It's Okay To Lose Your Job Since You Can Always Buy "Stuff" From China.

Here we go again.  In the Washington Post's 'Wonkbook,' [1] Dylan Matthews trumpets the tired old canard that American consumers benefit from the low price of Chinese imports. 

Matthews cites a University of Chicago study that tried to estimate how Chinese exports have affected the cost of living for low-income Americans.  They found that non-durable goods from China comprise a much bigger share of low-income Americans’ spending than that of wealthier U.S. consumers. Because of this, "from 1994 to 2005, inflation among poor U.S. households grew 6 percentage points slower than among rich households."

Basically, the study is saying that poor America shops at Wal-Mart and CVS.  And this is great because those folks can buy low-cost goods there.

It's a great, simple theory.  But it also overlooks the overall ramifications of an increased reliance on exports.  The wider long-term national cost of our mushrooming trade deficit [2] with China is closed factories, lost jobs, and stagnant wages. In fact, the Economic Policy Institute (EPI) found that the trade deficit with China has cost 2.7 million U.S. jobs [3], 2001-2011.

On a personal note, I was one of those low-income Americans.  When I lost my job in the 2001 recession, I was unemployed for nine months.  All I could find in that time was a job at a bookstore.  I earned roughly $6.50/hour.  After taxes, I was earning roughly $5.35/hour.  A typical, non-durable good, like the ones Matthews celebrates, was a regular-sized Speed Stick deodorant.  At CVS, it cost $4.  So, it was taking me almost one hour to earn the money to buy one household good. 

When we lose good-paying jobs, we can’t afford to buy much of any supposed low-cost imports.  To me, Matthews blog piece is frustratingly elitist.

One more example: A paper mill worker in Wisconsin is earning $70,000/year, with benefits and healthcare for his family.  Thanks to China's massive subsidization [4] of its paper industry, plus its illegal currency manipulation [5], he loses his job.  Now, he's earning hourly wages while working at Wal-Mart or CVS.  How does he support his family, pay for healthcare, put his kids through college?

Sorry, Matthews, your viewpoint doesn't hold up in the real world.