Michael Lind and the tariff advocates are delusional when they say tariffs will get manufacturing to come back to the United States

During the heyday of American tariffs, tariff revenues were tiny and went to fund a tiny federal government.

From 1880 to 1910, federal spending grew from about $300 million nominal to $800+ million, and tariff revenues more or less tracked it to pay those bills.

 

At the same time the rich risked their own money to build US manufacturing, and the tax code was uniquely arranged to reward them for it.

To put it simply, until Reagan we taxed ordinary income at high marginal rates, while income from long term capital investment received relatively preferential tax treatment. That investment translated directly into American manufacturing, higher-paying American jobs, and robust economic growth.

High marginal ordinary income tax rates, which dominated the tax code from WWI except during the roaring 1920s, were first brought down by JFK to 70% from 91%, then to 50% by Reagan I, and finally to 28% by Reagan II. Democrats subsequently lifted these into the high 30s where they are now. 

Capital gains rates of 25%, which persisted throughout the period, suddenly lost much of their appeal because the spreads closed. The new arbitrage which opened up because of globalization was between costly labor at home and cheap labor abroad, which the rich then exploited to get even wealthier.

For those of us who lived through this period, it was accompanied by the constant drum beat of one business after another closing up its domestic operations and moving them abroad, leaving a steady stream of workers behind who were forced to find usually less well paying work here.

We did this to ourselves and called it conservatism. 

Michael Lind here is delusional about how to turn back this clock:

Tariffs — taxes on imports — are a means to the end of “reshoring” manufacturing in America. By making some imports more expensive, Trump hopes to expand the market for those products at home for American manufacturers.

Apart from not working (!), this makes the consumer pay the bill instead of placing the risk where it belongs, with the capitalists, who have the capital!

You will never accomplish with tariffs, whose arena is now much too small, what you can with the stick of high ordinary income tax rates, high capital gains taxes on income from US investment abroad, and the carrot of relatively lower capital gains taxes on income from domestic investment.

We need to attract capital back to the United States and give it preferential treatment in the tax code while penalizing in a relative way the income received from foreign sources and from high ordinary incomes received at home.

Ordinary incomes up to $101,082/$134,776 single/married-filing-jointly in Sep 2026 should be free of federal tax, but anything higher should be progressively and steeply taxed.

Capital gains tax rates should follow the reverse course: steep taxes on income from capital held up to a year, and progressively lower taxes on income from capital held 2, 3, 5, 7, 10, 20, and 30 years.

In such a tax environment, corporate taxes would be redundant, unnecessary, and counterproductive. 

Meanwhile 10 years of the Trump tariff regime are not working to revive domestic manufacturing, and the long term comparison with the pre-Reagan past remains negative.

 

Globalization obviously hit America hardest after 1999 when total hours worked by all workers as a percentage of civilian population plunged as manufacturing jobs leaving the country became a flood, but people pretend not to see

1970-1985 sucked pretty bad though, long before the current suckiness which tastes like nothing so much as that era.

A country that doesn't work is a poor country.

But of course globalization after 1984 meant the good paying manufacturing jobs started to dry up because patriotic American businessmen relocated them to cheaper labor countries in East Asia.

😏 

 

This story is all excited about that little squiggle uptick on the right lol

 

The Real Economy: Manufacturing Jobs

Oren Cass, Commonplace

 

Joe Biden manufacturing employment never looked so good.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

I don't know how you crash something that was so tiny already, but Trump found a way

 Manufacturing employment as a percentage of population:

 

Well, that's not supposed to be happening in the new Golden Age

Private payrolls rose by 38,000 in August, less than expected, ADP reports 

 ... Manufacturing lost 17,000 jobs, professional and business services was off 16,000 and both the natural resources and mining as well as trade, transportation and utilities reported declines of 5,000. ...

Larry Kudlow is back touting a non-existent booming economy just like he did during Trump's first administration

 This Is the Best 'Hard Goods' Boom in Decades

... Tuesday’s industrial production report showed back-to-back gains in June and July for both total production and manufacturing production. ...

Larry is rightly happy about the increase in the durable manufacturing index. 

No doubt about it, it is up, but notice that it is still not as high as it was in Trump 2018 or Obama 2014. 

More importantly, percent change in the index for 1H2026 was 1.94, lower than the 2.28 in 1H2018 when Trump was president the first time.

But this isn't an economic boom, and neither was that. 

Those are welcome highpoints but in a long-term trend all down hill since the 1980s when Reagan was president, and no one asks why.

Kudlow & Co. never go back in the data as far as they should, even though they served in the Reagan Revolution and touted the results for the economy of the posthumous JFK tax cut in the Revenue Act of 1964, which cut the top marginal rate from 91% to 70%.

Today they use these data sets which go back only to the beginning of 1972, but even at that there is a giant durable goods growth spike of 9.02% in 2H1983 which we have been unable to reproduce since then, which should make them ask themselves, What went wrong?, but it doesn't.

Socrates said that the unexamined life isn't worth living.

So let's examine it.

Robust post-war growth is a truism which is true!

Industrial production generally, and for manufacturing specifically, grew robustly year over year, and the trend for those growth rates was itself strongly positive, as the chart for 1948 to 1984 shows.

But look at what happens after 1984. 

You still get positive growth rates year over year, but not as robust as before, and the trend for those growth rates becomes strongly negative.

Something changed in the 1980s to cause this.

I say it's the Reagan Revolution in ordinary income tax rate reductions which caused this, not because tax cuts for rich people is bad, but because Reagan unintentionally sabotaged the tax rate arbitrage which before those tax cuts existed had pushed rich people for decades to make long term capital investments here at home in order to get low capital gains taxes in return.

In other words, Reagan destroyed the negative incentives which drove domestic investment. Take away the penalty of high ordinary income tax rates, and suddenly there's no reason to plow your money into the investments which drive business, jobs, and GDP, especially as enthusiasm for regulations of all kinds began to grow and hamstring profits. 

The new tax cut windfalls freed up a lot of money to seek return wherever it could be found, and in the aftermath of the Reagan era that money increasingly went abroad. For people who lived through it, the one persistent theme of the business news was one business after another closing up shop in America and moving production overseas. After China entered the WTO, the steady departure of businesses from America became a flood.

And that's why that last chart, for 1984 to the present, looks like hell.

It has nothing to do with the U.S. Dollar being the world's reserve currency either. That is the dumbest thing I've heard in years, and I can't tell you how amusing that is coming out of the mouth of a Yalie. I guess they don't teach 'em at Yale that the dollar was the world's reserve currency 1948-1984.

I am not an economist. I do not know how to wave a magic wand of policy to make it all right again. 

I am just a scholar in the humanities who wanted to know what turned my world upside down in 2007 and why I and millions like me have never recovered.

I have made a life for myself in spite of it all, as people do, but I tell you what, America was pretty great once, so don't tell me this is an economic boom.

I knew the economic boom. The economic boom was a friend of mine. And Larry, this isn't an economic boom.

 

 

Industrial production missed the consensus estimate yesterday, so they trotted out Larry Kudlow to tell you otherwise lol

 For month over month in July, the consensus estimate was for +0.3%. Instead we got +0.2%.

Meanwhile the big picture shows, like so many indicators, that industrial production hit the big brick wall of Reaganism in 1984.

Post-war industrial production grew handsomely and its growth rate trended upward from 1948 to 1984, but not after.

Why is that?

I think it's because the incentive to invest in domestic industry went away because of the Reagan tax revolution.

Up to that time, high ordinary income tax rates had pushed owners of capital to invest in America for decades because by doing so they could take advantage of relatively much lower long term capital gains tax rates when they wanted to take income. After the dramatic Reagan cuts to ordinary income tax rates, that arbitrage disappeared. From that time onward owners of capital, now flush with cash from taking income at low ordinary income tax rates year upon year, found it more advantageous to invest abroad where low labor costs and unregulated markets promised even more fabulous returns on investment as America hobbled itself with regulation at home. The exit of businesses of all sizes from the United States to East Asia which began from this time turned into a flood after China was admitted into the WTO in 2001.

But today J. D. Vance thinks the U.S. Dollar's status as the world's reserve currency is the cause of all our problems.

If you want to know what makes me despair, that's it.

The following news story was more accurate than Kudlow. 

US: Industrial Production Up Again in July as Modest Manufacturing Recovery Continues 

The boom in manufacturing is so quiet it's showing up as -0.11% change from a year ago in July 2026 for manufacturing employment

 😂😂😂

The Quiet Manufacturing Boom

Steve Cortes, The Daily Signal

 

This is the ten year chart, from July 2016, a few months before Trump was elected the first time.

 

The trend for manufacturing employment growth since then is negative.

 

Be careful about what politicians promise.

 

You often get the exact opposite ("mission accomplished", affordable healthcare, Mexico will pay for the wall, "we're going to cure cancer", energy bills cut in half, et cetera, et cetera, et cetera).

 

Meanwhile the trend for industrial production in manufacturing remains . . . not good. 

 

 

 

Haley Stevens after debate with Abdul El-Sayed: I’m also not a millionaire like Abdul is, he won’t release his tax returns

 

 It's always great to see the pretensions of progressives skewered.

Democratic Senate candidates sling mud in post-debate spin room 

 ... “Standing up for Michiganders when their jobs were on the line during the Great Recession, standing up for Michiganders when their jobs were on the line yet again during COVID and the COVID pandemic and securing our manufacturing supply chain. I work to get things done. I am not trying to be a celebrity or famous or to sell a book or to push a podcast. I’m also not a millionaire like Abdul is. I am a hard-working gal who rolls up my sleeves, fights like heck for Michigan and delivers for us.” ... 

 

We need 7 million new manufacturing jobs, not 7,000

 

The Dow Jones consensus estimate for May jobs was +80k, leisure and hospitality alone led all sectors with +70k lol, well above the 14k/month average over the past year, government added 52k, education and health services 40k

 

Productive jobs rose by 7k in manufacturing, by 17k in construction, and by 4k in mining and logging, mixed in there with the others.

 

 U.S. payrolls rose by 172,000 in May, much more than expected; unemployment at 4.3%

 

 

"We got this, we got this" USDA says about Plan B after Plan A began too late, with too little urgency, and will be short of the needed 500 million sterile screwworm flies until 2028 at the earliest

We are so screwed, so to speak. 

Hamburgers will never be cheap as long as Donald Trump is president.

 

 Flesh-eating screwworm is confirmed in the U.S., officials say

... "The United States has defeated this pest before, and we will do it again," the USDA said.

... Dudley Hoskins, undersecretary for marketing and regulatory programs at the USDA ... “USDA invested heavily in the tools needed to eliminate NWS ever since cases started increasing in Central America and Mexico,” Hoskins said. “The United States has defeated this pest before, and we will do it again.” ... 

 Confirmed screwworm case in Texas sends two biotech stocks higher

... regional director of the Federal Crop Agency ... “We just had a conditional use drug approved; U.S. producers can handle it.” 

August 15, 2025: 

In Texas cattle country, ranchers brace for flesh-eating screwworms: The devastating pests have crossed Central America. Despite stepped-up efforts, there are not enough sterile flies to stop them.

... Washington has halted cattle imports from Mexico and invested millions in setting up a new sterile fly production plant in Metapa, Mexico. But it will take roughly a year to come online. 

 ... The U.S. eliminated screwworms in the 20th century by flying planes over hotspots to drop red-striped boxes packed with sterile flies, sometimes called “cupcakes” by ranchers. The USDA constructed a fly production plant in Mission, Texas, in 1962, that pumped out 96 trillion flies until it was decommissioned in 1981. Now the USDA is planning to resurrect the plant to disperse sterile flies, while Texas officials have scattered 100 screwworm traps along the border.

USDA inspectors known as Tick Riders who patrol the border on horseback to guard against another pest, the cattle fever tick, have also been tasked with conducting screwworm preventive treatment for all cattle and horses they find in the border area.

At the heart of the problem is an unworkable math equation. The USDA estimated 500 million flies need to be released weekly to push the fly back to the Darien Gap. At its maximum, the Panama plant produces just 100 million. 

“It’s an overwhelming situation at this point,” Dr. Lansford said. “Screwworm is obviously doing well in Mexico, and they’re up against the same challenges we are.” ...

October 21, 2025: 

Mexico’s major initiative to eradicate the screwworm will be ready in July 2026: The government is overhauling a fly production complex in Chiapas to make it the ‘world’s most modern’ facility of its kind, capable of manufacturing millions of sterile specimens as a chemical-free form of pest control

... Moscamed, as the factory is called, will begin manufacturing 100 million sterile flies by July 2026. ...

Until now, the sterile flies that are spread throughout the country to combat the screwworm plague (100 million each week) are brought from a plant managed by the Panama-United States Commission for the Eradication and Prevention of the Cattle Screwworm (Copeg), in Panama, where they have been working at maximum capacity to control the pest since January 2025. ...

With the other leg of the project, the construction of a manufacturing plant for these flies in Texas, international efforts project a production of up to 500 million flies per week, which will be released throughout the region. If international cooperation continues, myiasis could be eradicated in less time than the first time. Some representatives of Senasica have even talked about achieving this goal in five years. ...

USDA didn't break ground on the Texas facility until two months ago.

April 17, 2026: 

USDA and U.S. Army Corps of Engineers Break Ground on New Texas Sterile Fly Production Facility

 ... Initial operational capability targeted for November 2027, reaching production of 100 million sterile flies per week. 

Construction continues immediately beyond initial operations to scale full production capacity to 300 million sterile flies per week. ...

This new state-of-the-art facility will complement USDA’s ongoing production of 100 million sterile flies per week at the Panama-based COPEG facility. USDA has also invested $21 million to support modernization of Mexico’s Metapa, MX facility, expected to be operational in summer 2026. ... 

Manufacturing jobs went sideways in April 2026, economic boom nowhere in sight

 

US economic growth peaked during the Reagan administration because America is a debt-based economy and we turned our backs on the formula during it

 The trend for the growth of the total universe of US debt, TCMDO or total credit market debt outstanding, rolled over after 1985, one year after GDP did.

TCMDO is the real money, almost $108 trillion at the end of 2025. In 1985 it was $9 trillion.

M2 was merely $22 trillion at the end of 2025. 

TCMDO is the sum total of debt expansion throughout the sectors of the economy.

Historically, most people have experienced it this way.

You get a full time job, which itself was created by a business selling debt in the form of stocks and bonds in order to expand its operations and future profits, and you go buy a house, putting down $100k on a $500k property. The bank loans you the $400k through fractional reserve lending on a small portion of its reserves but secured by the house. That new money is created out of thin air but is actually represented by the "guaranteed" future income stream of your job for 30 years, because you're a smart, reliable guy who never misses a day of work. TCMDO expands, and expands some more each time this happens.

When the conditions disappear for full time job creation, the process slows down. You can see the decline in the growth of the economy in the decline of the growth of the debt. Yes, everything is still growing, but not as vigorously.

Full time as a percent of population peaked 26 years ago, in 2000, at 53.55%, but retested the 1975 low of 46.74% in 2010 and 2011 at 46.97%, back-to-back years in the Late Great Recession.

Housing strength persisted in the immediate post-Reagan period on the illusory basis of windfalls from massive ordinary income tax cuts combined with the demographic peaking of the 1957 Baby Boom turning 40 in 1997 driving demand, but the hollowing out of the economy had already begun with the move of 20,000 manufacturers abroad after the 1986 tax reform.

Early warning signs began flashing already during the Clinton era.

Clinton immediately raised taxes in 1993 after he promised not to raise them in 1992, began a long series of cuts to federal government employment, and gutted the US Navy.

Americans were already struggling at the time and ominously tapped housing equity to sustain their middle class standard of living. Owners' Equity in Real Estate averaged 70% 1982-1986 inclusive, but plunged ten points within a decade to 60% 1996-1999 inclusive.

Homes had become piggy banks, preparing the way for 1997, the year Clinton and the Republicans went further still and turned homes into mere commodities, which in turn prepared the way for the housing catastrophe of 2008. From 1997 a flood of 70,000 more manufacturers began moving out as globalization kicked into high gear and China gained admission to the WTO in 2001.

Almost no one today wants to say out loud how unpatriotic this whole business was. 

Reagan tried to convince us that we know best what to do with our own money, and we promptly turned around and staked our fortunes on foreign investment, not domestic.

Libertarianism is a lie.  

Today you will be hard-pressed to identify a major manufacturing concern with 100% of its operations in the US. Tesla is a standout (heavily subsidized by the federal government!), but other than that most of the businesses which remain patriotically committed to the American idea are pretty small beer compared with how it used to be. 

The formerly domestic debt expansion was exported abroad, creating middle classes where none existed before, especially in East Asia, and doing so cost businesses A LOT less, the key attraction for them.

As a result, enormous profits accrued to the owners of capital while wage earners here struggled to maintain the American dream. Wealth inequality soared, and now our children are 40 before they buy their first home.   

TCMDO grew at a compound annual rate of 8.355% 1945-1985, but at only 6.398% 1985-2025. The change from optimism to pessimism can be traced in the trend lines.

Continued growth of TCMDO at the former rate but after 1985 would have yielded TCMDO at the end of 2025 of $223 trillion, or 106% more "money" than we actually have.

$115 trillion is "missing", or at least something like that. We will never know for sure, but some of us can still imagine because we watched the great betrayal actually happen.

This is why I say socialism is the future, not because I want it or because I think it will work.

People are going to figure this out eventually, get angry, and do the wrong thing, just like we did during the Reagan administration. 

 

 

OMG Whirlpool's problems are of much older vintage than February 28, 2026 ROFLMAO

 Whirlpool says Iran war causing ‘recession-level industry decline.’ The shares are down 20%

 

Ha, taxes coerce behavior whether you like it or not, so you'd better decide what behavior you want because you're going to get it good and hard either way

 Tax Power Not Designed To Coerce Behavior - Gary Abernathy, RCEnergy

... the Fifth Circuit’s ruling is a welcome nod to the fact that the federal government cannot take tax laws intended to increase revenue and twist them merely to regulate business activities. ...

I mean, do these people not remember Ronald Reagan?

“If you want more of something, subsidize it; if you want less of something, tax it.” 

But Ronald Reagan ignorantly reduced high marginal ordinary income tax rates, destroying the need for the owners of capital to make the arbitrage decision going forward between either choosing low long term capital gains tax rates or the high ordinary income tax rates. 

The owners of capital had been no dummies and had picked the low rates for years. That drove domestic investment throughout the post-war because it had to, and produced the good paying full time jobs and GDP which too few even remember now. But faced with an easier path to low taxes, they took it.

The tax windfall set the conditions for the hollowing-out of the U.S. economy when those billions of dollars met the opening to China in 2001, where they worked for pennies on the dollar and regulations were practically non-existent.

20,000 domestic manufacturing establishments alone were lost in the wake of the 1986 tax reform, and 70,000 more after 1997. Millions of manufacturing jobs went with them, and with them the American middle class and the American dream.

All because Ronald Reagan, the liberal, thought rich people knew best what to do with their own money.

In the mid-1980s we had maybe 35 billionaires and people in their 20s routinely married and bought their first home. Today we have 1,135 billionaires and people are nearly 40 before they can afford to buy their first home. And we have Ph.D.s all over the place who can't spell in their own language let alone in a foreign one.  

Put a random set of 100 people in a room and the fact is only 25% of them are college material, but the rest need and deserve good jobs the same as they do, and they aren't going to be "knowledge" jobs.

I can still remember my company's HR head telling my truck-driving employees in the 1990s that they had to start thinking of themselves as "knowledge workers" instead of as what they were. I got the hell out of there. By 2003 most of those new "knowledge workers" of mine had lost their jobs driving truck when the company had to "restructure". Just one tale in tens of thousands of such tales.

America will not begin to be great again without tax policy which favors the American people over some eggheaded libertarian's idea of a principle which favors only the rich. 

I keep hearing how we don't need manufacturing jobs because robots and automation are going to save us

 

Manufacturing employment falls again in Feb 2026, back to Mar 2018 levels

 

Manufacturing jobs in Jan 2026 remain down 83k since Trump took over

 

Trump's corrupt state capitalism, but I repeat myself, is anti-American, anti-competitive, and advances long-standing Democrat objectives, which is one reason big business is keeping its big yap shut

When the Democrats can't get what they want, a Republican chump comes along who does it for them.

The power of existing businesses will only get stronger thanks to Trump, so mum's the word.

 

Trump administration equity stakes pose risks to U.S. companies and markets 

The Trump administration’s portfolio of equity stakes in U.S. companies has reached a scale that is unprecedented outside economic crisis or wartime.... 

“It is a invisible barrier to startups and new market entrants,” said Scott Lincicome, an international trade lawyer affiliated with Cato Institute. “Why would you ever want to enter a market that you know your chief competitor is backed by the U.S. government?”...

The Trump administration’s approach is a major ideological departure for the Republican Party, which has traditionally championed free market capitalism and excoriated government intervention. The Democrats have typically been the party of industrial policy and intervention in markets.

Sen. Bernie Sanders and Sen. Elizabeth Warren, for example, introduced an amendment to Biden’s CHIPS Act that would have allowed the government to take stakes in companies that accept federal funding for semiconductor manufacturing. The measure ultimately died in the Senate....

Top executives have voiced virtually no public criticism of the Trump administration taking stakes.... 

Before the U.S. took its stake in Intel, Trump said CEO Lip-Bu Tan was “highly conflicted” and called for his resignation over his ties to Chinese companies. The comments sparked a brief sell-off of Intel shares.... 

               

Trump bought 433.3 million shares of Intel in August 2025 at $20.47, about $3 off its recent lows around $17.66, risking taxpayer money, not his own.