NAFTA, global trade deals, aren’t what killed American manufacturing jobs

❝ Politically speaking, there was no debate on United States international trade agreements in 2016: All politicians seeking to win a national election, or even to create a party-spanning political coalition, agree that our trade agreements are bad things.

❝ From the left, we had Democratic presidential primary runner-up Bernie Sanders — and a remarkably close runner-up he was — slamming trade. From the — I do not think it’s wrong but it’s not quite correct to call it “right,” at least not as Americans have hitherto understood what “right” is — but from somewhere, we had now-President Donald Trump. Listen to them: The rhetoric is the same.

❝ And what did we hear from the center establishment? We had…Hillary Rodham Clinton: “I will stop any trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election, and I’ll oppose it as president…”…

❝ The political truthiness has been flying thick and fast on this subject for decades now. Politicians are taking claims that have a very tenuous connection to economic reality — claims that feel true — and running with them, sometimes out of ignorance, sometimes because of cynical calculation…

❝ Yes, America has been losing manufacturing job share at a furious rate. Yes, the spread between the incomes of the non-college-educated and the college-educated has widened massively. Yes, the spread between the incomes of even the college-educated and our overclass has exploded.

But this is not due to NAFTA. This is not due to bringing China into the WTO rather than keeping it out. This is not due to the not-yet-completed — and now never-to-be-completed — TPP…

❝ To defend trade deals is not to say that US economic policy has been without fault

To be clear, I do think American international economic policy has been far, far from perfect. I could rant with the best of them about our failure to be a capital-exporting nation financing the industrialization of the world, a role from which we would ultimately benefit both economically and politically. I can rant about our reluctance to properly incentivize the creation and maintenance of the global treasures that are our communities of engineering practice…

❝ But the never-to-be-implemented TPP? NAFTA? And China-WTO? They are not big parts of any picture. They are not a big part of the long-run decline in the manufacturing job share. Indeed, they barely register among the flaws in US international economic policy.

By and large, the jobs that we shed as a result of NAFTA and China-WTO were low-paying jobs that we did not really want. Because of NAFTA and China-WTO, we have been able to buy a lot of good stuff much cheaper — which means we have had more income to spend on other things and to pay people to do other, more useful things than work on low-productivity blue-collar assembly lines.

❝ The elephant in the room is the collapse over the past three generations of the manufacturing employment share here in America.

A manufacturing job making things in a factory is no longer, in any sense, a typical job for Americans. A sector of the economy that provided three out of 10 nonfarm jobs at the start of the 1950s and one in four nonfarm jobs at the start of the 1970s now provides fewer than one in 11 nonfarm jobs today. Proportionally, the United States has shed almost two-thirds of relative manufacturing employment since 1971…

RTFA. Please. It’s long and detailed in premises and proofs. That doesn’t make economics or thoroughgoing history more enjoyable; but, it surely helps with understanding.

❝ But — as professor DeLong concludes — even here in America, you can, as you definitely can elsewhere, mobilize a great deal of populist energy by identifying foreigners as the enemy. I do not think this is an impulse that it is healthy for any part of this country. I do not think this is something any political movement that seeks to do anything other than destroy can dare to encourage…The economic case against the two agreements that passed, and the one that did not, doesn’t hold water. It’s clear, however, that candidates can make an effective political case against trade agreements — and that scares me.

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One thought on “NAFTA, global trade deals, aren’t what killed American manufacturing jobs

  1. List of X says:

    I don’t know in which fantasy world laying people off from a manufacturing job is considered to be freeing them to participate in more productive activities. In the real world, where a lot of manufacturing workers don’t have nor need college degrees, the average hourly wage in manufacturing is $21, and the hourly wage for a high school graduate is $16, laying off these workers will, more likely, “free them” to fall into poverty.

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