charts are generally anathema to Tufte-heads and other connoisseurs of chartistry:
they use far too much space to convey far too little information. But I like
the one at the right, from an NPR
story about Fort Payne, Alabama – the former "sock capital of
As you can see, the US sock-manufacturing industry is a shadow of its former
self. And naturally, its decline is blamed on competition from abroad; Fort
Payne’s sock manufacturers are lobbying for the US to impose a tariff of about
14% on imported socks.
The NPR story does note that the sock jobs lost in Fort Payne have been replaced
by higher-paying ones, leading Tim Schilling to start channeling
This is a classic example of how the dropping of trade barriers works. And
it also provides a classic example of Schumpeter’s idea of "creative
destruction" – how dynamic economies destroy old industries, replacing
them with new industries. The new industries generally provide better paying
jobs, and may require higher skill levels.
Except I can’t help but feel both sides are wrong here. Removing trade tariffs
didn’t cause the decline of the Fort Payne sock industry, nor did it cause that
industry to be replaced by metal tube manufacturers. Here’s the crucial bit
of the story:
Back in 1984, the U.S. wanted to help the poor Central American nation of
Honduras — where democracy had only just replaced a military dictatorship
— by allowing duty-free exports of socks whose toes were seamed there.
Today, Baker wants the U.S. to rescind that deal and re-impose the old sock
tariff of somewhere around 14 percent.
Yep, 1984. Fast-forward 15 years, and you get to the first pie chart, where
the US has a 76% market share of sock manufacturing. I doubt it was the 1984
tariff reduction which was responsible for the move seen between 1999 and 2006.
Maybe it’s just that Fort Payne’s factories could be put to more profitable
use in other industries – and maybe globalization and reduced sock tariffs
have absolutely nothing to do with it.