On Trade, Angry Voters Have a Point
What seems most striking is that the angry working class — dismissed so often as myopic, unable to understand the economic trade-offspresented by trade — appears to have understood what the experts are only belatedly finding to be true: The benefits from trade to the American economy may not always justify its costs.
.. In theory, a developed industrial country like the United States adjusts to import competition by moving workers into more advanced industries that can successfully compete in global markets.
.. In another study they wrote with Daron Acemoglu and Brendan Price from M.I.T., they estimated that rising Chinese imports from 1999 to 2011 cost up to 2.4 million American jobs.
.. the case for globalization based on the fact that it helps expand the economic pie by 3 percent becomes much weaker when it also changes the distribution of the slices by 50 percent, Mr. Autor argued.
.. American manufacturing employment remained fairly stable in the years after Nafta came into force in 1994, plummeting only after China entered the World Trade Organization in 2001 and gained consistent access to markets in the United States.
.. Mr. Autor suggests that Americans’ low savings rate was a big part of the story, coupled with foreigners’ appetite for accumulating dollar assets, which helped keep American interest rates low and the dollar strong, in that way fueling a persistent trade deficit.
.. Germany’s highly skilled workers were harder to replace with cheaper Chinese labor, limiting though not totally eliminating outsourcing. Germany’s stronger labor unions also put up more of a fight.
.. The United States might have leaned against China’s export-led strategy, they argue, perhaps by insisting more forcefully that Beijing let its currency rise as its trade surplus swelled.
.. What Washington did, instead, was hitch the nation’s future to housing and finance.