If a manufacturing trade deficit leads to deficits of skills, then that can be something truly serious.

Sir, Professor Robert H Wade when commenting on Martin Sandbu’s “Trump’s love of manufacturing is misguided” of February 15 writes: “manufacturing typically has strongly positive “externalities”, especially in innovation, and that the innovation intensity of manufacturing depends on close, physical links between production and innovation (“learning while doing”).” “Manufacturing has positive externalities” February 17.

Indeed, just think of where you, I and we all would have been, if America had not had that manufacturing capabilities and those skills that allowed it to build up what Franklin Roosevelt called “The Arsenal of Democracy”, and which allowed for the defeat of Germany’s impressive war machinery during World-War-II.

And currently, the possibility of some other nation ending up with 1st class robots, and your own with 2nd or even the 3rd class robots should clearly be a source of much concern to everyone.

My current pray is “God save my grandchildren from being surrounded by dumb artificial intelligence and 2nd class robots”. But that said perhaps intelligent artificial intelligence could be worse, since then we humans might turn into having to be its obedient servers. Who really knows?

​PS. Here is what I commented previously​ on Sandbu's article

PS. This is personal. Without “The Arsenal of Democracy” I would not be.

@PerKurowski

In order to rein in inequality, bank regulations must change too.

Sir, I refer to Professor Robert H Wade’s letter “In order to rein in inequality, market need to change”, February 21. Therein Wade writes: “any serious attempt to rein in income and wealth inequality in the US, Britain and elsewhere has to change the institutional structure of markets so that they are less efficient at sluicing pre-tax income up towards the top”.

That is correct but let us not ignore that at the core of that “sluicing”, lies the number one source of damnable inequality politics, namely that which impedes equal opportunities for all. And in this respect, nothing is sluicing cheap and plentiful bank credit away from the “risky” medium and small businesses, entrepreneurs and start-ups, towards the “infallible sovereign and the AAAristocracy, than the current risk-weighted capital requirements for banks.

And that these capital requirements do by allowing banks to hold much less capital against assets deemed “safe”, than against assets deemed “risky”, which of course means that banks will earn much higher risk-adjusted returns on equity when lending to what is perceived as “safe”, than when lending to what is perceived as “risky”.

And all that odious regulatory discrimination for nothing, since never ever has a crisis of the bank system resulted from excessive exposures to what was ex ante perceived as “risky” these always have resulted from excessive exposures to what ex ante was perceived “absolutely safe” but that, ex post, turned out to be risky.

Sadly though, that regulatory discrimination seems to be of no concern whatsoever for most current “inequality fighters”… (like Professor Joseph Stiglitz)