An Ignored Truth

In the discussions of tariffs and international trade, something that is frequently ignored is that the trade regime of the 80s, 90s, and particularly the 2000s did actually result in large numbers oi job losses.

When one looks at things like the GATT, later the WTO, and to an even greater extant WIPO, it becomes clear that the so-called "Free Trade" deals of that era were neither about freedom nor trade.

Instead, they were orgies of self-dealing and political lobbying, with the interests of labor ignored for the benefit for the interests of international finance. 

It's all about one countries negotiating deals that benefit their particular brand or rent-seekers. 

The goal was to create greater inequality through labor arbitrage.

There are claims that it was all due to productivity increases, but this growth was pitiful compared to earlier times.

I had a couple of people ask me what I thought of this NYT piece on trade and manufacturing from last week. The piece makes some valid points, but it continues to push the elites’ big lie, that trade was not the major factor in the collapse of manufacturing employment in the 00s.

It makes this point explicitly:

Take manufacturing. Of the six million factory jobs erased during the 2000s, Chinese imports accounted for about one-sixth of the losses, or a million jobs. But the other five million were killed off by other forces. 

The other forces are supposed to be productivity growth and the shift from goods consumption to service consumption. There is a big problem with these alternative explanations. We had productivity growth forever. We also have been seeing people shift from goods consumption to service for a long time. It did not just begin in the 00s, or end there. But the job loss in manufacturing did.

As can be seen, there are cyclical ups and downs throughout the whole period, but the only time we saw widespread job loss outside of a recession was in the 00s. It seems a bit fantastical to think that productivity growth and a shift to service consumption cost us 40 percent of manufacturing jobs in this decade when the trade deficit exploded, but not in the decades before or in the last fifteen years, when employment in the sector has been on a modest upward trend.

You can read the rest. 

The reason that our economy, and our society, feel so out of whack is because the haves have increasingly crafted a system which is designed to allow them to loot the have nots.

A lot of this is the outgrowth of the DMCA, signed into law in the 1990s, not the safe harbor provisions, but the anti-circumvention provisions, which created an orgy of rent seeking and speculation that drove out building and investment.

Trump is a symptom of this, not the disease.