In a recent Cavalier Daily article, guest writer Milan Bharadwaj makes an inaccurate claim about free trade policies. He focuses his ire on the North American Free Trade Agreement, which he claims “mainly” was responsible for outsourcing “nearly 40 percent” of America’s manufacturing jobs as a result of its implementation. The author proceeds to describe how American workers cannot compete with their Indian and Chinese counterparts, who are paid a fraction of what American workers are compensated. The claim that NAFTA itself caused 40 percent of jobs in the manufacturing sector to disappear is debunked after a quick Google search or two, and it's vital to note that the North American Free Trade Agreement currently encompassing the United States, Canada and Mexico has nothing to do with China or India.
But the wider skepticism evinced by the author towards free trade, free trade agreements and trade’s disproportionate negative effects on manufacturing jobs in the United States touches on an issue at the core of the triumph of President-elect Donald Trump’s candidacy. The bipartisan consensus of free trade as sound economic policy has collapsed as both major party nominees called for the shelving the Trans Pacific Partnership, and one in particular hammers NAFTA and calls for new tariffs on trading partners like China. In keeping with a global trend against increased trade, Americans are turning against free trade and globalization in a way that imperils any new free trade agreements, from those being immediately considered like the TPP, and those still being negotiated like the Transatlantic Trade and Investment Partnership.
Indeed, there is a lot of useful evidence, despite Bharadwaj’s misdirected fire, to back up this assessment of trade’s unequal distribution of benefits. A recently popularized “elephant chart” first plotted by Branko Milanovic in 2012 depicts income gains for those between the 80th and 90th percentiles of global income levels from 1988-2008 as stagnant. This is in contrast to the fabulous gains posted by those in the top 10 percentile and the bottom 75-80 percentile, with the global rich and poor benefiting from globalization, seemingly, at the expense of the developed world’s working class. This global perspective is reinforced by a narrower look at how free trade agreements, and NAFTA in particular, have caused concentrated pockets of job loss and wage cuts by location and sector that have left communities reeling. These localized effects have had a strong impact on political expression. Researchers at institutions from MIT to the University of Zurich have found that areas beset by trade shocks strongly correlate with increased political polarization and ideological orthodoxy.
The result has been a political sea change with broad ripple effects on the growth of trade itself as it peters out in 2016. This is largely the effect of structural deficiencies as the developed world remains in the clutches of secular stagnation with chronically low consumption and investment bedeviling rich economies.
But even with these difficulties, the truth is that increased trade has provided enormous benefits to the American economy and the American consumer that are often overlooked. Furthermore, many of the jobs lost in the manufacturing sector over the last 20 years are better explained by increasing automation than by international competition. Engaging in a trade war with China, whose overleveraged economy is already facing stiff headwinds, would only aggravate situations of poverty, job loss and economic disempowerment. The TPP itself stands to reduce over 18,000 barriers to American exports with the 11 other signatory Asia Pacific nations who bought 44 percent of U.S. goods exported in 2014, boosting U.S. annual incomes, productivity, growth and even workers’ wages.
The answer is not to close America off to the world or to attempt a revolution in the global economic system. Such proposals, if enacted, would make a bad situation worse. It is rather to think boldly and imaginatively about what can be done for workers left behind by the pace of change. One of the great challenges of this in the coming decade will be how we accommodate and assist those communities whose jobs are made obsolete almost overnight. That means making investments in infrastructure, from maintenance to long-term projects, encouraging and subsidizing trade and vocational schools, expanding unemployment benefits and wage insurance, overhauling our education system to establish universal pre-kindergarten and to make it less dependent on local revenue, boosting the earned income tax credit and much more. Policy solutions that get to the heart of this question are what should be driving the conversation around America’s trade policy, and not the binary and simplistic lens of whether we should be trading with the world at all. The tide of history has made that decision for us; the question is whether we will be caught in the riptide or rise to the occasion. If Trump is serious about any of the policies he has touted on trade during the campaign, America and the world will suffer irreparable harm.
Olivier Weiss is a Viewpoint writer.
Read More
PARTING SHOT: No man is an island
By Ava MacBlane | YesterdayRetirement, as you can tell, has been treating me well. When people ask me now if I miss it, I laugh and tell them some things I definitely don't miss. But I don't always get to tell them about the things I really do miss.
PARTING SHOT: You never know unless you try
By Lexi Baker | 2 days agoMy time at the University was shaped by the people who showed me grace and kindness and by those who had confidence in me, even when I struggled to have it in myself.
PARTING SHOT: A love letter to Cav Daily and Connection
By Ava Proehl | 2 days agoMy time here taught me to look for the genuine, human connection in every moment.
