Donald Morrison: Economics for the Buggy Whip era

BECKET -- Head east with me, down the twists and turns of Route 20 and into America's industrial past. Our destination is Westfield, just 30 miles from where I sit.

This graceful old mill town used to be famous for one thing: buggy whips. A century ago Westfield had nearly 40 factories turning out those must-have equine accessories. They still call it Whip City, but the whips are long gone.

You know why. The automobile. Technology. Progress.

It's an old story, but the folks who now run our government seem to have forgotten it. They're pursuing an economic policy designed to lead America boldly into the 19th century.

I am talking not just about those old-fashioned tariffs the president wants to slap (and tariffs are always slapped) on imported steel and aluminum. Retrograde as they are, tariffs are just the latest tool in a protectionist campaign to drag us back into the golden age of spats and corsets.

One of the president's earliest priorities was to revive the coal industry, that buggy whip of energy greatness. His minions set about opening additional federally owned land to mining, reducing the royalties paid by existing mines and making it easier to dump poisonous tailings in America's waterways. The administration has bestowed similar gifts on oil and gas producers, those legacy industries with troubling environmental and climate-change impacts. And instead of moving America into the clean energy future, the White House in January slapped — slapped! — a tariff on imported solar panels. The few remaining U.S. producers may benefit, but solar installation and innovation will slow at a time when we need them to accelerate.

Innovation seems to trouble the president. His government is moving to end a policy called net neutrality, which has until now banned internet providers from charging extra — and reducing download speeds — for certain content. That change could enrich big telecoms but punish innovative web startups.

The president has had a rocky relationship with scientists and tech titans, whom he suspects of being leftists. They, in turn, are alarmed when he consults anti-vaccine activists and lards his government with climate change deniers. He still doesn't have a White House science adviser. His initial budget this year even called for cuts to research spending at several health and scientific agencies.

The administration's recent tax cuts are another relic of the Gilded Age. They favor the ultra-rich and their heirs, entrenching a 19th-century-style aristocracy of wealth, not talent. Much the same for the president's restrictive immigration policy. At first glance, it seems very unlike the 19th century, an era when the U.S. accepted vast waves of immigrants to fill its labor needs. But that was also a time of virulent anti-immigrant passions that eventually curbed the flow of foreigners. Today, despite the country's tight labor market, declining birth rate and aging population, the White House is marching to the tune of the 19th century's bigoted, anti-immigrant Know Nothings.

That brings us back to tariffs, which — in a sense — are to goods what border walls are to people. Both invite retaliation, create ill will and carry dubious economic benefits. Both reinforce a kind of insularity and complacency that makes it harder to compete in a diverse, fast-moving, irreversibly global marketplace.

As Westfield learned, the world has changed. Even tariffs don't really save dying industries anymore. They're dying not so much because of foreign perfidy but because of automation and technological upheaval. Meanwhile, the world economy has become so integrated that it's hard to slap a tariff — or put up a wall — without hitting yourself in the face. After Europe threatened to retaliate for Trump's steel and aluminum levies by taxing American bourbon and Harley-Davidsons, the president vowed to re-retaliate by taxing European cars. We do buy a lot of European cars, but many of them are assembled here. From parts made here -- and there and everywhere.

Invest in the future

A better idea might be to focus on the future. Sure, we have an overall trade deficit with the rest of the world. But we have a trade surplus or a technological edge, or both, in fast-growing segments like services, aviation and self-driving vehicles. Rather than waste time propping up old industries, we should be investing in the next ones. Look at China, which is pouring billions into artificial intelligence and other emerging technologies.

Or look at Westfield. The old Whip City survived the dawn of the automobile age. Its population has tripled since then, to 41,000. It has become a transport and logistics hub with a new, city-wide fiber optic network and a well-regarded university, Westfield State.

That institution has an Economics and Management Department, where you can no doubt learn all about the buggy whip industry — and the consequences of 19th century protectionist thinking.

Donald Morrison is an author, lecturer and member of The Eagle's Advisory Board.


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