Five Big Truths about Trade

The above title is from an article in the WSJ by Alan S. Blinder. He states five truths. 1. Most job losses are not due to international trade. (Five million jobs are created and lost each MONTH. Mostly a net gain. Trade is a minor part of this volume) 2. Trade is about efficiency-and hence wages-than about the number of jobs. (When items can be made more efficiently elsewhere there is disruption and change in our labor structure. Instead of resisting it and losing in the long run, we should prepare for it so to take advantage of the change, not yell about it). 3&4. Bi Lateral trade imbalances are inevitable and mostly uninteresting. He states trade deficits mean nothing if our economy is growing, we were mercantilist for well over a 100 years. 5. Trade agreements barely affect a nations’ trade balance. (He states that populist talk from Trump, Sanders and Clinton is just that,not based on fact.)

Without healthy trade deals we would pay more for the stuff we consume every day, impacting the less well off significantly.  We can’t make T Shirts cheaper than Vietnam. Do we need fair trade deals, certainly, whatever than means. Should we do a better job of assisting workers affected by trade, certainly-Congress and administrations from both parties have not done well here.

But to color international trade as bad is just plain stupid.

An Update, The weekly Investors’ Business Daily had an editorial on the same subject, “A Lost Chance On Free Trade” on May 16th also echoing the above but also citing a survey that shows the largest support for global trade is among millennials, 48%.  The older you are the less support you give for trade, I think supporting the argument that trade is good, but the support for those affected must be reasonable.

Global Trade is Good for America, Bernie, Donald and Hillary-wake up and tell the truth.

With all the talk about global trade by both sides of the aisle, many articles have come out with actual facts.  Amazing, facts!

Economist.  4/2/16. “Trade, at what price?” Plenty of data that supports global trade as good for America. The issue is the benefits are concentrated in those with more education and willing to move for a new job.  The less fortunate will suffer dramatically if tariffs are imposed, their cost of living will rise 10-20% since they purchase more this material than those with more money. TAA has not made up the difference in wages for those that lose their jobs.  manufacturing has been shedding jobs long before NAFTA, etal, due to global competition requiring more productivity.

National Review, 4/11/16. “The Truth about Trade.”  Lots more data agreeing with the above article. What to do?

  1. US workers should receive the same tax benefit for training unrelated to their current job.
  2. SSDI requirements should be tightened so able-bodied adults are looking for and accepting work.
  3. Occupational reform should be a priority, especially at the state level.
  4. Federal job training programs should be consolidated-issue vouchers or block grants for states to experiment.
  5. Tax free savings accounts like Canada should be explored.
  6. Health care portability, and tax deductible at the individual level should be put in place.
  7. Reduce barriers to opening new businesses, regulations and costs.

Trade is good.  Losing high labor, low value added work is how we have gotten richer for 200 years, stop stoking the fears of those who are affected!