Archives for April 2022

A large tenet of Donald Trump’s campaign in 2016 was the restoration of American manufacturing. Trump sought to restore America to its former economic glory as the world’s manufacturer superpower. How did he go about doing this once in office? Tariffs.

According to most economists, tariffs, which make foreign goods more expensive for domestic consumers by fiat, damage economic well-being, reduce net production, increase unemployment, and reduce incomes. Tariffs also tend to be regressive, burdening lower-income consumers the most.

According to a model created by the Tax Foundation, the tariffs imposed under the Trump administration and remaining in place under the Biden administration will reduce long-run GDP by 0.22 percent ($55.7 billion) and wages by 0.14 percent and eliminate 173,000 full-time equivalent jobs.

Another problem with tariffs is retaliation. In response to Trump’s actions, other countries imposed retaliatory tariffs on U.S. exports, which is estimated to further reduce U.S. GDP by 0.04 percent ($9.4 billion) and eliminate 29,000 full-time equivalent jobs.

So, tariffs reduced and will continue to reduce wealth…but have they returned manufacturing to the U.S.?

Short answer: sort of. 483,000 manufacturing jobs had been added during his presidency before the pandemic-induced recession. An admirable increase, but hardly a mass migration back to the States.

Trump did have his thumb on a real issue, however. Over the past 50 years, manufacturing’s share of gross domestic product in the U.S. has shrunk from 27% to 12%. Between 2000 and 2010, nearly six million jobs in U.S. manufacturing were lost. During this time, China quickly rose to prominence as an industrial superpower and the world’s leading manufacturer.

It is important to consider how exactly this happened. It’s simple: Chinese workers are cheaper than American workers. And it’s not only that the Chinese work for less, they work for longer hours, as many companies illegally force excruciating overtime hours upon employees.

This is, of course, the result of free trade and free markets: companies will manufacture where labor is cheapest and profit is highest. Interfering policies like tariffs attempt to disrupt this tendency.

Most of us are aware of this reality. After all, who can forget the stories surfacing of Chinese manufacturers installing nets at the top of their buildings to prevent worker suicide?

So perhaps there is a moral mandate to return manufacturing to nations with greater worker protections like the United States. There may also be an economic mandate, as offshore manufacturing has resulted in a U.S. trade deficit of $310.3 billion with China in 2020. The two nations undoubtedly depend on each other, but China has the upper hand.

In the United States, we believe in equality of opportunity for all Americans.

This idea is unfortunately idealistic and vague.

How does one define equality of opportunity? It is undeniable that certain children are born with great advantages over others. These advantages could include natural intellectual, athletic, or creative capacities, the wealth and status of their family, or the quality of their education.

Today, we will focus on education. This post will address how public schools are funded and whether they are providing children an equal education.

School budgets and the ways they are financed vary from state to state and school district to school district. According to EducationWeek.org, generally, states use a combination of income taxes, corporate taxes, sales taxes, and fees to provide about 48% of the budget for elementary and secondary schools. Local districts contribute around 44%, drawn mostly from local property taxes. The federal government provides for about 8% of state education budgets.

Because local funding is so important for public education, the amount of money particular schools receive tends to vary dramatically, depending largely on property values. Less wealthy communities are not able to raise as much money for schools as wealthier districts, leaving their children at a considerable disadvantage. Variation is also seen at the state level. According to the recent data from the National Center for Education Statistics, the average state spending per pupil ranged from a high of $11,572 in New York to a low of $3,886 in Utah.

The higher the share of funding that states provide for education, and the more states target that money, the better the chances for increasing equity in the system.

Court battles have repeatedly determined that states are responsible for all education spending and that even when their funding is simply a minor supplement to local budgets, states should not allow one district to spend vastly more than another.

Let’s shift the discussion to Pennsylvania specifically.

In 2005, the General Assembly of Pennsylvania commissioned a study to determine how much it costs to provide a quality education for every child in Pennsylvania. The study found that $21.63 billion dollars would be necessary
to educate all students in a manner that prepared them to meet state standards. Yet the state was only spending $17.25 billion.

In 2008, Pennsylvania adopted a funding formula stipulating a baseline funding level for all school districts on a per student level. The funding formula provided extra funds on top of the base to help districts meet added cost factors such as the number of students in poverty or who don’t speak English, district size, and cost of living differences. The formula provided extra state funds to low-wealth districts to ensure that poor communities received sufficient funds.

In 2011, a billion dollar cut to state education funding was accompanied by legislation that also eliminated the 2008 education funding formula. The cuts caused property taxes to rise and educational opportunities for students suffered. Since the formula was scrapped, the funding gap among districts has risen to an all-time high.

If students from less wealthy districts do not receive the same quality of education that those in wealthy districts do, how can we in good faith espouse equality of opportunity? Education is vital to a person’s financial, personal, and intellectual success. We must ensure, through policies like the fair funding formula, that students are given equal access to educational resources.