|From 2015 05 07 Portland|
There, I said it. I know it's an unpopular opinion in this election campaign. Donald Trump and Bernie Sanders made opposition to free trade a major issue in their campaigns (which differ in almost every other other way). Hillary Clinton has taken to opposing free trade as well, or at least one trade deal, the TPP, although it's reasonable to doubt whether her heart is in it.
Well, my heart is on the side of free trade, even if it's an electoral loser.
Douglas A. Irwin, in an article in Foreign Affairs, explains why I hold this unpopular opinion:
To me, this shouldn't be contentious. It's the Economics 101 that I grew up with. It's the Economics 101 that propelled the American economy to #1 in the world, a position it still occupies.Trade is actually a two-way street — the exchange of exports for imports — that makes efficient use of a country's resources to increase its material welfare. The United States sells to other countries the goods and services that it produces relatively efficiently (from aircraft to soybeans to legal advice) and buys those goods and services that other countries produce relatively efficiently (from T-shirts to bananas to electronics assembly). In the aggregate, both sides benefit.
A narrative has taken hold that trade has cost Americans their jobs, squeezed the middle class, and kept wages low. The truth is more complicated. Although imports have put some people out of work, trade is far from the most important factor behind the loss of manufacturing jobs. The main culprit is technology. Automation and other technologies have enabled vast productivity and efficiency improvements, but they have also made many blue-collar jobs obsolete.
Source: Foreign Affairs.
America hasn't slipped from that perch. Do you know in what year GDP from manufacturing had its best performance? It wasn't, say, 1955. It was 2015. That's right. America is manufacturing more than it ever has. We just aren't using as many workers to do it as we used to. That's not because the work is moving overseas. Remember, I said manufacturing right here in America had its best year ever last year. One big manufacturer, GM, had its own best year ever last year while employing 25% fewer workers than in the past. Manufacturing is up but employment is down. It's not because of free trade. It's because robots are replacing human workers.
All that is why the 2016 presidential election campaign is so frustrating to me. The candidates know all this. Or ought to. But they aren't leveling with the American people. Again, Douglas A. Irwin lays out the dismaying story heard on the stump.
None of the candidates is demonstrating leadership on this issue. And that's my unpopular opinion.Despite all the evidence of the benefits of trade, many of this year's crop of presidential candidates have still invoked it as a bogeyman. [Bernie] Sanders deplores past agreements but has yet to clarify whether he believes that better ones could have been negotiated or no such agreements should be reached at all. His vote against the U.S.-Australian free-trade agreement in 2004 suggests that he opposes all trade deals, even one with a country that has high labor standards and with which the United States runs a sizable balance of trade surplus. [Donald] Trump professes to believe in free trade, but he insists that the United States has been outnegotiated by its trade partners, hence his threat to impose 45 percent tariffs on imports from China to get "a better deal" — whatever that means. He has attacked Japan's barriers against imports of U.S. agricultural goods, even though that is exactly the type of protectionism the TPP has tried to undo. Meanwhile, [Hillary] Clinton's position against the TPP has hardened as the campaign has gone on.
Source: Foreign Affairs.