In DC the geniuses are busy with the billionaire agenda, fighting the things We, the People do to make our lives better. Meanwhile, in the real world yet another report is out that shows how one-sided trade deals with China and others are killing off our jobs and factories and industries and economy. And while DC’s geniuses work themselves into a frenzy over the budget deficit — money that we Americans mostly to each other — they ignore the real problem: the trade deficit, and hundreds of billions of our dollars continue to bleed out of our country, year after year.
A new report is out, from economists Justin Pierce of the Federal Reserve Board and Peter Schott of Yale University’s School of Management. The report, titled, The Surprisingly Swift Decline of U.S. Manufacturing Employment is available at the National Bureau of Economic Research. The summary,
This paper finds a link between the sharp drop in U.S. manufacturing employment after 2001 and the elimination of trade policy uncertainty resulting from the U.S. granting of permanent normal trade relations to China in late 2000. We find that industries where the threat of tariff hikes declines the most experience greater employment loss due to suppressed job creation, exaggerated job destruction and a substitution away from low-skill workers. We show that these policy-related employment losses coincide with a relative acceleration of U.S. imports from China, the number of U.S. firms importing from China, the number of Chinese firms exporting to the U.S., and the number of U.S.-China importer-exporter pairs.
What It Means
Hint, for those who don’t like to read long academic papers: one-sided trade deals have cost us millions of good-paying manufacturing jobs, closed tens of thousands of factories and greatly weakened the essential ecosystems that enable key strategic industries to remain in the US.
Hint, for those who haven’t noticed: this devastated the surrounding communities and small businesses, devastated entire regions of our country and forced people and communities into debt just to get by.
Hint, for those who have trouble making connections: it also enabled the giant corporations to break unions and force down everyone else’s wages as millions went looking for work, decreasing demand in the economy and further devastating other businesses and the rest of our economy.
Hint, for those who don’t read the news: all of this greatly enriched a few already-wealthy billionaires who use their enormous fortunes to
bribe keep our country’s policies the way they are because the way things are does so well for them.
Reporting On The Report
The Wall Street Journal reports on the report, in Remember That Jobless Recovery? China’s Fault,
[The 2001 recession] ushered in a huge decline in manufacturing employment. About 1.5 million manufacturing jobs were lost in the first year of that downturn –and continued to fall for years afterward– far more than the 900,000 manufacturing jobs lost in the first year of the so-called Great Recession of December 2007 through mid-2009.
What happened? In a word: China.
Economists Justin Pierce of the Federal Reserve Board and Peter Schott of Yale University’s School of Management argue in a recent paper that import competition from China had a devastating impact on U.S. manufacturing jobs. …
How much damage did PNTR do to manufacturing jobs? (Emphasis added, for emphasis.)
“Manufacturing employment would have been higher by over 4 million employees in 2007 without the effect of PNTR” for China, the economists calculate.
The Washington Post also reported on the report, inStudy: Freer trade with China cut manufacturing employment by almost a third.,
… a new working paper from the Fed’s Justin Pierce and Yale’s Peter Schott argues that the 2000 granting of permanent normal trade relations (PNTR) to China was the rare high-profile trade deal that really mattered. PNTR did not actually involve much in the way of new tariff reductions, but what it did offer was certainty. It suggested that previously eliminated tariffs on Chinese goods weren’t coming back anytime soon.
That reassurance, Pierce and Schott argue, mattered a great deal. All told, they argue that employment in the manufacturing sector in the United States was 29.6 percent lower than it otherwise would have been absent PNTR. That means that employment in that sector would have grown — by close to 10 percent, Pierce and Schott estimate — as opposed to shrinking considerably, as it actually did. It presumably would have grown even more in the absent of other, non-PNTR liberalizations, such as China’s admission to the World Trade Organization. The effect was four times as strong for production-line workers as for non-production workers, which is in line with the usual finding that the losers from trade tend to be low-skilled workers in rich countries.
Trade Policies That Make Us Poorer
So OK, we all know that our trade policies have made almost all of us poorer, cost us millions of jobs, wiped out entire regions of our country, transferred key technologies out of the country and weakened critical components of our manufacturing ecosystem — especially in key strategic industries that are the key to making a living in the future. We all know this. But our leadership and information channels ignore this, and intentionally distract us from it.
We are intentionally whipped into a panic over a budget deficit that can be solved by fixing the things that caused the deficits. Meanwhile the trade deficit continues to do us real, serious and long-lasting harm.
Next: a discussion of the trade deficit, and what we can do to turn it around.