The trade deficit
FOREIGN TRADE (Census Bureau, U.S. Department of Commerce)
is the official source for U.S. export and import statistics...
If you're searching for import or export statistics...
this is the place to get the information you need.
At that web site, the most interesting information to me (for 2012) is
1307 - U.S. Exports, Imports, and Merchandise Trade Balance by Country
[for years 2001 - 2010]
[Excel spreadsheet 222k] | [PDF table 165k]
found at the page Exports and Imports - The 2012 Statistical Abstract.
The (non-seasonally adjusted) figures for 2011 are at
PDF, XLS.
Here is an excerpt from Day of Reckoning (2007) by Patrick J. Buchanan.
Emphasis is added.
[7.1.25]
Between January 2002 and January 2007,
the gargantuan U.S. trade deficit set five straight world records,
as did the U.S. trade deficit in autos, auto parts, and trucks.
If this is the fruit of a successful trade policy,
what would a failed trade policy look like?
[7.1.26]
From 2001 to 2007,
America ran $4 trillion in trade deficits,
$2.6 trillion in manufactured goods.
[I.e., two-thirds of the trade deficit in those years.]
Three million manufacturing jobs, one in every six, vanished.
By January 2007, wages in manufacturing had fallen 3 percent in three years—
during a recovery when the stock market had risen every year.
[7.1.27]
Since NAFTA passed in 1993,
America has run fourteen straight trade deficits with Mexico.
Grand total: over $500 billion.
In 2006,
Mexico exported more than 900,000 vehicles to the United States.
The United States exported fewer than 600,000 to the entire world.
...
[7.1.29]
In 1943–44, at the height of World War II,
40 percent of all U.S. jobs were in manufacturing.
In 1950, a third of our labor force was still in manufacturing.
Today it is 10 percent and falling.
For the first seventy years of the twentieth century,
we ran trade surpluses every year.
We have now run trade deficits for thirty-five years.
We used to export twice as much as we imported.
Now we import twice as much as we export.
Is it good for America that our dependence on imports
has risen from 4 percent of GDP to 16 percent?
Is it good for America that we import a third of our manufactured goods?
Is it good that American workingmen and women
make fewer and fewer of the things their countrymen need,
while corporate chiefs bank billions of dollars
for shipping American jobs overseas?
Here is an excerpt from
“Decline is a Choice:
The New Liberalism and the end of American ascendancy,” (2009-10-19)
by Charles Krauthammer.
Emphasis is added.
[R]esistance to decline begins with moral self-confidence and will.
But maintaining dominance is a matter not just of will but of wallet.
We are not inherently in economic decline.
We have
the most dynamic, innovative, technologically advanced economy in the world.
We enjoy the highest productivity.
It is true that
There are, of course, major threats to the American economy.
But there is nothing inevitable and inexorable about them.
Take, for example,
the threat to the dollar (as the world’s reserve currency)
that comes from our massive trade deficits.
Here again,
the China threat is vastly exaggerated.
In fact,
fully two-thirds of our trade imbalance comes from imported oil. [Cf.]
This is not a fixed fact of life. We have a choice.
We have it in our power, for example,
to reverse the absurd de facto 30-year ban on new nuclear power plants.
We have it in our power
to release huge domestic petroleum reserves
by dropping the ban on offshore and Arctic drilling.
We have it in our power
to institute a serious gasoline tax
(refunded immediately through a payroll tax reduction)
to curb consumption and induce conservation.
[All three of Krauthammer’s suggested policy changes
would only reduce America’s dependence on foreign oil
(a valuable objective, to be sure).
They would do nothing
to reduce China’s overwhelming trade surplus vis-à-vis the U.S,
and the fast-rising mountain of debt that entails for the U.S.]
Nothing is written. Nothing is predetermined.
We can reverse the slide, we can undo dependence if we will it.
By ASHLEE VANCE
New York Times, 2010-01-06
[A single paragraph from the article; emphasis is added.]
[Yes, we’ve been hearing that fairly monotonously from the “elite.”
But “little danger” of what?
The incomes and life-styles of the “elite” being challenged?
Let’s look at what that off-shoring of jobs means to the rest of us.
It damages us in two ways: jobs and
the buildup of debt owed by the U.S.
to those countries that have a trade surplus with us.
The lack of jobs is an immediate issue of high salience now, in 2010,
and has been since the recession started around the start of 2009.
The buildup of debt is practically ignored by the chattering classes now,
since interest rates are low
and foreigners are still willing to recycle their dollars
by buying those U.S. treasuries and thus financing the U.S. federal deficit.
But anyone with an ounce of sense knows that
that situation is too good (for the U.S.) to last.
The time will come when all that debt to foreigners in general,
and the countries that contain those electronic manufacturers in particular,
will have to be paid back,
or the U.S. will face other very unpalatable alternatives.
So far as I know,
no country in history has maintained a monotonically increasing debt
without something awful happening to it.
So why is the “elite” so accepting of the loss of those manufacturing jobs?
One answer is that there are some in the “elite” who feel
those jobs were “low-value”
(see the above quote, and a quote above from Charles Krauthammer)
and thus not to be worried over.
But low-value to whom?]
By EDWARD WONG
New York Times News Analysis, 2010-02-21
...
[T]ensions are likely to worsen in coming months
as domestic pressures in each country
push the governments to assert their agendas more boldly,
and as China’s confidence in its economic system continues to grow.
On the American side,
a struggling economy is forcing the Obama administration to make
currency valuation and market liberalization top priorities.
With an unemployment rate of nearly 10 percent
and midterm elections coming up,
American officials are aware that
pushing China to raise the value of its currency, the renminbi,
and allowing American companies greater access to some Chinese markets
could be important political victories for Mr. Obama and his party.
“We’ve got to look at the risk of a more populist American public
and the U.S. Congress deciding that
China is the reason our economy isn’t growing enough,”
the American official said.
...
[This is certainly true, as far as it goes.
But where is concern about the effect of the trade deficit
on the rise of American debt to China?
There is no mention of that issue in the article.
So far as this article is concerned
that is not an issue for the American “elite.”
But if you stop to think about it,
how can that ever-rising debt to a foreign power,
and in fact our chief competitor,
not be a major vulnerability in what’s left of America’s future?
Cf. Paul Kennedy’s The Rise and Fall of the Great Powers.]
Burgeoning middle class drives a roaring trade across the border
By Nick Miroff and William Booth
Washington Post, 2012-09-10
...
[The italicized line above was the subtitle in the print edition.]
[16]
Trade with the United States has increased sixfold
since the North American Free Trade Agreement went into effect in 1994,
according to Bank of Mexico and U.S. Commerce Department data.
The trade agreement eliminated tariffs for goods
and made it easier to invest across the border.
[17]
In the United States,
NAFTA is still often used as a pejorative shorthand for outsourced jobs,
particularly in Rust Belt states
where manufacturers have closed plants and moved south.
The torrid expansion of auto manufacturing in Mexico, for instance,
is viewed by some industry experts as a long-term threat
to much-touted U.S. job growth in the sector.
[18]
But NAFTA today generates far less controversy in Mexico.
The last large protests,
by farmers angry about cheap corn imports from Canada and the United States,
occurred in 2008.
[19]
During Mexico’s presidential campaign this year, none of the candidates —
not even leftist challenger Andres Manuel Lopez Obrador —
campaigned against NAFTA or threatened to revoke it.
The winner, President-elect Enrique Peña Nieto, said he wants to expand it.
[20]
And there is little wonder why.
Mexican exports to the United States
have soared from $42 billion in 1993 to $263 billion in 2011,
according to the Commerce Department.
Almost 80 percent of Mexico’s exports go to the U.S. market, led by
crude oil, fruits, vegetables, televisions, cellphones, computers
and passenger vehicles.
[21]
“Before NAFTA, we had a slight trade deficit with the United States,”
said Daniel Chiquiar, a Bank of Mexico statistician.
“Now we have a huge trade surplus.”
[22]
U.S. exports have also multiplied,
especially as the consumption tastes of the growing Mexican middle class
increasingly resemble those of U.S. shoppers.
[23]
“Mexico and the United States are no longer competitors,
where one country wins and the other loses.
They are partners,”
said Christopher Wilson of the Mexico Institute in Washington,
who is the author of the report “Working Together.”
“The Mexican and U.S. economies are now as deeply integrated as any on Earth.”
‘Looking for quality’
[24]
In a Costco store in the suburbs at the edge of Mexico City,
shoppers browse shelves loaded with pallets of Kirkland vitamins, value packs of Nature Valley granola bars and sacks of Cape Cod kettle-cooked potato chips.
[25]
From 2009 to 2011,
825 new discounters and more than 3,000 convenience stores
opened for business in Mexico.
The biggest growth came in modern retail chains, filled with U.S. products,
that are challenging, for better or worse,
the traditional mom-and-pop stores doling out soda, eggs and tortillas.
[26]
Mexico bought $198 billion worth of U.S. goods last year,
up from $41 billion in 1993.
[27]
The United States sold more stuff to Mexico
than to Brazil, India, Japan and Britain combined.
[28]
At Costco, even the walls in the butcher aisle
boast the “USDA Premium” and “USDA Choice” labels, in English.
...
[36]
About 6 million jobs in the United States depend on trade with Mexico,
according to the consulting group Trade Partnership Worldwide,
which calculated the total for the Mexican government in 2008.
[But nowhere in the article do the authors tell us the converse number,
how many jobs jobs in Mexico depend on trade with the United States,
which would give insight into how many jobs (net) the U.S. has lost.
It seems to me the lack of giving that balancing number makes the article one-sided
on the question of the effect of NAFTA on U.S. employment.]
...
[While the article emphasizes
the (increase in the) amount of goods that the U.S. sells to Mexico,
it almost totally ignores the crucial fact that
the U.S. now runs a large net trade deficit with Mexico.
The only mention I could find of that crucial fact was in ¶21,
where it is given from the Mexican point of view,
where it is a “huge” surplus.
I guess the authors didn’t want to point out that
a “huge trade surplus” for Mexico is a “huge trade deficit” for the U.S.
Below is a table which pulls together the trade figures given in the article,
in ¶20 and 26,
to show the actual deficit in 1993 and 2011.]
[To me, those numbers suggest that
Ross Perot was absolutely right circa 1992
when he warned that
passage of NAFTA would lead to a “Giant Sucking Sound”
as American jobs went south to Mexico.
What does that $65G deficit mean in terms of jobs?
I am not an economist nor a student of this issue,
but can show how certain assumptions will lead to certain conclusions.
Suppose the Mexican workers making the goods implicit in that $65G deficit
are paid an average of $10K ($10,000) per year.
Then we would be talking $65G/($10K/worker) = 6.5M workers.
That is no doubt highly simplistic,
but might indicate the ball park of the job loss implicit in that trade deficit.]
...
[42]
This year,
Mexico became the No. 1 investment destination for the aerospace industry.
by David H. Autor, David Dorn, Gordon H. Hanson
NBER (National Bureau of Economic Research), 2016-01
ABSTRACT:
China’s emergence as a great economic power has induced an epochal shift in patterns of world trade.
Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks.
Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences.
These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated.
Adjustment in local labor markets is remarkably slow,
with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated
for at least a full decade after the China trade shock commences.
Exposed workers experience greater job churning and reduced lifetime income.
At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize.
Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.
Republicans rallied around a law to expand trade. Now it may doom them.
by Jim Tankersley
Washington Post, 2016-03-22
The Republican establishment began losing its party to Donald Trump on May 24, 2000, at 5:41 p.m., on the floor of the House of Representatives.
Urged on by their presidential standard-bearer, Texas Gov. George W. Bush, and by nearly all of the business lobbyists who represented the core of the party’s donor class, three-quarters of House Republicans voted to extend the status of permanent normal trade relations to China. They were more than enough, when added to a minority of Democrats, to secure passage of a bill that would sail through the Senate and be signed into law by President Bill Clinton.
The legislation, a top Republican priority, held the promise of greater economic prosperity for Americans. But few could predict that it would cause a series of economic and political earthquakes that has helped put the GOP in the difficult spot it is in today: with the most anti-trade Republican candidate in modern history, Trump, moving closer to clinching the party’s nomination.
...
In many ways, the vote worked out much better for the GOP’s donor class
than for the working-class voters now flocking to Trump.
[Surprise!]
By 2004, U.S. imports from China had nearly doubled.
By 2011, the U.S. trade deficit with China had quadrupled.
Thanks to the law, Americans were able to buy cheaper electronics, clothes, toys and other consumer goods.
Some companies ramped up exports to China, creating jobs.
Other companies were able to send millions of jobs
to a country where factory workers earned far less than those in the United States.
The ripple effects of those job losses have persisted, for workers,
in ways that surprised many economists.
Standard economists predicted no net job losses from expanded trade with China,
economists David Autor, David Dorn and Gordon Hanson wrote
in a working paper released this year
["The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade"].
In reality, the authors found, new jobs have not materialized quickly,
as expected, to replace the jobs lost from trade.
“Adjustment in local labor markets is remarkably slow,
with wages and labor-force participation rates remaining depressed
and unemployment rates remaining elevated for at least a full decade
after the China trade shock commences,” they wrote.
“Exposed workers experience greater job churning and reduced lifetime income.”
...
by Clyde Prestowitz
Boston Globe Op-ed, 2016-03-22
...
While economists argue endlessly over the impact of the trade deficit,
one incontrovertible conclusion stands out.
None of the trade agreements have eliminated it, or even reduced it, as promised,
and none of them have come close to achieving other promised benefits.
Or, consider the US-Korea Free Trade Agreement of 2012.
In 2011, the US trade deficit with Korea was $13 billion.
Top US trade officials again told Congress and the public that
this deal would dramatically open the Korean market to US exports
and sharply cut the bilateral trade deficit.
But by 2015, the deficit had climbed to $28 billion
as Korean exports to America exploded,
while US exports to Korea remained about the same.
The growth in this deficit,
contrary to the forecasts of the government
and most of the leading economic think tanks,
represents the elimination of about 90,000 US jobs,
if we apply the Commerce Department’s calculation of
6,000 jobs for every billion dollars of exports or imports.
...
But, if the deals are so bad,
why have intelligent, well-educated officials of both the Republican and Democratic parties
persisted in making them,
and in making the same old discredited cases for them?
There are two major reasons.
The first is that
the primary purpose of the trade agreements
is not to improve the economic welfare of the United States.
Rather, it is to strengthen the American geopolitical position.
For instance, I was one of several people invited to the White House in 2009
to discuss the possibility of a Trans Pacific Partnership free trade agreement.
When I asked what the purpose of the agreement was,
I heard that it was to show our Southeast Asian friends and allies
that America is back, and
that it really cares about the region.
In other words, this deal was not primarily aimed at
creating American jobs or raising American incomes.
It was aimed at reassuring allies and friends
and at countering China’s influence
The second reason is that universities, think tanks, and media
still propagate a badly outdated notion of trade and globalization.
It is argued that trade is always and everywhere a win-win proposition
and that even if a trading partner doesn’t reciprocate with open markets,
unilateral free trade is still better than mutually closed markets.
The problem is that these assumptions include
full employment, fixed exchange rates,
no cross-border investment or technology flows,
and no costs for moving or closing one industry and opening a new one.
This clearly isn’t the world in which we live.
Just think about exchange rates.
They have been floating since the early 1970s.
Countries like China and Switzerland, to name just two,
have systematically intervened in global currency markets to devalue their currencies.
So, in a trade deal, maybe every country agrees to cut its tariffs by, say, 10 percent.
But then perhaps one of the countries acts to devalue its currency by 20 or 30 percent,
negating the effect of the tariff cuts. Or think of investment.
In today’s world, global financial flows are greater than trade flows.
As for technology, countries like Japan, in the past, and China, today,
have often made technology-transfer a condition of market access.
by Clyde Prestowitz
Tribune News Service, Memphis Commercial-Appeal, 2016-05-29
For all his bullying, narcissism and self-contradiction,
there is one point on which
presumptive Republican presidential nominee Donald Trump cannot be criticized.
In attacking our longtime free-trade policies and deals,
he has brought necessary attention to a huge elephant in America's policy room,
one that has run wild and must be stopped by the nation's next leader.
...
What did Trump so presciently see?
First, he saw the problematic approach taken by establishmentarians like Robert Zoelleck, a former World Bank president and deputy secretary of state, who in a Wall Street Journal op-ed this month argued for the TPP by focusing on the impact America's trade deals have had on national security.
To insiders like Zoelleck, the main purpose of trade and globalization policy is not to enhance the welfare of ordinary Americans; it's to shore up allies against Russia and stop China from doing what is never precisely stated.
This position is held by the very people who were silent when General Electric, rather than invest here, decided to move its high-tech aviation electronics division to Shanghai through a joint venture with a state-owned Chinese company. These are the people who promoted and profited from the offshoring of millions of U.S. manufacturing jobs in the name of making China a responsible stakeholder in the world economic system.
Neoclassical economists and the foreign policy establishment see the nonreciprocal opening of U.S. markets as an allegedly cost-free way of buying friends and persuading countries with tiny economies to host U.S. troops and join us in supporting supposedly critical issues at the United Nations.
This approach has long been deemed cost-free because top Anglo-American economists — not, mind you, Japanese, Korean, German or Singaporean economists — argued that free trade is always win-win.
So, opening U.S. markets to foreign competition, even when it has been clear the competitors are operating under mercantilist, export-led growth policies, has been said to be a big win for the vast majority of Americans. Of course, it has been admitted, a few workers or companies will be displaced, but it's also been promised they'll be compensated by the vast majority of winners.
All this has been based on the counterintuitive concept of comparative advantage, first articulated in 1817 by British economist David Ricardo. The theory basically holds that countries should concentrate on producing what they do best and trade for the rest.
What countries produce best, according the theory, is determined by their endowments of land, labor and capital. Therefore, countries like America, with skilled labor and lots of land and capital, ought to produce agricultural and advanced manufactured products and trade those for toys, clothing, and other products from countries with lots of cheap labor.
However, as economist Paul Krugman noted in the early 1980s, this theory rested on a host of far-fetched assumptions: fixed exchange rates, no cross-border flows of investment or technology, constant full employment, no cost of entry into or out of business, no government intervention such as Social Security or minimum wages, no unions and, very important, no economies of scale.
Indeed, in the late 1990s, Ralph Gomory, a former chief scientist at IBM, and William Baumol, a former president of the American Economic Association, showed that in the real world, where many countries and products were experiencing rapid technological change, immense cross-border flows of investment and technology, and frequent fluctuations in economic growth and employment, trade is as likely to be a zero-sum (I win, you lose) proposition as a win-win situation.
Trump probably hasn't read these analyses. But he has seen that none of the forecasts by Republican or Democratic administrations for job creation and reduced trade deficits came true. For instance, our $2 billion trade surplus with Mexico has become a $50 billion deficit since the North American Free Trade Agreement took effect. Our trade deficit with China, $80 billion in 2011, has ballooned to nearly $400 billion. Our free-trade pact with South Korea has seen U.S. exports decline, imports double and 11,000 jobs lost.
It's hard to deny that Trump has been right on trade.
is the official source for U.S. export and import statistics...
If you're searching for import or export statistics...
this is the place to get the information you need.
At that web site, the most interesting information to me (for 2012) is
1307 - U.S. Exports, Imports, and Merchandise Trade Balance by Country
[for years 2001 - 2010]
[Excel spreadsheet 222k] | [PDF table 165k]
found at the page Exports and Imports - The 2012 Statistical Abstract.
The (non-seasonally adjusted) figures for 2011 are at
PDF, XLS.
Here is an excerpt from Day of Reckoning (2007) by Patrick J. Buchanan.
Emphasis is added.
[7.1.25]
Between January 2002 and January 2007,
the gargantuan U.S. trade deficit set five straight world records,
as did the U.S. trade deficit in autos, auto parts, and trucks.
If this is the fruit of a successful trade policy,
what would a failed trade policy look like?
[7.1.26]
From 2001 to 2007,
America ran $4 trillion in trade deficits,
$2.6 trillion in manufactured goods.
[I.e., two-thirds of the trade deficit in those years.]
Three million manufacturing jobs, one in every six, vanished.
By January 2007, wages in manufacturing had fallen 3 percent in three years—
during a recovery when the stock market had risen every year.
[7.1.27]
Since NAFTA passed in 1993,
America has run fourteen straight trade deficits with Mexico.
Grand total: over $500 billion.
In 2006,
Mexico exported more than 900,000 vehicles to the United States.
The United States exported fewer than 600,000 to the entire world.
...
[7.1.29]
In 1943–44, at the height of World War II,
40 percent of all U.S. jobs were in manufacturing.
In 1950, a third of our labor force was still in manufacturing.
Today it is 10 percent and falling.
For the first seventy years of the twentieth century,
we ran trade surpluses every year.
We have now run trade deficits for thirty-five years.
We used to export twice as much as we imported.
Now we import twice as much as we export.
Is it good for America that our dependence on imports
has risen from 4 percent of GDP to 16 percent?
Is it good for America that we import a third of our manufactured goods?
Is it good that American workingmen and women
make fewer and fewer of the things their countrymen need,
while corporate chiefs bank billions of dollars
for shipping American jobs overseas?
Here is an excerpt from
“Decline is a Choice:
The New Liberalism and the end of American ascendancy,” (2009-10-19)
by Charles Krauthammer.
Emphasis is added.
[R]esistance to decline begins with moral self-confidence and will.
But maintaining dominance is a matter not just of will but of wallet.
We are not inherently in economic decline.
We have
the most dynamic, innovative, technologically advanced economy in the world.
We enjoy the highest productivity.
It is true that
in the natural and often painful global division of labor
wrought by globalization,
less skilled endeavors like factory work migrate abroad,
but
America more than compensates
by pioneering the newer technologies and industries
of the information age.
There are, of course, major threats to the American economy.
But there is nothing inevitable and inexorable about them.
Take, for example,
the threat to the dollar (as the world’s reserve currency)
that comes from our massive trade deficits.
Here again,
the China threat is vastly exaggerated.
In fact,
fully two-thirds of our trade imbalance comes from imported oil. [Cf.]
This is not a fixed fact of life. We have a choice.
We have it in our power, for example,
to reverse the absurd de facto 30-year ban on new nuclear power plants.
We have it in our power
to release huge domestic petroleum reserves
by dropping the ban on offshore and Arctic drilling.
We have it in our power
to institute a serious gasoline tax
(refunded immediately through a payroll tax reduction)
to curb consumption and induce conservation.
[All three of Krauthammer’s suggested policy changes
would only reduce America’s dependence on foreign oil
(a valuable objective, to be sure).
They would do nothing
to reduce China’s overwhelming trade surplus vis-à-vis the U.S,
and the fast-rising mountain of debt that entails for the U.S.]
Nothing is written. Nothing is predetermined.
We can reverse the slide, we can undo dependence if we will it.
Miscellaneous Articles
2010
2010-01-06-NYT-Asian-electronics-manufacturing
Asian Computer Makers Move Into Riskier VenturesBy ASHLEE VANCE
New York Times, 2010-01-06
[A single paragraph from the article; emphasis is added.]
As
manufacturing of electronics in the United States
began moving offshore decades ago,
some feared the American economy would suffer.
But the American companies,
as well as economists and policy makers,
said that
manufacturing of electronics in the United States
began moving offshore decades ago,
some feared the American economy would suffer.
But the American companies,
as well as economists and policy makers,
said that
as long as
the high-value jobs like research and design
remained in the United States,
there was little danger.
the high-value jobs like research and design
remained in the United States,
there was little danger.
[Yes, we’ve been hearing that fairly monotonously from the “elite.”
But “little danger” of what?
The incomes and life-styles of the “elite” being challenged?
Let’s look at what that off-shoring of jobs means to the rest of us.
It damages us in two ways: jobs and
the buildup of debt owed by the U.S.
to those countries that have a trade surplus with us.
The lack of jobs is an immediate issue of high salience now, in 2010,
and has been since the recession started around the start of 2009.
The buildup of debt is practically ignored by the chattering classes now,
since interest rates are low
and foreigners are still willing to recycle their dollars
by buying those U.S. treasuries and thus financing the U.S. federal deficit.
But anyone with an ounce of sense knows that
that situation is too good (for the U.S.) to last.
The time will come when all that debt to foreigners in general,
and the countries that contain those electronic manufacturers in particular,
will have to be paid back,
or the U.S. will face other very unpalatable alternatives.
So far as I know,
no country in history has maintained a monotonically increasing debt
without something awful happening to it.
So why is the “elite” so accepting of the loss of those manufacturing jobs?
One answer is that there are some in the “elite” who feel
those jobs were “low-value”
(see the above quote, and a quote above from Charles Krauthammer)
and thus not to be worried over.
But low-value to whom?]
2010-02-21-NYT-Wong-China
Rift Grows as U.S. and China Seek Differing GoalsBy EDWARD WONG
New York Times News Analysis, 2010-02-21
...
[T]ensions are likely to worsen in coming months
as domestic pressures in each country
push the governments to assert their agendas more boldly,
and as China’s confidence in its economic system continues to grow.
On the American side,
a struggling economy is forcing the Obama administration to make
currency valuation and market liberalization top priorities.
With an unemployment rate of nearly 10 percent
and midterm elections coming up,
American officials are aware that
pushing China to raise the value of its currency, the renminbi,
and allowing American companies greater access to some Chinese markets
could be important political victories for Mr. Obama and his party.
“We’ve got to look at the risk of a more populist American public
and the U.S. Congress deciding that
China is the reason our economy isn’t growing enough,”
the American official said.
...
[This is certainly true, as far as it goes.
But where is concern about the effect of the trade deficit
on the rise of American debt to China?
There is no mention of that issue in the article.
So far as this article is concerned
that is not an issue for the American “elite.”
But if you stop to think about it,
how can that ever-rising debt to a foreign power,
and in fact our chief competitor,
not be a major vulnerability in what’s left of America’s future?
Cf. Paul Kennedy’s The Rise and Fall of the Great Powers.]
2012
2012-09-10-WP-Mexicans-snap-up-Made-in-USA
Middle-class Mexicans snap up more products ‘Made in USA’Burgeoning middle class drives a roaring trade across the border
By Nick Miroff and William Booth
Washington Post, 2012-09-10
...
[The italicized line above was the subtitle in the print edition.]
[16]
Trade with the United States has increased sixfold
since the North American Free Trade Agreement went into effect in 1994,
according to Bank of Mexico and U.S. Commerce Department data.
The trade agreement eliminated tariffs for goods
and made it easier to invest across the border.
[17]
In the United States,
NAFTA is still often used as a pejorative shorthand for outsourced jobs,
particularly in Rust Belt states
where manufacturers have closed plants and moved south.
The torrid expansion of auto manufacturing in Mexico, for instance,
is viewed by some industry experts as a long-term threat
to much-touted U.S. job growth in the sector.
[18]
But NAFTA today generates far less controversy in Mexico.
The last large protests,
by farmers angry about cheap corn imports from Canada and the United States,
occurred in 2008.
[19]
During Mexico’s presidential campaign this year, none of the candidates —
not even leftist challenger Andres Manuel Lopez Obrador —
campaigned against NAFTA or threatened to revoke it.
The winner, President-elect Enrique Peña Nieto, said he wants to expand it.
[20]
And there is little wonder why.
Mexican exports to the United States
have soared from $42 billion in 1993 to $263 billion in 2011,
according to the Commerce Department.
Almost 80 percent of Mexico’s exports go to the U.S. market, led by
crude oil, fruits, vegetables, televisions, cellphones, computers
and passenger vehicles.
[21]
“Before NAFTA, we had a slight trade deficit with the United States,”
said Daniel Chiquiar, a Bank of Mexico statistician.
“Now we have a huge trade surplus.”
[22]
U.S. exports have also multiplied,
especially as the consumption tastes of the growing Mexican middle class
increasingly resemble those of U.S. shoppers.
[23]
“Mexico and the United States are no longer competitors,
where one country wins and the other loses.
They are partners,”
said Christopher Wilson of the Mexico Institute in Washington,
who is the author of the report “Working Together.”
“The Mexican and U.S. economies are now as deeply integrated as any on Earth.”
‘Looking for quality’
[24]
In a Costco store in the suburbs at the edge of Mexico City,
shoppers browse shelves loaded with pallets of Kirkland vitamins, value packs of Nature Valley granola bars and sacks of Cape Cod kettle-cooked potato chips.
[25]
From 2009 to 2011,
825 new discounters and more than 3,000 convenience stores
opened for business in Mexico.
The biggest growth came in modern retail chains, filled with U.S. products,
that are challenging, for better or worse,
the traditional mom-and-pop stores doling out soda, eggs and tortillas.
[26]
Mexico bought $198 billion worth of U.S. goods last year,
up from $41 billion in 1993.
[27]
The United States sold more stuff to Mexico
than to Brazil, India, Japan and Britain combined.
[28]
At Costco, even the walls in the butcher aisle
boast the “USDA Premium” and “USDA Choice” labels, in English.
...
[36]
About 6 million jobs in the United States depend on trade with Mexico,
according to the consulting group Trade Partnership Worldwide,
which calculated the total for the Mexican government in 2008.
[But nowhere in the article do the authors tell us the converse number,
how many jobs jobs in Mexico depend on trade with the United States,
which would give insight into how many jobs (net) the U.S. has lost.
It seems to me the lack of giving that balancing number makes the article one-sided
on the question of the effect of NAFTA on U.S. employment.]
...
[While the article emphasizes
the (increase in the) amount of goods that the U.S. sells to Mexico,
it almost totally ignores the crucial fact that
the U.S. now runs a large net trade deficit with Mexico.
The only mention I could find of that crucial fact was in ¶21,
where it is given from the Mexican point of view,
where it is a “huge” surplus.
I guess the authors didn’t want to point out that
a “huge trade surplus” for Mexico is a “huge trade deficit” for the U.S.
Below is a table which pulls together the trade figures given in the article,
in ¶20 and 26,
to show the actual deficit in 1993 and 2011.]
| Year | M -> U.S. | U.S. -> M | U.S. Trade Deficit |
|---|---|---|---|
| 1993 | $42G | $41G | $1G |
| 2011 | $263G | $198G | $65G |
[To me, those numbers suggest that
Ross Perot was absolutely right circa 1992
when he warned that
passage of NAFTA would lead to a “Giant Sucking Sound”
as American jobs went south to Mexico.
What does that $65G deficit mean in terms of jobs?
I am not an economist nor a student of this issue,
but can show how certain assumptions will lead to certain conclusions.
Suppose the Mexican workers making the goods implicit in that $65G deficit
are paid an average of $10K ($10,000) per year.
Then we would be talking $65G/($10K/worker) = 6.5M workers.
That is no doubt highly simplistic,
but might indicate the ball park of the job loss implicit in that trade deficit.]
...
[42]
This year,
Mexico became the No. 1 investment destination for the aerospace industry.
2016
2016-01-Autor-Dorn-Hanson-The-China-Shock
"The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade"by David H. Autor, David Dorn, Gordon H. Hanson
NBER (National Bureau of Economic Research), 2016-01
ABSTRACT:
China’s emergence as a great economic power has induced an epochal shift in patterns of world trade.
Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks.
Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences.
These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated.
Adjustment in local labor markets is remarkably slow,
with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated
for at least a full decade after the China trade shock commences.
Exposed workers experience greater job churning and reduced lifetime income.
At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize.
Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.
2016-03-22-WP-how-republicans-helped-create-donald-trump-more-than-15-years-ago
What Republicans did 15 years ago to help create Donald Trump todayRepublicans rallied around a law to expand trade. Now it may doom them.
by Jim Tankersley
Washington Post, 2016-03-22
The Republican establishment began losing its party to Donald Trump on May 24, 2000, at 5:41 p.m., on the floor of the House of Representatives.
Urged on by their presidential standard-bearer, Texas Gov. George W. Bush, and by nearly all of the business lobbyists who represented the core of the party’s donor class, three-quarters of House Republicans voted to extend the status of permanent normal trade relations to China. They were more than enough, when added to a minority of Democrats, to secure passage of a bill that would sail through the Senate and be signed into law by President Bill Clinton.
The legislation, a top Republican priority, held the promise of greater economic prosperity for Americans. But few could predict that it would cause a series of economic and political earthquakes that has helped put the GOP in the difficult spot it is in today: with the most anti-trade Republican candidate in modern history, Trump, moving closer to clinching the party’s nomination.
...
In many ways, the vote worked out much better for the GOP’s donor class
than for the working-class voters now flocking to Trump.
[Surprise!]
By 2004, U.S. imports from China had nearly doubled.
By 2011, the U.S. trade deficit with China had quadrupled.
Thanks to the law, Americans were able to buy cheaper electronics, clothes, toys and other consumer goods.
Some companies ramped up exports to China, creating jobs.
Other companies were able to send millions of jobs
to a country where factory workers earned far less than those in the United States.
The ripple effects of those job losses have persisted, for workers,
in ways that surprised many economists.
Standard economists predicted no net job losses from expanded trade with China,
economists David Autor, David Dorn and Gordon Hanson wrote
in a working paper released this year
["The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade"].
In reality, the authors found, new jobs have not materialized quickly,
as expected, to replace the jobs lost from trade.
“Adjustment in local labor markets is remarkably slow,
with wages and labor-force participation rates remaining depressed
and unemployment rates remaining elevated for at least a full decade
after the China trade shock commences,” they wrote.
“Exposed workers experience greater job churning and reduced lifetime income.”
...
2016-03-22-Prestowitz-Boston-Globe-oped-trading-up-and-down
Trading up or downby Clyde Prestowitz
Boston Globe Op-ed, 2016-03-22
...
While economists argue endlessly over the impact of the trade deficit,
one incontrovertible conclusion stands out.
None of the trade agreements have eliminated it, or even reduced it, as promised,
and none of them have come close to achieving other promised benefits.
Take the 2000-01 deal to include China as a member of the World Trade Organization.
At the time, the US trade deficit with China was about $80 billion.
The US trade representative and the secretary of commerce
told Congress and the public that
getting China into the WTO would dramatically reduce that deficit
because China had more and higher barriers to US exports
than the United States had to Chinese exports.
Ergo, in the wake of a deal,
US exports to China would soar far faster than Chinese exports to America.
Well, 15 years later the US deficit with China is almost $370 billion.
Or, consider the US-Korea Free Trade Agreement of 2012.
In 2011, the US trade deficit with Korea was $13 billion.
Top US trade officials again told Congress and the public that
this deal would dramatically open the Korean market to US exports
and sharply cut the bilateral trade deficit.
But by 2015, the deficit had climbed to $28 billion
as Korean exports to America exploded,
while US exports to Korea remained about the same.
The growth in this deficit,
contrary to the forecasts of the government
and most of the leading economic think tanks,
represents the elimination of about 90,000 US jobs,
if we apply the Commerce Department’s calculation of
6,000 jobs for every billion dollars of exports or imports.
...
But, if the deals are so bad,
why have intelligent, well-educated officials of both the Republican and Democratic parties
persisted in making them,
and in making the same old discredited cases for them?
There are two major reasons.
The first is that
the primary purpose of the trade agreements
is not to improve the economic welfare of the United States.
Rather, it is to strengthen the American geopolitical position.
For instance, I was one of several people invited to the White House in 2009
to discuss the possibility of a Trans Pacific Partnership free trade agreement.
When I asked what the purpose of the agreement was,
I heard that it was to show our Southeast Asian friends and allies
that America is back, and
that it really cares about the region.
In other words, this deal was not primarily aimed at
creating American jobs or raising American incomes.
It was aimed at reassuring allies and friends
and at countering China’s influence
The second reason is that universities, think tanks, and media
still propagate a badly outdated notion of trade and globalization.
It is argued that trade is always and everywhere a win-win proposition
and that even if a trading partner doesn’t reciprocate with open markets,
unilateral free trade is still better than mutually closed markets.
The problem is that these assumptions include
full employment, fixed exchange rates,
no cross-border investment or technology flows,
and no costs for moving or closing one industry and opening a new one.
This clearly isn’t the world in which we live.
Just think about exchange rates.
They have been floating since the early 1970s.
Countries like China and Switzerland, to name just two,
have systematically intervened in global currency markets to devalue their currencies.
So, in a trade deal, maybe every country agrees to cut its tariffs by, say, 10 percent.
But then perhaps one of the countries acts to devalue its currency by 20 or 30 percent,
negating the effect of the tariff cuts. Or think of investment.
In today’s world, global financial flows are greater than trade flows.
As for technology, countries like Japan, in the past, and China, today,
have often made technology-transfer a condition of market access.
2016-05-29-Prestowitz-when-it-comes-to-trade-trump-is-spot-on
When it comes to trade, Trump is spot-onby Clyde Prestowitz
Tribune News Service, Memphis Commercial-Appeal, 2016-05-29
For all his bullying, narcissism and self-contradiction,
there is one point on which
presumptive Republican presidential nominee Donald Trump cannot be criticized.
In attacking our longtime free-trade policies and deals,
he has brought necessary attention to a huge elephant in America's policy room,
one that has run wild and must be stopped by the nation's next leader.
...
What did Trump so presciently see?
First, he saw the problematic approach taken by establishmentarians like Robert Zoelleck, a former World Bank president and deputy secretary of state, who in a Wall Street Journal op-ed this month argued for the TPP by focusing on the impact America's trade deals have had on national security.
To insiders like Zoelleck, the main purpose of trade and globalization policy is not to enhance the welfare of ordinary Americans; it's to shore up allies against Russia and stop China from doing what is never precisely stated.
This position is held by the very people who were silent when General Electric, rather than invest here, decided to move its high-tech aviation electronics division to Shanghai through a joint venture with a state-owned Chinese company. These are the people who promoted and profited from the offshoring of millions of U.S. manufacturing jobs in the name of making China a responsible stakeholder in the world economic system.
Neoclassical economists and the foreign policy establishment see the nonreciprocal opening of U.S. markets as an allegedly cost-free way of buying friends and persuading countries with tiny economies to host U.S. troops and join us in supporting supposedly critical issues at the United Nations.
This approach has long been deemed cost-free because top Anglo-American economists — not, mind you, Japanese, Korean, German or Singaporean economists — argued that free trade is always win-win.
So, opening U.S. markets to foreign competition, even when it has been clear the competitors are operating under mercantilist, export-led growth policies, has been said to be a big win for the vast majority of Americans. Of course, it has been admitted, a few workers or companies will be displaced, but it's also been promised they'll be compensated by the vast majority of winners.
All this has been based on the counterintuitive concept of comparative advantage, first articulated in 1817 by British economist David Ricardo. The theory basically holds that countries should concentrate on producing what they do best and trade for the rest.
What countries produce best, according the theory, is determined by their endowments of land, labor and capital. Therefore, countries like America, with skilled labor and lots of land and capital, ought to produce agricultural and advanced manufactured products and trade those for toys, clothing, and other products from countries with lots of cheap labor.
However, as economist Paul Krugman noted in the early 1980s, this theory rested on a host of far-fetched assumptions: fixed exchange rates, no cross-border flows of investment or technology, constant full employment, no cost of entry into or out of business, no government intervention such as Social Security or minimum wages, no unions and, very important, no economies of scale.
Indeed, in the late 1990s, Ralph Gomory, a former chief scientist at IBM, and William Baumol, a former president of the American Economic Association, showed that in the real world, where many countries and products were experiencing rapid technological change, immense cross-border flows of investment and technology, and frequent fluctuations in economic growth and employment, trade is as likely to be a zero-sum (I win, you lose) proposition as a win-win situation.
Trump probably hasn't read these analyses. But he has seen that none of the forecasts by Republican or Democratic administrations for job creation and reduced trade deficits came true. For instance, our $2 billion trade surplus with Mexico has become a $50 billion deficit since the North American Free Trade Agreement took effect. Our trade deficit with China, $80 billion in 2011, has ballooned to nearly $400 billion. Our free-trade pact with South Korea has seen U.S. exports decline, imports double and 11,000 jobs lost.
It's hard to deny that Trump has been right on trade.
posted by KHarbaugh at 00:55
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