Donald Trump’s demagoguery aside on an issue he really doesn’t understand, and seems not to care to, the anti-trade issue he has raised in this campaign has resonated with large numbers of people in his support base as well as many others, Democrats and Republicans alike, who are convinced that free trade has been a loser for the U. S., particularly in the export of manufacturing jobs to lower wage countries. For many, the North American Free Trade Agreement (NAFTA) was the original sin, considered by many as responsible for the decline in U. S. manufacturing, however strongly the evidence suggests otherwise. There is simply no evidence that imports are the primary driver of U. S. manufacturing job losses or even that the manufacturing sector overall is in decline.
No matter. The populist anti-trade crowd has pointed to a new study for the National Bureau of Economic Research by labor economists David Autor, David Dorn, and Gordon Hanson as the final validation that free trade, particularly with China, has been really bad for America and its workers, and that protectionist trade policy is the corrective.
But the reality is not so simple, as the study notes, for despite the impact of trade globalization on certain economic sectors, which is very real in terms of job destruction, there are broad-based benefits from free trade for U. S. consumers (particularly poor and middle class), businesses, and workers. The main problem that we have failed to properly address is what the study authors call U. S. labor dynamism–the natural, beneficial replacement of old jobs with new ones which is primarily a function of the willingness of workers to seek new jobs and their ability to obtain them–a factor which has decreased precipitously since 2001.
As described in a recent article in National Review by Scott Lincicome, the reasons for this decline in dynamism are many and include various perverse government policies, from health care finance to unemployment benefits to misguided job training programs to minimum wage laws. And I would add more emphasis to the role played by declining education standards as a key element in the lack of dynamism in providing worker adaptability to new job opportunities.
The bottom line for me is that, as I have suggested, the displaced middle class who are most injured by our failure to respond to these anxieties and these very real structural problems represents the core political constituency of this century.