Global Trade War, Trump Edition
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