Chart of the Day: Sock Manufacturing in the US

Pie 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 the world".

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The NPR story does note that the sock jobs lost in Fort Payne have been replaced by higher-paying ones, leading Tim Schilling to start channeling Tom Friedman:

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.

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