Tuesday, August 4, 2015

The Trump Trade Narrative

I will leave it to you to decide whether Daniel Drezner is correctly characterizing Donald Trump’s campaign theme, but he seems to have gotten close enough to warrant attention:

On the Sunday talk shows, Trump made variations of the same argument he made in 2012 —  that as president he would be able to bring back lost manufacturing jobs from China and Mexico. If there’s been a policy “theme” to Trump’s campaign — and my colleague David Fahrenthold cogently explains why I put quotes around that word — it’s that past U.S. presidents have been bad trade negotiators and that because of these bad trade deals the rest of the world is somehow fleeing the U.S. manufacturing sector. This is a message he’s delivered  again  and  again and again.

Is it true? Did previous administrations negotiate badly and ship American jobs overseas? Or were they corrupted by corporate influences to sell out American workers?

The message is seductive. In fact, it is so seductive that it bears more than a passing resemblance to the underlying thesis of Michael Moore’s movie: “Roger and Me.” While Moore blames it all on greedy capitalists, Trump blames it on incompetent government officials. Perhaps that makes him a champion of free trade, but one does wonder?

Drezner responds that the Trump narrative is factually inaccurate:

To repeat a point I’ve made before (and will have to make again because this is a powerful myth), the truth is that while a small fraction of American manufacturing jobs migrated overseas over the past few decades, a far greater fraction of manufacturing jobs simply disappeared and are not coming back. The far bigger driver of these job losses is the creative destruction that comes from technological innovation and productivity increases. 

And Drezner quotes Charles Kenny, writing in Bloomberg Business:

Pretty much every economy around the world has a low or declining share of manufacturing jobs. According to OECD data, the U.K. and Australia have seen their share of manufacturing drop by around two-thirds since 1971. Germany’s share halved, and manufacturing’s contribution to gross domestic product there fell from 30 percent in 1980 to 22 percent today. In South Korea, a late industrializer and exemplar of miracle growth, the manufacturing share of employment rose from 13 percent in 1970 to 28 percent in 1991; it’s fallen to 17 percent today.

As for the recent news that a Chinese textile manufacturer is relocating some of its operations to America, it appears that the new plant will not provide very many jobs.

So reports the New York Times:

The work is highly automated, with the factory’s 32 production lines churning out about 85 tons of yarn a day. Even when Keer opens a second factory next year, it will hire just 500 workers, a fraction of the thousands of workers who toiled at cotton mills across the South for much of the 19th and 20th centuries — a big reason Keer is able to keep costs down.

For the record, it does not seem commensurate to compare the labor force at one factory with that of the entirety of the South, but still, the new mills, like many other new manufacturing facilities, are not labor intensive places. As I reported yesterday, even Chinese factories are discovering the benefits to replacing humans with robots.

Will anyone call out Donald Trump on this deception at Thursday’s debate? One suspects that the candidates will not do so. Perhaps the moderators will.

As for Trump’s ability to negotiate great trade deals, the truth is: he has never done it. If that is sufficient grounds to support his candidacy, good luck.

1 comment:

Sam L. said...

Off-shoring: Let's consider EPA regs, OSHA regs, insurance costs, tax laws both fed and state, labor and industries regs, diversity issues, union issues, health insurance changes, (feel free to add any and all others you can think of)--off-shoring jobs sound like less frustration.