Truthiness On Trade

Dean Baker

Dean Baker Co-Director, Author, Center for Economic and Policy Research

With the official death of the Trans-Pacific Partnership (TPP) and the likely renegotiation of NAFTA, the proponents of these deals are doubling down in their defense of the current course of U.S. trade policy. While there are serious arguments that can be made in defense of these policies, advocates are instead seeking to deny basic reality.

These trade policy proponents are trying to deny that these policies have hurt large segments of the workforce and are claiming that the people, who believe that they were hurt by trade, are simply misinformed. The proponent’s story is that the real cause of job loss was the impersonal force of technology, not a trade policy that deliberately placed U.S. manufacturing workers in direct competition with low paid workers in the developing world.

Fortunately this is a case where the facts are clear. The people who think they were hurt by trade are right. It is the people who blame technology who are misinformed or worse.

The obvious error in the technology or automation story is that automation is not anything new. We have been seeing increases in productivity in manufacturing forever; it is not something that just happened in the last two decades. In fact, the most rapid period of technological change was in the quarter century from 1947 to 1973, not the last two decades.

In spite of increases in productivity growth, there was relatively little net change in manufacturing employment in the three decades from 1970 to 2000. There were 17.8 million jobs in manufacturing in 1970 and 17.3 million in 2000. There were cyclical ups and downs, but the downward trend was relatively modest. To be clear, manufacturing was declining as a share of total employment, but there was little change in the absolute level of employment.

This changed in the years from 2000 to 2007. Over this seven year period, manufacturing employment fell by 3.4 million jobs to 13.9 million. Note that 2007 is before the collapse of the housing bubble that threw the economy into recession. The reason for this plunge in employment is simple, the trade deficit exploded to almost 6.0 percent of GDP, more than $1.1 trillion in today’s economy.

To argue that this surge in the trade deficit was not associated with a loss of manufacturing jobs is absurd on its face. Does anyone seriously want to argue that if the trade deficit had remained near 1.5 percent of GDP (its mid-1990 level), that we would not have more manufacturing jobs. Or to flip the question over, can we add over $1 trillion to our annual output in manufacturing without hiring additional workers?

And these job losses were concentrated in the traditional industrial states that featured prominently in the fall election. Ohio lost 250,000 manufacturing jobs over this period, one quarter of its total. Michigan lost 280,000 jobs, more than 30 percent of its manufacturing employment. Pennsylvania lost over 300,000 manufacturing jobs, roughly one-third of its total.

None of these numbers are seriously contestable outside of Donald Trump’s alternative fact universe. They all come from the Bureau of Labor Statistics and can be easily verified by any of the commentators blaming automation, if they were interested in actually knowing anything about the issue.

In fact, this story really understates the impact of trade since the imbalances that lead to the housing bubble and the subsequent crash and Great Recession were directly tied to the massive trade deficit the United States ran in this period. For this reason, people would not be wrong to say that our trade policies were an important contributor to the Great Recession and its devastating impact on the labor market.

It is also worth pointing out we could have pursued trade policies that were not so harmful to these workers. Our high dollar policy, which began under Treasury Secretary Robert Rubin in 1996, was central to the huge trade deficits of the next decade.

Also, contrary to the folk wisdom of the elites, we have selective protectionism, not free trade. While it is easy to import manufactured goods produced by the cheapest labor anywhere in the world, even a highly qualified foreign doctor would get arrested for practicing medicine in the United States unless they first completed a U.S. residency program. We subjected our manufacturing workers to international competition, while largely protecting our most highly paid professionals.

This reality check is important. The people who turned away from the Democrats and voted for Donald Trump really did have legitimate grievances. Trade policies supported by the leadership of both parties had a devastating impact on the lives of millions of workers and their families.

This doesn’t justify voting for a reality-challenged bigot like Trump, but it is flat out dishonest to deny the damage that our trade policies have inflicted on large segments of the country. Denying this reality is not a promising path for winning back the support of these voters, although it may make the people who benefited from these trade policies feel better about themselves.

***

This was reposted from The Huffington Post.

Dean Baker is author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy,” PoliPoint Press, LLC. This piece was first published on the Center for Economic and Policy Research’s Jobs Byte. CEPR’s Jobs Byte is published each month upon release of the Bureau of Labor Statistics’ employment report. For more information or to subscribe by fax or email contact CEPR at 202-293-5380 ext. 102 or chinku@CEPR.net.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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