Thursday, December 1, 2016

Know-it-alls know nothing on trade and jobs

Part of the problem with critics of free trade, besides not knowing what the hell they are talking about, is that is that their arguments are so obviously racially-motivated. They “pick on” the easiest targets, not necessarily the most “guilty” culprits. Let’s take the official trade numbers for 2015 from the U.S. Census for select countries, using first the amount in dollars of products exported from the U.S. to those countries, the amount imported from those countries, and the resulting trade imbalance:

CHINA: exports $116.1 billion, imports $483.2 billion=$367.1 billion deficit.

GERMANY: exports $49.9 billion, imports $124.8 billion=$75 billion trade deficit. 

JAPAN: exports $62.4 billion, imports $131.4 billion=$69 billion deficit.

MEXICO: exports $235.7 billion, imports $296.4 billion=$60.7 billion deficit. 

Now, the first thing we should notice about these numbers is that Mexico imports more goods from the U.S. than the other three countries combined—this in spite of the fact that all three alone have far larger GNP’s than Mexico. In fact, nearly half of Mexico’s total trade is with the U.S.; is that “bad” for American businesses, consumers and the economy in general? I guess that depends on who you ask, and their level of nativism, xenophobia, stereotyping, paranoia, prejudice and other such “rational” discussion variables. 

Both Donald Trump and—to his discredit—Bernie Sanders, have been blowing smoke in people’s eyes about the realities of trade. We live in a different world now, just in case they haven’t noticed—and one largely created by the people who are in power, not immigrants who often get the blame. Automation has been and will continue to be a major reason for the loss of manufacturing jobs in the country. Americans’ addiction to cheap apparel, shoes, electronics and practically every useless trinket you can find is why they have a “Made in China” label.  Germany exports their “superior” automobiles to this country, and they don’t want any of our “junk.” Japan is nitpicky about what it will accept that is American-made as well, and in this country people still believe that Japanese cars (and their heavy machinery, like the “Big Bertha” drill?) get better gas mileage and less prone to “breakdown.” But when it comes to NAFTA, and Mexico in particular—note that Canada is never mentioned in such discussions—people in this country raise their fists and vow “retaliation.” 

Trump and Sanders are being cowardly in their populist rhetoric directed at Mexico as the “villain,” as if they would prefer to have an economically Third World country right on the doorstep. But the “Mexicans” are “stealing” jobs from “real” Americans, we are told; well, I tell you what, if you live in Kent and you need a job, and if you are black, female (preferably both, thus “killing” two demographic birds with one stone) or a white kid with no job skills, just sign up for a position as an order picker at the Amazon Fulfillment Center. They are waiting for you, regardless of your (lack of) work ethic or if you are on a prison work release program. It’s part of their “progressive” hiring policy, because its mid-level to management hiring practices are not. Everyone else is wasting their time even bothering to apply. 

Truth, however has little relevancy when playing on people’s dark side, where paranoia and prejudice coexist comfortably.  Both Trump and Sanders have lately been attacking a company called Carrier, which manufactures furnaces. Carrier is planning to move two plants from Indiana to Mexico, with the loss of supposedly 2,000 jobs. There are calls for the company’s parent United Technologies Corp. to stop the move, with the threat of denying UTC government contracts. If the move is stopped and plants stay in Indiana, then of course the nativists will thump their chests at defeating the brown-skinned “enemy.”

But as the Washington Post recently told us, it is all a “lie”:

Trump is selling a vision of manufacturing as it was in the 1950s, where workers with modest skills went to work in factories that employed huge numbers of people in good-paying, secure jobs with excellent benefits. That world doesn’t exist anymore. In some cases it’s because those jobs have moved overseas, not because of bad deals, but because people in Mexico or China or Vietnam will work for wages Americans won’t accept. The reason you can buy a 12-pack of tube socks at Walmart for $5 is that the socks aren’t made by people earning the kind of wages Americans demand. That’s a reality of different countries’ states of development, not a question of whether a trade deal is “bad.” 

The Post also points out that manufacturing jobs in apparel and electronics are likely gone for good—mostly to China, where the U.S. has lost by some estimates 3.2 million manufacturing jobs alone since 2001, but also because “manufacturing jobs have disappeared (because of) automation. When Trump says we don’t make anything anymore, he’s lying. In fact, we make lots of stuff — we just need fewer and fewer workers to make it…The issue is that the fortunes of factories themselves and of manufacturing workers have diverged…U.S. factories now manufacture twice as much as they did in 1984, with one-third fewer workers, according to the Federal Reserve.”

Trump and Sanders are also lying to the American people about a return to some 1950s middle class utopia, according the Post: “Trump will be signing Republican policies that represent the opposite of that happy 1950s vision of American manufacturing. They’ll be keeping the minimum wage low, making health care less secure, undoing regulations on worker safety, and engaging in an all-out assault on the unions that negotiated those high wages, good benefits, and job security. Look for a national ‘right to work’ law meant to stab collective bargaining in the heart…In other words, Trump and the Republicans plan to nationalize the Southern economic model, which says that if you release corporations from the burden of taxation and roll back worker protections, you can attract jobs. Sometimes it works — but those jobs are inevitably less secure and lower paying.”

Yet we will continue to hear the bullies and cowards blame immigrants in general and “Mexicans” in particular for low wages and the loss of jobs for “real” Americans. What the bullies and cowards will not tell you, as the Los Angeles Times recently reported, is that

The bottom line, say economists and company executives, is that what’s good for Mexico’s factory workers is good for some U.S. workers too. That’s because the chain of goods that supplies Mexico’s factories is very different from the one for China. Simply put, Mexico needs to consume a chunk of U.S. goods in order to make its own. Around 40 cents of every dollar that the United States imports from Mexico comes from the U.S., compared with just 4 cents of every dollar in Chinese imports, according to the Woodrow Wilson Center. The influx of auto factories in Mexico might sustain hundreds of supplier jobs in Deforest, Wis., or Calhoun, Ga. “Instead of thinking of Mexico as a separate part of production, it’s now part of our manufacturing process,” said Raymond Robertson, an economist at Texas A&M University. “Mexican companies aren’t just producing products that rival ours, they are producing parts of our products.”

The Times noted that even if Trump’s “wall” gets built, it will not bring jobs back, especially from the Pacific Rim. “‘Trump's talk on trade is bluster,’ says economist Charles Ballard of Michigan State University. ‘Even if you did [what Trump says], you wouldn't reverse the technology, which is a very big part of the picture.’" It was also pointed out that putting high tariffs on Chinese and Mexican goods would repeat the mistake of the Smoot-Hawley Tariff Act, which only served to dig the country deeper into the Great Depression. It would also merely make more expensive products that workers in the lower-income brackets would not be able to afford to purchase—and thus causing job losses in service-sector jobs.

But try telling Trump or Sanders that—they are the “experts” on trade and the economy, aren’t they—as are all these right-wing know-it-alls I listen to on street corners or in eating establishments. Even pro-labor research institutes in the U.S. admit that trade with Mexico has been far less damaging to job losses in the U.S. than China has been, and most economists are forced to admit that NAFTA has been a zero-sum game as far as the jobs-lost vs. jobs-gained equation is concerned. In fact the relatively manageable trade deficit with Mexico compared to other countries indicates that there is little relationship between the NAFTA trade gap and the jobs numbers; as many people here have gained from NAFTA as have been “hurt” by it. That cannot be said of U.S. trade relations with other countries. 

Yet people are still fixated on Mexico, and this can only be attributed to prejudice against Mexicans. China is far away and too big to “push around.” Politicians have been using “Mexicans” as scapegoats to rouse their constituents for a long time, and the trade and jobs shibboleth is just another myth for the ill-informed masses.

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