Yesterday, I encountered two different news stories that illustrated the deleterious health effects of nationalism. In China, a government policy based on national pride is resulting in thousands of needless deaths from COVID:
South Korea’s leading vaccine producer says it is unlikely to supply COVID jabs to China due to Beijing’s “national pride” and insistence on using domestic vaccines, even as the country is hit by its biggest outbreak of the pandemic.
China’s domestically-made vaccines are widely viewed as inferior to vaccines available in other countries.
China had plans to rapidly ramp up production of nuclear power plants, but has fallen well short of its goals:
They called for the mass deployment in both coastal and inland provinces, with a mixture of Chinese indigenous and imported technology. Together with hydropower, nuclear would comprise the backbone of China’s low-carbon baseload capacity additions.
Instead, new nuclear power generation has largely undershot those goals. Total nuclear capacity was just 51 GW by 2020, and China is now targeting just 75 GW by 2025. Meanwhile, coastal provinces are still approving tons of coal-fired capacity. What happened? . . .
By the end of the 2010s, several things had become apparent to Chinese policymakers and energy planners: First, imported designs from the U.S. and France were taking longer to build and were costing a lot more than initially budgeted. Second, the trade war with the U.S. exposed Chinese nuclear developers to supply chain risks via their American suppliers.
Obviously, the slow rollout of nuclear is only a small portion of their environmental problem, but air pollution from coal is estimated to kill hundreds of thousands of Chinese each year. Just one more consequence of the US trade war.
Some of the effects of nationalism are obvious, as with the Russian war against Ukraine. Others are more subtle, as when a recent shortage of infant formula in the US was aggravated by trade barriers.
In some cases, Americans don’t even know that they are being hurt by nationalism. David Henderson recently pointed out that one factor explaining the low quality of airline service in America is the prohibition on domestic flights by highly respected international airlines, such as Singapore Air. I wonder how many frustrated Southwest Airline passengers are even aware that their government doesn’t allow them to choose foreign airlines? And how many are aware of how the Jones Act contributes to higher prices?
Does nationalism cause inflation? Yes and no. Most inflation is caused by monetary policy. If the Fed were serious about its 2 percent average inflation target, then nationalism would not cause any inflation in the long run.
In the short run, demand side inflation generated by monetary policy also raises nominal incomes. It is the inflation that Americans find especially painful, the supply side inflation, which is exacerbated by nationalism. For any given level of nominal GDP, policies such as Russia’s war on Ukraine and the US trade war on China cause prices to rise. This is the sort of inflation that reduces living standards.
READER COMMENTS
Brett
Jan 9 2023 at 3:54pm
The nuclear delays don’t surprise me. The regulatory costs with nuclear power in western countries tends to get most of the attention, but even without that safe nuclear plants are pretty expensive and complicated to build.
Jose Pablo
Jan 9 2023 at 6:43pm
that safe nuclear plants are pretty expensive and complicated to build.
That was not the point. The point was that “safe nuclear plants are MORE expensive and take longer to build them that PLANNED”. Which is a completely different issue.
steve
Jan 9 2023 at 5:29pm
The Chinese vaccines are better than many think, especially against the variants. Three doses of a Chinese vaccine are about as effective as an m-RNA vaccine against severe illness. The vaccines got a bad rep due to their effects against the original covid variants. The m-RNA vaccines were actually pretty good at stopping infection (people forget that or dont want to remember) but the Chinese vaccine was significantly worse at only about 50%-60% effective.
Their problem has not being able to get old people vaccinated. Unlike in the US where old people got vaccinated and young people did not it is opposite in China. Not sure why to be honest.
Nice piece from an ex-pat on what it has really been like living with China’s Zero-covid policy. Daughter lives there now and mostly rings true.
https://lateralthinkingtechnology.wordpress.com/2023/01/07/add-oil-the-tragedy-of-zero-covid/
Steve
Jon Murphy
Jan 10 2023 at 7:10am
Assuming that’s true, then the Chinese government’s actions make even less sense
Scott Sumner
Jan 10 2023 at 12:15pm
“The Chinese vaccines are better than many think, especially against the variants.”
I agree, but that’s consistent with my post. There are somewhat effective, but still fall short of RNA vaccines. BTW, relatively few Chinese have been boosted.
Knut P. Heen
Jan 12 2023 at 8:35am
Quality is not the same as quantity. They need billions of doses.
Mactoul
Jan 9 2023 at 8:33pm
1. M-rna vaccines have no effect on overall mortality.
2. Only countries having persistent covid at present bar China are those vaccinated with m-RNA.
3. All public health statements of the sort
X kills this many millions per year are dubious and most likely made on misrepresentation or misunderstanding of underlying research. For instance, the headline:
“pollution killed 300k people in the US every year”
Is derived from an actual scientific fact
“About 300k people in the US with serious pulmonary or respiratory diseases with estimated lifespans of 10 years will have those lifespans reduced by a month or two due to pollution”
Scott Sumner
Jan 10 2023 at 12:14pm
“M-rna vaccines have no effect on overall mortality.”
Sorry, but these claims are just silly. These vaccines are highly effective, in the 80% to 90% range.
Mactoul
Jan 10 2023 at 7:06pm
Overall mortality is very different thing from vaccine efficacy. A vaccine could be 100% efficacious but still have no effect on overall mortality.
And mRNA vaccines are 80-90 percent efficacious in what? Preventing infection? As they were originally sold?
There has been Cleveland study of 51000 persons summer 2022 showing that the probability of covid infection goes up with the number of mRNA doses taken.
The efficacy is negative and is been to be negative for more than an year.
Warren Platts
Jan 10 2023 at 1:45pm
I just saw this tweet by freshman Senator J.D. Vance:
So is the fact that there is a shortage of imported baby ear infection antibiotics, is that the fault of nationalism or globalism?
Jon Murphy
Jan 10 2023 at 3:50pm
Neither. It appears to be more a regulatory issue. The shortage is due to the surge in RSV this fall. Ordinarily, when demand increases, prices rise as well, and the shortage disappears. However, there are many price controls on these drugs, so price couldn’t rise, and the ordinary price mechanism couldn’t come into play.
NB: this situation would also hold if the good was domestically produced (eg baby formula, toilet paper in 2020, etc).
Jose Pablo
Jan 10 2023 at 4:58pm
Does Senator Vance think that producing in Ohio the antibiotics to be consumed in Ohio would reduce problems in the “antibiotic supply chain”? (I mean, if it works for USA it should work also for Ohio)
What about producing the antibiotics consumed in Middletown within the limits of the city of Middletown, does Senator Vance think this would reduce the problems with the “antibiotic supply chain”?
And why limiting this approach to antibiotics? In Senator Vance world, the solution is easy: let’s produce in Middletown anything that is going to be consumed in Middletown.
It sounds like the right thing to do!
He can even call some Argentinian experts in the subject. They will be more than willing to explain the niceties of imports substitution to the Middletown City Council.
Scott Sumner
Jan 10 2023 at 6:59pm
Warren, Shortages can occur with nationalism or globalization, but a more diverse set of suppliers makes shortages less likely.
Warren Platts
Jan 11 2023 at 1:42pm
Agree 100% sir. But that’s the problem, isn’t it? That globalism doesn’t necessarily result in a more diverse set of suppliers. As often as not, a single SOE in one big country taking advantage of huge state subsidies winds up cornering the entire world market for a given product.
Indeed, that international specialization tends to reduce diversity of suppliers is baked right in Ricardo’s theory itself. Before specialization, a consumer had two sources of cloth or wine. After specialization, only a single global source of either.
We can probably agree that the root cause of supply chain issues is monopoly and neither globalism nor economic nationalism.
Jon Murphy
Jan 11 2023 at 1:57pm
No, that doesn’t appear to be the case at all. Actually just the opposite: SOEs tend to be very fragile.
What evidence do you have for your assertion?
Warren Platts
Jan 11 2023 at 2:09pm
Sinopharm is a HUGE state owned enterprise. It’s sales are over 10 times its closest Chinese competitor.
国药党建网 > ABOUT US > About Us (sinopharm.com)
Jon Murphy
Jan 11 2023 at 2:27pm
And they have a global market share of about 0.6%. 0.6% seems a long way from “cornering the entire world market for a given product.”
Jon Murphy
Jan 11 2023 at 2:05pm
Nationalism, by definition and goal, creates monopolies (that’s the whole point of a tariff or industrial planning: reduce competition for domestic producers and grant them monopoly power). So, if monopoly is the problem, then nationalism necessarily contributes to it by reducing competition.
Two other logical problems with your theory:
First: if there is truly a world monopoly for a given good, then economic nationalism would necessarily mean that the home country is denied those goods/services since the barriers to entry would be too high for other firms to overcome.
Second: Monopolies cannot explain shortages. A monopolist still has the incentive to increase production in a shortage.
Warren Platts
Jan 11 2023 at 2:41pm
No, no, no! That is disinformation, Jon. If you’ll read the actual protectionist literature, you will find that the goal of a tariff is to increase domestic competition behind the tariff screen. When all domestic producers are driven out of business by foreign low-wage competition, where is the competition for domestic producers? There is none.
The evidence for increased competition because of a tariff is exemplified by the “Chicken Tax” on pickup trucks. There are at least 10 producers of pickup trucks in the USA. The Ford F-150 is the number one best-selling vehicle worldwide (including cars of all types). Similarly, Trump’s washing machine tariff increased the number of domestic producers from 3 to 5.
then economic nationalism would necessarily mean that the home country is denied those goods/services since the barriers to entry would be too high for other firms to overcome.
Not at all. Economic nationalism doesn’t mean the same as autarchy. Another straw man. Again, for example, Japan, Korea, and now China have basically cornered the world’s large shipbuilding industry (thanks mainly to heavy-handed industrial policies); yet USA manages to keep a small, civilian shipbuilding sector going thanks to the Jones Act.
Monopolies cannot explain shortages.
Yes it can. In fact wrt the baby formula crisis that you brought up, monopoly is the root cause. Three companies control 90% of the market. I think Abbot had like close to 40%. So when they screwed up, there wasn’t enough excess capacity elsewhere to make up the difference. Please read that article.
Jon Murphy
Jan 11 2023 at 2:44pm
If that’s the goal, then protectionism is based off bad economics. But you implicitly admit my point with your hypothetical question: protectionists want to reduce competition.
Jon Murphy
Jan 11 2023 at 2:54pm
There was: the global market. The Biden Administration had to waive legislation forbidding the importation of baby formula.
Warren Platts
Jan 11 2023 at 5:00pm
Call it bad economics if you want: you are entitled to your own theories, but not to your own empirical facts. And the undeniable facts are that both the Chicken Tariff & Trump’s washing machine tariff increased competition among domestic suppliers, thus disproving your earlier mere assertion that “that’s the whole point of a tariff: [to] reduce competition for domestic producers and grant them monopoly power.”
There was never a ban on imported baby formula. E.g., there were imports from Europe prior to the crisis, as stated in that Wired article I provided. It was just that most foreign-produced baby formulas could not meet FDA standards of quality. So if Biden allowed lower quality baby formula imports, whether that’s a good thing is matter of opinion.
Jim Glass
Jan 11 2023 at 9:03pm
Warren Platts wrote:
Yup. True. The theory is called “Import Substitution”. Argentina adopted it as policy for a couple generations and developed itself from having top-tier world GDP into being a developing nation. In the 1980s its domestic car makers had been successfully protected from foreign competition and were healthily competing among themselves at producing 1960s-model US cars.
If you read the actual alchemy literature, you’ll find its goal is to turn lead into gold. That doesn’t mean it works.
Jim Glass
Jan 11 2023 at 11:49pm
Warren Platts wrote:
Trump’s washing machine tariff increased the number of domestic producers from 3 to 5.
Is this a good thing? Sufficient tariffs on textiles in the 1980s could have kept all those creaky old mills on Route 128, Massachusetts, producing T-shirts and shoes, instead of becoming Silicon Valley East.
And Berkshire Hathaway could still be a shirt company – more jobs saved!
Trade isn’t about either jobs or prices – it’s about productivity.
Jon Murphy
Jan 11 2023 at 2:53pm
No. Ricardian comparative advantage increases the number of producers in the market. That’s why gains from trade occur. Instead of having just one producer (England), consumers now have two to choose from (England and Portugal). The precise terms of trade will come about from the opportunity costs. If the opportunity costs change, then so, too, does the trade pattern.
I think part of the problem is you may be misinterpreting some presentations of Comparative Advantage. Some books will present the specalization and trade portion as one person (or country) entirely specalizing in one good and the other in the other good. That is done for the sake of demonstration. Many other books show incomplete specalization. Indeed, as I discuss here, there is no particular reason to think intra-industry trade will not occur once you rememer that comparative advantage depends on the comparison being made.
Now, theoritical problems of your hypothesis of trade aside, you have a larger issue:
If trade necessarily leads to monopolization, why have prices fallen?
Warren Platts
Jan 11 2023 at 4:38pm
It’s not a necessary condition of Ricardo’s model that there be zero trade prior to national specialization. Tariffs or high shipping costs could easily keep both sectors viable in both countries, and English connoisers of Portuguese wine would still be able to obtain it and vice versa for Portuguese connoisers of fine English cloth. Thus national specialization reduces the number of available suppliers from 4 to 2. Not saying that’s necessarily a bad thing, but it is a logical implication of Ricardo’s model.
The price of IMPORTS goes down. The price of EXPORTS goes up! Right? And in this case, the trade deficit doesn’t matter because the surplus countries still have to invest in US assets like real estate, so those prices go up too.
Also, I explicitly said that trade does not necessarily lead to monopolization. Neither does economic nationalism.
Jon Murphy
Jan 11 2023 at 4:50pm
Yes it is. It’s a model of autarky versus trade.
Not quite. At the moment of opening, yes. In the long run, real prices fall because of gains from trade and increased competition.
You also explicitly said it does:
Jim Glass
Jan 11 2023 at 9:50pm
Re. Warren & John:
Health care is a superior good. Demand increases with income. The USA is the richest country in the world. Health care costs here should be the highest in the world*. This includes pharma. Also, there is a tremendous amount of price discrimination in pharma. It’s like college tuition, very few pay the full list price for drugs.
And also, BTW, IIRC, the benefit of international trade is not bringing down prices but increasing productivity. Ricardo said England and Portugal would get more wine and cloth relative to the resources used to produce them – not falling prices for wine and cloth. Prices aren’t determined by supply alone. So the difference between prices in the US and abroad by itself means zip.
*If not as high as they are. The “superior good” effect accounts for about half of the gap in the cost between health care in the US and in the next most costly nations, by the best analysis I’ve seen. Most notably, wages across US health care industries are the highest in the world. (Bad thing? Good thing?) There’s no way around that with any simple fix. The other half in the gap comes from our system being a dreadful inefficient mess that our politics won’t let us repair.
Mark Z
Jan 10 2023 at 4:34pm
While I agree these are bad policies, would you be able to explain why privileging producers from one’s own country is nationalism rather than patriotism, in a way that isn’t just Russell conjugation?
Scott Sumner
Jan 10 2023 at 6:58pm
Nationalists favor protectionist policies. A patriot understands that globalization is best for his country, and thus favors free trade. I have other posts where I discuss the difference between the two concepts.
Warren Platts
Jan 10 2023 at 7:05pm
That’s the theory, for sure, Jon. But the reality is that Americans chronically pay higher prices for prescription drugs than people in practically every country. Therefore, shouldn’t we be first in line? But since it’s all foreign sourced, that’s not our call..
Jon Murphy
Jan 10 2023 at 7:28pm
Yup. And theory matches reality. Any theory that cannot describe reality is quite useless. Once again. standard price theory tells us the story.
Bizzare reasoning (also incorrect. Recall that a market transaction has both consumers and suppliers, not just suppliers).
If foreign suppliers are the problem, why are there chronic shortages of domestically protected items like baby formula? Wouldn’t domestic producers make Americans first in line?
Your hypothesis cannot explain reality.
Indeed so. Do you know why? Partly because of protectionism, mostly because of regulation.
Jon Murphy
Jan 11 2023 at 9:56am
Allow me to elaborate on my point:
Warren, you write:
As I read your comment, you reject the theory that goods and services are allocated by price and instead propose the hypothesis that goods/services allocated by nationalistic concerns.
As a hypothesis, it certainly is possible, but it cannot explain out-of-sample observations. Why do shortages occur in domestically-produced goods? Why are goods only exported if the world price is higher than the domestic price (and vice versa)?
Further, why do you reject the prevailing price theory? You make a comment about how the theory doesn’t conform to reality, but you never actually show that. In fact, I show perfectly well how the theory can explain the current observations. In what way(s) is the theory deficient?
In short: what evidence do you have that your proposed hypothesis is superior to the current theory?
Warren Platts
Jan 11 2023 at 2:01pm
I don’t reject price theory! But the fact remains that the domestic price for prescription drugs is like 40-50% higher than the world price, yet the vast majority of prescription drugs are imported. Therefore, the price theory doesn’t conform to THAT reality. Obviously, the problem is crony capitalism on steroids when it comes to the U.S. medical sector. Be my guest at fixing that! I’m surprised the medical crony capitalism doesn’t get more attention from economists: that’s probably the single largest source of deadweight losses in the U.S. economy. That said, there are national security reasons for wanting to reshore prescription drug production back to the USA when our main supplier’s political & military leadership literally consider themselves at war with the USA. (Cf. Qiao & Wang’s manifesto Unrestricted Warfare)
Jon Murphy
Jan 11 2023 at 2:12pm
Yes it does, as I explained. You rejected the price theory explination of that and subsituted in your hypothesis of political allocation (“it’s not our call”). I’m just wondering what evidence you have.
Well, there’s a whole field of study edicated to that. In fact, I am teaching a course on it this semester. Health Economics is a huge field.
So your solution is to increase that deadweight loss?
Now, I am all in favor of talking about regulatory barriers. That was my whole point. Ya can’t blame globalization for that problem and forcing domestic supply chains will not solve the problem either (as we’ve seen with the Jones Act, baby formula, and many shortages in 2020).
Warren Platts
Jan 11 2023 at 4:11pm
No it doesn’t. If USA produced all its own pharmaceuticals, that could explain a 40-50% price differential compared to the world price, according to price theory. But we import most of our medicines. Thus, according to price theory, we should be paying the world price. Yet we do not.
Agree with you 100% Jon! I was merely pushing back against the assumption that globalism necessarily enhances diversity of suppliers & that economic nationalism necessarily decreases diversity of suppliers.
Jon Murphy
Jan 11 2023 at 4:18pm
That could explain a differential (assuming we could not trade). Also an extremely high tariff (which is often the case).
But I think you’re confusing several things. First off, the US is extremely protectionist in terms of pharmaseuticals as a whole. In most cases, it is illegal to import drugs into the United States. The few cases we can import, the Feds step in to ensure prices are much higher because of regulatory issues and tariffs.
It’s not an assumption. It’s literally what happens. You yourself has said that’s the goal of nationalism.
Warren Platts
Jan 11 2023 at 5:48pm
{citation needed}
Oh and by the way:
Sinopharm has total sales of $271 billion in 2021, whereas the global market for pharmaceuticals in 2021 was about $1,250 billion. Thus a single Chinese SOE accounts for a 22% global market share. So you’re only off by a factor of 33X Jon!
Warren Platts
Jan 11 2023 at 5:57pm
Oops. I forgot to add the links regarding Sinopharm:
China’s pharmaceutical industry will be the world’s largest (daxueconsulting.com)
Global Pharmaceuticals Market Report 2021: Market is (globenewswire.com)
Jim Glass
Jan 11 2023 at 11:24pm
Re. Warren & John:
You fellows seem to be arguing as if prices are set by the “law of supply”. That is neither trade theory nor price theory.Price theory: Price is determined by quantity of supply and quantity of demand, Supply & Demand. Cost of supply has nothing to do with price.
Um, no, not at all. International trade theory says trade increases productivity, trading nations produce more relative to the amount of resources spent on production. It says nothing about prices, as prices are not determined by supply alone.
Price theory says that prices are set by supply & demand in the relevant market. That’s the USA, not some lower-price market abroad. It also tells us heath care is a “superior good” — one for which demand increases with income. And increasing demand increases prices. The USA is the richest market in the world. Thus health care, as a superior good, should cost more in the USA than anywhere else. That includes pharma. As per my prior comment.
If the USA buys a drug for 5 cents from East Cheapastan, the resulting increased quantity of supply in the US market will reduce the price of the drug relative to what it otherwise would have been without the increase — but in no way is there any reason to assume it will or should reduce the US price to lower than in any other country, given the quantity of demand here. (The 5 cent purchase price is irrelevant to the US market price.)
MarkW
Jan 11 2023 at 7:22am
And how many are aware of how the Jones Act contributes to higher prices?
Almost nobody is aware or has ever heard of the Jones Act. Last summer I was chatting with a woman who lived on an island in Puget Sound near Seattle about problems with the ferries. I suggested that the Jones Act might be part of the problem. She had no idea what the Jones Act was. She seemed a bit interested — maybe later she took the time to look it up, but more likely she quickly forgot about it. And she experiences the problems it causes every day. There’s only one person I know personally (my son actually) who I’d give even a 50% chance of being able to identify the Jones Act. And this is among a group of mostly educated professionals. I have no idea what to do about this. People have busy lives, and there’s so much stupidity out there that it’s really impossible to keep up with all of it.
steve
Jan 11 2023 at 4:52pm
In my specialty we use a lot fo injectable generic drugs, the ones where we frequently run into supply issues. I was part of a group who looked at why this kept/keeps happening. While there is sometimes a regulatory component what we also was that the price margins in the generic drugs was low and competition was fierce. That ended up with sometimes just 2 or 3 producers. These manufacturers dont produce the drugs all year long. They typically set up a run of the drug and then do others.
If there is supply interruption on the part of one of the 2 or 3 producers it is difficult for the other 1 or 2 suppliers to make up the difference so we end up with shortages. Our society has successfully pushed to allow drugs made outside the US when this happens. Then I get to find out those drugs are almost identical, except occasionally they have a quirk I didnt know about which I usually end up dealing with at 2 AM.
In this case if you dont have the option of looking outside the US then I guess you are really out of luck. (We didnt look specifically at generic antibiotics so I cant really address this specific shortage.)
Steve
Warren Platts
Jan 11 2023 at 5:39pm
Yep. Exactly what happened in the US baby formula crisis.
John Thacker
Jan 12 2023 at 12:08pm
The nationalism in China killing people from COVID is not so much the native vaccines (which are fine, even if not perfect the difference is slight), but the boosting of Traditional Chinese Medicine (much of which was done for “national pride” reasons by the government), which is popular among the elderly and many TCM practitioners discourage vaccination and cast worries about side effects.
What’s really killing Chinese is that they’re one of the few places where the elderly are less likely to be vaccinated than the middle-aged or young, and it’s strongly correlated with those who prefer TCM to “Western medicine.” Even among the foolish in other countries you mostly see people who are in their 40s or 50s say that they don’t need it because they’re not old, instead of people in their 80s like in China.
Warren Platts
Jan 13 2023 at 2:05pm
Whether it’s a good thing or not wasn’t my main point. I was specifically responding to Jon’s assertion that “the whole point of a tariff [is to] reduce competition for domestic producers and grant them monopoly power.” Since the tariffs increased the number of domestic producers, competition within the US was increased.
But yes, that’s a good thing because when there’s lots of domestic competition, prices will be pressed down, innovation pressed up, even as there are more domestic jobs.
As to the $820K “cost to consumer per new job” that is one of the most meaningless statistics ever invented by economists; frankly, it’s designed to mislead gullible readers.
Imagine an entirely new product emerging in one year — flying cars say — that sold $1.5 billion worth of production & employed 1800 workers. It would seem pretty silly for an economist to say, “Gee Whiz, all those new flying cars represent a cost to consumers of $8 HUNDRED THOUSAND DOLLARS PER WORKER PER YEAR! Our general equilibrium model shows that represents money that could have been spent elsewhere in the economy (e.g., on nights eating out at restaurants!) and thus causing job losses elsewhere in the economy!”
Yet the situation is exactly analogous.
Anyways, even though “cost to consumers per new worker” is designed to be misleading, it is at least a directionally correct, if highly inaccurate, measure of productivity. That is, the higher the number, the higher the productivity of the new worker. Therefore, the measure doesn’t even achieve its polemical purpose — at least to anyone who knows what they’re looking at — because the higher the number, the more beneficial to the economy it is!
I did some research yesterday to more accurately describe the washer & dryer sector. Here are my results:
The W&D manufacturing sector (the factories that assemble the appliances) employ about 10,000 workers total. Their value-added is about $6 billion per year. Thus the productivity of these factory workers is $600K per worker per year. That is YUGE labor productivity. And that’s what we want, right? The only other sector I can think of off the top of my head that’s more productive would be the oil field sector, where such workers produce about $2 million value added per worker annually.
However, gross output of the W&D sector (that I deduced based on Flaan et al.’s figures) is about $15.5 billion per year. This would include upstream suppliers of intermediate parts & downstream distributors of washers & dryers. This is what Flaan et al. were looking at. But perhaps it is not wrong to give the factory workers at least indirect credit for all this economic activity. In that case, total gross output per W&D factory worker (aka “cost to consumer per worker”) would be $1.55 million per year. Much higher than Flaan’s estimate. But again, that’s a good thing!
Thus we should not begrudge these workers their new jobs when their contribution to the economy is over 10X their wages. One factory worker generating $600K of GDP is worth 20 food service workers producing $30K of GDP per year.
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