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Project Syndicate:
The Trump Administration’s
Attitude Toward Trade Is a
Problem: A BIGLY Problem
J. Bradford DeLong
U.C. Berkeley
, WCEG, and
NBER
http://bradford-delong.com
brad.delong@gmail.com
@delong
2017-01-26
pages:
https://www.icloud.com/pages/
0aHDTg0zDZpPUzCXJmmQikfyw#2017-01-26_Project_Syndicate
html:
http://www.bradford-delong.com/2017/02/trade-deals-and-
alternative-facts-now-fresh-at-project-syndicate.html
pdf:
845 words
1
I
just published a long 8000-word piece on “trade deals” at
Vox: <
http://www.vox.com/the-big-idea/
2017/1/24/14363148/trade-deals-nafta-wto-china-job-loss-
trump
>.
My point is that a “bad trade deal” like NAFTA can be held
responsible for
at most
1/200 of the 21.4
%
-point decline in
the manufacturing share of American employment.
The loss of economic opportunities for workers today
whose predecessors half a century ago had a fi t with
manufacturing is a huge and very worrisome problem. But
to claim that it is all—or most, or even some—due to “bad
trade deals” is to be a fool. A BIGLY fool.
I had promised Ezra Klein and company 5000 words by
late September. I delivered 8000 words in late January. The
8000 words I delivered did only a third of what I had
wanted them to. I had wanted to:
1.
show the irrelevance of “bad trade deals” in terms of
the causes of the problem of loss and lack of
opportunity.
2.
present w
hat our trade
—i
n fact, our industria
—
policy
should
be
with respect to manufacturing.
3.
explain why the
fi xation
—
from both left and right
—
on
“bad
trade deals
”
. As I told union executives, members,
and lobbyists in large numbers back in 1993: this
2
energy from you is profoundly lacking on all the much
more important issues on which we can agree. And I
asked why that was
…
I failed. Ezra Klein and company published it anyway, at
excessive length. I am very grateful to them.
The third remains a mystery to me. The best partial
explanation I have seen starts from Ernest Gellner’s cruel
observation that left-wing academics were gobsmacked by
the fact that History had delivered the goods to the wrong
address: that political energy and organizing mojo were
supposed to focus around class, but instead they focus
around nation and ethnicity. Political actors seeking to
summon the lightning of populist energy thus fi nd
themselves summoning hate of foreigners and aliens, thus
supping with the devil without any spoon at all. But I do
not fi nd that adequate.
Some of the second was covered in my book with Stephen
Cohen,
Concrete Economics
<
http://amzn.to/2kylcA1
>:
sensible and pragmatic attention to the value of
communities of engineering practice and to forward and
backward linkages from them should guide industrial
policy. The rest is that the United States ought to be acting
like a normal rich country: funding the industrialization of
the rest of the world via capital export and a trade surplus.
3
It isn’t, and it hasn’t been since the destructive
macroeconomic policies of Ronald Reagan.
I did, however, deliver on the fi rst.
The U.S. went from
30
%
of its nonfarm employees in manufacturing to 12
%
because of rapid growth in manufacturing productivity and
limited demand
.
The U.S. wen
t
from 12
%
to 9
%
because of
stupid and destructive macro policies
—
the Reagan defi cits,
the strong-dollar policy pushed well past its sell-by date,
too-tight monetary policy
—
that diverted it from its proper
role as a net exporter of capital and fi nance to economies
that need to be net sinks rather than net sources of the
global flow of funds for investment
.
The U.S. went from
9
%
to 8.7
%
because of the extraordinarily rapid rise of
China
. And
t
he U.S. went from 8.7
%
to 8.6
%
of its
nonfarm employees in manufacturing because of NAFTA
.
As Larry Summers <
https://www.ft.com/content/
f710909f-7f26-399f-a135-e24a91c9063b
> and Barry
Eichengreen <
https://www.ft.com/content/2a01d6c2-
de6f-11e6-86ac-f253db7791c6
> both observed last week,
Donald Trump’s policy initiatives, such as they are—or
such as we think they are, because far less is clear than
usual at this stage in a transition—are as if designed to
further reduce employment in manufacturing in America. It
is the strong dollar that sends manufacturers the signal that
they are not wanted in America. And Trump’s tax cuts, his
urging the Fed to raise interest rates, and his proposed
4
changes to the tax code will all work to strengthen the
dollar.
But, of course, the strength of the dollar will be blamed not
on incoherent and counterproductive policies, but on the
Chinese. And the Mexicans.
And Trump is not alone.
T
he American political system
right now is blaming all, 100
%
, every piece of that decline
from 30
%
to 8.6
%
,
and every problem that can be laid
at
its
door
,
on brown people from Mexico.
That is a problem.
It is a problem for the United States.
It is a problem for the world.
It is a BIGLY problem.
5
