nonexistent.

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Russia’s stock market has suffered its worst week in more than two years in response to U.S. President Donald Trump’s sweeping global tariffs and a drop in global oil prices. “A massive crisis is unfolding before our eyes,” said Yevgeny Kogan, an investment banker and professor at the Higher School of Economics in Moscow.

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Notes 

Some simple but often overlooked points from Tabarrok:.

The US is a manufacturing powerhouse. We produce $2.5 trillion of value-added in manufacturing output, more than ever before in history.
As a share of total employment, employment in manufacturing is on a long-term, slow, secular trend down. This is true not just in the United States but in most of the world and is primarily a reflection of automation allowing us to produce more with less. Even China has topped out on manufacturing employment.

A substantial majority of US imports are for intermediate goods like capital goods, industrial supplies and raw materials that are used to produce other goods including manufacturing exports! Tariffs, therefore, often make it more costly to manufacture domestically.

The US is a big country and we consume a lot of our own manufacturing output. We do export and import substantial amounts, but trade is not first order when it comes to manufacturing. Regardless of your tariff theories, to increase manufacturing output we need to increase US manufacturing productivity by improving infrastructure, reducing the cost of energy, improving education, reducing regulation and speeding permitting. You can’t build in America if you can’t build power plants, roads and seaports.

The US is the highest income large country in the world. It’s hard to see how we have been ripped off by trade. China is much poorer than the United States.

China produces more manufacturing output than the United States, most of which it consumes domestically. China has more than 4 times the population of the United States. Of course, they produce more! India will produce more than the United States in the future as well. Get used to it. You know what they say about people with big shoes? They have big feet. Countries with big populations. They produce a lot. More Americans would solve this “problem.”

Most economists agree that there are some special cases for subsidizing and protecting a domestic industry, e.g. military production, vaccines.