Legions of Trump supporters have legitimate grounds for discontent. As my colleague Peter Goodman wrote last week:
Trade comes with no assurances that the spoils will be shared equitably. Across much of the industrialized world, an outsize share of the winnings has been harvested by people with advanced degrees, stock options and the need for accountants. Ordinary laborers have borne the costs and suffered from joblessness and deepening economic anxiety.
.. The story of Trump’s amazingly successful movement is also the story of how Democrats turned their backs on their working-class roots and sided with the elites on the crucial economic question of our times: Who would win from globalization, and who would lose?
.. Trump’s strategy is essentially one of withdrawal from the world economy. He wants less trade and less outward foreign investment. He offers no plans for how to improve our export performance. This is protectionism, pure and simple.
Erik Brynjolfsson, an economist at M.I.T.’s Sloan School of Management, was more forceful:
No nation can succeed by trying to protect the past from the future. We will succeed by having the confidence to embrace competition, and leveraging our comparative strengths, which are numerous. We have the largest, most productive and most technologically advanced economy that’s ever existed on this planet. The more open the world economy is, the more we have an opportunity to leverage our many strengths.
Looked at this way, Trump’s stance is an implicit admission that he and his followers do not “believe in America” — an argument that the United States cannot compete successfully in the world arena unless protected by the imposition of high tariffs and punitive taxes on foreign production and foreign competitors.
.. Trump’s trade proposals, Reich argues,
assume the U.S. can’t compete and must erect trade barriers lest other countries flood America with better and cheaper products. That’s the opposite of believing in America.
.. Free trade is not surrender, and not something that only suckers do. In fact, just the opposite. Closing our borders would be surrender to a nonexistent enemy. It would make us poorer without bringing back the jobs.
.. Many economists share the view that Trump’s trade proposals would beruinous to the American economy, but in order to retain union support, Hillary Clinton has not been able to directly challenge Trump on these grounds.
.. “Withdrawing from global competition is a particularly terrible idea for the United States right now, since we are on the verge of introducing much more capable robots into the manufacturing process,” Daron Acemoglu, the lead author of the research paper “The Race Between Machine and Machine” and an economist at M.I.T., wrote by email.
Once the advances in robotics are achieved, Acemoglu wrote,
many of the tasks now offshored to China or other low-wage economies can be performed even more economically by robots in the United States. This won’t bring back the semi-skilled jobs that have left (and gone for good whatever Trump says he will do) but might just ensure that a whole slew of non-production jobs and supporting production jobs surrounding these tasks locate back to the United States.
.. Trump has a vastly exaggerated sense of the contribution of trade and trade policy to the decline of manufacturing in the U.S. In terms of real manufacturing output, the U.S. has actually done pretty well.
.. If the United States were to impose a 35 percent tax on Mexican imports, according to Summers, the economies of both countries would suffer:
It would be one of the best things that ever happened for Asian and European competitors.
.. Trump’s trade proposals reflect his bullying style and his technologically uninformed approach to tackling America’s competitive vulnerabilities
We broke down Trump’s supporters. We needed more baskets.
The Washington Post and ABC News
found that Republicans and Republican-leaning independent voters who supported Trump in the primary could be divided into not two, but four baskets of roughly equal size based on their economic and racial anxieties:.. Only 26 percent of Trump’s supporters said that they were not struggling economically or in the lower class, but that it was a bigger problem that whites were losing out to African Americans and Hispanics than vice versa
.. Another 20 percent said they did not think it was a problem that whites were losing out, but they did put themselves in the lower class or said they were struggling economically.
.. Twenty-five percent of Trump’s supporters said both that whites were losing out and reported economic distress.
.. Finally, 24 percent said neither that they had financial problems nor that whites were losing out.
.. Republicans and independents who supported primary candidates other than Trump were much less likely to say either that they were in economic straits or that whites were losing out to other racial and ethnic groups.
.. those who think African Americans aren’t trying hard enough or are getting more than they deserve, for example — also have more negative views of the economy.
There’s No Such Thing as an Economic Miracle
Most of the world’s wealthiest and best-governed countries got there without super-rapid bursts of growth. Denmark, which has a per capita income of about $52,000 and is frequently ranked as one of the happiest countries in the world, never experienced what anyone would call an economic miracle.
.. From 1890 to 1916, per capita growth averaged about 1.9 percent per year, and if in 1916 you had forecast that this pace would continue for another 100 years, you would have been off by only about $200. Denmark had positive growth about 84 percent of the time and no deep recessions
.. U.S. growth rates at the time were typically below 2 percent, and even lower up through 1860, hardly impressive by the standards of today’s China or India — or for that matter today’s U.S. The big advantage of the U.S. is that it avoided major catastrophe for long periods of time, apart from the Civil War, and pushed ahead with fairly steady progress.
.. It’s hard for economies at or near the technological frontier to rapidly improve living standards, because invention is usually slower than playing catch-up by borrowing technologies from wealthier nations.
.. Many export industries are automated and hence don’t create as many middle-class jobs as they used to.
.. In other words, today’s world may resemble the 19th century more than the last few decades.
We’re in a Low-Growth World. How Did We Get Here?
In the United States, per-persongross domestic product rose by an average of 2.2 percent a year from 1947 through 2000 — but starting in 2001 has averaged only 0.9 percent.
.. 81 percent of the United States population is in an income bracket with flat or declining income over the last decade. That number was 97 percent in Italy, 70 percent in Britain, and 63 percent in France.
.. The underlying reality of low growth will haunt whoever wins the White House in November, as well as leaders in Europe and Japan. An entire way of thinking about the future — that children will inevitably live in a much richer country than their parents — is thrown into question the longer this lasts.
.. In January 2005, as it does every year, the Congressional Budget Office released its forecast for the United States’ budget and economic outlook over the decade to come. If the C.B.O.’s projections had come true, the United States would have had $3.1 trillion more economic output in 2015 than it actually did — 17 percent more... An analysis by the White House Council of Economic Advisers last year estimated that about half of the decline in labor force participation since 2009 was caused by aging of the population (which was anticipated in the projection), and about 14 percent from the economic cycle. About a third of the decline was a mysterious “residual”: younger people leaving the work force, perhaps because they saw little opportunity or viewed the potential wages they could earn as inadequate... Mr. Summers, in an interview, frames it as an inversion of “Say’s Law,” the notion that supply creates its own demand: that economywide, people doing the work to create goods and services results in their having the income to then buy those goods and services.In this case, rather, as he has often put it: “Lack of demand creates lack of supply.”