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Fast Money & Foreign Objects
Conservatives’ major fail on trade
By Jennifer Rubin September 27 at 1:00 PM
Donald Trump began the debate with an assault on trade. Among other whoppers, he said: China is still devaluing its currency; jobs are fleeing due to defective trade deals; “thousands” of Ford jobs are leaving Michigan and Ohio; and Mexico’s value-added tax (VAT) is unfair — or something. (In all honesty, his word salad on that was incomprehensible: “Let me give you the example of Mexico. They have a VAT tax. We’re on a different system. When we sell into Mexico, there’s a tax. When they sell in — automatic, 16 percent, approximately. When they sell into us, there’s no tax. It’s a defective agreement. It’s been defective for a long time, many years, but the politicians haven’t done anything about it.”)
And the reaction from most conservatives was, sadly from my perspective, to praise his hogwash. How effective! Winning arguments! Shame on them.
Trump got virtually everything wrong. China has not been devaluing its currency. There is zero evidence that millions of jobs have been lost to trade deals; we have had a resurgence of manufacturing jobs. On Ford, The Post’s Fact Checker explains: “Ford is moving its small car production to Mexico, but the expansion will not affect U.S. workers. The company has said that while production of Ford Focus models will shift to Mexico, its plant in Michigan will build other, larger vehicles.”
The trade demagoguery we have talked about misstates just about every economic principle there is. As the Cato Institute explains: “One of the reasons that trade is so maligned is that the public has been [led] to believe that the trade account is a scoreboard, with the deficit indicating that Team America is losing – and it’s losing on account of poorly negotiated trade deals and foreign cheating.”
Conservatives who should know better continue to misstate that we have “lost” jobs to China and Mexico due to trade deals. You can argue that automation and lagging worker training in the United States have fueled some unemployment, but in accuracy there is no convenient scapegoat. Unfortunately, the GOP has now become the anti-trade party, according to recent polling.
Dan Ikenson explained in greater detail:
Rather than a reflection of weakness or stupidity or profligacy or foreign malfeasance, the annual trade deficit is a sign of U.S. economic hegemony – a global endorsement of the relative strength of the U.S. economy and its direction. The United States has run annual trade deficits for 41 straight years. (Yet we’re still alive – even thriving!) The trade account turned to deficit in 1975, just four years after President Nixon upended the gold standard and caused the world’s investors to seek out safe havens. Because of its relative stability and the relatively low-risk associated with U.S. economic policies, the dollar quickly became the world’s predominant reserve currency. Demand for dollar-denominated assets grew swiftly, and with that inflow of investment came greater U.S. demand, for both domestic and imported goods and services.
During those 41 straight years of trade deficits, the size of the U.S. economy tripled in real terms, real manufacturing value added quadrupled, and the number of jobs in the economy almost doubled, outpacing growth in the civilian workforce. Perhaps these trends would have been more favorable had the United States run 41 straight years of trade surpluses, but that is highly doubtful, for the reasons below.
It’s false — as false as dozens of other Trump lies — to say trade has put millions of working-class people in the Rust Belt out of work. That does not mean some people have not been adversely affected by imports; they have. But that is a far cry from saying regions of the country have been wiped out because of China or Mexico. It’s a lazy argument that allows people and government officials to deny responsibility for the real issues with our economy.
Conservatives who defend Trump or Trump voters too often accept as fact that trade has damaged millions of American workers. (These same people oppose trade adjustment legislation that would help those actuallyharmed.) It’s intellectually dishonest and irresponsible. Moreover, it is one of many signs that the GOP has become intellectually debased and corrupted.
Conservatives’ major fail on trade
By Jennifer Rubin September 27 at 1:00 PM
Donald Trump began the debate with an assault on trade. Among other whoppers, he said: China is still devaluing its currency; jobs are fleeing due to defective trade deals; “thousands” of Ford jobs are leaving Michigan and Ohio; and Mexico’s value-added tax (VAT) is unfair — or something. (In all honesty, his word salad on that was incomprehensible: “Let me give you the example of Mexico. They have a VAT tax. We’re on a different system. When we sell into Mexico, there’s a tax. When they sell in — automatic, 16 percent, approximately. When they sell into us, there’s no tax. It’s a defective agreement. It’s been defective for a long time, many years, but the politicians haven’t done anything about it.”)
And the reaction from most conservatives was, sadly from my perspective, to praise his hogwash. How effective! Winning arguments! Shame on them.
Trump got virtually everything wrong. China has not been devaluing its currency. There is zero evidence that millions of jobs have been lost to trade deals; we have had a resurgence of manufacturing jobs. On Ford, The Post’s Fact Checker explains: “Ford is moving its small car production to Mexico, but the expansion will not affect U.S. workers. The company has said that while production of Ford Focus models will shift to Mexico, its plant in Michigan will build other, larger vehicles.”
The trade demagoguery we have talked about misstates just about every economic principle there is. As the Cato Institute explains: “One of the reasons that trade is so maligned is that the public has been [led] to believe that the trade account is a scoreboard, with the deficit indicating that Team America is losing – and it’s losing on account of poorly negotiated trade deals and foreign cheating.”
Conservatives who should know better continue to misstate that we have “lost” jobs to China and Mexico due to trade deals. You can argue that automation and lagging worker training in the United States have fueled some unemployment, but in accuracy there is no convenient scapegoat. Unfortunately, the GOP has now become the anti-trade party, according to recent polling.
Dan Ikenson explained in greater detail:
Rather than a reflection of weakness or stupidity or profligacy or foreign malfeasance, the annual trade deficit is a sign of U.S. economic hegemony – a global endorsement of the relative strength of the U.S. economy and its direction. The United States has run annual trade deficits for 41 straight years. (Yet we’re still alive – even thriving!) The trade account turned to deficit in 1975, just four years after President Nixon upended the gold standard and caused the world’s investors to seek out safe havens. Because of its relative stability and the relatively low-risk associated with U.S. economic policies, the dollar quickly became the world’s predominant reserve currency. Demand for dollar-denominated assets grew swiftly, and with that inflow of investment came greater U.S. demand, for both domestic and imported goods and services.
During those 41 straight years of trade deficits, the size of the U.S. economy tripled in real terms, real manufacturing value added quadrupled, and the number of jobs in the economy almost doubled, outpacing growth in the civilian workforce. Perhaps these trends would have been more favorable had the United States run 41 straight years of trade surpluses, but that is highly doubtful, for the reasons below.
It’s false — as false as dozens of other Trump lies — to say trade has put millions of working-class people in the Rust Belt out of work. That does not mean some people have not been adversely affected by imports; they have. But that is a far cry from saying regions of the country have been wiped out because of China or Mexico. It’s a lazy argument that allows people and government officials to deny responsibility for the real issues with our economy.
Conservatives who defend Trump or Trump voters too often accept as fact that trade has damaged millions of American workers. (These same people oppose trade adjustment legislation that would help those actuallyharmed.) It’s intellectually dishonest and irresponsible. Moreover, it is one of many signs that the GOP has become intellectually debased and corrupted.
Conservatives’ major fail on trade
