Two happenings this week show how far we’ve traveled from reality. The vice-presidential debate and the East Coast Longshoreman Strike may have little in common, but both evidence an archaic way of thinking. The idea that we can stand in the way of progress in a way that saves everyone’s present job has never worked out in practice. Pursuing such a program with an expanding wage scale is madness.

From Diocletion’s Roman Empire to China’s Qing Dynasty, stopping time by government fiat only resulted in decline. Yet both vice presidential candidates claim they can preserve and bring back manufacturing jobs. J.D. Vance hews to Trump’s tariffs to protect otherwise unprofitable businesses. At the same time, Tim Walz would continue massive subsidies and tariffs to do the same.

The East Coast longshoreman demanded a considerable wage increase and banned further automation. With its potentially severe economic consequences, this strike is a stark reminder of the dangers of resisting technological progress. The Luddites in the U.K. in the early 19th century, who violently opposed technological change and rioted over the introduction of new machinery in the wool industry, would seem to be a strange model to follow. There appears to be a settlement with a significant wage increase, but we don’t know about automation. It’ll be interesting to see the final draft.

Both presidential tickets employ industrial policy methods of protection and subsidies, disregarding the fundamental economic concepts of “Comparative Advantage” and “Opportunity Cost.” Some countries possess advantages that enable them to produce goods more economically. Understanding these concepts is not just important; it’s empowering. It’s the key to making informed economic decisions and fostering growth.

Understanding and applying the principles of comparative advantage is crucial for economic growth; it’s a beacon of hope. Canada could grow dates in greenhouses, but countries with a favorable climate can send them to Canada at a much lower price. On the other hand, wooded Canada has lumber unavailable in date-producing desert nations. Dates for the lumber trade leave everyone with more. Adhering to these principles has allowed billions of people to live better than ever, and continuing to do so can lead to even more prosperity.

Yet here we are, blocking lower-cost items with tariffs so we pay more, not less. We subsidize manufacturers to produce things where we have no comparative advantage. This practice doesn’t just increase consumer costs; it’s a cause for concern. It diverts resources from more productive sectors at a high opportunity cost. The excess cost of billions could go into doing what we do better, such as tech, services, energy, and agriculture. How does raising the costs and taxes on success make sense to protect and subsidize losers? Why pour resources into electric vehicles, windmills, steel, and solar panels where others have a comparative advantage?

2023 the United States exported $3,053.5 billion in goods and services, $35 billion more than in 2022. This comprised $2,050.7 billion in goods and $924.2 billion in services. These come from our successful competitors and are sold on the world market. Tariffs are usually met with retaliation. These companies and their workers will suffer to protect the uncompetitive. Did the Smoot-Hawley tariffs teach us nothing?

However, there are gray areas where our inability to compete is self-inflicted. Regulations have made doing business in the U.S. more expensive than in many other nations. In some cases, this obscures actual costs. Take nuclear power. The lengthy approval times and redundant safety systems explode reactor costs. Based on the safety record and advanced tech, a more realistic approach might show that nuclear is the lowest-cost way to get to zero carbon.

This outcome is gaining where it counts in the marketplace. The fastest-growing area of energy usage is tech, especially AI. Microsoft intends to reopen the uninjured Three Mile Island unit as a needed source of reliable energy. Meanwhile, Bill Gates is building modular reactors in Wyoming on the site of an old coal-fired plant.

Being close to raw materials is generally considered an advantage. The ability to ship bulk goods by water lowers costs. Today, it is almost impossible to open a new mine anywhere in the U.S. While the Great Lakes and the Mississippi River still carry a lot of goods, our long coastline suffers from the Jones Act restrictions.

We have enormous natural resources, but under the current regulatory system, it’s virtually impossible to exploit them. For instance, a world-class copper mine has been in limbo for nearly three decades. This mess is in Arizona, a state famous for copper.

While waiting for other solutions, such as nuclear, we have a super comparative advantage in natural gas, the perfect transition energy source. Already, it has replaced twice as emitting coal, making the U.S. lead in lowering carbon emissions. As a reliable source, it reasonably meets technology’s energy needs, giving us a comparative advantage in tomorrow’s technology and everything else.

Using our abundant natural gas, we have a reliable energy source at a favorable cost and a solid export earner. Our fracking technology can provide natural gas to replace cow paddies and wood in the third world with enormous benefits.

In my series on stopping inflation, I proposed several ways to increase efficiency and lower costs. Reforming our regulatory systems is at the top of the list.

Even though both parties appear to be falling all over themselves to get the union vote, the place of organized labor in the demise of some

  U.S. industries need to be illuminated. It isn’t an accident that most of the shrinking industries we protect with tariffs are union-dominated. Even before significant offshoring occurred, many manufacturers moved to right-to-work states, mainly in the South, to avoid union-high labor costs and work rules. Can anybody show me any union-dominated area that thrives anywhere from steel to education? Like a parasite, they weaken the host.

To achieve the same output, we can only offset higher wages than the rest of the world by substituting tech and machines for workers as advancing societies have done.

Suppose we reverse some of our self-imposed disadvantages. In that case, we may find more areas with our comparative advantages. In 1900, 40% of the U.S. Labor force was involved in agriculture. Today, it’s 1.62%., yet we produce much more.

The dockers’ desire to kill automation raises costs for importers and exporters, making us less competitive and worse off. Even now, our ports are among the most inefficient in the world. As we’ve automated, more Americans are employed, producing more value per capita.

Changing things that we can fix that makes us uncompetitive is preferable to beggar thy neighbor and starting trade wars that only make everyone poorer.

The idea that any nation can wall itself off and produce everything is absurd. Instead, it makes sense to encourage our supply lines to run through friendly, rule-abiding nations. This was the thought behind the Trans-Pacific Partnership (TPP), a proposed trade organization of 12 Pacific countries, including the U.S. but excluding China. That would’ve encouraged supply lines to run between members to benefit all. Sadly, the 2016 presidential candidates, Trump and Clinton, foolishly turned to the Obamas Treaty.  

The other eleven nations proceeded in 2018 with a renamed treaty, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Even without the U.S., its success offers up a trading system of the willing worldwide. The U.K. just joined. Others are likely to follow. The U.S. hurts itself and its security by not joining with its friends.

You can see my dilemma with this election. Both candidates are abandoning basic economic principles. Abandoning these fundamentals can only lead to decline. It’s coming down to who the lesser train wreck is.