Thursday, July 31, 2008

Jobs and China

The Economic Policy Institute released a policy brief yesterday which claimed that 2.3 million American jobs were lost between 2001 and 2007 as a result of the trade deficit with China.

Granted, the report is really talking about gross job loss, not net job loss. They don't talk about how many jobs were created by trade with China. Still, the story is pretty clear cut. With trade deficits as massive as the ones we're running with the Middle Kingdom, jobs and money go over there and products come over here - there's not much arguing with that.

We can't slip into mercantilism, as I've warned before - we can't cut off trade out of fear, because we do indeed benefit from cheap products and a more efficient use of the global labor supply... but...

Let's not hollow out the American economy in a free-trade frenzy. You can be a patriotic free trader that prefers to buy American and invest in American economic infrastructure - there's nothing anti-market about that.

3 comments:

JSN said...

Three things:

1. I am patting myself on the back. One day I talk here about Paris Hilton and politics, the next McCain releases an ad comparing Obama to Hilton.

2. I know you aren't saying imports don't create half as many jobs as they cost, are you?

3. America became a great, industrial power, say, during the period 1830-1950. Just somewhere in there. During that period it had the highest average tariff in the industrialized world. You _need_ some Ha-Joon Chang ;)

dkuehn said...

On #1, congratulations - a truly astute observer of the political scene!

#2: Absolutely not - and maybe I should have made that point more clear. If you read my earlier posts, you'll see that I'm not a free trade cheerleader, and that I have huge concerns about China. Still, it frustrates me when EPI and other groups don't come totally clean on what they're reporting. It just leaves us open to accusations of isolationism/protectionism which is obviously not what I'm advocating.

on #3 - you've convinced me... I'm looking Chang up on amazon now!

dkuehn said...

This is the same guy that wrote "Kicking Away the Ladder"! I read that in my development econ class in undergrad.

Fantastic! Yes - he is very insightful. I'll have to read Bad Samaritans.