2016 Postmortem
Related: About this forumEven Mainstream Economists Now Say Free Trade Harms US Workers & Does Long-Lasting Harm
In a recent study, three economists David Autor at the Massachusetts Institute of Technology, David Dorn at the University of Zurich and Gordon Hanson at the University of California, San Diego raised a profound challenge to all of us brought up to believe that economies quickly recover from trade shocks. In theory, a developed industrial country like the United States adjusts to import competition by moving workers into more advanced industries that can successfully compete in global markets.
They examined the experience of American workers after China erupted onto world markets some two decades ago. The presumed adjustment, they concluded, never happened. Or at least hasnt happened yet. Wages remain low and unemployment high in the most affected local job markets. Nationally, there is no sign of offsetting job gains elsewhere in the economy. Whats more, they found that sagging wages in local labor markets exposed to Chinese competition reduced earnings by $213 per adult per year.
In another study they wrote with Daron Acemoglu and Brendan Price from M.I.T., they estimated that rising Chinese imports from 1999 to 2011 cost up to 2.4 million American jobs.
These results should cause us to rethink the short- and medium-run gains from trade, they argued. ......
snip
The new evidence from trade suggests American policy makers cannot continue to impose all the pain on the nations blue-collar workers if they are not going to provide a stronger safety net.
That might have been justified if the distributional costs of trade were indeed small and short-lived. But now that we know they are big and persistent, it looks unconscionable.
http://www.zerohedge.com/news/2016-03-18/free-trade-agreements-used-help-american-workers-now-they-hurt-them
rhett o rick
(55,981 posts)50 million Americans living in poverty and Clinton supports Goldman-Sachs. Of course they helped make her very wealthy.
Response to rhett o rick (Reply #1)
PonyUp This message was self-deleted by its author.
amborin
(16,631 posts)FreakinDJ
(17,644 posts)amborin
(16,631 posts)Hortensis
(58,785 posts)Claiming that free trade is bad in itself after witnessing what happens when it is inadequately regulated is about as foolish as claiming that baking powder is a bad thing after witnessing what happens when a whole box is dumped in a cake.
These things are extremely useful tools and ingredients, but they need to be used properly.
How silly to claim economists think free trade itself is a bad thing. They don't. Go try to find an article claiming they think we should return to mercantilism or some such silliness. You won't.
What we need is control of the process. And for that we need to put more Democrats in office and toss out the incompetent free-trade ideologues who have run us on the rocks.
amborin
(16,631 posts)for American workers; and it harmed Mexicans, who are still paying down the bailouts to the banks
Hortensis
(58,785 posts)Those who learn a bit about contemporary economic history can at least discuss this at a high school level.
amborin
(16,631 posts)Last edited Sat Mar 26, 2016, 08:53 PM - Edit history (1)