The Maine lobster industry, which has been abused for years as a result of the Trump administration’s trade war with China, received good news on Wednesday. The president unexpectedly announced that the lobster industry will be eligible for bailout funds that had previously only been awarded to farmers and ranchers.
Trump, being Trump, described this not as what it is, a course correction meant to belatedly limiting the collateral damage of his own political ideas, but rather as an effort to rescue the Maine coast from the depredations of the US administration. Obama that, according to him, “destroyed the lobster and fishing industry in Maine”.
Pres. Obama destroyed the lobster and fishing industry in Maine. Now he is back, bigger and better than anyone thought possible. Enjoy your “lobster” and fish! Make a lot of money!
– Donald J. Trump (@realDonaldTrump) June 25, 2020
None of this is true: Fishing in Maine really thrived during the Obama years. It was a generally difficult period for the Maine economy, especially in the interior, due to both the general weakness of the US job market and a specific structural decline in demand for paper. But the lobster industry performed very well thanks to a combination of what appears to be a rise in climate change-induced lobster catches and strong demand from Asia.
Trump lying about things is nothing new. And the fate of the New England lobster industry is not particularly important in the scheme of things; in fact, despite his economic status in Maine, it is not even necessarily that important to the local economy, but it is a microcosm of Trump’s general approach to economic policy, which is business-friendly without encompassing free markets and emphasizing To a large extent, the idea of targeting resources based on political considerations.
Trump’s Lobster Rescue Explained
The origins of this week’s lobster policy announcement lie in the taxes Trump initially imposed on imported goods from China years ago. Those higher taxes did not generate the policy concessions Trump was seeking, thus leading to higher and broader taxes on Chinese imports over the years.
China retaliated against these movements by reducing imports of a range of American-made products, largely agricultural, creating a political problem for Trump because rural voters are one of his important constituents. The tariffs also raised consumer prices in the United States by something like $ 57 billion per year, according to the conservative American Action Forum. But Trump never expressed much concern about the impact on consumer prices, insisting (falsely) that the economic cost of taxes fell entirely on Chinese producers.
However, he was concerned about the impact on American farmers. To address this, Trump exploited the FDR-era Commodity Credit Corporation to channel billions of dollars to soybean producers, pig producers, and other components of the United States Department of Agriculture. Indeed, American consumers have been paying higher prices for manufactured goods, and the money is being used to compensate American farmers for the loss of Chinese customers. But lobsters were not considered agricultural products for the purpose of this rescue, which left the Maine coast in the cold, even while the Midwest soybean producers were being cared for.
Then came the CARES Act, designed to protect the economy from the repercussions of the coronavirus pandemic. The most important provisions of this bill relate to unemployment insurance and $ 1,200 stimulus checks that were sent to most families, but also facilitated the expansion of Trump’s CCC businesses. As part of that, he is now extending aid to the lobster industry, which was working well before taking office.
The Obama years were kind to the Maine lobster industry
Trump’s support for the Maine lobster is welcome in the industry. But it also represents a kind of embarrassing double reversal. The pain that lobster fishermen have felt in recent years is largely Trump’s fault, a consequence of his trade policy, and the fact that aid is only coming now It represents a management decision to prioritize other larger industries over the lobster niche.
The president prefers to pretend he’s correcting an Obama-era problem instead of eliminating his own policy mistakes, but as Bates professor Michael Roque points out, the actual lobster statistics paint a clear picture of an industry that really held up. well during the Great Recession and then fell off a cliff once Trump took office.
Politically, this is important primarily because of its potential impact on the Maine Senate race.
Economically, it just isn’t that significant. Although it is an important display of Trump’s overall vision for the economy, he highly values ad hoc measures and rewards friends for markets or efforts to help those most in need. After all, throughout Trump’s various interventions in the agricultural economy, he has consistently worked to exclude the poor from nutritional assistance, preferring to reward what he considers to be politically useful producers rather than needy consumers.
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