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Here we go again.  In the Washington Post’s ‘Wonkbook,’ 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 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, 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 of its paper industry, plus its illegal currency manipulation, 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.

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