"Why Trumponomics fails"

link to an interesting blog piece by Robert Reich called "Why Trumponomics fails".

Specifically great are the comments Trump recently made about the new Boeing being made in the US (realistically assembled). but more relevant to the topic at hand, the situation of the workers who do the majority of the manufacturing of the components which are then assembled in the US.

To quote Reich below he states the following when speaking about the workers in the countries where a good chunk of the production takes place:

Notably, these companies don’t pay their workers low wages. In fact, when you add in the value of health and pension benefits – either directly from these companies to their workers, or in the form of public benefits to which the companies contribute – most of these foreign workers get a better deal than do Boeing’s workers. (The average wage for Boeing production and maintenance workers in South Carolina is $20.59 per hour, or $42,827 a year.) They also get more paid vacation days. 

These nations also provide most young people with excellent educations and technical training. They continuously upgrade the skills of their workers. And they offer universally-available health care. 

To pay for all this, these countries also impose higher tax rates on their corporations and wealthy individuals than does the United States. And their health, safety, environmental, and labor regulations are stricter.

Not incidentally, they have stronger unions.

All of this initially seems like it would result in much higher costs (higher wages, high taxes, more vacation days, etc.) so why doesn't Boeing manufacture these parts at home (America) using their cheaper American labour who take fewer vacations?

to answer this with another snippet from Reich:

The way to make the American workforce more competitive isn’t to put economic walls around America. It’s to invest more and invest better in the education and skills of Americans, in on-the-job training, in a healthcare system that reaches more of us and makes sure we stay healthy. And to give workers a say in their companies through strong unions. 

In other words, we get a first-class workforce by investing in the productive capacities of Americans  – and rewarding them with high wages.

It’s the exact opposite of what Trump is proposing.

That is - despite the higher wages, taxes and vacation days being enjoyed by workers abroad, their high level of education and technical training translates into high quality, and high productivity work, allowing these workers to produce a superior product at a cost that must meet if not be below the cost which would be incurred domestically.

Again this simply reiterates the point made during an earlier post that the liberalization of trade (free trade) is not in itself the problem being faced by the US. Instead, the problem has been decades of misplaced policy resulting in a lack of investment in education and technical skills, leaving a vast amount of the American labour force unable to compete against global labour pools. Where this is no longer a case of being unable to compete due to lower wages being paid to workers in Asia, but rather unable to compete due to the higher skill sets and levels of productivity of workers in Europe as well other developed countries.

What are your thoughts on this, what are the solutions? protectionism? or evaluating some alternatives which pay prove the be quite costly in the short-run in order to play catch-up?

Feel free to comment below.