Don't Blame Americans for Blaming China; Free Trade With China Wasn't Such a Great Idea for the U.S.

[bananas]

http://www.bloombergview.com/articles/2016-01-27/don-t-blame-americans-for-blaming-china

Don't Blame Americans for Blaming China
JAN 27, 2016 5:40 PM EST
By Megan McArdle

Was opening our markets to trade with China a good idea?

My colleague Noah Smith argues “maybe not,” citing a new paper from David Autor, David Dorn, and Gordon Hanson.

They write:

Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize.

This is, as Tyler Cowen suggests, “some of the most important work done by economists in the last twenty years”. Adds my colleague: “Economists may blithely declare that free trade is wonderful, but our best researchers have now shown that public misgivings about these smooth assurances have been completely justified.”

It’s fashionable for columnists to write “I was wrong” pieces, and if this work by Autor et al holds, this will go down as one of the four things I was most mistaken about: the Iraq War, the severity of the financial crisis that followed Lehman’s collapse, the rise of Donald Trump, and now, China trade. It’s been obvious for a while that China has played some role (though not the biggest) in the decline of labor-market opportunities for workers without a college diploma. But the authors suggest that the effect is both bigger, and longer lasting, than I would have predicted. Nor has much seemed to help the adjustment: workers are less mobile than expected, domestic American industries less able to absorb the surplus, particularly among the lower-skilled workers whose human capital was job- and industry-specific.

<snip>

I’d be happy to offer government assistance to these folks, but it’s hard to name the government assistance that is going to undo the damage. The rise of both Donald Trump and Bernie Sanders points to the hollowness of the traditional sops that both parties trot out. The people enraged by the loss of the lower-middle-class American dream don’t think a cut in the corporate income tax or capital gains rate is going to offset China’s enormous wage advantage, and they’re right to disbelieve something so ludicrous. Their problems are also not going to be fixed by paid family leave, college tuition, or free daycare for the kids while they’re at the jobs that don’t exist; these are the preoccupations of an educated professional class that is already doing very well. And wringing another 75 cents an hour out of Wal-Mart is probably not going to cut it either, particularly if that means that their local Wal-Mart will then close.

Politicians know that what people want most is work and community -- not tax cuts, not welfare, not more generous government benefits. The problem is, they have no idea how to actually deliver it. Whatever mistakes we made 20 years ago, we’re stuck with them now.

The problem is, that’s not really a very satisfying answer, is it? I’m not stuck with them; I have a stable job, a lovely if somewhat decrepit row home in our nation’s capital, and a marvelously cheap smartphone manufactured in China. It’s someone else who got stuck with the decisions the elites made, and all the elites can seem to offer is pretty much exactly the same policy prescriptions they were in favor of 25 years ago. I can’t blame the elites, exactly. But I can’t blame the folks who have decided they’re sick of listening to them, either.

[frizzled]

1. Could we get journalists like this to just stop writing?

this will go down as one of the four things I was most mistaken about: the Iraq War, the severity of the financial crisis that followed Lehman’s collapse, the rise of Donald Trump, and now, China trade.

I mean, at what point does a reasonable person just realize they should just never say anything in public as long as they live?

[Wilms]

2. Look at her wiki page.

https://en.wikipedia.org/wiki/Megan_McArdle

Seems like another privileged waste of time.

She got the GM bailout wrong too. And hubby works for "Reason" magazine.

[frizzled]

5. Got as far as "libertarian"

Eugh. I can't wish anything worse on these assholes than to live in a country run by their own philosophy.

And they get to call you "the fringe" if you say stuff like "Healthcare is a human right".

[elljay]

3. But but but

we can buy so many Chinese-made quality products now! If math education were better in the U.S. we might realize that it costs more to buy 10 cheap pieces of junk than one more expensive product that lasts longer, but we're just not that smart. In the meantime, a certain very small percentage of the population is making more money than ever. Works well for everybody, doesn't it?

[Wilms]

6. Yup.

How much can you blame the politicians when the electorate is what it is.

I was in an auditorium the day NAFTA was voted on. The show host popped a topical question to the audience asking for a show of hands of those who were for and those who were against it. After the fors and againsts were surveyed, the host added another question: "Who has no idea what NAFTA is?" That got more than HALF the audience to raise their hand.

[vinny9698]

8. I lived in China and taught English

The reason Chinese products are so bad in quality is that the US retailers want cheap products to last a few months so that the consumer has to buy more.
It is called planned obsolesce. I remember when I was a child a pair of sneakers would last until you wore out a hole on the sole.
Now the sneakers fall apart because of cheap glue that is used to make them. I use super glue to hold them together and they last another few months. Why don't they use better glue. Wal Mart and company want that cheap shoe.
When I shopped at Chinese stores the quality was there. None of that Wal Mart quality.

[exboyfil]

4. Before China

Japan did a good job of kicking the crap out of us as well. They only are not in the conversation anymore because China out Japaned Japan.

[Gumboot]

7. Well, I am blaming Americans for blaming China.

When they should be blaming the American corporate class for sending millions of our jobs to what's basically a prison camp economy.

The Chinese didn't just stroll in and take our jobs. They were deliberately offshored by American ultra-elites.

But no, the corporate media keeps making sure we're all on-message. These jobs just magically "went to China," without any prompting from Wall Street's robber barons and the politicians they own.